International Islamic University,

Islamabad, Faculty of Mgt Sciences;

Operations Management Course;
(Module-2)
“Introduction to Operations
Management”
by
Sheikh Naseer-ul-Haq
M.A. (Economics), MS Dev. Mgt (USA), PA & AS
Former Director General, National Institute of Management
Former Additional Secretary, Establishment Division
Former Deputy Auditor-General of Pakistan
 MODULE OBJECTIVES
❑ The main objectives of the module are:-
To help the students understand the “Key Concepts” of the
subject of “Operations Management” by highlighting the
main concepts, introduce the various terms being used in the
subject and to provide & explain their definitions to develop
proper perception of the “Key Concepts”
To identify the ever-changing, dynamic and challenging
Organizational environment of 21st Century
To help the students understand the characteristics of an
effective organization; and to make them aware of the steps
required to achieve organizational effectiveness in a 21st
Century dynamic managerial environment
 Operations Management
❑ Operations Management can be defined as:-
“the Transformation Process that converts resources
into finished goods and services”
(Stephen Robins)
“ a systematic approach to addressing issues in the
transformation process that converts input into useful,
revenue generating outputs”
(Mahadevan)
❑ Manufacturing Organizations; that produce physical
goods
❑ Service Organizations; that produce nonphysical
products in the form of services
Operations Management (Focus)
❑ Four aspects of Operations Management
need closer attention:-
1) Operations Management is a systematic approach;
hence the focus should be on developing a set of tools
and techniques to analyse the problems faced within
an operations system.
2) Operations Management involves addressing various
issues that an organization faces; like re-routing jobs,
procuring materials on time, handling machine
breakdowns etc
Operations Management (Focus)
3) Transformation processes are central to the
operations system; the design, planning and
operational control of the transformation
processes.
4) The goal of the operations management is to keep
the costs to the minimum and obtain revenues in
excess of costs through careful planning and
control of operations; because “Profit” is
“Sales/Revenues minus Costs”; since in a
“Competitive” business environment the
organization cannot charge its own “Price(s)”.
 The Organizational Systems and the
Operational Management process
❑ The Organizational System; Definition:- A framework specifically
designed to operate an organization in line with its business processes. It
takes inputs and converts them into the desired outputs in accordance
with the organizational policy and objectives; that is what constitutes its
Operations Management Process:-

Inputs Outputs
• People
•Technology •Goods
•Capital Transformation
•Equipment Process •Services
•Materials
•Information Quality Maintenance Process
Management Management Improvement

Feedback
 Basic Organizational Linkages
● The Basic
Organizational
Functions and
Linkages:- Finance

Operations

Marketing HRM
 Operations Function and its
Linkages in an Organization
● Operations Management Linkages Operations Support Layer
•Marketing
Inside & Outside the Organization:- •Maintenance
•Quality
Customer Layer •Costing
• Ultimate Customers •Planning
•Dealers •Tooling
•Retailers •Material
•Information Technology
•Design
•Industrial Engineering

Core Operations
Layer of Layer
Innovation •Testing
•Innovation •Assembly Supplier Layer
Strategy •Fabrication •Sub-Contractors
•Research and •Matching •Suppliers
Development •Service Delivery •Other Service Providers
System
 Operations Management;
A Systems Perspective
● The basic inputs in an operating system are labour,
material and capital
● Processing includes the various activities that an
operating system undertakes to convert the raw
material into useful products for the consumers
● An important aspect of operations management is
estimating the demand for your “Product/
Services”. This is done through a process of
“Forecasting”
 Operations Management (OM)
Functions
● The important OM functions can be understood
by:-
1) Categorizing them as “Design Issues” and “Control
Issues”
2) Classifying them as “Long Term Issues” and “Short
Term Issues”, based on the “Planning Horizon”
Design Issues (Long Term) Operational Control Issues (Short Term)
Product Design and Development Demand Forecasting
Process Design Production Planning & Control
Quality Management Supply Chain Management
Location & Layout of Facilities Maintenance Management
Capacity Planning Continuous improvement of Operations
Challenges in Operations Management

● The following are the 21st Century critical

issues in OM:-
1) Competitive pressure due to Economic
Reforms around the world (WTO regime)
2) Growing customer expectations
3) Technological Developments
4) Environmental Issues
 Current Priorities for OM
● The following are the current priorities for
OM by the businesses:-
1) Relate the operations systems to the customer/market
requirements
2) Acquire capabilities to develop product/service
proliferation
3) Develop systems and procedures that promote
learning
4) Develop green manufacturing practices
Strategic Role of Operations Management

● Operations Management plays a “Strategic

Role” in the organizational business plans,
policies and profile; because it improves
“system efficiency”, promotes “proper
linkages”, and develops “Synergy” among
the processes to produce the desired effects
in a sustainable manner.
Why emphasize “Operations Management”

❑ Organizations emphasize on proper

“Operations Management Process” in order
to:-
Effectively and efficiently utilize resources;
To fulfill the needs of the customers in the best
possible way; and
To create “Value” at step every step of the
stated process
Value Chain Management
❑ Value:- The performance characteristics,
features, and attributes, as well as any other
aspects of “Goods” and “Services” for
which the customers are willing to give up
resources usually money.
❑ Value Chain:- The entire series of
organizational work activities that add value
at each step from raw materials to finished
product.
Value Chain Management
● Value chain management is the process of
managing the sequence of activities and
information along the entire “Value Chain”
that is from the procurement of the raw
material from the supplier to the delivery of
the product to the customer. It involves the
different segments of both the “external and
internal” environments of the organization.
“Supply Chain” vs “Value Chain”

● In order to contrast “Supply Chain

Management”; which is “internally”
oriented and focuses on efficient flow of
incoming materials (resources) to the
organization; “Value Chain Management” is
“externally” oriented and focuses on both
incoming materials and outgoing products
and services.
“Supply Chain” vs “Value Chain”

● The difference between the two is that the

“Supply Chain Management” is
“Efficiency” oriented (its goal is to reduce
costs and make the organization more
productive); while the “Value Chain
Management” is “Effectiveness” oriented
and aims to create the highest “Value” for
the customers.
Benefits of “Value Chain Management

● The following the four primary benefits of

“Value Chain Management”:-
1) Improved procurement
2) Improved logistics
3) Improved product development, and
4) Enhance customer order management
Requirements for “Value Chain Management”

● The following are the critical requirements

for proper “Value Chain Management”:-
1) Coordination and Collaboration among “external”
and “internal” stakeholders
2) Technology management/investment
3) Organizational Processes Development/Change
Management
4) Leadership Style
5) Employees/Human Resource capabilities
6) Organizational Culture and Attitudes
Obstacles to Value Chain Management

● The following are generally found to hinder

the implementation of Value Chain
Management Processes:-
Organizational Barriers
Cultural Attitudes
Required Capabilities
Organizational People; their lack of committment
Current Issues in Operations Management

● Technology Management/Maintenance and

Re-investment in Capital Stock
● Quality Assurance/Initiatives:-
Planning for Quality
Organizing and Leading for Quality
Controlling for Quality
– Quality Goals; ISO 9000 and Six Sigma
❑ Mass Customization
 Quality Dimensions
● Product Quality Dimensions:-
1) Performance; Operating Characteristics
2) Features; Important special characteristics
3) Flexibility; Meeting operating specifications over some
period of time
4) Durability; Amount of use before performance
deteriorates
5) Conformance; match with pre-established standards
6) Serviceability; Ease and speed of repair or normal
service
7) Aesthetics; How a product looks and feels
8) Perceived quality; Product image/brand name
 Quality Dimensions

● Service Quality Dimensions:-

1) Timeliness; Performed in promised period of time
2) Courtesy; Performed Cheerfully
3) Consistency; Giving all customers similar experiences
each time
4) Convenience; Accessibility to customers
5) Completeness; Fully serviced; as repaired
6) Accuracy; Performed correctly each time
Characteristics of Services
● Fundamentally, Services differ from
manufacturing with respect to:-
– Tangibility
– Heterogeneity
– Simultaneity
– Perish-ability;
but from the Operations management perspective;
a “pure product” and a “pure service” are just two
ends of the spectrum
THANK YOU