Operation Management-II

Report on:

Learning journey of classroom discussions

Prepared By

Nidhi D

Under the Guidance of

Dr. PRS Sarma (IIM Visakhapatnam)

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Topic Page No.

1. Course Introduction……………………………………………………3

2. Operation and Manufacturing Strategy………………………………..4-5

2.1. Operation Strategy………………………………………………..4

2.2. Manufacturing Strategy…………………………………………..4

3. Managing Operations………………………………………………….5-7

3.1. Achieving Excellence…………………………………………….5

3.2. Quality and lean Management……………………………………5

3.3. Capacity Strategy…………………………………………………6

3.4. Project Management………………………………………………6

4. Digital Supply chain and Logistics…………………………………….7

5. Theory of Constraints: The GOAL…………………………………….8

6. Conclusion……………………………………………………………..9

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 1. Course Introduction:

We started the course by introducing what is operations management. It is basically the

management of the systems and processes that create goods/ services. Operation is the
conversion of input into output. Operations and supply chain (which will be studied in detail in
the further sessions) are important part of any organization. The essence of the operations
function is to add value during the transformation process. While operations can be a competitive
weapon when applied correctly, it needs support from other areas of the organization such as
finance and Marketing.

Whether Operations Management is your major or not, the skill you gain studying operation
management will serve you well in your career. Few of the many skills required by the
operations manager are technical competency and behavioral competency. The way in which
operations manager support the company success is by;

 Increasing profitability, productivity, quality and safety for the company

 Creating value (good quality in less cost), delivery and flexibility for the
customers.

Learning about how important operations management is, we also went through some of the
challenges such as difficulty to establish quality standards, productivity management, developing
production lines, managing global networks, developing and integrating new technologies into
the existing one and conforming to environmental constraints and ethical standards.

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 2. Operations and manufacturing strategy:
2.1 Operation Strategy

In this session we studied about different ways in company competes and why some firms do a
very good job of competing. We learned this in context with how operation and manufacturing
strategy play an important role in helping firms to compete. We defined operation strategy as, A
consistent pattern of business decisions for operations and the associated supply chain that are
linked to the business strategy and other functional strategies, leading to a competitive
advantage for the firm. As seen from the definition that operation strategy should be in line with
the business strategy, following are the examples of the operations strategy;

Organization Strategy Operation Strategy

Low price Low cost
Responsiveness  Short processing time
 On-time delivery
Differentiation: High quality  High processing quality
 Consistent quality
Differentiation: Newness Innovation
Differentiation: Variety  Flexibility
 Volume
Differentiation: Service Superior customer service
Differentiation: Location Convenience
Moreover, it is important to look at the environmental aspect, that is minimizing or eliminating
environmental impacts of operations like packaging, Manufacturing etc.

2.2. Manufacturing Strategy:

The manufacturing strategy that we studied were;

 Make to stock (MTS)

 Assemble to order (ATO)
 Make to order (MTO)
 Engineer to order (ETO)

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 3. Managing operations:
3.1 Achieving excellence

To learn about achieving excellence, we did a case study in class, Narayan Hrudayalaya (A).
The case showed how Dr. Devi Shetty employed health care operations methods that were so
different from the Indian health care system at the time. He wanted to make the health care
service affordable to the to financially challenged patients and for that he employed various
methods such as; treating high number of patients, he used the equipment’s at full potential to
reduce the per unit cost, he rented the equipment. They offered Karuna Hrudaya Scheme and
started mobile cardiac lab to provide services in rural areas.

3.2 Quality and lean management

We started by talking about the evolution of total quality management, and introducing Quality
4.0, and talked about how Quality 4.0 is important in this era to achieve efficiency, reduce cost
and create value for the end customers. We also defined what is Quality. One way of thinking
about Quality is the degree to which performance of a product or service meets or exceeds
customer expectations. Quality is also conformance to specifications, fitness for purpose or use.

Dimensions of Quality;

 Quality of Design- Quality of determined before a product is produced. It refers to the

performance, aesthetics, features of the product.
 Quality of conformance- producing a product to meet the specifications.

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  The abilities- abilities refers to the availability, reliability, maintainability, durability, etc.
of the product.
 Field Service- refers to the maintenance, repair, replacement of the product after it has
been sold.

We also learned lean management, “Lean is a process of eliminating waste with the goal of
creating value for enterprise stakeholders.” Lean thinking means removal of Muda, which
means waste in Japanese. We identified seven forms of waste such as excess processing, too
much inventory, unnecessary motion, defects, overproduction, waiting time, unnecessary
transportation. We also learned lean transformation model as given below,

3.3 Capacity strategy

To learn capacity strategy, we did a case study on Benihana of Tokyo. The case is about the hotel
group that provided services in US with Japanese ambience and on table cooking to create
differentiation. The hotel group was doing good until they face the problems of; cost related to
the Japanese materials and Japanese staff to work in US. Long queuing time was also the
problem. They made capacity changes to address these problems such as, more staff per table,
add more tables, rearrange lounge space during busy hours.

3.4 Project management

To start with the topic, we saw examples of different projects around the globe (eg: bridges). We
then defined what is project, “A temporary endeavour undertaken to create a

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‘unique’ product, service, or result.” A project should be technically feasible, commercially
viable, politically suitable, socially acceptable. Some of the tools used to manage project are
Gantt charts, PERT, CPM. We then studied the three project objectives as shown below;

4. Digital Supply chain and logistics:

We started the class by discussing what is supply chain and supply chain management. Supply
chain is the sequence of organization, their facilities, functions and activities, that are involved
in producing and delivering a product or service. Supply chain management is a set of
approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, stores and
customers, so that merchandise is produced and distributed.

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Supply chains are the lifeblood of any organization. This was explained by using the example of,
how badly the supply chains were disrupted during Covid pandemic. Managing supply chain is
the process of planning, implementing and controlling supply chain operations. The goal of the
supply chain management is to match supply to demand as effectively as possible. Key aspects
relate to;

 Determining level of outsourcing

 Managing procurement
 Managing customer relationship
 Quickly able to identify problems and respond to them

Components of supply chain;

 Upstream supply chain- from suppliers to the organization

 Internal supply chain- to convert input into output by organization
 Downstream supply chain- from organization to customers

We also learned about Logistics, it is a part of supply chain involved with the forward and
reverse flow of goods. Logistics management includes, management of inbound, outbound,
material handling, warehousing, inventor, third party logistics and reverse logistics. We focused
more on the third-party logistics (3PL) which means outsourcing a part of, or entire logistics to
outside organization. Logistics outsourcing is a business practice in which services or job
functions are given to a third party, which traditionally were performed inhouse by the
company’s own employees and staff. Outsourcing is mainly done to lower the labor cost, lower
overhead cost, and bring flexibility.

5. Theory of Constraints: The GOAL

A constraint is defined as anything that limits a system’s higher performance relative to its
purpose. When we’re viewing an organization from the functional perspective, list of constraints
is usually quite long. TOC postulates that the goal is to make (more) money. The basic financial
components of any organization are defined by TOC are: increase throughout rate, decrease
inventory, reduce operating expenses. When we are looking for the constraint, an organization

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must ask the question, “What is limiting our ability to increase our rate of goal generation.” We
classified constraints of three types;
 Physical constraint- shortage of raw materials, reduced capability, non-availability of
people or specific set of skills.
 Policy constraint- policies are the rules and measures that govern the way organizations
go about their business.
 Paradigm constraint- beliefs or assumptions that organization or individual hold.
The five steps for ongoing improvement;
i. Identify the system’s constraint
ii. Decide how to exploit the system’s constraint
iii. Subordinate everything to the decisions made in steps one and two
iv. Evaluate the system’s constraint
v. Go back to step one
To learn the theory of constraints we watched a movie named THE GOAL as a part of our
curriculum.

6. Conclusion:

The overall course was very informative and engaging as the professor conducted in class
activities to understand the concepts better. During in class activities we were directed to apply
the concept to the real- world problems which helped us a lot. Moreover, a field visit was
arranged to The Akshaya Patra Foundation where we were given opportunity to walk through
their entire operations from start to the end. This helped us in acknowledging how the real-world
organizations apply the concepts that are taught in the operation management course.