Operations Management

Year: Ist Semester: Ist

Weightage: 100 marks Duration: 40 hrs

Professor Anagha Gokhale

NE Society’s Institute of Management Studies

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 Chapter 1 : Introduction

Introduction to Operations Management

Applications in product & service industry

Use of Competitive Advantage

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Classification and Evolution of Economic Offerings

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The range from Services to Products

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Comparison of Alternative Economic Offerings

Economic Offering Commodities Goods Services Experiences

Value added by Extracting Producing Delivering Staging

Form of output Fungible Tangible Intangible Memorable

Key characteristics Natural Standardized Customized Personalized

Buyer Market User Client Guest

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 Operations Activities
Strategy
Output Planning
Capacity Planning
Facility Location
Facility Layout
Aggregate Planning
Inventory Management
Materials Requirements Planning
Scheduling
Quality Control
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 What is Operations Management?
Operations management is an area of management concerned with
designing and controlling the process of production and
redesigning business operations in the production of goods or services.

Operations management refers to the administration of business practices

to create the highest level of efficiency possible within an organization. It
is concerned with converting materials and labor into goods and services as
efficiently as possible to maximize the profit of an organization. Operations
management teams attempt to balance costs with revenue to achieve the
highest net operating profit possible.

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 Objectives of
Operations Management

Ultimate Objectives Intermediate objectives

1. Right Quality 1. Machinery & Equipment
2. Right Quantity 2. Materials
3. Right Time 3. Manpower
4. Pre-established costs 4. Manufacturing Services

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 Functional View of Organizations

Three Core Functions

- Operations
- Marketing
- Finance/Accounting
Other Important Functional Activities
- Human Resource Management
- Information Systems
- Engineering

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Functional View of Organizations
CEO

Finance
Manages:
Marketing Operations Cash flow,
Manages: Manages: people, current assets,
Customer demands equipment, technology, capital investments,
materials & information
incomes & expenditures
Generates: Sales for
goods & services To Produce:
To reduce costs &
goods & services
enjoy profits

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Flow chart of Operations Management

Customer Feedback

Inputs

- Human
Resources
Output
The
Transformation - Goods
- Facilities & Process
Processes - Services
- Technologies
Materials Performance Information

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Decision Area of Operations Management

Goods & Service design

Quality
Process & Capacity design
Location selection
Layout design
Human resource & job design
SCM
Inventory
Scheduling
Maintenance 12
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 Functions of Operations Management
Production Planning
Production control
Quality control
Industrial Engineering
Purchasing
Plant Engineering
Manufacturing
Method analysis
Inventory control
Plant Layout & Materials handing
Work measurement
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 Importance of Operations Management

Organization
Consumer
Investors
Employee
Suppliers
Community
Nation
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 Problems of Operations Management

Location of a plant
Plant layout
Product designing
Inventory & production control
Quality control
Labour control
Cost control & improvement

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 Operations Strategy
Operation strategy is the pattern of decisions and the course of
action taken either b the individual functions within a business
(micro operations) or the whole organization (macro operations), in
order to create goods & services which will satisfy the
organization’s business strategy.

This means that operation’s resources must be selected, deployed

and managed in the most effective manner using the right
technology, workforce, systems & procedures to meet the strategic
goals of the organization.
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 Elements of Operations Strategy
Positioning the production system
(i) Product focused and (ii) Process focused
Focus of factories & service facilities
Product/service design & development
Technology selection & process development
Allocation of resources to strategic alternatives
Facility planning

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 COMPETITIVE ADVANTAGE
It can be defined as “strategic advantage one business entity has over it’s
rival entities within a competitive industry. Achieving competitive
advantage strengthens and positions a business better within the business
environment.”

Michael Porter “competitive advantage grows out of value. A firm is able

to create for its buyers that exceeds the firm’s cost of creating it. Value is
what buyers are wiling to pay and superior value stems from offering lower
prices than competitors for equivalent benefits or providing unique benefits
that more than offset a higher price.”

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 Competitive priorities & capabilities
Competitive priorities are the critical operational dimensions, a process or value chain
must possess to satisfy internal or external customers, now & in future. They are the
abilities that must be present to maintain or build market share or to allow other internal
processes to be successful. Following are the competitive capabilities of an entity;
Cost
Quality (top quality & consistent quality)
Time (delivery speed, on-time delivery & development speed)
Flexibility (customization, variety, volume)

When the capability falls short of the priority attached to it, management must find
ways to close the gap or else revise the priority.
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Competitive Strategy

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 Factors influencing on Competitiveness
 Product & service design
 Cost
 Location
 Quality
 Quick response
 Flexibility
 Inventory management
 Supply chain management
 Service
 Managers & workers
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  Thank You! 

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