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Manufacturing & Operations Management

Production is the process by which raw materials and other inputs are converted into finished products. Production & Manufacturing Decision Making Strategic decisions Operating decisions Control decisions

Production function as a competitive advantage

Shorter new-product lead time More inventory turns Shorter manufacturing lead time Higher quality Greater flexibility Better customer service Reduced wastage

Operations Management

Operations management is the process in which resources/inputs are converted into more useful products.

The distinction Production mgmt. is more used for a system where tangible goods are produced. Operations mgmt. is more frequently used where various inputs are transformed into intangible services.

Recent Trends in Operations Mgmt.

Global Market Place Operations strategy as an integral & important part of overall business strategy TQM Technology Worker involvement Environmental issues Corporate rightsizing Supply chain management Lean production

Elements of Operations Strategy

Positioning the Production System custom & standardised Focus of factories & service facilities specialized in some way Product/Service design & development introduction, growth, maturity, decline Technology selection & process development Allocation of resources to strategic alternatives funds, capacity, workers, materials, talent & other resources Facility planning, capacity, location & layout

Methods of Manufacturing
Process Choice It is the way of structuring the process by organizing resources around the process or organizing them around the products.

4 process choices / methods of manufacturing Job Process / Project / Jobbing Batch Process / Batch Production Line Process / Process Production Continuous Flow Process / Continuous Production

Job Process / Project / Jobbing

A process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable complexity and divergence in the steps performed. Customization is high & volume for any one product is low. Workforce & equipment are flexible to handle considerable task divergence. Typically products are made to order and not produced ahead of time. Each new order is handled as a single unit as a job.

Batch Process
Batch process differs from job process with respect to volume, variety, and quantity. Volume - Volumes are higher because the similar products are produced repeatedly. Variety - A narrower range of products is provided. Quantity Production lots are handled in larger quantities (or batches) than are with job processes. A batch of one product is processed and then production is switched to the next one.

Line Process Production


Volumes are high & products are standardized. Production & material handling equipment is specialized. Standard products are produced in advance of their need & held in inventory so that they are ready when a customer places an order. Each step performs the same process over & over with little variability in the products manufactured. E.g. assembly of computers, automobiles & appliances.

Continuous Flow Process / Continuous Production

High volume standardized production. Process divergence is negligible. Usually one primary material (such as a liquid, a gas, or a powder) moves without stopping through the process. Process is capital intensive & operates around the clock to maximize utilization. Materials flow through the process without stopping until the whole batch is finished. E.g. petroleum refining, chemical processes & making of steel

Five Ps of Manuf. & Oper. Mgmt.

Product: Performance Aesthetics Quality Reliability Quantity Selling price or production/operating costs Delivery dates and/or times

Future possible demands Design and layout of buildings and offices Performance and reliability of equipment Maintenance of performance Safety of installation and operation Social responsibility

Available capacity Available skills Type of production/operation Layout of plant and equipment Safety Maintenance requirements Costs to be achieved

Purchasing Transforming Maintenance Cash Storage Transport

Wages/salaries Safety Conditions of work Motivation Trade unions Education & training

Five Ps of Manuf. & Oper. Mgmt.

Product Plant Processes Programmes People

Five Ps of Manuf. & Oper. Mgmt.

Product Plant Processes Programmes People

Contribution of Taguchi

Genichi Taguchi, a Japanese engineer, realised the importance of cost associated with poor quality and its impact on corporate profitability. His focus was on achieving quality by reducing variations in processes. His principle states that for each deviation there is an incremental economic loss of geometric proportion. Traditional view there is no negative effect as long as the products/components are within their respective engineering specifications. Taguchi says that the point to consider is the cumulative impact of the deviations from the target value.

Contribution of Taguchi

Taguchi methods of quality control : on-line and off-line methods On-line methods: methods like use of statistical process control charts. Off-line methods: involve market research, product design & development, process development. The variations from the target values are very important and these variations are to be reduced as much as possible.

The definition of quality changes from achieving conformance to specifications to minimizing the variability while achieving the target.

Ishikawa diagram / Cause & Effect diagram / Fishbone diagram Identification of possible causes for quality deviation or important input parameters Design of Experiments (DOE) It is a structured method where input parameters are adjusted in a planned & systematic way to achieve process improvement.

Design of Experiments (DOE)

Run X (Vehicle) Y (Road) Z (Driver) O ( Milege observed)

2 3 4 5


2 Lane
2 Lane 4 Lane 4 Lane 2 Lane


16 17 19 15

7 8


2 Lane
4 Lane 4 Lane


17 18

Contribution of Deming

W. Edwards Deming, was an American quality expert. Considered to be the father of the Japanese quality management systems. The highest honor for excellence in quality management, the Deming Prize, is named after him. Several TVS Group companies from India are Deming award winners. Demings basic premise regarding quality management It is possible to provide good-quality products and services to customers at a much lower price and firms can operate profitably in the long run.

Contribution of Deming

One of the aims of continuous improvements should be to minimize the variation. This concept is similar to Taguchi philosophy. The whole aim is to improve the process capability and more generally the system or organizational capability. Areas of continuous improvement need to be highlighted.

Contribution of Deming
Dr. Deming introduced the Plan-Do-Check-Act (PDCA) cycle. In this, company : Plans a change Executes it Checks the results and Depending upon the results, acts either to standardize the change or to begin the cycle of improvements again with new information. Continuous improvements requires such a cyclical approach.

Contribution of Crosby

From line inspector to corporate vice-president for quality. Introduced the concept of zero-defect performance and popularized the phrase do it right the first time. Zero defects implies that errors should not be expected or accepted as inevitable. Crosby noted that most companies spend 20 to 25 percent of their revenues on quality costs. Whereas a company with a well managed quality programme can achieve cost of quality that is less than 2.5 per cent of revenues.

Contribution of Crosby
Quality philosophy of absolutes management: I. Conformance to standards II. Prevention III. Performance standard is zero defects IV. Price of non- conformance V. No such thing as a quality problem



Contribution of Joseph Juran

Jurans approach to quality management complemented that of Demings. He believed that the quality problems faced by most companies are due to the constraints imposed by the top management rather than by those at the operational level. He proposed a simple definition of quality fitness for use. This definition suggests that quality be viewed from both external and internal perspectives.

Contribution of Joseph Juran

His approach to quality management focuses on three important aspects, known as Jurans trilogy: Quality planning: The process of preparing to meet quality goals Quality control: The process of making quality goals during operations Quality improvement: The process of breaking through to unprecedented levels of performance The Juran Institute, founded by him, provides training on the various areas quality and operational excellence.

Factors influencing the choice of location

Proximity to market provide better service, minimize transportation cost, JIT delivery, response to change in demand, react to field or service problem Integration with the organization integration with other associated units Availability of labor and skills Availability of amenities good external amenities like housing, shops, community services, communication systems, education

Factors influencing the choice of location

Availability of transport air, road, rail, water and pipeline. Choice depends on relative costs, convenience and suitability. Availability of inputs location near main suppliers will help to reduce cost, to meet suppliers to easily to discuss quality, technical or delivery problems. Availability of services six main services gas, electricity, water, drainage, disposal of waste, communications Suitability of land and climate humidity,

Factors influencing the choice of location

Regional regulations Room for expansion long range forecast Safety requirements Site cost Political, cultural and economic situation Special grants, regional taxes and import/export barriers

Doing Business : Comparison of India and China

Parameters China 12 41 India 11 89 49.50%

Starting a business
Procedures (number) Time (days)

Cost (% of per capita income) 14.50% Enforcing contracts

Procedures (number)
Time (days) Cost (%of debt)

241 25.50%

425 43.10%

Closing a business
Time (years) Recovery rate 2.4 35.20% 10 12.50%

Factors affecting the design of plant or premises

Size small units, large unit Number of floors single storey, multiple storey Access Free movement of goods in and out of unit, free movement within Services types & quantity of services Headroom required Loads to be carried Lighting Heating and ventilation Disposal of waste Special process requirements

Criteria for a good layout

Maximum flexibility Maximum co-ordination Maximum use of volume Maximum visibility Maximum accessibility Minimum distance Minimum handling Minimum discomfort Inherent safety

Criteria for a good layout

Maximum security Efficient process flow Identification

Types of Layout
Process layout or functional layout or job shop layout The process layout involves a grouping together of like machines in one department. The process arrangement is signified by the grouping together of like machines based upon their operational characteristics. The departments should be located as per the sequence of operations. Convenience for inspection & supervision should be ensured.

Light & heavy engineering industries, made to order furniture

Process layout

Advantages: Grater flexibility Better & more efficient supervision possible through supervision Greater scope of expansion Better utilization of men & machines Easier to handle breakdown of equipment Greater incentive to individual worker to increase his performance Investment of equipment would be comparatively lower

Process layout
Disadvantages: Difficulty in movement of materials. Requires more floor space. Difficulty in production control. Production time is more. Accumulation of work in progress at different places.

Product layout / Straight line layout

Involves the arrangement of machines in one line, depending upon the sequence of operations. Material is fed into the first machine and finished products come out of the last machine. Output of one machine becoming the input for the next. Emphasis is on special purpose machines in contrast to general purpose machines. There should be no point where one line crosses another line. All operations should be included in the line.


Reduction in materials handling cost. This type of layout avoids production bottlenecks. Economy in manufacturing time. Facilitates better production control. Requires less floor area per unit of production. Work-in-progress is reduced and investment is minimized. Greater incentive to a group of workers to raise their level of performance.


Product layout is known for its inflexibility Expensive Difficulty of supervision Expansion is difficult Any breakdown of equipment along a production line can disrupt the whole system.

Further Layouts
Fixed Position Layout Cellular Manufacturing (CM) Layout Combined Layout (or Group Technology Layout or Hybrid Layout)

Maintenance Management

Maintenance It is the function which is concerned with the day-to-day problem of keeping the physical plant in good operating condition.
It is necessary to ensure the availability of the machines, buildings and services needed by other parts of the organization for the performance of their function at an optimum return on investment in machines, materials and employees.

Maintenance Management

Need of maintenance because machines break down, parts wear out and buildings deteriorate over a period of time of use.

Maintenance covers two broad categories of functions: Primary functions: Maintenance of existing plant and equipment Maintenance of existing plant buildings and grounds. Equipment inspection and lubrication

Maintenance Management
Utilities generation and distribution Alterations to existing equipments and buildings New installations of equipments and buildings Secondary functions Storekeeping Plant protection Waste disposal Pollution control Any other service delegated to maintenance by plant management

Types of Maintenance
Corrective Maintenance or Break down maintenance: Occurs when equipments or machines fail and must be repaired on an urgent basis. Objectives: To get equipment back into operation To control the cost of repair To control the investment in replacement spare parts To control the investment in replacement spare

Types of Maintenance

Preventive Maintenance: Maintenance activities undertaken before the machines or equipments fail. Aims to minimize the possibility of unanticipated or major break-downs.

It consists of:

Proper design and installation of equipment Periodic inspection of plant and equipment to prevent break downs before they occur. Repetitive servicing, upkeep and overhaul of equipment Adequate lubrication, cleaning & painting of buildings

Predictive Maintenance: It is method in which the condition of the equipment is constantly monitored and the decision to carry out maintenance is taken based on the analysis of the equipment behavior. Planned Shutdowns: In PM focus is on ensuring the avoiding of breakdowns. In contrast in planned shutdowns, major focus is on improving the working condition by adding more capacity, to de-bottleneck the operation

Spare-Parts Management

The method of planning the ordering, stocking, and consumption of spares in a cost effective manner. The principle of not having an excess inventory of stock also applies to spare parts management.

Basic types of spare parts: Capital Spares Insurance Spares Rotable spares Maintenance consumables

Spare-Parts Management
Capital Spares: Supplied by the equipment supplier and are usually accounted under the capital costs of the project. The equipment/system down costs can be very high on account of non-availability of these spares. Insurance Spares: Spares of certain critical components of the equipment with very low chances of failure. Non availability of such spares is rare but may prove to be extremely costly.

Spare-Parts Management

Rotable spares: In a maintenance context, several spares could be repaired, reconditioned, and put to use again. Such spares are known as rotable spares. Such spares go through a rotating state several times which is depicted by the use-fail-repair-use pattern, before they are discarded. e.g. compressors, generator sets, batteries of various kinds.

Spare-Parts Management
Maintenance consumables: Those that are consumed in large quantities in any maintenance activity. Include items such as oil seals, springs, bearings and replacement parts. The characteristic feature is that they are consumed in large numbers.

Project Management

Project management offers alternative tools and techniques to address the planning and control issues pertaining to large scale activities performed in a non repetitive manner. Building a manufacturing facility Designing new products Construction of bridges and roads Designing new services

Characteristics of Project Organizations

Difference from mainstream activities e.g. designing of a new product No expertise currently available e.g. Chandrayaan, lunar mission of ISRO The product or service offered is large scale Problems involved like going from a subsystem to a total system, long lead times High degree of customization e.g. Nuclear Engineering Division at BHEL

Phases of Project Management

Conceptual Phase: Conceptual design, scope, objectives, budgeting Planning phase: Work breakdown, organization breakdown, cost, deadlines & milestones, resources planning Implementation & control phase Feedback: Post-project appraisal

Tools & Techniques for Project Management

Developing a network representation of a project Analyzing project networks Addressing time and resource constraints in projects Handling uncertainty in project completion The network representation provides a visual aid to a manager in understanding various activities involved and their interactions with other activities.

New Product Launch Project

A. B. C.

E. F.

Identify market needs Develop the conceptual design Develop the detailed design Create marketing infrastructure Plan production Reach the market

Product Launch Layout


Predecessor ( previous activity)




Critical Path Method

The path that has the maximum duration is the critical path. The critical path method (CPM) is a methodology of computing the critical path, the early and late schedules for activities, and the slack and using this information for addressing resource and costbased issues. Slack is the difference between the late start and early start schedules of an activity.

Two types of Inspection: Cent percent Inspection Sample Inspection

Statistical Quality Control

Control Chart It is a graphical representation of the process status in terms of the UCL, LCL, process average, and the plot of the sample data. It helps to identify when the process goes out of control

The characteristics for process control can be measured in different ways. These are: Attribute-based measurement Variable-based measurement

Statistical Quality Control

Attribute-based measurement It is simple clustering of the characteristics into a few categories (such as good or bad). Two frequently used attribute measures are the proportion of defects ( denoted as p) number of defects (denoted as c) These are easy to make, quick, and less expensive. However they reveal very little information on the actual performance of the process with respect to the characteristics.

Statistical Quality Control

Variable-based measurement It is to make detailed observations of the characteristic. Using the detailed measurements one can estimate the average of these measurements ( denoted as X ) range of the measurements ( denoted as R) These are expensive and more time-consuming but will provide a wealth of information about the process. For quality improvements, variable measurements are much more valuable.

Total Productive Maintenance

Cummins plant in Pune implementation of newer and better management practices resulting into reduction in the percentage of breakdowns by 70 percent in the shop floor, thereby reducing cost by 20 percent. Total productive maintenance (TPM) is an alternative approach to equipment maintenance that seeks to achieve zero breakdowns and zero defects.

Total Productive Maintenance

TPM is based on three ideas: Motivation Competency Work environment Central to the TPM philosophy is the concept of Overall Equipment Effectiveness (OEE) OEE = Availability x Performance efficiency x Quality rate

Total Productive Maintenance

OEE as the important measure for maintenance management. OEE captures six big losses that occur in any organization, which result into reduced effectiveness of using an equipment. 1. Breakdown Downtime losses 2. Set-up and adjustment 3. Idling and minor stoppage Speed losses 4. Reduced speed 5. Defect and rework Quality losses 6. Start-up

Total Productive Maintenance

Important elements of TPM Establishing a thorough system of preventive maintenance for the equipments entire life span Implementation of TPM by various departments, including engineering, operations, and maintenance Involvement of every single employee from top management to workers on the shop floor Creating autonomous small group activities for maintenance

Statistical Quality Control

Six Sigma Quality Control

Multinational firms such as Motorola and GE pioneered the use of the six sigma approach to quality. Six sigma is a new approach to process control based on a set of principles that enables organizations to improve their quality to near-zero defect levels. These include understanding customer needs well, appropriate and disciplined use of data and statistical tools, statistical analysis, and a closer attention to managing and improving business processes using a set of tools.

Six Sigma Quality Control

The basic unit of analysis with respect to the quality of any process is the defect. A defect is an unacceptable state of a product or service for a customer, arising out of a business process that produced it. Since the focus of six-sigma quality is primarily business processes, it is equally applicable to both manufacturing and service organizations.

Six Sigma Quality Control

Six-sigma quality control differentiates itself from the traditional quality control methodology on the basis of three features: A new metric, defects per million opportunities (DPMO) to predict/assess the quality of a business process. A new methodology, define measure analyze improve - control (DMAIC), to ensure that very high levels of quality could be assured in the chosen business processes An organizational framework for ensuring that these outcomes are generated on a sustained basis.

99 per cent quality in a large five star hotel

Process Description Guest check-out Impact of 99% quality Every 3 days, one guest checks out without paying the bill

Training and skill development Every day, 250 plates are broken

Facilities upkeep

Every day, 20 guests do not get back the right laundry

Every day, 15 tables in the restaurant have soiled linen

JIT Just In Time Manufacturing

The core logic of JIT is that of elimination of waste in a manufacturing system using deliberate method. Water flow analogy of a manufacturing system The philosophy of JIT is in contradiction with traditional thinking on solving problems encountered in manufacturing systems. Crux of JIT philosophy is to deliberately create some disturbances in the system in order to uncover problem areas. Once the problems are exposed, the organization will work towards solving the problem and restoring smooth production rates.

JIT Just In Time Manufacturing

The benefits include reduction in inventory, improved productivity and reduced product cost.
JIT logic
Withdraw buffer deliberately Expose hidden problems in the system Identify solutions to the problems, implement and attain smooth production rates Repeat the above steps

Overall impact of JIT

Faster feedback on quality Quality improvement Tight linking of preceding and subsequent processes

Increases responsibility effects

JIT Just In Time Manufacturing

Elements of JIT Manufacturing Changes in Manufacturing Architecture structural issues and logistical issues Lot-size Reduction Set-up time Reduction Pull scheduling Kanban as a control tool the concept of kanban denotes a card or a visible signal.

Lean Management

It is an organizational mechanism for defining value and thereby crating a value stream for customers. It is based on the premise that by identifying waste in any system and removing it, it is possible to create a value stream for the products and services that an organization offers to its customers. It enables organizations to provide better value in their offerings by constantly improving their operations. A good understanding of waste and value and a set of tools and techniques to eliminate waste from the system are crucial to creating a lean enterprise.

Lean Management

Value-added (VA) Activities: An activity is classified as value-added as long as the customer is willing to pay for that activity. Non-value-added (NVA) Activities: All those activities for which the customer may not want to pay are classified as non-value-added activities. All these activities add cost and time to the products and services offered, but no value. Necessary but Non-value-added (NNVA) activities: It highlights a set of activities that are to be eventually eliminated as and when better systems are developed in an organization.

Lean Management

Waste: Any process or set of activities that does not add values as perceived by the customer is classified as waste. It consists of both NVA and NNVA. Value stream: All activities that need to be performed (VA and NNVA) from the time the customer order is received to the time the order is fulfilled make up the value stream for an organization. Depending on the nature of business, it may span activities from concept to launch, order to delivery, or raw material to finished product.

Lean Management

Lean Management: It is a process by which the continuous efforts of all concerned parties enable an organization to create a channel for the value stream by eliminating waste from the system.

The Lean Management Process

Accrued benefit Less is more productive!

Process mapping, non value added analysis, Continuous improvement, Tools and Techniques used Kaizen, small group improvement Benchmarking, Quality circles Basic enabling mechanisms Total Quality Management (TQM)

Manufacturing architectural changes Set-up time reduction Small lot size processing Pull scheduling Simplified operation control (Kanban) Just in Time (JIT)

Basic Premise

Eliminating waste and creating a value stream for products and services

Work Study

Developed to improve performance of a given work. Work study is the body of knowledge concerned with analysis of the work methods, and the standard of proposed work methods. Objective of work study is to improve operational efficiency. The purpose of work study is to determine the best or most effective method of accomplishing a necessary operation.

Work Study
Benefits of Work Study Increased productivity and operational efficiency Reduced manufacturing costs Improved work place layout Better manpower planning and capacity planning Fair wages to employees Better working conditions to employees Improved work flow Reduced material handling cost

Work Study
Basic Work Study procedure Select Record Examine Develop Measure Define Install Maintain

Work Study
Benefits of Work Study Provides a standard of performance to measure labor efficiency Better industrial relations and employee morale Basis for sound incentive scheme Provides better job satisfaction to employees

Work Study
Time study and motion study are important parts of work study. Time study is exercising control over the output in respect of a job by setting standards of performance. Time study may be used to compare the effectiveness of alternative work methods. Method study is the study of existing method of doing any job, operation or activity and to develop an improved method to improve productivity and to reduce operating costs.

Method Study
Factors facilitating method study High operating cost High wastage and scrap Excessive movement of materials and workmen Excessive production bottlenecks Excessive rejections and rework Complaints about quality Complaints about poor working condition Increasing number of accidents Excessive use of overtime

Productivity = Output in a given period Labor + Capital + Materials + Energy used in same period

Areas of productivity Volume of production Rejection rates Rework rate Delivery schedules Idle time Set-up time MIS Overtime

Areas of productivity House keeping Accidents Inventory Automation Business Process Re-engineering Total Quality Management (TQM)