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OPERATIONS MANAGEMENT

GETTING STARTED
 Me
 Entrepreneur – www.prosares.com
 rvajpai@gmail.com
 9321521467 (only if really necessary)

 Expectations from you
 Energy
 Challenge
 Fun

ASSIGNMENTS
 Assignment
 Divide yourselves into groups of 4
 20 minutes of each day – Presentation by 1 grp
 10 Weightage points for presentation
 (5 individual, 5 group)
 5 weightage points for participation – one winner per
presentation
 CR to prepare and announce groups

OPERATIONS MANAGEMENT Introduction .

1. INTRODUCTION TO OPERATIONS MANAGEMENT  What is operations management?  Discuss .

OPERATIONS MANAGEMENT .CONTEXT Time Quality Operations Flexibility Costs .

FOUNDATIONAL CONCEPTS Product Type (Goods/Services) Product Positioning Development Product Architecture Process Type (Discrete/Continuous) Design & Technology Management Process Flow Supply Chain Supply Chain Architecture Supply Chain Co-ordination .

Material. Machine) (Indirect resources – e.g. Man.DEFINITIONS  “Management of direct resources that are required to produce goods and services” (Direct resources . Money)  “Design.g.e. operation & improvement of the systems that create and deliver the firm’s primary products and services”  Management of an organisation’s productive resources or its production systems  A Production System takes inputs and convers it into output  The Conversion process is the predominant activity of a production system  Primary concern of the Operations Manager is the conversion process .

WHY STUDY OM Finance/Accounting Production and Budgets Inventory data Cost analysis Capital budgeting requests Capital investments Capacity expansion and Stockholder Technology plans requirements Orders for materials Product/Service Production and delivery Availability Schedules Quality Lead-time estimates Marketing Requirements Design/ Status of order Suppliers Performance specs Delivery schedules Operations / Material availability Production Sales forecasts Quality data Customer orders Delivery schedules Customer feedback Designs Promotions Personnel needs Hiring/firing Skill sets Training Performance evaluations Legal requirements Job design/work Union contract negotiations measurement Human Resources .

DECISIONS & ACTIVITIES OF AN OPERATIONS MANAGER  Plan  Organize  Control  Direct  Motivate  Training & Development .

HISTORICAL EVOLUTION  The Industrial Revolution  Post-Civil War Period  Scientific Management  Human Relations & Behaviorism  Operations Research  The Service Revolution .

INDUSTRIAL REVOLUTION  Developed in England in 1700s  Steam Engine Invented by James Watt in 1764.  Spread to other European Countries & United States  Eli Whitney developed the concept of interchangeable parts (1790)  Textile industry was the first “industry”  Gasoline Engine & Electricity in 1800s further advanced the revolution  By Mid 1800’s the “cottage” production system gave way to “factory system” . replaced human & water power for factories  Adam Smith’s The Wealth of Nations in 1776 – Specialisation of labour  Late 1700s factories had the machine power and also ways of planning and controlling the tasks of workers.

POST-CIVIL WAR  Led to great expansion of production capacity  Following developments led to production explosion of 20th Century:  Increased capital & production capacity  Expanded urban workforce  New Western US Markets  An Effective National Transportation System .

learning ability determined  Stopwatch studies conducted to precisely set standard output per worker on each task  Material specifications. routing sequences were used to organise the shop  Supervisors were carefully selected and trained  Incentive pay systems were initiated  In 1920s. work methods.SCIENTIFIC MANAGEMENT  Frederick Taylor’s Shop System  Each worker’s skill. Ford Motor Company’s operations embodied  Standardised product designs  Mass production  Low manufacturing costs  Mechanised assembly lines  Specialisation of labour  Interchangeable parts . strength.

 Researchers and Managers alike were recognising that psychological and socialogical factors affected production.HUMAN RELATIONS & BEHAVIOURALISM  1927-1932 – Howthorne Studies realised that human factors were affecting production. .  From the work of behaviouralists came a gradual change in the way managers thought about and treated workers.

enormous quantities of resources (personnel.OPERATIONS RESEARCH  During World-War II.  After the war. operations researchers found their way back to universities. industry. supplies. . government and consulting firms. equipment) had to be deployed  Military operations research (OR) teams were formed to deal with the complexity of deployment.  OR helps operations managers make decisions when problems are complex and wrong decisions are costly.

there is a growing need for service operations management.  Investment per office worker now exceeds investment per factory worker.THE SERVICE REVOLUTION  The creation of services organisations accelerated sharply after World War II.  Thus. .

THE IT REVOLUTION  Explosive growth of computer and communication technologies  Easy access to information and the availability of more information  Advances in software applications as Enterprise Resource Planning (ERP) software  Widespread use of email  More and more firms becoming involved in E-Business using the Internet  Results: Faster. better decisions over greater distances .

Cost Challenges  Rapid Expansion of Advanced Technologies  Continued Growth of the Service Sector  Scarcity of Operations Resources  Social-Responsibility Issues .OPERATIONS MANAGEMENT IN TODAY’S CONTEXT  Global Competition  Quality. Customer Service.

SYSTEMS VIEW OF OPERATIONS Production System Conversion Inputs Outputs Subsystem Control Subsystem .

more equipment  More labour. less equipment  Mass production.MANUFACTURING VS SERVICES Manufacturing Service  Tangible output  Intangible output  Less labour. fewer  Customised output variations  Cannot store  Can produce and store  Intangible measures of  Quality determined by defects quality …(No more!!!) .

OPERATIONS STRATEGY .

WHAT IS STRATEGY?  Discuss .

STRATEGY a deliberate search for a plan of action that will develop and grow a business's distinctive competence .

OPERATIONS STRATEGY  Execution! .

STATEMENT “To provide unmatched consistency in operations in support of high product quality. This must be accomplished with adequate speed.”  Order winners  Consistent operations  High product quality  Order Qualifiers  Speed  Cost  Process innovation . low cost.MCDONALD’S OPERATIONS STRATEGY . and process innovation to accommodate changes in consumer tastes.

Vertical integration. Information/control systems  Capabilities  Unique to each firm  Competitive Priorities  Cost. Technology  Infrastructure  Workforce. Facilities. Time.COMPONENTS OF OPERATIONS STRATEGY  Structure  Capacity. Quality. Organization. Flexibility .

DIMENSIONS  Competition based on Costs  Competition based on Quality  Competition based on Time  Competition based on Agility  “blue ocean” .

SOUTHWEST AIRLINES Southwest Airlines Average Airlines Car Transport Price Meals Lounges Seating Hub Friendly Speed Point-Point Choice Connectivity Service Frequency Source: Kim & Mauborgne .

CRITERIA FOR EVALUATING OPERATIONS STRATEGY  Consistency  vis-à-vis business strategy  vis-à-vis other functions  vis-à-vis competitive dimension (cost/quality/etc)  vis-à-vis external environment  Contribution to Business .

but franchisees push to locally optimize Control Centralized buying Systems Bulk contracts "Push" system for basic supplies.although the uniformity is beginning to change Process High degree of process understanding.MCDONALD’S Dimension Strategy Capacity Growth as needed through additional stores . "pull" system day-to-day in the restaurants .franchisee's well-being depends on it being used heavily Facilities Distributed facilities. emphasis on "fool-proof" processes Technology A leader in the technology of fast-food delivery Vertical Partnership arrangement Integration Long-term relationship with suppliers to promote innovation and quality improvement Workforce Franchisees: well-trained. carefully selected. each facility being very similar to the next.but capacity added carefully Well-utilized . entrepreneurs Operators: high-turnover. all focused around the same menu . cheap Organization Guidelines provided by corporation.

 Recap? .