DEPARETEMENET OF SCHOOL OF GRADUATE

STUDY MASTER OF BUSINESS ADMINISTRATION

(MBA)
Assignment of Operational Management (OM)
Individual Assignment Section: - ONE

Submit by: - Name ID No

Bezawit Jembare---------MBA/1642/13/

SUBMITTED TO:
Dr. Endalkachew

January 2014 E.C

Addis Ababa-Ethiopia
1. Discuss on why the name of production management course has been changed
into operation management

Changing the name production management course into operation management was
necessarily needed because the Production Management have been dealing with
manufacturing / production / construction, while Operation Management cover both
products and services with that product and also because of production Management is a
part of the whole cycle of operations Management. Generally, new name Operations
Management was identified, as service sector became more prominent. Rapid changes in
technology has posed numerous opportunities and challenges which have resulted in
enhancement of manufacturing capabilities through new materials, facilities, techniques
and procedures. Hence, managing a service/production system has become a major
challenge in the global competitive environment. Production and Operations
Management leads the way for the organizations to achieve its goals with minimum
effort. Hence the study of the subject at undergraduate and postgraduate level has more
significance.

Production and operations management involve three main types of decisions, typically
made at three different stages:
1. Production planning. The first decisions facing operations managers come at
the planning stage. At this stage, managers decide where, when, and how production
will occur. They determine site locations and obtain the necessary resources.
2. Production control. At this stage, the decision-making process focuses on controlling
quality and costs, scheduling, and the actual day-to-day operations of running a
factory or service facility.

3. Improving production and operations. The final stage of operations management

focuses on developing more efficient methods of producing the firm’s goods or
services.
2. Explain the major factors to be considered in facility location and lay out for a
new business establishment

Facility Location

Of all the pieces of the planning puzzle, facility location is the most strategic and critical.
Once you build a new manufacturing facility, you have made a substantial investment of
time, resources, and capital that can’t be changed for a long time. Selecting the wrong
location can be disastrous. Some of the key factors that influence facility location are the
following:

 Proximity to customers, suppliers, and skilled labor

 Environmental regulations

 Financial incentives offered by state and local development authorities

 Quality-of-life considerations

 Potential for future expansion

The next step, after planning the production process, is deciding on plant layout how
equipment, machinery, and people will be arranged to make the production process as
efficient as possible.
Facility Layout
After the site location decision has been made, the next focus in production planning is
the facility’s layout. The goal is to determine the most efficient and effective design for
the particular production process. A manufacturer might opt for a U-shaped production
line, for example, rather than a long, straight one, to allow products and workers to move
more quickly from one area to another.

Service organizations must also consider layout, but they are more concerned with how it
affects customer behavior. It may be more convenient for a hospital to place its freight
elevators in the center of the building, for example, but doing so may block the flow of
patients, visitors, and medical personnel between floors and departments.
There are four main types of facility layouts: process, product, fixed-position, and
cellular.

The process layout arranges workflow around the production process. All workers

performing similar tasks are grouped together. Products pass from one workstation to
another (but not necessarily to every workstation). For example, all grinding would be
done in one area, all assembling in another and all inspection in yet another. The process
layout is best for firms that produce small numbers of a wide variety of products,
typically using general-purpose machines that can be changed rapidly to new operations
for different product designs. For example, a manufacturer of custom machinery would
use a process layout.
Products that require a continuous or repetitive production process use
the product (or assembly-line) layout. When large quantities of a product must be
processed on an ongoing basis, the workstations or departments are arranged in a line
with products moving along the line. Automobile and appliance manufacturers, as well as
food-processing plants, usually use a product layout. Service companies may also use a
product layout for routine processing operations.
Some products cannot be put on an assembly line or moved about in a plant. A fixed-
position layout lets the product stay in one place while workers and machinery move to
it as needed. Products that are impossible to move ships, airplanes, and construction
projects are typically produced using a fixed-position layout. Limited space at the project
site often means that parts of the product must be assembled at other sites, transported to
the fixed site, and then assembled. The fixed-position layout is also common for on-site
services such as housecleaning services, pest control, and landscaping.
3. What are the fundamental difference between product design and services
design? Show with example.

The early-stage development and design process is easily one of the most important
periods of time for any business, whether you are product or service based. After all, the
decisions that you make at this stage will have a huge impact on everything from
usability and accessibility, to desirability and feasibility. So, both service design and
product design as processes feed into how happy your customer or user will be.
It’s easy to fall into thinking that the two processes are exactly the same: How can
product design and service design really be that different? Well, the truth is, there
certainly are some similarities in the ways that they are often conducted, but there are
also huge differences that you need to be aware of so that you can create the best product
or service possible.

What is a product?
A product is tangible. That’s to say, that a customer can buy the product and then hold or
store it somewhere (be this in the “real world” or on a computer or device). Most often,
its value is generated and derived from the product by the user. The user already knows
what they want from the product, hence they buy it.

What is a service?

On the other hand, a service is something that someone experiences and isn’t necessarily
owned. For example, health care’s services or streaming platforms such as Netflix, Spotify
and Audible. In each of these cases, the service is not tangible and only has value when it
is performed for the user. With this in mind, it’s true to say that whilst services are by
definition people-centered, products aren’t.
What are the key principles of Product Design?

As Smashing Magazine point out, “Product design is the process of identifying a market

opportunity, clearly defining the problem, developing a proper solution for that problem

and validating the solution with real users.” As such, design thinking is a brilliant

foundation for the product design process, since it is so focused on finding actionable and

practical solutions to the problems of users. We’ve spoken a lot about design thinking on

our blog. In fact, we covered the topic just last week and explained how it differs from

Human-Centered Design.

Design Thinking is a problem-solving process: First you begin by understanding and

scoping a clear problem, and then you focus on how you can solve it. One of the ways that
this is best illustrated is through the Design Council’s Double Diamond: This is such a

valuable process for product designers, as it focuses on product development from one end

to the other, not just the design itself. This helps designers to define exactly what they’re

trying to achieve in terms of their users’ needs, thereby creating something with a much

greater chance of success. Understanding the Design Thinking framework, this then feeds

into the product development process. Each project will look slightly different, but here’s

how the general flow looks:

1. Defining the product vision

2. Product research

3. User analysis

4. Ideation

5. Design

6. Testing and validation

7. Post-launch activities

4. Discuss on the manufacturing and services operations with example.

An operation is a core functional area of an organization, along with marketing, human

resources and accounting. Operations management plays a crucial role in enhancing the
quality of products and efficiency of the production environment. According to
the Corporate Finance Institute, operations management is the process of administering
business practices to maximize the efficiency of operations and enhance the quality of
output. Operations management involves activities such as planning, organizing and
overseeing operational activities to reduce costs and improve profitability.

Manufacturing Operations
The term "manufacturing operations" refers to a framework in which man, machine and
material come together to produce a tangible product. It deals with all the supply chain
activities such as gathering requirements from customers, procuring raw materials,
allocating resources, scheduling the production, maintaining the inventory, and
delivering end products to customers.

Manufacturing operations are classified into process manufacturing and discrete

manufacturing. Process manufacturing is an operational method that produces goods by
following a specified sequence of steps or a predefined formula. Discrete
manufacturing emphasizes producing individual finished goods that are distinct from
one another. While pharmaceutical and food and beverage industries adopt the process
manufacturing method, automobiles and smartphone manufacturers adopt a discrete
manufacturing method.

Service-Providing Organizations
Services are intangible and non-physical products offered by one party to another in
exchange for money. As reported in the Harvard Business Review , service-providing
operations aim to deliver an experience that leads to customer satisfaction. Service
operations engage a wide range of teams to deliver services, including professional
service teams, customer support teams and customer experience teams. Organizations
that engage in hospitality, travel, media, sports, health care and entertainment are
service-providing organizations. Service-providing operations send employees to their
customers' locations or meet the customers at the company's premises to facilitate the
service provision.

The important components of service-providing operations are labor, service model and
service environment. Labor could be a skilled workforce or semi-skilled workforce that
directly engages with customers to provide services. The service model is the approach
that the organization adopts to deliver intangible value to customers. SAAS (Software-
As-A-Service) is a perfect example of a service operations model adopted by software
firms. A restaurant drive-in option is another service operations model that lets
customers remain in parked vehicles while they eat. Service environment refers to the
ambiance of the premises where the service provision takes place.

Similarities of Goods Production and Service Operations

Goods production and services operations look similar to an extent. Both goods
production and service operations engage human and physical resources to deliver the
desired output. For example, the goods production environment of an automotive
company uses human resources such as mechanical engineers, production labor and
physical resources like fabrication, welding and drilling machinery to deliver finished
goods. Similarly, service operations at a beauty salon engage human resources,
including haircutting experts and beauticians, and physical resources, such as
conditioners, straighteners, clippers, wands and combs, to offer the desired services.

Differences Between Goods Production and Service Operations

While manufacturing operations focus on producing goods and storing them at a
warehouse before delivering them to customers, service-providing operations facilitate
simultaneous production and consumption of services. For example, an automobile
company makes a car and keeps it in the warehouse until a customer comes forward to
purchase it. A beauty salon needs to provide haircutting services in the presence of the
customer.

Services cannot be stored for later use. When there is a high demand for services,
service operations should engage additional human resources and modify operational
activities accordingly to manage the supply-demand equation. Due to their nature of
producing and storing finished goods, manufacturing operations don't need to engage
additional resources and modify operational activities when there is a high demand for
products.

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.

5. How the productivity of an operation can be enhanced sustainably? Discuss the

methods of enhancing the productivity of an operation

Low productivity is one of the root causes of the “working poor” phenomenon: people who
work long hours, often in the informal economy or in subsistence agriculture, but still do not
earn enough to feed their families. Raising productivity – and ensuring that the productivity
gains are equitably shared between business owners and investors (higher profits and
shareholder value) and workers (higher wages and better working conditions) is, therefore, of
critical importance in efforts to reduce poverty. The virtuous circle of productivity,
employment and development can be fuelled through the re-investment of productivity gains
into product and process innovations, plant and equipment improvements, and measures to
enhance the skills and improve the work environment of the workforce.

Productivity refers to how efficiently resources are used; it can be measured in terms of all
factors of production combined (total factor productivity) or in terms of labour productivity,
which is defined as output or value added divided by the amount of labour used to generate
that output. Labour productivity increases when value added rises through the better use,
coordination, etc. of all factors of production. Value added may increase when labour is
working smarter, harder, faster or with better skills, but it also increases with the use of more
or better machinery, reduced waste of input materials, or with the introduction of
technological innovations. Labour productivity measures the efficiency of a country with
which inputs are used in an economy to produce goods and services and it offers a measure
of economic growth, competitiveness, and living standards within a country. Governments,
workers and employers are united in their pursuit of enhanced productivity because greater
productivity is the primary source of improvements in living standards, the most sustainable
route out of working poverty, and the basis (and measure) of competitiveness in global
markets.

Productivity growth may have employment-displacing effects and can even cause the
disappearance of entire job families. These effects are central to the discussion around the
Future of Work since new technologies and the automation of work processes may cause
profound disruptions in the world of work. However, experience has shown that in the longer
term and at the aggregate level, productivity growth may not necessarily reduce employment
growth in a country. Productivity gains can work their way through the macro economy so
that job losses in one location or sector is compensated by job gains in another area or sector.

DWA-SDG Relationship

Employment is the primary means of income generation for the poor. Increasing productivity
of the poor, improving their employability and creating productive employment opportunities
for them is an important way to fight poverty.

Cross-cutting policy drivers

The ILO promotes the so-called “high road” to productivity which seeks to enhance
productivity through better working conditions and the full respect for labour rights as
compared to the “low road” which consists of the exploitation of the work force.

As highlighted above social dialogue is crucial to all efforts aimed at improving

productivity, in particular those that adopt the “high road”. A recent ILO story from
Colombia illustrates very well how social dialogue and collective bargaining have greatly
improved productivity in the garment industry.

1 - Review Your Existing Workflow

You won’t know what can be changed until you know how everything works now. Three
areas contain critical information to help you identify needed changes.
  People - Do you have people with the right skills in the right places? Do you have
a project manager to keep the critical pathway visible and on track? Are
objectives clearly defined, realistic, and safe?
 Processes - When was the last time you mapped your processes? Have you used
value stream mapping to assess process improvement projects? Where are the
pain points and bottlenecks?

 Equipment and technology - Is all your equipment in good repair? Is the

technology you rely on optimal for your current needs? How easy is it to make
changes in production?

2 - Update Processes and Technology

Once you have reviewed and mapped your existing workflow, start identifying areas
where processes and/or technology could use some updating or changing. Processes that
have been in place for a long time may be riddled with workarounds as new equipment
was added or production methods changed.
 Automation is a powerful tool for increasing efficiency and reducing error.
 New software solutions can help with scheduling, inventory, and monitoring
workflow.

 Improvements in equipment can improve production speed and quality.