Faculty Introduction

 Name/Qualification/Experience: Tohid Kachwala, B.E.(Mechanical),

MAM, PhD (Management), Industry 1984 - 1997, Teaching – Part Time:

1992 - 1997, Full Time: 1997 onwards (Teaching at NMIMS since 1992)

 Present Status: Professor of Operations and Data Sciences at SBM,

NMIMS University (8th Floor, SBM Faculty Area – Cabin Number: E851)

 Email: tkachwala@nmims.edu, tkachwala@gmail.com

 Subjects: – Statistical Analysis (Trim I), Optimizing Models (Trim II),

Operations & Supply Chain Management (Trim III), Modeling for

Decision Making (Trim V)

Overview of Operations & Supply
Chain Management

Dr. T. T. Kachwala
 Slide 3

Overview of Operations & Supply Chain Management

 Introduction to Operations Management

 Classification of Operations Management

 Learning's from Video

 Operations Management integrated with other Business Functions

 Integrated Supply Chain

 Importance of Operations in Integrated Supply Chain

 Integrated Transformation for Service Sector

 Models of Operations

 Historical Milestones in OM

 Process view of Operations Management

 Slide 4

Introduction to Operations Management

 An earlier name for Operations was Production and Operation

management (POM). The management approaches and tools

were originally applied primarily in manufacturing companies
where the focus was on production management. These
approaches were later applied to service organizations where the
focus was on managing an organization’s operations.
 Today this discipline is generally referred as operations

management and it includes both the management of production

activities and the management of other operations.
 Slide 5

Classification of Operations Management

 Production (Manufacturing) is an intentional act of organizing the manufacturing resources

for the purpose of transformation of raw materials into a saleable product at optimum quality
and minimum costs.
 Production Management seeks to optimize the intentional act of planning, organizing,

directing and coordinating the manufacturing resources for the purpose of transformation of raw
materials into a saleable product at optimum quality and minimum cost, by controlling the
manufacturing cost, quality and inventory within the specific limits laid down by the production
plan, product design and available resources of skills and capital (money)
 Slide 6

Classification of Operations Management

 Service Industry also provides a product, but this product is intangible and cannot

be described in the same dimensional terms as manufactured goods. The type of

service industries are: Airlines where output is travel, Banking where output is
loans, Software where output is application program, Entertainment where output
is games & enjoyment, Hotels where output is a comfortable stay. These service
outputs cannot be held as finished goods inventory.
 In the service industry there is generally more client contact in all phases of

operating environment than there is in manufacturing. Those persons in services

are more people oriented as opposed to those in manufacturing, where there is
usually a higher proportion of technicians and engineers. Service Providers should
be warm & courteous and have good interpersonal skills for the job that entails
significant contact with customers.
 Slide 7

Classification of Operations Management

Service Organization’s Operations systems are similar to a manufacturing Organization. For

example, an Airline company is a service Operation & involves the activities of
 capacity planning (right number of planes in the right places)

 locating facilities (which cities to provide services, maintenance facilities)

 scheduling (planes for flights & maintenance, pilots, flight attendants, ground crew)

 motivating employees (in all phases of operations)

 ordering & managing supplies & inventories (food & beverages, first aid equipments,

magazines, pillows & blankets)

 selecting & maintaining equipment (airplanes, airport facilities)

 satisfying Quality Standards (dealing with customers at ticket counters, check in, &

reservations)
 & above all satisfying Customers
 Slide 8

Classification of Operations Management

 Service Business can also be characterized on the basis of (i)

Degree of Customization (highly standardized or highly
customized) & (ii) Degree of Complexity (skill, equipment &
capital investment). The following are examples for the four
possibilities:
(i) Customized & High Complexity: Doctor, Lawyer,
(ii) Standard & High Complexity: College Education, Auto Service
(iii) Customized & Low Complexity: Restaurants, House Painting
(iv) Standard & Low Complexity: Dry Cleaning, Fast Food
 The skill set & other resource requirements will be different
for each category of Service Business
 Slide 9

Classification of Operations Management

College Doctors
H
Education Lawyers
Complexity

Complexity
Restaurant
L Dry Cleaning
House Paints
Complexity

L. Customization
H. Customization
(Standard)

Customization
 Slide 10

Separation of Manufacturing & Services

 The separation of manufacturing and services is clearly not a black and white
matter. Some service firms violate the intangible product rule as illustrated
below:
1. Engineering and Construction Service firms build bridges
2. Food services or restaurants provide meals
3. Retail store are service organization involved in sale of tangible end product
 On similar lines, within all manufacturing industry there are service elements
for example
1. An after sales service for repairs
2. Legal service for employee rights
3. Purchasing services to improve quality of supplied products
4. Internal company training services to ensure effective performance
5. Human Resource department is a service for hiring employees, following
promotions, administering salaries, welfare activities etc.
 Slide 11

Separation of Manufacturing & Services

Insurance

Restaurant
Service

. Steel Product

Manufacturing
 Slide 12

(Learning's from Video -What is OM?)

1. Operations Management affects all parts of business operations from purchasing of raw material to
delivery of final goods & services.
2. Managing the Supply chain effectively can make a difference between success & failure of a product or
service. When choosing Suppliers the goal is to find the best product available for the best price
(example McDonald)
3. An efficient manufacturing process delivers quality products in the most cost effective way possible
(Example Hillerich manufacturer of base ball bats) – some times that needs introducing new technology
like ERP
4. Company that provide a service rather than a product also must find the most efficient processes
(Example Disney Land) in order to keep customers happy and profits up
5. Measuring is an important element of Operations Management to know your process for your product or
service – It is the only way to track improvement or failure in a process (example Honda Car)
6. Exceeding customer expectations is a powerful function within the hotel (Example Hotel Monaco of
the Crimpton Group)
7. Operations Management is the key to making any business more successful (example ABTCO)
 Slide 13
Operations Management integrated with other
Business Functions
 There are three primary functions: Operations, Marketing &
Finance. Operations Management is totally integrated with other
business functions for e.g.:
1. In operations one must control cost and this is where cost
accounting plays a role.
2. In all operations, capital investment is required for machine
equipment and building and so finance accounting is important.
3. In operations one needs motivated and productive people and
this is the link with human resource management.
4. Products that are made by operations have to conform to
customer requirements and hence the link with marketing.
5. The operations of the firm has to abide by the current laws
including worker safety, working hours, ecological environment
rules etc. and hence linkage with legal aspects.
 Slide 14
Integrated Supply Chain
 A supply chain is the sequence of Organizations – their facilities,
functions & activities – that are involved in producing &
delivering a product or service. An integrated supply chain
model with the material flow stream is as follows:
 Purchasing Operations Distributions
 Purchasing is the buying from suppliers and / or subcontractors
of the necessary raw materials, components and services.
 Operations is the manufacturing and assembly in work centers of
these raw material and components into finished goods.
 Distribution of the finished product to the customer and is often
referred as business logistics or physical distribution
management.
 Slide 15

Importance of Operations in Integrated Supply Chain

 Within each phase of the integrated supply chain are numerous

operations necessary to keep the activity functioning efficiently as
enlisted below:
 Under Purchasing: We have operational activities such as sourcing,
subcontractor selection, supplier selection, quality management in
purchasing, inventory management of raw material etc.
 Under Operations: We have planning of operations, layout of
facilities, quality management of the process, design of products, cost
control, inventory management of different types of material, just-in-
time, TQM etc.
 Under Distribution: We have warehousing for finished goods and
spare parts, transportation and distribution of goods, inventory
management of finished goods, final customer services, forecasting for
future needs etc.
 Slide 16

Importance of Operations in Integrated Supply Chain

 The three more important challenges to a firm are

quality products, promised delivery times and
acceptable cost. Therefore, it is vital that there is
proper management and control of these
operations in the integrated supply chain.
 Supply chain is perhaps better conceptualized in
manufacturing since there is a physical flow of
goods (Example a supply chain of bread).
 Slide 17

Integrated Transformation for Service Sector

 First example, consider College Education:

 Input Transformation Output

 Inputs include books, research reports, video tapes, CDs,

knowledge of Professors & Class mates.
 Transformation are the acquisition of knowledge and gaining of
new insights, understanding of relationships, improved ability to
think, to evaluate situations and to make better informed
decisions.
 Outputs include new knowledge and insight and students who
are better qualified to pursue objectives towards which they are
working
 Slide 18

Integrated Transformation for Service Sector

 Second example, consider Hospital:

 Input Transformation Output

 Inputs include Doctors, Nurses, Hospital, Medical

Supplies, Equipment Laboratories.
 Transformation are the examination, Surgery,
Monitoring, Medication & Therapy
 Outputs include healthy patient
 Slide 19

Models of Operations

A simple model for operations comprises three basic blocks: inputs, transformation
and outputs. Such a model is illustrated below:

Industry Inputs Transform Outputs

Food Cocoa Grinding / Blending Chocolate

Automobile Steel Machining / Assembly Motor Vehicle

Chemicals Crude Oil Refining / Plastic Utensils
Reformulation
Distribution Bulk Product Sorting / Packaging Customer Pack
 Slide 20

Historical Milestones in OM

1. Ancient times (Before 1700s): for example the Egyptian Pyramids, the Great Wall of China, the
Aqueducts of the Roman Empire.

2. 1700s in England, Industrial Revolution: substitution of machine power for human power. Invention of
Steam Engine ( James Watt 1764), Flying shuttle for weaving Textiles, Concept of interchangeable
parts (Whitney 1790) etc.

3. 1800s Gasoline Engines & Electricity were developed.

4. Mid 1800s factory systems replace traditional systems of making products.

5. 1900s Scientific Management: Frederick Taylor popularized Time Study, Method Study, & Efficiency
– getting output with minimum wastage.
 Slide 21

Historical Milestones in OM

6. 1920s Henry Ford Model ‘T’: used assembly lines (straight line
production). Parts were moved by automatic Conveyor belts. The
results were outstanding. Assembly time reduced from 728 hours
to only 93 minutes <
Snap Shot on Scientific Management at Ford Plant>
7. Post World War I: Human Relations Movement began.
Contributions of Elton Mayo, Maslow, Herzberg & McGregor.
8. World War II: Operations Research developed as a discipline to
optimize objective function in Decision Making.
9. Post World War II: Service Revolution with a spectacular
contribution to national economy for example; banks, hotels,
information technology, hospitals etc.
 Slide 22

Historical Milestones in OM

11. Computer Revolution: Many Operations activities can be performed

more quickly because of Computer technology. Software applications
like Enterprise Resource Planning (ERP) software such as SAP,
PeopleSoft, Oracle allows for real time information about inventory
levels, customer orders, current work loads, orders to vendors etc.
Internet Revolution is a relatively recent development with a strong
impact on Business. Firms are involved in e-business using the internet.

12. CNC, CAD, SPC, TQM, ISO standards, Benchmarking & SCM have
all impacted Operations.
 Slide 23

Process View of Operations Management

 A process is an activity or a group of activities that takes one

or more inputs and transforms them by adding value to one or

more outputs for its customers.
 For example, many parts of a restaurant like the designer of

the facility, the cooks, buyer, suppliers, hostess, parking

attendant and others support the server in providing
customers with a good meal and pleasant dining experience.
They all play a part in seeing that the customer is well-served.
 Slide 24

Process View of Operations Management

 Accounting process prepares financial & cost accounting information

 Finance process manages cash flow & capital investment requirements

 Human resources process hires & trains employees to match organization needs

 Management information system process develops information & decision support

systems

 Marketing process satisfies customer needs

 Operations process transform inputs into products & services

 Slide 25

Process View of Operations Management

 Transformation processes can be categorized as :

1. Physical (manufacturing)

2. Location (Transportation)

3. Exchange (Retailing)

4. Storage (Warehousing)

5. Physiological (Health Care)

6. Educational (Colleges)