Prof. M.H.Varma

Scope of Discussions / Objectives

Understanding the basic Concepts of Operational Activities of Organisations in Manufacturing and Services Sectors

Learning Outcomes
On successful completion of the Course, the Students should be able to do the following : -

• Student should be able to differentiate how different Operations Strategies lead to achieve Competitiveness demonstrate • Ability toProcesses differences between Manufacturing and Service of Product Service Design • Discusstothe Processthe Concepts and SCM, TQM, JIT Tools and of • Ability describe overall purpose in the Organisation Techniques and it’s Demonstrate understanding • of Project Management of Planning and Control Processes


Operations Managemen Introduction

Customer Retention Key Issues
A Recent Survey says –
90 % •“More thando notof unsatisfied customers complain” times to get a •“It costs 5than it more to keep anew customer does current customer”



What is Operations Management? Defined
Operations management (OM) is defined as the design, execution and improvement of the systems that create and deliver the firm’s primary products and services


Why Study Operations Management?
Systematic Approach to Org. Processes

Business Education

Operations Management

Career Opportunities

Cross-Functional Applications


What is a Transformation Process? Defined
A transformation process is defined as a user of resources to transform inputs into some desired outputs


Operations as a Process
Input Transformation (Conversion) Process Output


Operations as a Process
Input Transformation Fabrication Transformation Assembly Output

Fabrication: making the parts Assembly: putting the parts together


Operations as a Process
Energy Materials Labor Capital Information Feedback information for control of process inputs and process technology

Transformation (Conversion) Process

Goods or Services


     

Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications


What is a Service and What is Goods?

“If you drop it on your foot, it won’t hurt you.” (Goods or service?)

“Services never include goods and goods never include services.” (True or false?)


OM in the Organization Chart
Finance Operations Operations Operations Operations Manager Manager Marketing

Plant Plant Manager Manager

Director Director

Manufacturing, Production control, Manufacturing, Production control, Quality assurance, Engineering, Quality assurance, Engineering, Purchasing, Maintenance, etc Purchasing, Maintenance, etc

Functional Integration
Financial Management Human Resource Management Marketing Management

Production/ Operations Management

Materials Management

Research and Development

Management Information System

Relation of Operations to its Environment
Human EngineeringMarketing Resources

External Environment


Operations transformation system
Accounting Finance MIS




Functions of Operations Managers


• • • • •

Plan product and service mix Location & Capacity Planning Plan equipment procurement Generate Master Schedule – What products to make and when Decide number of shifts/ number of hours


• • • • •

Centralized or Decentralized operations Design hierarchical structure Assign responsibility for every activity Organize supplier/ subcontractor networks Establish maintenance policies

Functions of Operations Managers


• • • •

Compare costs to budget Inspect the Quality levels Compare work progress to schedule Compare actual labor hours to standards


• • • •

Establish provisions of union contracts Establish personnel policies Establish employment contracts Issue Job assignments and instructions

Functions of Operations Managers


• • •

Provide specific objectives/ Goals & challenges Encourage through praise, recognition of job achieved Motivate through tangible Reward System Coordinate through use of forecasts and master schedule Recommend corrective actions/ necessary improvement on performance achieved Report, inform and communicate (through MIS Reports) Support employees in training programs Encourage suggestion schemes Facilitate people involvement/ empowerment


• • •

Training and development

• • •


Core Services Defined Core services are basic things that customers want from products they purchase


Core Services Performance Objectives


Operations Management


Price (or cost Reduction)


Value-Added Services Defined Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way


Value-Added Service Categories
Problem Solving


Operations Management

Sales Support

Field Support


The Importance of Operations Management
 Synergies

must exist with other functional areas of the organization  Operations account for 60-80% of the direct expenses that burden a firms profit.

Historical Evolution of Operations Management


Scientific Management – F. W. Taylor – “ The Principles of Scientific Management” Moving Assembly Line – In 1911- Henry Ford applied the principles of Scientific Management (Model T)

Hawthorne Studies – Research Team from HBS – under the leadership of Elton Mayostudy conducted at Western Electric Company’s Hawthorne Plant (Chicago)

Operations Research – Operations Research teams formed in military operations to smoothen the complex logistics issues (USA & Europe)


Historical Development of OM

• JIT and TQC • Manufacturing Strategy Paradigm • Service Quality and Productivity • Total Quality Management and Quality


Historical Development of OM (cont’d)

• Business Process Reengineering • Supply Chain Management • Electronic Commerce


Current Issues in OM

• Coordinate the relationships between
mutually supportive but separate organizations. and distribution networks. services

• Optimizing global supplier, production, • Increased co-production of goods and


Current Issues in OM (cont’d)

• Managing the customers

experience during the service encounter operations as a significant competitive weapon

• Raising the awareness of


Question Bowl
A major objective of this book is to show how smart managers can do which of the following? a. Improve efficiency by lowering costs b. Improve effectiveness by creating value c. Increasing value by reducing prices d. Serving customers well e. All of the above

Answer: e. All of the above


Question Bowl
In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following? a. Displays b. Stocks of goods c. Sales clerks d. All of the above e. None of the above

Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.)


Question Bowl
In which of the following decades did the concept of quality control originate? a. 1920’s b. 1930’s c. 1940’s Answer: b. 1930’s (Tools such d. 1950’s as sampling inspection and e. 1970’s

statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)

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