Introduction To Operations Management Latest Techniques & Methods


Production Operations Management is managing of productive resources (Men, Material, Equipments & Facilities) Efficiently & Effectively. MBA graduates are expected to help organizations gain competitive advantage by excelling in meeting customer needs. Whether you are in Marketing, Finance or Operations; effectively serving customers will need knowledge of Operations Management. Serving customers means meeting the requirement in time, with exceptional quality at lowest cost.


Production Operations Management provides interesting career opportunities – Directly supervising Operations OR Operations Management specialists like (SCM) Supply Chain Management, ERP ( Enterprise Resource Planning), QA (Quality Assurance), Purchasing. Production Operations Management is defined as the design, operation & improvement of the system that creates & delivers firm’s primary products & services.

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Production is the process by which goods & services are produced. Manufacturing management brings together Men, Machines & Material to provide goods & services. There by satisfying customer needs. Operations includes both Manufacturing as well as Service Organizations. Operations may be defined as process of changing input into output; thereby adding value.

Service & Goods Production

Service is intangible while goods is a physical output. In service direct customer involvement in creating output is essential. Customers are on the ‘shop floor’ when consuming service. Shop floor may be called front office, dinning area, passenger cabin.


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Effectiveness of production process can be efficiency with which input is converted into output. Productivity=output/input. Essentially production/operations management is concerned with management of productivity. Reduce conversion cost, idling resources, defective goods, lower throughput time.

Functions of Manufacturing Management

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Product selection & design. Process selection. Facility location, Material handling. Capacity planning. Forecasting. Work-study & job design. Inventory control, Quality control. Cost control, Production control.


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T2 T2 T2 T2 Supply Chain Distribution Network T1 OEM T1 Warehouse Distributor Dealer Retailer Customer

Production Operations Management is concerned with managing all these individual processes Effectively


Within Operations Management the decisions can be divided into 3 broad areas. 1) Strategic:
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Long term decisions How to make the product? Where to locate the facility? How much capacity to be created?


2) Tactical Decisions:
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Medium term. Decisions made at strategic stage become preconditions. How many workers do we need? When do we need the material? How much inventory do we hold? Day to day planning. Scheduling, Priority What job to do? Whom do we assign?

3) Operational Planning & Control Decisions:
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Production System

Production system uses resources to transform inputs into some desired output (Product or Services). Inputs may be raw material; customers or finished products from another system.

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

Production System
System Primary Input Resource s Primary Transformatio n Function Healthcare Desired Output




Hungry Customers

Doctors, Nurses, Medicines, Equipment s Food items, Chef, Waiters, Environme Tools, nt Equipment s, Workers

Healthy Individuals

Well prepared, Well served food Fabrication, Assembly.

Satisfied Customers

Automobile Manufacturin g

Sheet Metal, Steel, Parts

High quality cars.

Production System
System Primary Input Resources Primary Transformati on Function Imparting Knowledge, Skills Attract shoppers, Promote products. Move to destination Desired Output Educated Individual s Sales to satisfied customer s. On time safe delivery to destinati College, Universit y High school Teachers, Pass outs Books, Classrooms. Stock of goods, Display, Sales persons Aero planes, Crew, Fuel.

Departme Shoppers -ntal Store



Historical Development of OM
Year 1910’s Concept Principals of scientific management. Time & motion study. Economic Order Quantity (EOQ). Conveyor Line Quality Control, SPC, Sampling Originator F.W.Taylor F.W.Taylor F.W.Harris Henry Ford Walter Shewhart IBM



Wide spread use of Computers in business.

Historical Development of OM
Year 1980’s 1990’s Concept JIT, Kanban, Lean Manufacturing Total Quality Management (TQM). Business Process reengineering Supply chain Management E – Commerce; B to B; B to C Originator Taichi Ohno, TPS Japanese Manufacturers SAP Amazon, Yahoo. E Bay


Typical Organization Structure
Operations Manufacturing Quality Assurance Materials Management



Introduction To Materials Management

Value of supply chain has been recognized long back. In 401 BC a Greek General while addressing his army of 14,000 men; fighting 1,300 miles away from Greece said “ The survival of the Greek army depends not only on it’s discipline, training & morale but also on it’s supply chain”. Today survival of most firms depends on intelligent supply chain decisions. Lot of brain power & technology is applied to improve supply chain performance.

What Is A Supply Chain

Supply Chain consists of all parties involved directly or indirectly in fulfilling customer request. It includes Manufacturer, Transporter, Warehouses, Retailers & Customers themselves. Within Manufacturing it includes all functions involved in receiving & fulfilling customer request.

Functions included are New Product Development, Marketing, Operations, Distribution, Finance & customer service.

Supply Chain

Customer walking into a retailer to purchase a detergent. Customer Retailer 3rd party logistic Distributor Logistic Manufacturer Tier1 supplier Tier 2 supplier.

Supply Chain
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Draw Supply Chain for : Supplier walking into a Super Market. Online purchase like Dell Computers & Amazon. COM. Online booking of Air ticket. Purchase of vegetables, fruits at Reliance fresh.

Supply Chain
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Supply Chain is dynamic. Involves constant flow of product, information & funds. It is a Network or Web of many suppliers & distributors.

Objectives of a Supply Chain
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Maximize overall value generated. Value is the difference between finals product’s worth to the customer & cost supply chain incurred to fulfill customer requirement. Value is correlated to supply chain profitability or supply chain surplus ( Total profit to be shared by all).

Objectives of a Supply Chain

Cost of supply chain includes cost of production, storage, transportation, cost to convey information, Funds transfer …. Etc. Success to be measured in terms of supply chain profitability & not individual stage. Focus on individual stage may lead to reduction in overall supply chain

Measuring SC performance

Inventory turns = Cost of goods sold p.a. Average aggregate inventory value Inventory in Number of days = 365* Average aggregate inventory
value Cost of goods sold