MANAGING SERVICE AND

MANUFACTURING OPERATION

Lecture Notes 6
Dr. Fahmy Radhi, MBA
 Operations Management
Planning and controlling in a
systematic process that transform
inputs into outputs of greater value

It deals with the production of

goods and services

8/31/2019 Business Introduction 2

8/31/2019 Business Introduction 3
 Transformation Process
Input Process Output

Materials Manufacturing Automobiles

Machines Assembling Televisions
Man/workers Transporting Services
Money/capital Storing
Information Consulting

8/31/2019 Business Introduction 4

 Types of Manufacturing Operations

Job Shop Manufacturing – make-to-order

product in accordance with design supplied
by the customer.
Its characteristics:
High variety product with low volume,
Using the multipurpose equipments and
flexibility material handling,
Need broad range skills.
E.g. custom-built home, custom tailor clothes,
specific machines
8/31/2019 Business Introduction 5
 Types of Manufacturing Operations
Repetitive Manufacturing – make-to-stock
produced to anticipation of customer
demand.
Its characteristics:
High volume with low variety as standardized
product for mass market
Repetitive process using the single purpose
equipment for the same process
Need a specialist skills.
E.g. Television, Refrigerator, most costumer
goods
8/31/2019 Business Introduction 6
 Types of Manufacturing Operations

Batch Manufacturing – similar standard

product produced periodically in batches.
Its characteristics:
Combination of product variety and average
volume per product,
Using flexible Equipment that must be
capable of performing some variety of tasks,
Need a variety of skills.
E.g. hand tools, bakeries

8/31/2019 Business Introduction 7

 Types of Services Operation
Service Factories: Low labor intensity - Low
customer interaction. E.g.: airline, hotel.
Service Shops: Low Labor intensity - high
customer interaction. E.g.: hospital, repair
service
Mass Service: high labor intensity - low
customer interaction. E.g.: Banking,
Education
Professional Services: both highly labor-
intensity and customer interaction. E.g.:
Doctors, Lawyer

8/31/2019 Business Introduction 8

 Operations Planning
1. Capacity Planning
2. Location Planning
3. Layout Planning
4. Product design planning
5. Process Planning
6. Drawing and Scheduling
7. Quality Planning
8/31/2019 Business Introduction 9
8/31/2019 Business Introduction 10
 Layout Types

Process/functional Layouts – arranged by

group similar process or function or activities
in department or work centers
Product/line Layouts – arranged in line
according to the sequence of operations for
particular product or service
Fixed-position Layout – arrangement in
which the product is in fixed place, while
worker along with equipments are move to
the product

8/31/2019 Business Introduction 11

8/31/2019 Business Introduction 12
 Material Management
Materials Management - an
integrated activities in purchasing,
transporting, storage, handling of
materials, and inventory control
Material Control Methods:
EOQ – Economic Order Quantity
JIT – Just-In-Time
MRP – Material Requirement Planning

8/31/2019 Business Introduction 13

 Improving Quality
Quality is the totally of features and
characteristic of a product or service that
bears on its ability to satisfy given needs
Major Areas of quality:
Quality of Design
Quality of transformation process
Quality of Products
Quality of Service after delivery

8/31/2019 Business Introduction 14

 Quality Dimensions
Performance – the main characteristics
Features – extra characteristic added.
Reliability – consistency its performance
Conformance – how well a product
meets standard
Durability, Serviceability, Aesthetics
and Safety

8/31/2019 Business Introduction 15

Total Quality Management
TQM is a philosophy and approach to managing
an organization that involves everyone in the
quest for quality as perceived by customer

The TQM approach:

Find out what customer want
Design should meet with customer want
Never ending improvement
Extend these concept to supplier and to
distribution
8/31/2019 Business Introduction 16
 TQM Strategy

1. Continuous improvement
2. Competitive benchmarking
3. Quality Function Deployment
4. Employee Empowerment
5. Team approach
6. Skills and knowledge Improvement

8/31/2019 Business Introduction 17

Operations Strategy

Focus of Business Strategy:

Effectiveness/Competitiveness
 Planning for the long term
 Strategic Triad (see figure)
 Customers
 Competitors
 Company’s resources (purview of OM)
Classification of Strategic Thrusts
 Cost leadership
 Focus (customer/product)
 Differentiation

8/31/2019 Business Introduction 18

 The Strategic Triad

CUSTOMERS

RESOURCES
COMPETITORS

Focus of OM

8/31/2019 Business Introduction 19

2-1
Operations Strategy

Elements of OM Strategy
 Inputs
 Add/remove capacity; outsourcing issues
 Skills/flexibility of workforce
 Safety/environmental commitment
 Transformation process
 Product/process development investment
 Commitment to standardization
 Control systems and automation
 Outputs
 Line of goods/services
 Focus on customer (recall 6 needs/wants)
8/31/2019 Business Introduction 20
Operations Strategy

Globalization
 Markets are no longer regional
 Deregulation
 Technology
 Privatization
 Hence, all business is international business
 Suppliers
 Customers
 Competitors
 As a result, competitive pressures require
increasingly greater levels of excellence

8/31/2019 Business Introduction 21

8/31/2019 Business Introduction 22