Introduction to Production and Operations Management

S. Ajit

Definition
The design, operation and improvement of the transformation process, which converts the various inputs into the desired outputs of products and services.

S. Ajit

Transformation Process
Quality of inputs monitored Random disturbances Quality of outputs monitored

Input

Transformation Process

Output

Feedback mechanism

S. Ajit

Transformation Process ‡ For pure services ± An MBA institution ‡ For pure manufacturing ± Automobile ‡ For hybrid ± A restaurant

Functional Subsystems

Marketing

Operations

HR

Finance

Operations Function
Forecast Location & Layout Product design & Analysis, work Study Input Material Labour Equipment Capital Aggregate Planning Master Production Schedule Production Control Scheduling MRP Line Balancing Capacity Planning Output

Product/ Service

Maintenance Management Inventory Control Quality Control

Types of Production System 1. Basis ± Type of Output
1. Products [features, reliability, durability] * TV, Radio, Lathe 2. Services [ accessibility, timeliness, consistency] * Transport, Health, Entertainment

Types of Production System
2. Basis ± Type of Flow
1. 2. 3. 4. Projects [one of a kind product/service]
* Construction of bridge etc

Job shop [ units of different types of products follow
different sequence thro¶ different shops] * Hospital, Auto repair

Flow Shop [ successive units undergo same sequence]
* TV factory, Automobile

Continuous process [ no way to identify successive
components] * Postal service, Oil refinery

Types of Production System 3. Basis ± Type of Specification
1. Customized * Medical care, Legal service 2. Standardized * Insurance, Supermarket

Recent Trends in Operations Management
‡ Long term success
± Investment in technology
‡ Improves efficiency and productivity ‡ Competitive Advantage ‡ Cost Advantage

‡ Manufacturing-focussed to Customer-focussed

Recent Trends in Operations Management
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Computer Aided Design Computer Aided Manufacturing Flexible Manufacturing System Computer Integrated Manufacturing Artificial Intelligence Electronic Data Interchange Business process Reengineering Supply Chain Management ISO standards

Computer Aided Design
Computer systems assist in the creation, modification, analysis and optimization of a design

Computer Aided Manufacturing
Computers are used either directly to control the processing equipment, or indirectly to support manufacturing operations

Flexible Manufacturing System
* Form of flexible automation in which several machine tools
are linked to the materials handling system * Operate depending on the instructions received from the computer with respect to the sequence and operational specifications of the process

Computer Integrated Manufacturing
* A computer application that connects various computerized
systems into a single multi-functional system * A Central computer controls all aspects of the system

Artificial Intelligence
* Enables computers to exhibit some of the characteristics of
human intelligence, like the capacity for understanding, problem solving etc

Electronic Data Interchange
* Structured transmission of data between organizations by electronic means * Used to transfer electronic documents from one computer system to another

Supply Chain Management
* Design, planning, execution, control, and monitoring of the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption

Business Process Reengineering ISO standards

Factors affecting Operations Management Today 1. 2. 3. 4. 5. 6. Reality of global competition Quality, customer service, & cost challenges Rapid expansion of advanced technologies Continued growth of the service sector Scarcity of operations resources Social-responsibility issues

Factors affecting Operations Management Today 1. Reality of global competition
± Changing nature of world business
‡ Spending power ‡ Communication ‡ Trade policies (Free Trade Agreements)

± International companies ± Fluctuation of international financial conditions

Factors affecting Operations Management Today 2. Quality, customer service, & cost challenges
± Perfect product & service quality (US vs Japan cars) ± Outsource
‡ Cheap labour, raw materials

Factors affecting Operations Management Today 3. Rapid expansion of advanced technologies
± Initial cost ± Product/service quality ± Scrap & materials cost ± Faster response to customers ± Faster introduction of new products

Factors affecting Operations Management Today 4. Continued growth of the service sector
± Service company exist coz manufacturing sector buys their services

5. Scarcity of operations resources
± Scarcity of funds, employees, raw materials, like titanium, coal, petroleum products, water

Factors affecting Operations Management Today 6. Social-responsibility issues
± Consumer attitude ± Government regulation ± Self-interest [Infosys]

Factors affecting Operations Management Today 6. Social-responsibility issues
6a. Environmental Impact
a. b. c. d. e. f. Ozone layer depletion, rain forest depletion Global warming & acid rain Radioactive waste disposal Pollution Energy conservation Recycling

Factors affecting Operations Management Today 6. Social-responsibility issues
6b. Safety Impact
a. Product safety [Nokia mobile battery, Lenovo, bridgestone]

6c. Employee Impact
a. b. c. d. Fair treatment of employees Employee safety & health programs No discrimination [age, sex, color, race etc.] Benefit programs

Developing Operations Strategy
Corporate Mission Assessment of global business conditions Distinctive competencies

Business Strategy

Product/ service plans Competitive Priorities

Operations Strategy

Competitive Priorities
‡ That customers want form product/service

‡ Tool to capture market share ‡ All of these cannot be used for a single product Competitive Priority Low Production Cost Definition Unit cost of product/service including labour, material Ways of Creating Redesign of Product/service New Technology Increase in Production volume Reduction of scrap Reduction of inventory

Competitive Priorities
Competitive Priority Delivery Performance Definition Fast delivery Ways of Creating Larger finished goods inventory Faster Production rates Quicker shipping method On-time delivery More realistic promises Better information systems Control of production orders

Competitive Priorities
Competitive Priority High quality products / services Definition Customer perception of degree of excellence Ways of Creating Improve Appearance Malfunction or defect rate After sales service Customer service & flexibility Ability to quickly Use of advanced technology change, customer Increase in capacity responsiveness Lean manufacturing

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