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GOODS & SERVICES
Managing various operations involved in production of goods and services For the production of goods and services there are various operations that are associated with them Goods- IMC, Manufacturing management, PPC, QC/QA, Dispatching, Distribution etc Services- Marketing, DBMS, IS, HRM etc
OM Vs Productions management
Production management is the part of OM Managing the operations associated with the actual manufacturing or only production process is called productions management While overall management of operations taking place in a manufacturing or service industry is called OM
Need of OM
• Main focus of all industries is to achieve maximum possible efficiency and effectiveness in the processes taking place in the organization • Through OM, we try to conduct all organizational operations in most efficient and effective way • OM assures efficient and effective utilization of resources and it assures the proper distribution of goods & services to the customers.
OM : Absent
• PEPSICO , channo, Sangrur • Concentrate of PEPSI + FRITO LAY • Fully automated and well managed plant • “Department of operations management”- operations mangers • DOM, regulates all production and distribution related activities • Failure of OM
Major functions/areas of OM
Purchase management Management control and coordinating function Productions management- goods & services Quality management Inventory management Logistics & transport management Facilities management Configuration management-keeping the systems of organization up-to-date Dispatch & distribution All operations functions work in coordinated way for establishing an efficient OM in the organization.
Birth of OM
• 18th century- introduction of factory system to the world, mass production concept came into existence • 19th century-Management thinkers- scientific mode of management, moving assembly lines, sophisticated the operations in organizations • HRM, Marketing concepts introduced • To resolve sophisticated operations, operations managers started using mathematical models and scientific tools to manage operations. • Forecasting, Gantt charts, CPM (to connect different operations), linear programming • Finally with the incorporation of IT I organizations, Modern OM came into existence.
Buffering of operations
• Do business in Turbulent market conditions • Ex- food processing unit, cant predict the inflow of raw food material. • To minimize these market uncertaintiesoperations managers do buffering of operations. • Two type of buffering methods- physical buffering & organizational buffering
Operations mangers maintain the stored resources (inventories of raw materials) at a level more then optimum level of storage. So that if any disruption in the supply takes place, then operations can be protected by utilizing present inventory onlyBuffer stock/safety stock.
In this mode of buffering we reduce and divide the responsibilities of operations functions. Recruitment processes- HRM Process technology- Technology department So, by reducing and dividing the responsibilities of operations management, organizations try to protect the operations functions.
• • • • Manufacturing companies- Goods Ex- Agriculture, mining, fishing etc. Service companies- Services Ex- transportation, consultancy, finance etc • Mixed companies- Goods as well as services
• Any tangible, physical, touchable entity • Consumer goods- those goods that satisfy needs or wants of customers, manufactured by manufacturing companies • Durable goods- long span of life, goods that doesn't get disposed quickly. Ex- LCD. • Perishable goods- less span of life, goods that get consumed very rapidly. Ex- an icecream
• Producer goods- that are physically required to produce consumer goods i.e. raw materials-used by manufacturing companies as inputs • Capital goods- those goods which are required for converting producer’s goods into consumer’s goods exmachinery
• Intangible, non-physical in nature • When you pay somebody to do something for you, you are buying a service • Service businesses- service companies that produce services by directly interacting with the customers, exairlines, hospitals etc. – Facility based services and field based services • Customer support services- provided by both manufacturing as well as service companies • Internal services- provided to internal customers of organization (IS)
• Both of them provide value to customers • Both get produced by processes involving people & technology. • OM is required in both • Both can be Standardized
• Goods are tangible while services are intangible • The demand for services is more difficult to predict than the demand for goods. • Services cannot be stored as physical inventory • Patents do not protect services
• MNC, headquartered in Japan • Founded by Kiichiro Toyoda in 1937 • As a manufacturing company, understands the need of efficient operations management in the company. • Dedicates its major portion of finance and Human power to well manage the operations in the organization
Just in Time
• Through JIT strategy, Toyota tries to minimize the efforts required in IMC function of OM • Operations managers at Toyota use various forecasting methods, mathematical models and analytical tools to get exact predictions about market demand. • On the basis of these analysis reports they plan the traffic of inventory in production plant
• Each day material coming in plant gets consumed for production • And finished goods get distributed to outlets on same day • So there is no accumulation of inventory at all • This is called JIT strategy, that reduces inventory costs to a great extent
Flexible operations Technique
Toyota believes in technology Production lines of Toyota are highly flexible Toyota produces different types and different models of vehicles No two vehicles can have same technical specifications So for a shift in production, different production and assembly lines need to be settled according to new product in demand
• But in Toyota their production and assembly lines are extremely flexible. • So whenevr, there is a need of shift in production, production and assembly lines require only a few changes in linear programming to restart the production • For example- CNC lathe instead of gear cutting machines • To avoid market turbulence Toyota follows organizational buffering strategy.
• Above given were only a few examples of operations management in Toyota. • By efficient operations magnet, Toyota became the world leader in automobile industry • So, operations management is quite necessary tool of effective management in organizations