PRODUCTION & OPERATIONS MANAGEMENT
Why should you study PRODUCTION & OPERATIONS MANAGEMENT ?
Because …………. *Understanding of modern approaches to managing operations *Provides a systematic way of looking at organizational process *Presents interesting career opportunities *Concepts & tools of OM is widely used in other functions.
Production involves the step by step conversion of one form of material into another through chemical & mechanical processing to create or enhance the utility of the products.
# Operations management refers to the direction and control of the processes that transform inputs into finished goods & services
What is operations management?
*Organizations can be described as production systems.
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Set of inputs : Materials, Labour, Facilities, Equipments, Land, Energy Outputs : Goods & Services
Operation Bank Inputs Outputs
Tellers, Staff, Computer Loan, deposit, safekeeping
Faculty, staff, library, computers
Educated students, research
Aircrafts, pilots, flight attendant etc.
Transportation from one location to another
Process: Any activity or group of activities that takes one or more inputs, transforms & adds value to them and provides one or more outputs for its customers. Nested Process: Concept of a process within a process
Transformation: It is the part of the system that adds value to the input Value can be added in four ways: *Alter *Transport *Store *Inspect
Tangible Transfer of ownership Homogenous A thing Production & distribution are separated from consumption Intangible
No transfer of ownership Heterogeneous An activity or process Production, Distribution, Consumption are simultaneous process.
Core value produced in factory.
Core value produced in buyer seller interaction.
Can be stored Customers do not participate in production process Quality control is possible Requires physical distribution Attributes can be determined before purchase eg. Colour, size etc. Shelf life – days to years
Cannot be stored Customers participate in production process Difficult to control Mostly worked with personal contact Difficult to evaluate in advance. Shelf life zero
*Manufacturer not only produces goods and service organizations not only offer services. Both type of organization offer a package of goods & services. *Despite the fact that service providers cannot inventory their outputs, they must inventory the inputs for their products. *Many service operations have little outside customer contact.
Productivity: It is the value of outputs (goods & services) produced divided by the values of input resources used. Productivity measures: Restaurant : Customer (meals) per labour hour Retail Store: Sales per square foot Utility Plant: Kilowatts per ton of coal Insurance firm: office productivity as no. of policies processed per employer per week.
Operations Managers key skill areas: *Quantitative analysis to solve problems * Knowledge of information system to manage vast quantities of data. *Concepts of organizational behaviour to aid in designing jobs and managing jobs. *An understanding of international business methods to gain useful ideas about facility location, technology, and inventory management
*Coordination & effective communication among various functions are essential to achieve organizational goal. Discuss: Various functions & their responsibilities in an organization. Various functions & responsibilities: *Operations/Production transforms inputs into outputs. *Accounting collects, summarizes, and interprets financial information. *Distribution deals with the movement, storage, handling of inputs & outputs. *Engineering develops product & service designs and production methods.
OM as a function
*Finance secures and invests the company’s capital assets. *Human resources hires & trains employees. *Marketing generates demand for the company’s output.
Decisions can be divided into 5 categories: *Strategic Decisions: determines company’s global strategies & Competitive priorities. *Process Decisions: job work, automation, improvements, technology decisions.
Decisions in POM
3. Quality Decisions: to establish quality objectives & the ways to improve it (TQM) & the use of inspection & statistical method to monitor the quality produced (SPC) 4. Capacity, Location & Layout Decisions: 5. Operating Decisions: Supply Chain Management, Forecasting, Inventory management, Resource planning & Scheduling decisions are done. There are 3 types of production: *Job
Types of Production
A process with the flexibility needed to produce a variety of products or services in significant qualities. (customer requirements of special order) Eg: machining a metal casting for a customized product, handling a special delivery mail, making customized cabinets etc. A process that differs from the job process with respect to volume, variety & quantity. Eg: making components to feed the assembly line, processing loan, manufacturing medicines etc.
The extreme end of high volume, standardized production with rigid line flows.
Eg: Petroleum refineries, chemical plants, plants making beer, steel etc. Two types of continuous production: a. Mass Production b. Flow Production
Objectives of Production Mgmt.
1. Ultimate Objective The primary responsibility of the manufacturing activity is to produce a product or products at #pre-established cost #according to specified quality #with stipulated time frame
i.) Manufacturing Cost: Reduction in Variable Cost, Fixed Cost, Increase in volume of production & allocation of fixed overheads. ii) Product Quality Quality standards should be maintained, cost and time schedule should not be compromised. iii) Manufacturing Schedule Time schedule should be broken into sub systems & should not be set for shipment alone
2. Intermediate Objectives: To attain optimum utilization of various types of inputs. i) Machinery & Equipment: Acquisition & Utilization of machinery & equipments ii) Materials: per unit material cost should be specified & efforts should be made to increase the inventory turnover. iii) Manpower Manpower should be closely allied with the objective of manpower selection, placement,
training, rewarding & utilization iv) Manufacturing services Provision of proper & adequate services that directly affect the utilization of inputs (men, machine, material) like, power, water supply, material handling etc.