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OPERATIONS MANAGEMENT

FACULTY
Prof. M.H.Varma
B.E.(Mech.),DMS, PGDMM, MBA(SCM)

Scope of Discussions / Objectives

Understanding the basic Concepts of Operational Activities of Organisations in Manufacturing and Services Sectors

JIT Tools and Techniques and it’s overall purpose in the Organisation Demonstrate understanding of Planning and Control Processes of Project Management .Learning Outcomes On successful completion of the Course. the Students should be able to do the following : - • • • • • Student should be able to differentiate how different Operations Strategies lead to achieve Competitiveness Ability to demonstrate differences between Manufacturing and Service Processes Discuss the Process of Product and Service Design Ability to describe the Concepts of SCM. TQM.

5 Operations ManagementIntroduction .

Customer Retention .Key Issues A Recent Survey says – 6 •“More than 90 % of unsatisfied customers do not complain” •“It costs 5 times more to get a new customer than it does to keep a current customer” .

7 What is Operations Management? Defined Operations management (OM) is defined as the design. execution and improvement of the systems that create and deliver the firm’s primary products and services .

8 Why Study Operations Management? Systematic Approach to Org. Processes Business Education Operations Management Career Opportunities Cross-Functional Applications .

9 What is a Transformation Process? Defined A transformation process is defined as a user of resources to transform inputs into some desired outputs .

10 Operations as a Process Input Transformation (Conversion) Process Output .

11 Operations as a Process Input Transformation Fabrication Transformation Assembly Output Fabrication: making the parts Assembly: putting the parts together .

Operations as a Process Energy Materials Labor Capital Information Feedback information for control of process inputs and process technology Transformation (Conversion) Process Goods or Services 12 .

13 Transformations  Physical--manufacturing   Locational--transportation Exchange--retailing   Storage--warehousing Physiological--health care  Informational--telecommunications .

14 What is a Service and What is Goods?  “If you drop it on your foot.” (True or false?) . it won’t hurt you.” (Goods or service?)  “Services never include goods and goods never include services.

Engineering. Purchasing. etc .15 OM in the Organization Chart Finance Operations Marketing Plant Manager Operations Manager Director Manufacturing. Maintenance. Production control. Quality assurance.

Functional Integration Financial Management Human Resource Management Production/ Operations Management Marketing Management Materials Management Research and Development Management Information System .

Relation of Operations to its Environment SOCIETY Human Engineering Marketing Resources External Environment Suppliers Operations transformation system CUSTOMERS Accounting Finance MIS COMPETITORS GOVERNMENT .

Functions of Operations Managers  Planning • • • • •  Plan product and service mix Location & Capacity Planning Plan equipment procurement Generate Master Schedule – What products to make and when Decide number of shifts/ number of hours Organizing • • • • • Centralized or Decentralized operations Design hierarchical structure Assign responsibility for every activity Organize supplier/ subcontractor networks Establish maintenance policies .

Functions of Operations Managers  Controlling • • • •  Compare costs to budget Inspect the Quality levels Compare work progress to schedule Compare actual labor hours to standards Directing • • • • Establish provisions of union contracts Establish personnel policies Establish employment contracts Issue Job assignments and instructions .

Functions of Operations Managers  Motivating • • •  Provide specific objectives/ Goals & challenges Encourage through praise. inform and communicate (through MIS Reports) Training and development • • • Support employees in training programs Encourage suggestion schemes Facilitate people involvement/ empowerment . recognition of job achieved Motivate through tangible Reward System Coordinating • • •  Coordinate through use of forecasts and master schedule Recommend corrective actions/ necessary improvement on performance achieved Report.

21 Core Services Defined Core services are basic things that customers want from products they purchase .

22 Core Services Performance Objectives Quality Flexibility Operations Management Speed Price (or cost Reduction) .

23 Value-Added Services Defined Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way .

24 Value-Added Service Categories Problem Solving Information Operations Management Sales Support Field Support .

.25 The Importance of Operations Management Synergies must exist with other functional areas of the organization Operations account for 60-80% of the direct expenses that burden a firms profit.

Henry Ford applied the principles of Scientific Management (Model T)   Hawthorne Studies – Research Team from HBS – under the leadership of Elton Mayostudy conducted at Western Electric Company’s Hawthorne Plant (Chicago)  Operations Research – Operations Research teams formed in military operations to smoothen the complex logistics issues (USA & Europe) .Historical Evolution of Operations Management  26 Scientific Management – F. Taylor – “ The Principles of Scientific Management” Moving Assembly Line – In 1911. W.

27 Historical Development of OM • JIT and TQC • Manufacturing Strategy Paradigm • Service Quality and Productivity • Total Quality Management and Quality Certification .

28 Historical Development of OM (cont’d) • Business Process Reengineering • Supply Chain Management • Electronic Commerce .

and distribution networks. production. • Optimizing global supplier.29 Current Issues in OM • Coordinate the relationships between mutually supportive but separate organizations. • Increased co-production of goods and services .

30 Current Issues in OM (cont’d) • Managing the customers experience during the service encounter • Raising the awareness of operations as a significant competitive weapon .

All of the above Answer: e. Increasing value by reducing prices d. Serving customers well e. All of the above . Improve efficiency by lowering costs b. Improve effectiveness by creating value c.31 Question Bowl A major objective of this book is to show how smart managers can do which of the following? a.

32 Question Bowl In the Input-Transformation-Output Relationship. Displays b. The correct answer is “Shoppers”. Stocks of goods c. None of the above (The above are considered “Resources” of a department store. All of the above e. Sales clerks d. None of the above Answer: e. a typical “input” for a Department Store is which of the following? a.) .

1930’s (Tools such d. 1920’s b. 1930’s c. Romig. 1970’s statistical tables where first developed by Walter Shewhart.33 Question Bowl In which of the following decades did the concept of quality control originate? a. Dodge. F. 1950’s as sampling inspection and e. G.) . and H. H. 1940’s Answer: b.