OPERATIONS

MANAGEMENT
Operations Management

 Operations Management is the planning,

scheduling and controlling of activities that
transforms inputs by way of raw materials,
capital, machinery, labour, information and
time into outputs in the form of products and
services of higher value than the inputs.
Decision Areas

 Managing Quality
 Product Design
 Process Design
 Location Strategies
 Layout Strategies
 HR Strategies
 Supply chain Management
 Inventory Management
 Scheduling
 Maintenance
 Difference between Production &
Productivity

 Partial Vs Total Productivity

 4Ms: Men Machine Material Money

 Efficiency Vs Effectiveness
Type of Production Systems

 Mass / Flowline
 Batch
 Job
 Projects
Plant Location

A good location reduces the cost of production

& distribution to a considerable extent

Need for Plant Location:

- New Factory
- Expansion
- Relocation
Factors determining the plant
location: Primary….
 Supply of Raw Material
 Nearness to the market
 Transport Facilities
 Labour Supply
 Availability of Power
 Supply of Capital
Secondary

 Facilities
 Natural Factors
 Political Factors
 Govt Subsidies and facilities (SEZ…)
 Initial start & Goodwill
 Personal Factors
 Miscellaneous Factors (Eg.Vaastu ….Maruti Udyog
Ltd)
…and many more.
Urban Vs Rural
Manufacturing Operations
 Forming
Casting
Forging
Extrusion
Stamping
 Machining
Lathe
Drilling and Boring
Milling
Grinding
Electro Discharge Machining (EDM)
Electro Chemical Machining (ECM)
 Assembling
Welding
Brazing
Soldering
Riveting
Plant Layout

Plant Layout is the physical arrangement of

machines, processing equipment and service
departments to have the best co ordination
and efficiency of man machine and material
in a plant.

Principles of Plant Layout…

Factors affecting layout

 Types of Industries
 Type of production system
 Type of product
 Volume of product
 Desired flexibility
 Use of space / Available floor space
 Flow of Work, Material & Personnel
 Accessibility
 Working Environment
 Architecture design of the space
Types of Plant Layout

 Process Layout
 Product Layout
 Hybrid Layout
 Fixed Position Layout
Material flow systems

 I Type
 L Type
 U Type
 S Type
 O Type
Process charts

 Operations Process chart

 Flow process chart

Material handling equipments

 Conveyors: Belt, Chain, Roller.

Cranes, Hoists
Forklifts & Industrial Trucks
Principles of Material Handling
INVENTORY MANAGEMENT

Managing the stock of items kept on hand by

an organisation to be used to meet customer
demand.

Types of Inventory
- RM Inventory
- WIP Inventory
- FG Inventory
Functions of Inventory

 To meet anticipated demand

 To smooth production requirements

 To avoid over stocking and under stocking

 To avail quantity discounts

 To hedge against price fluctuations and seasonal

demand.
Concept of EOQ

 Meaning of EOQ
 Types of cost
 Reorder level
 Assumptions of EOQ
Selective Inventory Control

 ABC Analysis
 VED Analysis
 FSN Analysis
Materials Management

Materials Management consists of planning,

directing, co-ordinating and controlling those
activities which are concerned with the
materials and inventory requirements from the
point of their inception to the final
manufacturing.

“Right Material in right quantity at the right time

at the right price from the right source of
supply.”
Importance of materials management
 Accounts for major part of the capital employed
 Offers maximum opportunities to reduce costs and
shorten the process time thus increasing profits
 Quality of finished products eventually depends on the
quality of the materials used
 Materials management encompasses some of the
most prominent areas like Purchasing, Storing,
Inventory, Material Handling, Transportation,
Shipping….
 Material Procured should be compatible with the
demand
Functions

 Minimisation of costs (Material, purchase,

inventory..)
 Maintain the desired quality
 Avoid overstocking & stock outs
 Increase the inventory turnover
 Vendor Management & Vendor Relations
 Development of Operations Personnel
Purchase Dept

Types of procurement

 Centralised
 Decentralised
Modes of purchasing materials

 Spot Quotations
 Floating the limited inquiry
 Tender
Stores Management
Functions:
 Receipt
 Storage
 Retrieval
 Issue
 Records
 Housekeeping
 Surplus stock
 Scrap
 Verification
 Co ordination & Co operation
Stores Management

Objective:
 Material never goes out of stock
 Material is never too excess than what is
required
 Minimise costs
 Material should be easily traceable and available
at beck and call
 To protect the stores against theft , damage
etc…
 Optimum utilisation of cubic space.
Principles of Stores Layout

 Optimum utilization of floor space

 Adequate floor load
 Wide aisles & Gangways
 Heavy items to be stored at low levels
 Most frequently used items to be stored near
issuing windows
 Movement of air, temp, light, materials,
humans not to be obstructed
 Ergonomically designed
 Water proofing is essential
 Adequate security & safety
 Adequate material handling equipments
 Proper Material tracking & locating systems
Material Issuance & pricing methods

 FIFO
 LIFO
 Average Cost
Type of Stores

 Centralised

 Decentralised
Maintainance Management
 It refers to the upkeep and protection of plant,
building & machinery and other fixed assets of a firm
which are subject to deterioration due to their use
and exposure to the environment over a period of
time.

 Maintainance encompasses all those activities

required to keep the physical facilities and
equipments in good working condition and make
necessary repairs when breakdown occurs, so that
the system can perform as intended.
Major areas of Maintainance

 Civil

 Mechanical

 Electrical
Types

 Breakdown Maintenance
 Preventive Maintenance
 Predictive Maintenance
 Routine Maintenance
 Planned Maintenance
Some Indices

 Maintenance cost index

 Frequency of breakdowns
 Down time index
 Breakdown Maintenance index
 Labour cost of planned Maintainance
KAIZEN

 Developed by Masaaki Imai

 Meaning
 Principles
 Merits
 Limitations
5s
KANBAN

 Literal Meaning “Card Bin”

 Coined by Taiichi Ohno
 It is a scheduling system for Regular and just-
in-time (JIT) production.
 Poka Yoke
 Gemba
 Muda Mura Muri (7 Wastes)
 Jidoka
 Andon (Self study)
Six Sigma

 Six Sigma ( ) is a process improvement set of

tools and strategies to achieve excellence and
perfection.
 Developed by Motorola in 1986.
 The term borrows its name from the Normal
Distribution.
 A six sigma certification is granted to a process
which manufactures products in which 99.99966%
Of the products manufactured are free of defects.
 A maximum of 3.4 defects per million are allowed.
DMAIC Model
Learning Curve

A learning curve is a graphical representation

of the changing rate of learning (in the
average person) for a given activity or task.
 Concept
 Graph
 Learning Rate
 Limitations
 Anti Learning Curve
Quality

The quality of product or service is a customer’s

perception of the degree to which the product
or service meets his or her expectations.

Quality is the performance of the product as per

the commitment made by the producer to the
consumer.
Benefits of Quality Control

 Minimum Scrap
 Reduction in costs
 Standardisation or uniformity in products
 Reduced Production Bottlenecks & Stoppages
 Reduced inspection and Quality Checks
 High Customer Satisfaction
 Increase in Brand Goodwill & thus higher Sales
 Higher Operating efficiency
 Sense of pride amongst the Employees
 Better utilisation of resources.
Dimensions of Product Quality

 Performance
 Features
 Reliability
 Serviceability
 Appearance
 Customer Service
 Safety
Q C TOOLS

 Stratification
 Data Collection
 Check Sheet
 Pareto Analysis
 Histogram
 Ishikawa Diagram
 Control Charts
Quality Gurus

 Ishikawa
 Deming
 Philip Crosby
 Juran
 Feigenbaum
SELF STUDY

ISO
ERGONOMICS
 ST ! ! !
H E B E
AL L T