Production & Operations

Management:
Introduction and Manufacturing &
Service operations
Dr. Ravindra Ojha
( 3rd, 4th, 5th & 6th Jan 2023)
Growing importance of Operations in Leadership
What is not an effective Operation?

Operation
 About US & POM
• Introduction,

• Course outline,

• Mutual Expectations,
 About the
• course
Service Vs Mfg, Capacity, Inventory, Material flow, Quality, ToC, Lean,
Resourcing, Supply chain and many more.
• Interaction with Operations expert – Prof. Ravishankar – SMCM &
I4.0
• Learning through anecdotes from real life, caselets and Case studies.

My Your
expectations? expectations?

• Individual assessment criteria?

• Group exercise?
• About the two Quizzes?
• Academic expert session?
Key highlights

• Case studies

• Academic expert

• Approximately 20
tools/techniques

• Participation a
must

• Support from TA
 Agenda
• Introduction to POM,
• Growing relevance & its Impact,
• Growth triggers & historical milestones,
• Transformation process & Performance measures,
• Operations : Manufacturing vs Service
 PRODUCTION & OPERATIONS MANAGEMENT

Ratan Tata – Automobiles Sanjeev Kapoor – Food and Prince Charles appreciating – Six
production in factory. experience in Restaurant. sigma quality in service to customer.
 Product Life Cycle
VOLUME
Stages

Examples for understanding?

• Private Engineering colleges
• Maruti 800cc car sale 1986…
Startup rapid growth maturation decline • Technology I1.0  I4.0
Time
 Triggers to Operations
• Proliferation of products
• Walk into a neighborhood store - simple product like toilet soap has 50 odd varieties
• Life Cycles
• Cell phone, Laptop, Automobile, dress design, hair style etc. It is shrinking rapidly.
• Outsourcing What is the impact of Industry 4.0 on economy?
• Bata, Dell computers: network design, IT system & coordination. Era of specialization.
• Globalization
• High tech m/cs, Haldiram, Textile etc- Farther…Faster…Flatter…Fewer
 Competition & Price
- Product innovation/brand equity no longer trigger price. Value for money. VMI, new services.
 Technology
- Service firms, Healthcare, Food industry- 3D, RFID, AI, IIOT, Inventory/ logistics optimization.
 Indian Economy
• Share of the three key aggregates of India’s GDP:
- Service, - Industry (Manufacturing+ Construction +....), – Agriculture related (horticulture +fishery ---
• As per statistics times, India's sector-level GDP breakup in 2020-21 shows;
• Service (53.89%) is still the major contributor to GDP
• Followed by Industry (25.92%) and
• Agriculture (20.19%).

Can an economy be entirely Service based?

 Indian Economy
• YoY growth trends of the three key aggregates of economy:
- Service - Industry (Manufacturing+..) - Agriculture
 Indian Economy
• Growth trends of the three key aggregates of or economy:
- Service - Industry (Manufacturing+..) - Agriculture
80.0
Annual share
70.0
trend of the 3
60.0
sectors in the
50.0
period 2000-16
40.0 Service
Agri
Agri%GDP
30.0

20.0
%-->

10.0

0.0 Period --->

2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015-
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Source Based on RBI Handbooks

Why is Manufacturing sector share to GDP nearly flat?
 Historical Developments- Operations
Management

Manufacturing strategy developed

Late 1970s
Just-in-time (JIT) production pioneered by the
Early 1980s Japanese
Mid 1980s Service quality and productivity
Total Quality Mgmt. (TQM) & Quality certification Toyota Production System
Early 1990s
TPS
prgs. Six-sigma quality
Mid 1990s
Business process reengineering Late 1990sSupply chain management
(BPR)
(SCM)
Electronic commerce EarlyValue
2000s
flow / Lean
Globalization systems
Just-in-time (JIT) manufacturing, a subset of the
Toyota Production System (TPS), is
an inventory control methodology aimed primarily at
Mid 2010s
Business analytics Industry 4.0
reducing times within production system as well as
response times from suppliers and to customers.
What are the three top drivers of Operations today?
 What is Operations Management

Operations management is as a systematic approach to addressing

issues in the transformation process of converting inputs into useful
revenue generating outputs. It is applicable to Products & Services

• Healthcare
• Hospitality
• R&D
• Entertainment
• Education
 Conversion Process in Operations
Control / Value addition Monitor /
adjustment Experience
Inputs Output
• Man Transformation • Good
• Material process
• Machine • Services
• Method
• Management
Feedback
Plan vs Actual

Quality, Cost, Dependability, Flexibility and Innovation

Does the Film director deliver a product or service?

 Relevance of Operations Management

• Goal of Operations management is to ensure competitiveness in;

• Quality –product performance as defined by the customer & the designer,

• Cost efficiency – low product cost, value for money for the customer.
• Dependability – reliability and timely delivery of goods and service.
• Flexibility – responding to changes in Volume & Variety.
• Innovation – creating new products and services.

Which two goals should be the priority for India in its drive for ‘Make-in-India’ and ‘Atmanirbhar Bharat’?
 Goals - Benchmark industries
Price (Cost) Low Cost Nirma detergent, OYO rooms &
Ginger hotels, Dollarama in US
Sony TV, Motorola, Mumbai
Quality/ High-performance design or high ,Dabbawala, IITs & IIMs Institutes,
Performance quality Consistent quality
Express Mail, Fedex, Instant photo,
Delivery & Rapid delivery Dominos Pizza delivery, GoAir,
dependability On-time delivery
Mumbai Dabbawala

Variety Burger King, Supermarkets

Flexibility
Volume
Superior customer service Disneyland, Nordstroms, Mumbai
Service Dabbawala, IKEA, Google
Consistently launching successful Google, Apple, Netflix
Innovativeness new products
 Operational Excellence Measures
Manufacturing deliverables Few measures

Quality / Performance Straight-pass yield, Cost of Poor quality, Defect per million
opportunities, Process capability index, Customer retention, CSI
Cost Unit product cost, Manufacturing cost as %age of sales, ratio of
processing-time to lead-time of product flow, Total cost of
ownership.
Dependability Order to delivery lead-time, On-time full delivery, schedule
adherence,
Flexibility New product development time, variations in product line,
Process flexibility, manpower skill flexibility,
Innovativeness New models / services introduced, percentage turnover from
new product
Miscellaneous Value addition growth, Direct to indirect manpower, Inventory
turn ratio, Improvements / employee/year,
Manufacturing & Services Operation
• Manufacture yields a tangible output
• Car
• Soap https://www.youtube.com/watch?v=6z-Hbetgc94
• Books
• Cuisine

• Services are intangible

• Medical
• Transportation
• Education https://www.youtube.com/watch?v=X2zlRzddLco
• Programming

Is ‘Research & Development’ a Production or service operation?

 What are Goods and Services?
• Service: intangible task that satisfies consumer or business user needs.
• Goods-services continuum: It helps to visualize the differences and
similarities between goods and services

Mobile phones -Goods Restaurant – Goods & Service Healthy check – Service

11-21

Is Service quality a customer experience driven by the five senses of human being?
 Goods-Service Continuum

Goods Services
Surgery, Teaching, Consultancy and R&D

Song writing, software development

Computer repair, restaurant meal

Automobile Repair, fast food

Home remodeling, retail sales

Automobile assembly, Steel making

Unlike Mother Teresa service providers are largely the unsung hero of society!
Manufacturing and Services : Similarities
Similarities

• conversion process and add value

• Concerned with quality, productivity, cost & delivery

• Make choice on capacity, location and layout

• Deal with suppliers

• Plan operations, schedules and resources

• Balance capacity with demand

• Forecast demand
Manufacturing and Services : Differences
Manufacturing
• Physical and durable,
• Output can be stored,
• Low customer contact,
• Long response time,
• Wider markets,
• Large facilities,
• Capital intensive,
• Quality - easy to measure.
Services
• Intangible and perishable,
• Output cannot be stored,
• High customer contact,
• Short response time,
• Local markets*,
• Small facilities, usually,
• Labour intensive,
• Quality - difficult to measure.
 Characteristics of Service Operations
• Customer participation – automobile operator/ end buyer vs Dealer /customer
• Presence of the participants requires a different skill set / attention
• Simultaneity – services are created and consumed simultaneously
• No inventory, immediate feedback
• Perishability – service is a perishable commodity
• Unoccupied airline seat, smoothen demand by reservation/appointments,
• Intangibility – services are ideas and concepts and are not patentable
• Buying the service is based on reputation
• Heterogeneity – combination of intangibility and customer participation
• Genuine concern for others, specifications are based on five senses.
• Non-transferable ownership – customer buys an experience / service
• Customers gain access or rental of resource for a period of time
Goods vs Service – Characteristic summary
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Shelf life High perishable

Can Service be mass produced?

 SERVICE SECTOR

1. Customer orientation is a must for a service provider.

2. If served well he/she is unsung but if not he/she comes in limelight (negative).
3. Self-driven / intrinsic desire / passion / selflessness.
4. Mother is the best service provider.
5. 35% of losses occur due to poor service.
 Supply chain vs Service Supply
relationship
• The reason – Customer-Supplier duality

• Services can be considered acting on people’s-

• Minds (education, entertainment etc),

• Bodies (transportation, lodging, health care etc),

• Belongings (auto-repair, dry cleaning, banking, etc) and

• Information (Tax preparation, insurance, legal defense etc)

 Bidirectional service supply relationship

Service category Customer supplier Input / Output Service Provider

Minds Student Mind / Knowledge Professor
Bodies Patient Tooth / Filling Dentist
Belongings Investor Money / Interest Bank
Information Client Documents / filled Tax-preparer

Single-level Bi-directional service supplier relationship

Emergence of Self-service
 Some thoughts on the vignette/episode
• Many opportunities exist for the growth of self service.
• Service provider get motivated & customer is benefited.
• Elimination of labour cost for non-productive activities. COVID experience has hastened this drive!

• Service is migrating from human-interaction to machine-service.

• Electronic service is available anytime and anywhere.
Evolution of self-service:
Service-industry Human-contact Machine-assisted Internet-facilitated
Airlines Ticket agent Check-in kiosk Print boarding pass
Education Teacher Computer tutorials Distance learning (Covid-19 days)
Banking Teller ATM Online banking
Movie theatre Ticket sale Kiosk Ticketing Pay-per view
• High-touch services: health-care, fire-fighting, dentistry remain immune to self service but
made some inroads.
• Low-wage/unskilled/non-value added services would disappear. Growth in service jobs
would be in high-skill areas – Health care, intellectual, creative (entertainment)
 A caselet – Expresso lube
• Read the case (1.25 pages) quickly.

• Answer the 4 questions in short.

Expresso lube
 Summary
• Operations is all about transformation of inputs into good and services.
• Indian economy is dominated by the service sector and has many challenges
in the manufacturing sector.
• Quality, Cost, Dependability, Flexibility and Innovations are the five goals.
• Measures of each are critical to track the improvement process.
• Production and Services co-exist in all areas.
• There are interesting differentiations in the process of operations in the two.
• The six characteristics of services and the importance of the 5 senses of the
customer makes it challenging.
• Service industry is moving towards self-service, rather fast.
Thanks