Operations Management – Session 1

Introduction to Operations Management

Chapter 1 Operations and Productivity
Chapter 2 Operations Strategy in a Global Environment
• Master of Commerce, MBA, Certified in
Production & Inventory management (APICS),
Lean Six Sigma Black Belt trained.
• 20+ yeas across domains of Supply Chain
Management mainly Logistics, Warehouse
Operations, Inventory Management, Demand
Forecasting, Sourcing, Outsourcing and
Customer Services.
• Worked with 3M, L'Oréal and DHL in the
Middle East, Africa and Europe regions.
• Teaching interests include Logistics, Professor N P Girish
Visiting Faculty – Logistics, Project,
Operations, Warehousing, Project Operations Management
Management, Six Sigma related topics. NMIMS Global Access School for Continuing
Education
 Course Methodology

Guided Sessions of the Concepts

Case Examples
Real life experience sharing from corporate world
Text book concepts summarized
IA will be Application Based
TEE will be mix of Theory and Application
Recommended Reading – Text Book, Course Slides
Road Map
Road Map
 IA
 IA is Descriptive Question
 1 * 10 Marks Question
 Case let situation / asked to choose a situation
 Theory plus Application expected
 Concept application to case situation
 30 to 40% weightage for Theory in the DQ
 No calculation is expected either
 Keep answers to the topic and application situation
 Stick to the concept being asked to be applied
 Stay within the operations management domain in giving
answers
 Topics
 Operations Management
 Productions, Supply Chain and Operations Management
 Role of Operations Manager
 Operations Management Challenges
 Productivity
 International Operations Strategies
 Location
 Facility
 Seating Capacity
 Interiors
 Food Quality
 Entertainment
 Operations Management
Operations management (OM) is the set of activities that
creates value in the form of goods and services by
transforming inputs into outputs.

Activities creating goods and services take place in all

organizations.

In manufacturing firms, the production activities that create

goods are usually quite obvious

In Service Industry, the services may be “hidden” from the

public and even from the customer.
Operations Management
Operations Management
Operations Management
 Operations Management
Operations management (OM) is the set of activities that
creates value in the form of goods and services by
transforming inputs into outputs.

Activities creating goods and services take place in all

organizations.

In manufacturing firms, the production activities that create

goods are usually quite obvious

In Service Industry, the services may be “hidden” from the

public and even from the customer.
 OM, Production, Supply Chain

 Production - The creation of goods and services.

 Supply chain - A global network of organizations and activities

that supplies a firm with goods and services.

 Operations management (OM) - Activities that relate to the

creation of goods and services through the transformation of
inputs to outputs.
 Benefits of Understanding OM
 OM is one of the three major functions of any organization, and
it is integrally related to all the other business functions. All
organizations market (sell), finance (account), and produce
(operate), and it is important to know how the OM activity
functions.

 To know how are goods and services are produced

 Regardless of your job in an organization, you can perform

better if you understand what operations managers do.

 A large percentage of the revenue of most firms is spent in the

OM function. Improve Service, Optimize Cost
 Role of Operations Manager
10 Strategic OM Decisions
 Design of goods and services
 Managing quality
 Process strategy
 Location strategies
 Layout strategies
 Human resources
 Supply-chain management
 Inventory management
 Scheduling
 Maintenance
 Role of Operations Manager

WayCool Foods - Reimagining India's Food Supply Chain - YouTube

“If Coca-Cola can sell billions of sodas and
McDonald’s can sell billions of burger, why
can’t Aravind sell millions of sight-restoring
operations, and, eventually, the belief in
human perfection?” – Dr. Venkatawamy (Dr.
V)

Aravind’s business model is based on his

vision to solve the blindness problem
regardless of the patient’s ability to pay.

Aravind has been able to successfully execute

this business model over the last forty years
to become the largest provider of eye-care
services in the world.

Productivity
Quality
Cross Trained Workforce
Inhouse production
Technology to Aid Outreach
 Operations Management Challenges
 Globalization:
 The rapid decline in the cost of communication and transportation has made
markets global.
 Operations managers are rapidly seeking creative designs, efficient
production, and high-quality goods via international collaboration.

 Supply-chain partnering:
 Shorter product life cycles, demanding customers, and fast changes in
technology, materials, and processes require supply-chain partners to be in
tune with the needs of end users.
 Suppliers may be able to contribute unique expertise, operations managers
are outsourcing and building long-term partnerships with critical players in
the supply chain.

 Sustainability:
 Operations managers’ continuing battle to improve productivity is concerned
with designing products and processes that are ecologically sustainable.
 Designing green products and packaging that minimize resource use, can be
recycled or reused, and are generally environmentally friendly.
 Operations Management Challenges
 Rapid product development:
 Technology combined with rapid international communication of news, entertainment, and
lifestyles is dramatically chopping away at the life span of products.
 OM is answering with new management structures, enhanced collaboration, digital
technology, and creative alliances that are more responsive and effective.

 Mass customization:
 Once managers recognize the world as the marketplace, the cultural and individual
differences become quite obvious.
 Substantial pressure is placed on firms to respond in a creative way.
 OM must rapidly respond with product designs and flexible production processes that cater
to the individual whims of consumers.
 The goal is to produce customized products, whenever and wherever needed.

 Lean operations:
 Lean can be thought of as the driving force in a well-run operation, where the customer is
satisfied, employees are respected, and waste does not exist.
 Need is for organizations that are more efficient, where management creates enriched jobs
that help employees engage in continuous improvement, and where goods and services are
produced and delivered when and where the customer desires them.
 Operations Challenges/Roles
HouseSmarts Cool Tools "Dutch Boy Twist and Pour Paint Can"
Episode 82 - YouTube

Last Mile Delivery Route Optimization for e-grocery Industry |

Big Basket Success Story - YouTube
 Globalization of Operations
• Revolutionary Product
• State of Art Technology
• Global 300+ Suppliers
• Collaborative Development
• Operational Efficiency
• Logistical Challenges
• Supply Chain Risk

• Communication and Technology

• Shipping and Logistics
• Economic Integration
• Interdependence of Countries
• Global Spread of Talent
• Global Supply Chain and Distribution Networks
 Why Organizations go Global
• Improve the supply chain – Production Centres, Expertise

• Reduce costs and exchange rate risk – China Outsourcing

• Improve operations – Japanese, German approach

• Understand markets – Mature Markets to Developing ones

• Improve products – Samsung, Bosch lithium ion batteries.

Toyota, BMW joint research

• Attract and retain global talent – Growth Opportunity,

Migration for better quality living
 Productivity
 The creation of goods and services requires changing resources into
goods and services.

 The more efficiently we make this change, the more productive we are
and the more value is added to the good or service provided.

 Productivity is the ratio of outputs (goods and services) divided by the

inputs (resources, such as labor and capital)
 The operations manager’s job is to enhance (improve) this ratio of
outputs to inputs.

 Improving productivity means improving efficiency

 Productivity
 Improvement can be achieved in two ways:
 Reducing inputs while keeping output constant
 Increasing output while keeping inputs constant.
 Both represent an improvement in productivity

 Production is the making of goods and services

 High production may imply only that more people are working
and that employment levels are high
 It does not imply high productivity.
Productivity
 Competitive Pressure?? and Ethics
In September 2015, the US Environmental
Protection Agency (EPA) found that in over
590,000 diesel motor vehicles, Volkswagen
had violated the Clean Air Act as the
vehicles were equipped with “defeat
devices” in the form of a computer
software, which was designed to cheat on
federal emissions tests

In 2017, the U.S.-based VW executive In April 2017, a US federal judge

Oliver Schmidt, who oversaw emissions
issues, was sentenced to seven years in
prison and fined $400,000, the maximum
possible under a plea deal the German
national made with prosecutors after
admitting to charges of conspiring to
mislead U.S regulators and violate clean-
air laws.
ordered Volkswagen to pay a $2.8
billion criminal fine for "rigging
diesel-powered vehicles to cheat on
government emissions tests". ... As
of 1 June 2020, the scandal had cost
VW $33.3 billion in fines, penalties,
financial settlements and buyback
costs.
International Operations Strategies
Optional Slides
Operations Strategy Issues
 Competitive Advantage
• Competitive advantage implies the creation of a system that
has a unique advantage over competitors.
• The idea is to create customer value in an efficient and
sustainable way.
• Differentiation, Low cost, and Response are ways to gain
competitive advantage

• Engaging a customer with a product through imaginative use

of the five senses, so the customer “experiences” the
product.
• Achieving maximum value, as perceived by the customer.
• A set of values related to rapid, flexible, and reliable
performance
Competitive Advantage
 1903
Heavy Losses….. Served World Wars

1949
 Passionate Employees
 Rode the vehicles to understand technical issues and challenges
 Engine Improvement
 Improving Weakness
 Expensive, Powerful Bikes
 New Outlets.. Branding by updating outlets
 Customer Experience
 Outsourcing and Core Competency
• As organizations develop missions, goals, and strategies, they
identify their strengths
• What they do as well as or better than their competitors is
their core competencies.
• By contrast, non-core activities, which can be a sizable
portion of an organization’s total business, are good
candidates for outsourcing.
• Outsourcing is transferring activities that have traditionally
been internal to external suppliers.
• 1 increased technological expertise
• 2 more reliable and cheaper transportation
• 3 the rapid development and deployment of
advancements in telecommunications and computers
 Outsourcing Pros and Cons

Big multinational companies moving out of China

As the US-China trade war rumbles on and relations between other liberal democracies and
Beijing deteriorate due to everything from intellectual property (IP) theft to human rights
violations in Xinjiang and the eroding away of Hong Kong's autonomy, many globally-
renowned companies are deserting China.
Gartner revealed last year that a third of supply chain leaders had plans to move at least
some of their manufacturing out of China before 2023. Coronavirus-related sales slumps
and supply chain disruption, as well as rising production costs, have also hastened the
exodus.
Big multinational companies moving out of China | lovemoney.com