Productio n &Operati ons Manage ment

Production (Vs) Operation

Output may be a product or service. If it is a product centric that is known as production, If it is a service centric then that is known as operation.

INPUT Material Machines Labor Management Capital

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Production/operat ions management

It is concerned with the production of goods and services, and involves the responsibility of ensuring that business

operations are efficient and effective. It is also the management of resources, the distribution of goods and services to customers.

Definition

"The field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of

concepts from design engineering, industrial engineering, management information systems, quality management, inventory management, accounting, and other functions as they affect the organization" ~ APICS The Association for Operations Management

OPERATIONS MANAGEMEN T
Production Systems - Nature, Importance and organizational function. Characteristics of Modern Production and Operations function. Organization of Production function. Recent Trends in Production and

Operations Management. Role of Operations in Strategic Management. Production and Operations strategy - Elements and Competitive Priorities. Nature of International Operations Management.

UNIT - II FORECASTING, CAPACITY AND AGGREGATE PLANNING Demand Forecasting Need, Types, Objectives and Steps. Overview of Qualitative and Quantitative methods. Capacity Planning - Long range, Types, Rough cut plan, Capacity Requirements Planning (CRP), Developing

capacity alternatives. Aggregate Planning Approaches, costs, relationship to Master Production schedule. Overview of MRP, MRP II and ERP

UNIT - III DESIGN OF PRODUCT, SERVICE AND WORK SYSTEMS Product Design - Influencing factors, Approaches, Legal, Ethical and Environmental issues. Process Planning, Selection, Strategy, Major Decisions. Service Operations - Types, Strategies, Scheduling (Multiple resources and cyclical scheduling). Work Study - Objectives, Procedure. Method Study and Motion Study. Work

Measurement and Productivity Measuring Productivity and Methods to improve productivity

UNIT - IV MATERIALS MANAGEMENT Materials Management Objectives, Planning, Budgeting and Control. Overview of Materials Management Information Systems (MMIS). Purchasing Objectives, Functions, Policies, Vendor rating and Value Analysis. Stores Management Nature, Layout,

Classification and Coding. Inventory Objectives, Costs and control techniques. Overview of JIT.

UNIT - V PROJECT AND FACILITY PLANNING Project Management Scheduling Techniques, PERT, CPM, Crashing CPM networks - Simple Problems. Facility Location - Theories, Steps in Selection, Location Models Simple Problems. Facility Layout -

Principles, Types, Planning tools and techniques.

Business environment (Vs) Operations management

The following figure shows the various functions of operations management in other functional areas.

Finance/Ac cou nti ng

Budgets Cost analysis Capital investments Stockholder requirements

Production and inventory data Capital budgeting requests Capacity expansion and technology plans Orders for materials Production and deliver)' schedules Quality requirements Design/performance specs Product/service availability Lead-time estimates
2
ZJ

Status of order Deliver)' schedules Operations

Sales forecasts Customer orders Customer feedback Promotions Material availability Quality data Delivery schedules Designs

Hiring/firing [Training
Personnel needs Skill sets Performance evaluations job design Work measurement

Legal requirements Union contract negotiations

Human Resources

Evolution of Operations Managemen t (or) History of OM

Mass Production Lean Production

Prior to that time only craft production Mechanically powered machines replaced the laborer as the primary factor of production and brought workers to a central location called Factory.

The Industrial

Revolution
The revolution first took hold in textile mills, grain mills, metalworking, and machine- making facilities

Production process was broken down into a series of small tasks, each performed by a different worker.

Division of Labor

Allowed him or her to become very proficient at those

tasks

/ A car \ / manufacturer >

(percentage of in-house manufactured parts: 31%

Assembling and processing of primary parts Co-operating with Company "A 118 enterprises Manufacture of machine parts, accessories, machining, and press work

Same as at left, metallurgical tools and fixtures Press work, plating, cutting, screws, casting and forging, special parts processing

Scientific Management

Based on observation, measurement, and analysis, he identified the best method for performing each job The methods

were standardized for all workers, and economic incentives were established to encourage workers to follow the standards

5 c
r
total time (TT) i

c c
)
non-workplace (NW) workplace time (WP)

c
supportive work time (WT) J work time (WT) v ancillary work time (AW) J service time (ST) non-work time (NT)
v

Elton Mayo and Hawthorne studies, introduced the idea of workers motivation and Productivity Theories of motivation were developed by Hertzberg, Maslow, McGregor, and

others

Mass Production

Computers and automation led still another upsurge in technological advancements

Lean Production/ JIT production:

Lean production prizes flexibility (rather than efficiency) and quality (rather than quantity)

SHORT

/TECHNOLOGY XX PEOPLE \
/ - STRUCTURED FLCW jC - TOTAL EMPLOYEE \ / MANUFACTURING M \ INVOLVEMENT / SMALL LOT / PRODUCTION SETUP REDUCTION /

CONTRO VISIBILIT

^ANW*
/m . . ^ \ -TOTAL QUAUTY

HOUSEKEEPING

/ ManufacturingX
TOTAL OUALITY FOCUS CONTINUOUS IMPROVMENT

SUPPLIER PARTNERSHIPS PULL SYSTEMS

Eli Whitney

Interchaangeable Parts Drawing Conventions Tolerances Modem Machine Tool Development Fredenck Taylor Standardized Work Time Study & Work Standards Worker/Management Dichotomy Frank Gilbreth Process Charts Motion Study TOM Eiji Toyoda Taichi Ohno Shigeo Shingo Toyota Production System Just-ln-Tim e Stockless Production World Class Manufacturing Henry Ford Assembly Lines Flow Lines Manufacturing Strategy Edwards Deming Joseph Juran Ishikawa

Lean Manufacturing
(c>2005 St rat egos. Inc.

It specifically refers to machines or the production line itself being able to stop automatica lly in abnormal conditions This

Autonomation allows machines to run autonomously, as they will stop when a problem occurs.

Jidoka/ Autonomation
Ultimately, it is about transferring human (or better) intelligence to machines.

Production system
'A production system is the collection of people, equipment, and procedures organized to accomplish the manufacturing operations of a

company (or other organization).'

Types of production systems

There are three common types of basic production systems: Batch production system or Job shop

1)

2)

3)

production, Continuous production system or flow shop production, Project system or one shot system.

 General-purpose equipment and methods are used to produce small quantities of output with specifications that vary greatly from one batch to the next. A given quantity of a product is moved as a batch through one or more steps, and the

total volume emerges simultaneously at the end of the production cycle.

Batch production system

(e.g) heavy-duty construction equipment, specialty

chemicals, and processed food products, etc

6 CNC MACHNE ACCURATELY 6 THE PROOUCTS ASSEMBLED BY SHAPES THE PAPTS A MACHINE OPERATED BY A WORKER 7. PRODUCT QUALITY 6 PRODUCT PASSED ON CHECKED AND TESTED TO NCKAGING DEPARTMENT

Continuous production system

Since large volumes of throughput are expected, specially designed equipment and methods are often used so that lower

production costs can be achieved. (e.g.) assembling automobiles, consumer products such as televisions, washing machines, and personal computers etc

 Resources are brought together only once. Because of the singular nature of project systems, special methods of management have been developed to contain the costs of production

within reasonable levels.

Project system
(e.g.) Construction of building, bridge etc

Decision Making in OM
Strategic Decisions Operating Decisions Control Decisions

Strategic Decisions
Examples include deciding:
11 the design for a new product's productio n process 11 where to locate a new factory 11 whether to launch a

new-product development plan

Operating Decisions
Examples include deciding:
11 how much finished-goods inventory to carry 11 the amount of overtime to use

next week 11 the details for purchasing raw material next month

Control Decisions

In the 1980s, Computer Integrated Manufacturing was developed and promoted by machine tool manufacturers and the CASA/SME (Computer and Automated Systems Association /Society for Manufacturing

Engineers).

CIM
complete of a plant, under control together. automation with all manufacturing

CIM used to describe the

processes functioning computer and digital

information tying them

/*

1 Simu'ation.
Customer orders / Production

validation
Results, simulation Performance costs, capacities Request lor estimates Planning Proposa's Computer-bastf

Technical data Calculation^ of material V requirements and toads. PIC -*7 Design. -/ methods. / CAD. CAM Database What and when? Monitoring performance

Purchases
What and when'

Products

Production system

Today's Factors Affecting OM

Global Competition Quality, Custome r Service, and Cost Challeng es

Rapid Expansion of Advanced

Technologies Continued Growth of the Service Sector Scarcity of Operations Resources Social-Responsib ility Issues

Reality of Global Competition

Changing Nature of World Business

u Companies all over the
globe are aggressively exporting their products/services to the US Many US companies are targeting foreign markets to shore

up profits. The global economy that interconnects the economies of all nations has been termed the global village. One of the most important new markets is China.

International Companies
International firms search out opportunities for profits relatively unencumbered by national boundaries. Operations managers must coordinate geographically

dispersed operations.

Strategic Alliances

Strategic Alliances
11 A financial keiretsu links companies together with cross-holding of shares, sales and purchases within the group, and consultation. 11 A production

keiretsu is a web of interlocking relationships between a big manufacturer (Toyota) and its suppliers.

Production sharing means that a product might be designed and financed in one country, its materials produced in other countries, assembled in another country, and sold in yet

other countries.

Production Sharing
The country that is the highest-quality, lowest- cost producer for a particular activity would perform that portion of the production of the product.

11 Productivity grows more quickly (living standards can go up faster) 11 Global competition and cheap imports keep a lid on prices (inflation less likely to derail economic growth) 11 Open economy

spurs innovation (with fresh ideas from abroad) 11 Export jobs often pay more than other jobs

Pros and Cons of Globalization

11 US has more access to foreign investment (keeps interest rates low)

11 Millions of Americans have lost jobs due to imports or production shifts abroad 11 Most displaced workers find new jobs that pay less 11 Worke rs face

pay-cu ts deman ds from emplo yers 11 Service and white-collar jobs are increasingly vulnerable

Pros and Cons of Globalization

11 US employees lose their comparative advantage when companies build advanced factories abroad

Elements of Operations Strategy

Positioning the production system

Product/service plans Outsourcing plans Proce ss

and techn ology plans Strate gic alloca tion of resou rces Facility plans: capacity, location, and

layout

Positioning the Production System

Select the type of production processing system
11 Product focused 11 Process focused

Select the type of finished-good

s inventory policy
11 Produce-to-stock 11 Produce-to-order

Product/Service Plans
As a product is designed, all the detailed characteristics of the product are established

Each product characteristic directly affects how the product can be made.

How the product is made

determines the design of the production system.

Stages in a Product's Life Cycle

u Growth - sales
grow dramatically, marketing efforts intensify, capacity is expanded, profits begin. Maturity production focuses on high-volume,

efficiency, low costs; marketing focuses on competitive sales promotion; profits are at peak. Decline - declining sales and profit; product might be dropped or replaced.

Stages of a Product's Life Cycle

Dot-Matrix Printer

I
B&WTVi CD Player i Automobile i

Fix Machine Cell Phone ^ Video Recorder Color Copier

Maturity Decline

Introduction Growth

This strategy is being used more and more as companies strive to operate more efficiently. Outsourcing has many advantages and disadvantages. Companies try to determine the best level of outsourcing to achieve their operations &

business goals.
1

i More outsourcing requires a company to have less

Outsourcing Plans
equipment, fewer employees, and a smaller facility.

 A company might outsource any of the following manufacturin g related functions:

11 Designing the product 11 Purchasing the basic raw materials

11 Proces sing the subco mpone nts, subass emblie s, major assem blies, and finishe

d product

Outsourcing Plans
11 Distributing the product

Outsourcing Plans

Many companies even outso service functions such as:

11 Payroll i i Billing 11 Order processing 11 Developing/maintaining 11 Employee recruitment 11 Facility maintenance

Process and Technology Plans

The range of technologies available to produce products/servi ces is great and is continually changing.

Strategic Allocation of Resources

Some or all of these resources are limited. The resources must be allocated to products, services, projects, or profit opportunities in ways that maximize the

achievement of the operations objectives.

 The location of a new facility may need to be decided.

Facility Plans
The internal arrangement (layout) of workers, equipment, and functional areas within a facility affects the ability to provide the desired volume,

quality, and cost of products/services.