Module 1

1. What do you understand by the term “operations management”?

2. What are the major operations management issues that manufacturing
organizations face in India?
3. How would you define a service system? Give some examples to support
your definition.
4. What are the various functions of operations and how are they linked to
other parts of an organization?
5. Distinguish between the following terms: (a) Service attributes and
product attributes (b) Manufacturing organizations and service
organizations.
6. What does the term operations strategy mean? How is it different from
corporate strategy?
7. What is order-winning and order-qualifying attributes? Give three
examples of each in the service and manufacturing industries.
8. What is the role of technology in operations strategy?

ANSWER
Operations management is the administration of business practices to create the
highest level of efficiency possible within an organization. It is concerned with
converting materials and labour into goods and services as efficiently as
possible to maximize the profit of an organization. Operations management
teams attempt to balance costs with revenue to achieve the highest net operating
profit possible.
Operations management involves utilizing resources from staff, materials,
equipment, and technology. Operations managers acquire, develop, and deliver
goods to clients based on client needs and the abilities of the company.
Operations management handles various strategic issues, including determining
the size of manufacturing plants and project management methods and
implementing the structure of information technology networks. Other
operational issues include the management of inventory levels, including work-
in-process levels and raw materials acquisition, quality control, materials
handling, and maintenance policies.
Operations management entails studying the use of raw materials and ensuring
minimal waste occurs. Operations managers utilize numerous formulas, such as
the economic order quantity formula to determine when and how large of an
inventory order to process and how much inventory to hold on hand.

Ans 2. Challenge: Maintaining the Right Inventory Levels

Lack of a real-time view of inventory means you’re less than fully confident in
your ability to meet customer demand. It’s almost inevitable that you’ll find
yourself with inventory stockouts during times of high demand. A typical
response is to carry extra safety stock—but this increases costs and cuts into
profit margins.
Without a real-time view of inventory, you’re forced to devote significant man-
hours to tedious cycle counting just to keep track of your inventory levels—but
these counts are notoriously inaccurate. And it’s virtually impossible to
establish full inventory traceability of materials and products when you’re
keeping records manually on paper.
Challenge: Maximizing Production and Ensuring High Product Quality
The amount of waste and scrap caused by your production line can cause
frequent headaches. But it’s hard to minimize waste when you have so many
other priorities that seem more pressing.
Your customers hold you to high standards for product quality—and so when a
particular batch doesn’t pass muster, you may have to redo it. But because
quality management is so difficult to validate through traditional quality
assurance processes, you may find your company erring on the side of caution
and discarding more finished products than you’d like. Each time this happens,
you put your production goals at risk and cut even further into your profits.
Challenge: Optimizing Inefficient Processes
Uncertain inventory levels and inconsistent quality assurance processes create a
drag on your overall operational efficiency. But there are other causes for the
wasted staff time that inevitably reduces your manufacturing output.
The typical manufacturing workforce still wastes far too much time performing
manual machinery checks and keeping paper records. IT staff are forced to
spend hours maintaining hardware and software rather than finding new areas of
innovation. On either end of the production process, the purchasing and
shipping departments find themselves relying too heavily on costly expedited
shipping services.
ANS 3.
ANS 4. Key functions of operations management include the following:
Finance - Finance is a crucial component within operations management. It is
essential to make sure that all finances have been utilized to their fullest extent
and are being properly carried out to ensure for optimized creation of goods and
services. Proper utilization of finances will allow for a product or service to be
created that will satisfy overall consumer needs.
Strategy - When utilizing strategy within operations management, this refers to
planning tactics that can aid through optimized resources and development of a
competitive edge over other businesses. Many business strategies include
supply chain configuration, sales, capacity to hold money, and optimum
utilization of human resources.
Operation - This function of operations management is concerned with
planning, organizing, directing, and overall control of all activities within the
organization. This is the primary function of operations management and will
effectively aid in converting raw materials and human efforts into a durable
good and service that consumers will be able to utilize.
Product Design - With new technology becoming available, the selling of a
product become much moresimple. One of the main duties of operations
management is to ensure that a product is designed properly and caters to
market trends and needs of consumers. Modern-day consumers are concerned
about quality instead of quantity, which is why it is so crucial to develop a
durable and top-notch quality product.
Forecasting - Forecasting is the process in which software makes an estimate of
certain events that may occur in the future. In operations management,
forecasting can take an estimate of consumer demand, which correlates with
production through creating an accurate amount of product needed within a
given time. Overall, forecasting plays a crucial role within the production
process.
ANS 5. There are five main differences between service and manufacturing
organizations: the tangibility of their output; production on demand or for
inventory; customer-specific production; labor-intensive or automated
operations; and the need for a physical production location. However, in
practice, service and manufacturing organizations share many characteristics.
Many manufacturers offer their own service operations and both require skilled
people to create a profitable business.

Tangibility of Output
The key difference between service firms and manufacturers is the tangibility of
their output. The output of a service firm, such as consultancy, training or
maintenance, for example, is intangible. Manufacturers produce physical goods
that customers can see and touch.
Production on Demand
Service firms, unlike manufacturers, do not hold inventory; they create a service
when a client requires it. Manufacturers produce goods for stock, with inventory
levels aligned to forecasts of market demand. Some manufacturers maintain
minimum stock levels, relying on the accuracy of demand forecasts and their
production capacity to meet demand on a just-in-time basis. Inventory also
represents a cost for a manufacturing organization.
Customer Specific Production
Service firms do not produce a service unless a customer requires it, although
they design and develop the scope and content of services in advance of any
orders. Service firms generally produce a service tailored to customers’ needs,
such as 12 hours of consultancy, plus 14 hours of design and 10 hours of
installation. Manufacturers can produce goods without a customer order or
forecast of customer demand. However, producing goods that do not meet
market needs is a poor strategy.
Labor Requirements and Automated Processes
A service firm recruits people with specific knowledge and skills in the service
disciplines that it offers. Service delivery is labor intensive and cannot be easily
automated, although knowledge management systems enable a degree of
knowledge capture and sharing. Manufacturers can automate many of their
production processes to reduce their labor requirements, although some
manufacturing organizations are labor intensive, particularly in countries where
labor costs are low.
Physical Production Location
Service firms do not require a physical production site. The people creating and
delivering the service can be located anywhere. For example, global firms such
as consultants Deloitte use communication networks to access the most
appropriate service skills and knowledge from offices around the world.
Manufacturers must have a physical location for their production and stock
holding operations. Production does not necessarily take place on the
manufacturer's own site; it can take place at any point in the supply chain.
ANS 6. Operations strategies drive a company’s operations, the part of the
business that produces and distributes goods and services. Operations strategy
underlies overall business strategy, and both are critical for a company to
compete in an ever-changing market. With an effective ops strategy, operations
management professionals can optimize the use of resources, people, processes,
and technology.