PRODUCTION & OPERATIONS MANAGEMENT

UNIT: I
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ DEFINITION OF POM TRANSFORMATION PROCESS MODEL DECISION MAKING IN POM SCOPE OF POM RESPONSIBILITIES OF OPENS. MGR. IMPORTANTANCE OF POM OPERATIONS MANAGEMENT PRIORITIES OPERATIONAL-BASED COMPETITIVE ADVANTAGE

1999.. photocopier operations) .PRODUCTION & OPERATIONS MANAGEMENT (POM) ‡ DEFINITION ³Management of the conversion process which transforms inputs such as raw material and labor into outputs in the form of finished goods and services´ (Davis. * Focuses on the Operations Functions ± business function concerned with conversion of inputs into outputs (e. Aquilano & Chase.g.p5).

Transformation Process Model Production System Conversion System Control Subsystem Inputs Outputs .

INPUTS. TRANSFORMATION PROCESS. OUTPUTS ‡ Inputs : * * * * * * Materials (processed/unprocessed) Labors Information Human Resources Equipment and facilities Technology .

Conversion Process ‡ Physical (Manufacturing) ‡ Locational Services (Transportation) ‡ Storage Services (Warehousing) .

Outputs of a Production System ‡ Direct ± Products ± Services ‡ Indirect ± Waste ± Pollution .

Decision Making in POM ‡ Strategic Decisions ‡ Operating Decisions ‡ Control Decisions .

Strategic Decisions ‡ These decisions are of strategic importance and have long-term significance for the organization. ‡ Examples include deciding: ± the design for a new product¶s production process ± where to locate a new factory ± whether to launch a new-product development plan .

‡ Examples include deciding: ± how much finished-goods inventory to carry ± the amount of overtime to use next week ± the details for purchasing raw material next month .Operating Decisions ‡ These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits.

‡ Examples include deciding: ± labor cost standards for a new product ± frequency of preventive maintenance ± new quality control acceptance criteria .Control Decisions ‡ These decisions concern the day-to-day activities of workers. quality of products and services. and machine maintenance. production and overhead costs.

SCOPE OF POM ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Product Selection& Design Process Selection & Planning Location Facilities Layout & Material Handling Capacity Planning Operations Planning & Control Inventory & Quality Control Method Study Maintenance & Replacement .

1 litre bottles.RESPONSIBILITIES OPERATIONS MANAGER ‡ The Responsibilities of Operations Manager includes: * Operational planning ± what.quick output ‡ Operations Management begins with the need to fulfill identified customer needs! .5 litres). how and when to produce. 2. * Operations scheduling ± when to produce different product lines (Monday. etc) * Operations control ± ensures quality output .safe output ± healthwise .What exactly does the customer really want? . * Organising operations ± sequencing operational activities (caned coke. Tuesday.

g. ‡ Improves our ability to meet customer needs: * Ensure provision of high quality products and services at reasonable prices (not just cheap output) * Enables us to provide service to our target customers better than our competitors. fewer defect output.IMPORTANCE OF POM ‡ Improves productivity: * Effective control of the conversion process of inputs into outputs (e.. . ** Higher productivity leads to higher profits. * Meeting customer needs is crucial to long term survival of the firm. will lead to more output per unit time). effective allocation of staff. less wastage of material inputs.

as a competitive weapon: * High-quality product/service provider * Low cost/good value producer/service provider (e.g. Sony & Panasonic) * Fast delivery or response/lead time (e.) ‡ Central to the building of a brand name/reputation of the company/firm. Dominos Pizza for just 30 minutes .g..IMPORTANCE OF POM (Cont..

g.5 litres bottles) Reliability of service or products offered/Lower variability of specifications of products Higher service levels (total package of service) Coffee Shop: Cleanliness.OPERATIONS MANAGEMENT PRIORITIES ‡ For firms to survive. most of which are. speed of service (total shopping experience) . for rural low income customers) Shorter lead time/quicker response time Greater ability to change/adaptability/flexibility(e.. OPM must meet customer requirements/competitive priorities.. lighting. Germany or India) Low cost (e.g. 1 litre.. * * * * * * High quality ± demand characteristics of domestic customers (e.g. 2. Caned Coke.

. .Cost advantage. .Quality advantage. can even lead to higher prices (e.Lack of cost competitiveness can lead to large-scale retrenchments Do things fast: Speed advantage. improved competitiveness. Sony.cost efficiency leads to price competitiveness and decent profits . can lose sales if slow .OPERATIONAL-BASED COMPETITIVE ADVANTAGE ‡ Operational based competitive advantage can be achieved by: * Doing things right the first time . Doing things cost effectively . Toyota. lower costs.defect free output.g. etc).Reputation for speed is important * * .

Change operations to meet customer demand for variety .. sofa) Do things right every time: Reliability-advantage .OPERATIONAL-BASED COMPETITIVE ADVANTAGE * Change things quickly: Adaptability-advantage (ability to change from making Tea. tables. chairs.Ex. TQM ± all aspects of business important in delivering quality service to customer).g. Coffee.-Furniture manufacturer (beds. etc) . * * .offer error-free products or services to customers EVERY time Do things better: Service-advantage and continuous improvement (e.

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