Facilitator:

Dr. Pramod Shetty

 Introduction
• Major sectors in a country- Manufacturing , Service and Agriculture

• In India Manufacturing and Services together contribute around 67%

of the GDP

pramod
 Definition
Production and Operations Management ("POM") is about the
transformation of production and operational inputs into "outputs"
that, when distributed, meet the needs of customers.
 SCM

Company or organisation
Forecasting

Design Planning and Improvements

Phase Execution Phase
Purchasing Phase Sales & Distribution
Strategy JIT
Forecasting
Capacity TPM
Aggregate
Raw Materials New product Planning Kanban
Finished goods
dev
MPS 5S
Location
MRP Value
Layout analysis
 Operations Management
A Systems Perspective

Forecasting

PROCESSING
Labour Process & Purchasing Goods
& Inventory
Product

OUTPUT
INPUT

Material Control
Design
Capital Operations Material & Services
Planning & Capacity

Control Planning

Feedback
Quality Maintenance Process
Management Management Improvement
 Transformations
Manufacturing Transformations
 Machine tool mfg

Service Transformations
 Bank, garage, restaurant

Differences in terms of
 Tangibility
 Heterogeneity
 Simultaneous production &
consumption
 Perishability
 The Service – Product Continuum
Product Domination Service Domination

Materials, Assets, Products… Services, People, Interactions…

Passenger Cars, Machine Tools

Facilities Maintenance, Turnkey Project Execution …

Logistics, Tourism, Travel and Entertainment Sectors

Health Care System (Hospitals)

Restaurants, Fitness Centres

Professional Consulting, Legal Services

The Service – Product Continuum
 Manufacturing & Service
Similarities & Differences
Manufacturing Organizations Service Organizations
Differences
Physical durable product Intangible, perishable product
Output can be inventoried Output can’t be inventoried

Low customer contact High customer contact

Long response time Short response time
Regional, national, Intl. markets Local markets
Large facilities Small facilities
Capital intensive Labour intensive

Quality easily measured Quality not easily measured

Similarities
Is concerned about quality, productivity & timely response to its customers
Must make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice of resources
Has to make an estimate of demand
 OM incorporates many tasks that are interdependent, but
which can be grouped under 5 P’s starting with :
PRODUCT
Marketers in a business must ensure that a business sells products
that meet customer needs and wants.
The role of Production and Operations is to ensure that the
business makes the required products in accordance with the plan.
The role of PRODUCT in POM therefore concerns areas such as:
Q’s for Product
- Performance
- Aesthetics Will it sell?
- Quality Will the design allow it to be made easily and quickly?
- Reliability
- Quantity What materials will be used?
- Production costs What will they cost?
- Delivery dates
 PLANT
To make PRODUCT, PLANT of some kind is needed. This will comprise the bulk
of the fixed assets of the business.
In determining which PLANT to use, management must consider areas such as:
- Future demand (volume, timing)
- Design and layout of factory, equipment, offices
- Productivity and reliability of equipment
- Need for (and costs of) maintenance
- Heath and safety (particularly the operation of equipment)
- Environmental issues (e.g. creation of waste products)

Q’s for Plant

What buildings/equipment will be needed?
How will they be laid out?
 PROCESSES
There are many different ways of producing a product.
Management must choose the best process, or series of
processes. They will consider:
- Available capacity
- Available skills
- Type of production
- Layout of plant and equipment
- Safety
- Production costs
- Maintenance requirements
Q’s for Processes
Will the product be made as one off? In batches? Continuously on a
production line? Or some other way?
 PROGRAMMES
The production PROGRAMME concerns the dates and times of
the products that are to be produced and supplied to customers.
The decisions made about programme will be influenced by
factors such as:
- Purchasing patterns (e.g. lead time)
- Cash flow
- Need for / availability of storage
- Transportation
Q’s for programmes
How will different strategies and
functions be programmed to achieve
organizational timeline of production?
 PEOPLE
Production depends on PEOPLE, whose skills, experience and
motivation vary.
Key people-related decisions will consider the following areas:
- Wages and salaries
- Safety and training
- Work conditions
- Leadership and motivation
- Unionisation
- Communication
Q’s for people
What does the firm need to consider about the people
involved in the production of a good or service?
• What to Produce? The Design of Products & Services

• Where to Produce? Facility Location

• How Much to Produce? Capacity Planning for

Manufacturing & Service Systems

• How to Produce? Process Design; Work Analysis, Design

& Measurement; Layout & Safety.
• During theImportance
past couple of Operations
of decades, many Management
domestic companies saw
their market share decline due to their inability to compete with
foreign firms in terms of product design, cost, or quality.

• Theories to explain this development:

• Cultural differences
• Government policies
• Neglect of human resources
• Insufficient investment in technology

• World-class performance by operations in delivering high-quality, cost-

competitive products and services is essential to survival in today's global
economy.

• Of late Auto components, Pharma, IT and ITES sectors are showing

signs of global competitiveness.
 THE DRAGON
VS THE ELEPHANT
India Factor China
1947 Economic race started 1947
1991 Liberalisation initiated 1978

6-7% GDP Growth 7 -7.5%

125Cr + Population 136 Cr
$1165/Year Per Capita Income $3345 /Year
$21.27bn FDI $538bn
Rs. 10-12/unit Electric Power Rs. 6/unit
100 units Productivity 300 units
Very Strong Trade Unions No TU rights

pramod
 THE DRAGON
VS THE ELEPHANT
India Factor China

23 million TV sets produced 40 million

81.2 mn tons Steel production 779 mn tons

32 m bn Textiles production $145 bn

$36 bn Textiles exports $274 bn

5 million Automobiles production 23.72 million

pramod
Customer focus….
 Core Services

Core services are basic things that customers want

from products they purchase.
 Value-Added Services

Value-added services differentiate the organization

from competitors and build relationships that bind
customers to the firm in a positive way.
 Dealing with Trade-Offs

Cost (Value)

Flexibility Delivery (Speed)

Quality
WCM -companies adopt TQM, Pull systems, JIT,TPM
 How do Firms Add Value?

• Greater productivity
– Lower costs and expenses
– Lower prices for the customer
• Higher quality
– Better performance
– Greater durability, reliability, aesthetics.
• Better timeliness
– Faster response and turnaround
– On-time delivery, meet promises
• Greater flexibility
– greater variety
– customization for customer needs / desires
 Operations
A key functional area in an Organization

Finance

Operations

Marketing HRM
 Operations Management
Challenges
• Competitive Pressures due to economic reforms
• Falling Prices
• The on-road price of a Hyundai Santro has not changed much
between 2014 and 2019
• Shrinking Delivery Quote
• Textile Manufacturers are expected to cut their lead time from
order placement to final delivery down to 2 months
• Build-to-Order Requirements
• Need systems that allows customers to self-configure,
customize and visualize their own version of products &
services
 Operations Management
Challenges

• Growing customer expectations

• Examples: Tariff plans and options provided by mobile
operators, options in passenger car
• Customers tend to demand more and refine their
expectations
• Manufacturing & Service organizations must learn to
respond to these expectations
• Need to develop capabilities to bring newer products
and services faster and yet profitably
 Operations Management
Challenges

• Today’s businesses are constantly challenged by the rapid technological

advancements
• Example 1: ATMs & Internet Banking. Customers need not visit a bank branch. Drafts
and cheques replaced with electronic payment gateways & fund transfer mechanisms.
• Example 2: Buying a train ticket. By visiting a website like http://www.irctc.co.in/, a
customer can accomplish all tasks pertaining to ticket booking and cancellation at leisure.
• Example 3: Procurement of goods & services. A manufacturing organization can procure
goods & services by organizing a reverse auction on the Internet. In 3 to 4 hours, the best
price for a component and the supplier willing to provide the component at a desired quality
can be located.
• Example 4: New Product Development. A team of design personnel from across different
geographical locations can participate in new product development using technological
tools.
 Operations Management
Challenges

• Environmental Issues
• Growing industrialization raises concerns regarding the depletion of
natural resources and the waste generated from production systems and
end-of-life products.
• Consumption of energy and water in countries like India is on the rise.
Such a situation requires better practices and newer methods of
addressing these requirements using better operational practices.
• Increasingly, firms are under pressure to take responsibility of restoring,
sustaining, and expanding the planet’s ecosystem instead of merely
exploiting it.
• OM practices must address environmental concerns in
order to ensure a sustainable world
 Operations Management
Implications & Priorities

• Relate operations system to Customer/ Market

• Acquire Capabilities to tolerate product
proliferation
• Develop systems and procedures that promote
learning
• Develop Green Manufacturing Practices
• Effectively consolidating the operations resulting from
mergers.

• Developing flexible supply chains to enable mass

customisation of products and services.

• Managing global supplier, production and distribution

networks.
 Current Issues in OM (cont’d)
• Increased “commoditization” of suppliers.

• E-Commerce
pramod