Operations

Management (OM):
An Introduction

By
Mr. Anup
 Syllabus

Unit -1 Introduction, meaning, nature and scope

of production and operations management.
Difference between production and operations
management. Productivity, factors affecting
productivity; Operations: The Transformation
Model; Manufacturing and Services Operations;
Competitive Dimensions of Operation
Management or Operations Strategy, Role of
operations Manager.
Introduction
Operations management is the management of an
organization’s productive resources or its production
system.
A production system takes inputs and converts them
into outputs.
The conversion process is the predominant activity of
a production system.
The primary concern of an operations manager is the
activities of the conversion process.
Production
Production is conversion of input into output
Input-man , machine, material, money, methods ,
management
Output-goods produced and services rendered
Control is required at each stage
Production have impact on quality of goods and cost
of production.
Operation
Operation is activities related to production and
services there after
Management is the process of designing and
maintaining an environment in which individuals
work to accomplish aims.
Production management is the process of planning,
organizing, directing, controlling the activities of the
production function.
Operation management is the management of products
and services . If service concept is added to production
management , it can be called as operation
management .
Nature of Operations management

Operations as a system.
Operations as an Organizational function
Operations as a conversion/transformational process,
Dynamic, Continuous process
Scope of Production/Operations management
Scope of production management, before
actual production starts
Design of tools
Plant layout-placing machines at right place
Human resource requirement
Method of performance judgement
Selection & operation of the size of the firm
Scope of production mgt.during the
production
Preparation of production schedules
Plan for maintaining records of raw material, finished
goods
Control over the quality
Control on inventory
How any variance will be tackled
Objectives of operations management
Objectives of operations management
Difference between production and
operations management

Production management Operations

Management
• Related with • Both with manufacturing
manufacturing. & Services.
• Tangible Output • Both Tangible &
• Less labour, More Intangible Output
equipment. • More labour, less
• No Customer equipment.
Participation. • Frequent Customer
Participation.
Difference between production and
operations management
 Productivity

Productivity is a common measure on how well

resources are being used. In the broadest sense, it
can be defined as the following ratio:

Productivity = Outputs
Inputs

Productivity defines the quantitative relationship

between output produced and input used.
 Productivity Index

• PI =output (in particular time period )/ output (in base period)

• Productivity Index = Total Value of Output

Total Value of Input

• The productivity index (P.I) can be more or less than

1.
P.I > 1 = business running efficiently
P.I < 1 = business running inefficiently
 Measures to improve productivity
• Elaborate the objectives of co.
• Appoint right people for right job
• Effective production planning and control
• Reduce the complexity of product design
• Make work as flexible as can
• Use high quality production requirement
• Make value based decision
 Goods Versus Services
Attributes of Goods
(Tangible Product)
Can be resold
Can be inventoried
Some aspects of quality
measurable
Selling is distinct from
production
Product is transportable
Site of facility important for cost
Attributes of Services
(Intangible Product)
Reselling unusual
Difficult to inventory
Quality difficult to measure
Selling is part of service
Provider, not product, is
often transportable
Site of facility important for
customer contact
Table 1.3
 Productivity Calculations

Labor Productivity

Units produced
Productivity =
Labor-hours used

1,000
= = 4 units/labor-hour
250
 Multi-Factor Productivity

Output
Productivity =
Labor + Material + Energy +
Capital + Miscellaneous

 Also known as total factor productivity

 Productivity Variables
• Labor - contributes about 10% of the annual
increase
• Capital - contributes about 32% of the annual
increase
• Management - contributes about 52% of the
annual increase
 Activity -Numerical Solving
•The input and output data for an industry given in the table. Find out various productivity
measures like total, multifactor using of human and material and partial measure.
Output and Input production data in dollar ($)
•Output
•1. Finished units 10,000
•2. Work in progress 2,500
•3. Energy used 1,000
•4. Bonds -------
•5. Other income --------
•Input
•1. Human 3,000
•2. Material 153
•3. Capital 10,000
•4. Energy 540
•5. Other Expenses 1,500
Solution
 Activity-Solve it
• Bluegill Furniture is a small furniture shop that
focuses on making kitchen chairs. The weekly dollar
value of its output, including finished goods and work
in progress, is $14,280. The value of inputs, such as
labor, materials, and capital, is approximately
$16,528. Compute the total productivity measure for
Bluegill Furniture.
 Factors affecting Productivity
• Nature and quality of raw material
• Utilization of human resources
• Efficiency of plant and equipment
• Volume of production
• Benefits of high productivity
– Fosters economic growth and development
– Increases individual wages without inflation
– Lowers costs and makes firms more competitive
Factors affecting Productivity
Transformation Model
Transformation Model
Manufacturing and Services operations
Manufacturing Operations

• The term "manufacturing operations" refers to a framework in which man,

machine and material come together to produce a tangible product.

• It deals with all the supply chain activities such as gathering requirements from
customers, procuring raw materials, allocating resources, scheduling the
production, maintaining the inventory, and delivering end products to customers.

• Manufacturing operations are classified into process manufacturing and discrete

manufacturing.
Manufacturing and Services operations
Services Operations

• Services are intangible and non-physical products offered by one party to

another in exchange for money.

• service-providing operations aim to deliver an experience that leads to customer

satisfaction.

• Service operations engage a wide range of teams to deliver services, including

professional service teams, customer support teams and customer experience
teams

• Organizations that engage in hospitality, travel, media, sports, health care and
entertainment are service-providing organizations.
Competitive Dimension in Operation Management

Cost/Price

Employee Productivity and

Managerial Expertise Quality

Product and Service

Customer Service Differentiation

Dependability as a
Time supplier
Flexibility/
Services
 Operations Strategies
Operations Strategies

• An operations strategy refers to the system an organization implements to

achieve its long-term goals and mission.

• It involves decisions based on multiple factors, including product management,

supply chain, inventory, forecasting, scheduling, quality, and facilities planning
and management. 

• An effective Operation strategy must foster the alignment of people, processes

and products with the company’s overall mission to ensure long-term
sustainability and growth.
5 types of operations strategies
Types of Operations Strategies

Core competency
strategies

Competitive Product or Customer-driven

strategies service strategies strategies
 Roles of an Operations Manager

• Organizing events to increase staff motivation and engagement.

• Analysing data to calculate the cost-benefit ratio.
• Locating problems in the company’s supply chain through quality control
checks.
• Establishing and monitoring employee schedules.
• Creating programmes for employees’ professional development.
• Establishing objectives for increased output and improved efficiency.
• Monitoring the overall budget of the business as well as departmental
budgets.
 Roles of an Operations Manager

• Establishing corporate guidelines and carrying out frequent changes while

ignoring workflow and procedure.
• Resolving disputes between departments about resources.
• Examining the company’s resource management and looking for ways to
boost employee productivity.
• Developing tools to automate repetitious processes.
• Monitoring on-site projects and field operations.
• Resolving inventory management concerns.
• Constructing logistics-enhancing solutions.