OPERATIONS MANAGEMENT

MANAGEMENT:
We are all managers of our own lives. Practices of management are found in daily life of human
activities. Some types of management exist in every type of human organization. We are all affected
by good or bad management practices and we should therefore learn to recognize and influence the
quality of management that affects our lives.
Management makes human efforts more productive. It brings better equipments, plants, offices,
products, services and human relation to our society.

DEFINATION OF MANAGEMENT:
There are numerous definitions of management. The most common of them are giving below.
“The process of managing things with limited resources with best utilization is called management”.
OR
“Organization and coordination of the activities of an enterprise in accordance with certain policies
and in achievement of clearly defined objectives”
OR
“Management is the study of planning, organizing, leading and controlling”.
OR
“The attainment of organizational goals in an effective and efficient manner through planning,
organizing, leading and controlling organizational resources”.
There are two important ideas in this definition. One of them is the four function of management
and the other is attainment of organizational goals.
We must emphasize that management is an activity that converts disorganized human and physical
resources into useful and effective results.
Management is the most challenging, comprehensive, demanding, crucial and suitable of all human
activities.

FUNCTIONS OF MANAGEMENT:
There are four basic functions of management which are planning, organizing, leading and
controlling.

1. PLANNING:
Planning is the first function of management and may be define as “the process in which managers
define future goals and objectives for future organizational performances and the task and
resources needed to attain them”.
In planning we define future goals and objectives and decide that what we have to do, how we have
to do and when we have to do?
A lack of planning or poor planning can hurt an organization.
Three steps are involved in a good planning process.
 I. Which goal should be pursued?
II. How the goal should be attained?
III. How should resources be allocated?

2. ORGANIZING:
Organizing is a process used by managers and concerned with assignment of tasks, coordination of
task, controlling of task, grouping of tasks into departments, allocations of resources into
departments and distributation of authorities to job holders.
In organization managers will group people into departments according to the tasks performed.
Manager will also layout line of authorities and responsibilities for each members. Organizing
means coordinating activities and resources.

3. LEADING:
Leading is the process in which managers determine direction, state a clear vision for employees
and help employees to understand the roles they play in attaining goals. It is the use of influence to
motivate employees to achieve organizational goals.
Leading involves a manager using power, influence, vision, persuasion and communication skills.
Without the property of leadership one cannot be make a good manager.

4. CONTROLLING:
“In controlling managers evaluate how will the organization is achieving its goals and takes
corrective action to improve performance”.
“Monitoring employees activities, determining whether the organization is on target towards its
goals and making correction as necessary” its simply means how to control employees in an
organization. Managers will take action to increase performance as required.

Process of Management:
 Designing
 Planning
 Organizing
 Directing
 Controlling

What is Operations Management?

Operation management is an area of management concerned with overseeing Design, execution and
control of a firm’s operations that convert its resources into desired goods and service for
consumers and implement its business strategy.

Operations management refers to running the day-to-day operations of a given business.

Operations management refers to the administration of business practices to create the highest
level of efficiency possible within an organization. Operations management is concerned with
converting materials and labor into goods and services as efficiently as possible to maximize the
profit of an organization.

TYPES OF OPERATIONS:
1) Manufacturing
2) Supply
3) Transport
4) Service

MANUFACTURING.
The process in which machines, tools and labor are used for converting raw materials, components,
or parts into finished goods that meet a customer's expectations or specifications. Manufacturing
commonly employs a man-machine setup with division of labor in a large scale production.
Simply we can say that manufacturing is the process of converting physical materials into products.
We can also say that the process in which inputs (raw and other physical material) are converted
into outputs (goods and other products).

SUPPLY.
Change of ownership of physical goods is the main activity.

TRANSPORT:
Transport or transportation is the movement of goods or people from one place to another place
without any physical change taking place. Modes of transport include air, rail, road, water, cable,
pipeline, and space.

SERVICE
Changing the condition of the customer. The change could be emotional, physical, entertainment
etc.

Operation Management in non-profit organization

The term ‘not for profit’ is usually taken to mean both public sector organizations(such as central and
local government) and private non profit bodies( like social clubs and charities).

History.
 Manufacturing Management

 Production Management

And finally Operations Management

Key factors in development of OM:

 Globalization of the economy

 TQM

 Empowerment

 Technology

 Improving public services

 Improving service sector productivity

LECTURE 2:

Key Environmental Factors Affecting Operations Management:

1) Volume
2) Variation
3) Variety
4) Customer Contact
1. Volume:
How many products or services are made by the operation?
Volume refers to the number of times that an operation has to deliver a service of product. An
operation dealing with high volume should be designed to process the demands placed upon it
more speedily than the operation meeting lower volume.
The volume dimension has different implications whether it is in a high level or low.
In the low levels of volume, the company's operations have specific characteristics such as having
low repetition in the everyday procedures, each staff member performs more than one job in other
words they are multifunctional, less systemization and high unit costs.
In the high levels of volume, the company's operations have its own specific characteristics such
having high repeatability in the everyday procedures, there will be specialization, systemization,
and more capital intensive and low unit costs.
In MacDonald and in Chief Burger, customers come continuously and it is difficult for their
operation manager to handle it effectively. So high volume operation is difficult to arrange. Profit of
high volume operation is more but difficult to organize effectively.

2. Variation:
How much does the level of demand change over time? Variation describes the pattern of the
volume demands
Some time less work and some time more work refer to variation. In winter the volume of ice cream
lows down and in summer volume operation of ice cream goes to peak so this is actually called variation.
The variation in demand has many implications that can be seen from the company's characteristics. If
the company is in the high levels of demand variation then it has changing capacity, anticipation for
what the customer might demand, flexibility, in touch with demand and high unit cost. While in the
other side of the scale, the company would have a stable and predictable demand, routine, high
utilization of resources and low unit cost.

The operation manager should handle the variation effectively. He should fire the extra labor, should
invest less money on raw material if the volume is low
The operation manager should hire extra labor, invest more money for buying raw material and should
outsourced their work if the volume is getting more and more. By outsourced we means if you have
less product and demand is more so companies brings products from others and sell it on their own
name. E.g. sheren Mahal brought and buy sweets from other backers and then sell them on their own
name especially in Eidul-Fitr and in other special occasions when there is more demand.

3. Variety:
How many different types of products or services are made by the operation?
Variety refers to different types of services or product demand. Operation with more verities is
more challenging managerial task as compare to low verities. Those who have less verities can
spend their business easily and can handle it effectively.
The variety dimension has its own implication as well whether it is high or low. In the high side of
the scale there will be more flexibility in the procedure, complex, the company will make sure to
match customer needs and of course the unit cost will be high. In the other hand, when the
company is in the low side of the scale the procedures will be well defined, there will be routine,
standardization, and of course low unit cost.

4. CUSTOMER CONTACT:
The customer contact dimension is concerned with how much time the personnel of the operation
have to spend with their customer. It simply means how much time operation manager is spending
with customers.
The more those customers get involved therefore, the greater is the challenge to the planning and
control of the operation manager. It simply means that more the customers, difficult will be for the
operation manager to be in touch with their customers.

WHAT IS VALUE CHAIN?

A value chain is a chain of sequential activities that an enterprise performs to converts inputs into
value added outputs for its external customers. So simply we can say that chain of value added
activities is called value chain.
The goal is to analyze the activities through which firms can create a competitive advantage; it is
useful to model the firm as a chain of value-creating activities.
A value chain typically consists of

1) Inbound distribution or logistics

2) Manufacturing operations
3) Outbound distribution or logistics
4) Marketing and selling
5) After-sales service.
These activities are supported by
(6) Purchasing or procurement,
(7) Research and technology development,
(8) Human resource development,
(9) Corporate infrastructure.

The first five activities is called primary activities and are directly related with creating and
delivering product. The last four activities is called secondary or supporting activities and they are
not directly involved in production but increase effectiveness and efficiency.

Inbound logistics refers to the receiving and warehousing of raw materials and their distribution to
manufacturing as they are required. Manufacturing operation refers to the converting of raw
materials to finished products and services. Outbound logistics refers to the warehousing and
distribution of finished goods. Marketing and selling refers to the identification of customers needs
and the generation of sales. Services refer to the support of customers after the product and
services are sold to them. Purchasing or procurement refers to the purchasing inputs such as
materials, supplies and equipment. Technology development refers to support value creating –
activities. Human resource management refers to the recruiting of employees, training, hiring,
development and compensation. Corporate infrastructure refers to the organization structure,
control structure and company structure.

VALUE CHAIN ANALYSIS:

Value Chain Analysis is a useful tool for working out how you can create the greatest possible value
for your customers.
In business, we're paid to take raw inputs, and to "add value" to them by turning them into
something of worth to other people. The other peoples are the customers. And remember that your
customers aren't necessarily outside of your organization; they can be your bosses, your co-
workers, or the people who depend on you for what you do. The more value you create, the more
people will be prepared to pay a good price for your product or service, and the more they will they
keep on buying from you.
So how do you find out where you, your team or your company can create value? This is only
possible through value chain analysis. The “Value Chain Analysis" tool is useful. Value Chain
Analysis helps you identify the ways in which you create value for your customers, and then helps
you think through how you can maximize this value: whether through superb products, great
services, or jobs well done

The operations manager has to know how the operation’s activities fare under this calculation.
The ways in which the inbound logistics, Manufacturing operations, Outbound distribution or
logistics, Marketing and selling & After-sales service affect the value structure of operations have to
be analysed.
The operation manager should analysed the human resources management which is the main thing
and especially very much important in service industry. He should also analyse the technology
whether it will be sufficient or should installed mordent technology.
Company can also change operation manager from post to post to keep them motivated. Managers
are not there in the organizations for spending but for saving.

PERFORMANCE OBJECTIVES
If you keep them maintain so your performances as an operation manager will be good and your
out put will be more and more. These five performance objectives are given below.

 Quality
 Speed
 Dependability
 Flexibility
 Cost
 1. Quality
Quality is placed first in our list of performance objectives because many authorities believe
it to be the most important In manufacturing, a measure of excellence or a state of
being free from defects and deficiencies is called quality. , the other definition of quality is that a
product or service is as it is supposed to be.
Quality means performing the task to the required standards within the resources available.
Standard is given by the company which an operation manager has to get and maintain within the
resources available. e.g.
When bank provides loan to low level customers so in this case standard of the bank is to provide
or give loan to low level women and not to man and to high level women. Similarly we have our
own standards of universities while UK and USA has their own standard which they have to get.
Improving quality can be key in improving performance.

There are two important points to remember when reading the section on quality as a performance
objective.
 The external affect of good quality within in operations is that the customers who ‘consume’
the operations products and services will have less (or nothing) to complain about. And if they have
nothing to complain about they will (presumably) be happy with their products and services and
are more likely to consume them again. This brings in more revenue for the company (or clients
satisfaction in a not-for-profit organization).
 Inside the operation quality has a different affect. If conformance quality is high in all the
operations processes and activities very few mistakes will be being made. This generally means
that cost is saved, dependability increases and (although it is not mentioned explicitly in the
chapter) speed of response increases. This is because, if an operation is continually correcting
mistakes, it finds it difficult to respond quickly to customers requests. See the figure below.

2. Speed
Time taken by operation to deliver what is required of it.
Speed is a shorthand way of saying ‘Speed of response’. It means the time between an external or
internal customer requesting a product or service, and then getting it. Again, there are internal and
external affects.

 Externally speed is important because it helps to respond quickly to customers. Again, this
is usually viewed positively by customers who will be more likely to return with more business.
Sometimes also it is possible to charge higher prices when service is fast. The postal service in most
countries and most transportation and delivery services charge more for faster delivery, for
example.
 The internal affects of speed have much to do with cost reduction. The chapter identifies
two areas where speed reduces cost (reducing inventories and reducing risks). The examples used
are from manufacturing but the same thing applies to service operations. Usually, faster throughput
of information (or customers) will mean reduced costs. So, for example, processing passengers
quickly through the terminal gate at an airport can reduce the turn round time of the aircraft,
thereby increasing its utilization. What is not stressed in the chapter is the affect the fast
throughput can have on dependability. This is best thought of the other way round, ‘how is it
possible to be on time when the speed of internal throughput within an operation is slow?’ When
materials, or information, or customers ‘hangs around’ in a system for long periods (slow
throughput speed) there is more chance of them getting lost or damaged with a knock-on effect on
dependability. See the figure below.

3. Dependability:
This objective covers how reliable the organization must be in keeping its promises to its
customers.
Dependability means ‘being on time’. In other words, customers receive their products or services
on time. In practice, although this definition sounds simple, it can be difficult to measure. What
exactly is on time? Is it when the customer needed delivery of the product or service? Is it when
they expected delivery? Is it when they were promised delivery? Is it when they were promised
delivery the second time after it failed to be delivered the first time? Again, it has external and
internal affects.

 Externally (no matter how it is defined) dependability is generally regarded by customers

as a good thing. Certainly being late with delivery of goods and services can be a considerable
irritation to customers. Especially with business customers, dependability is a particularly
important criterion used to determine whether suppliers have their contracts renewed. So, again,
the external affects of this performance objective are to increase the chances of customers
returning with more business.
 Internally dependability has an effect on cost. The chapter identifies three ways in which
costs are affected – by saving time (and therefore money), by saving money directly, and by giving
an organization the stability which allows it to improve its efficiencies. What the chapter does not
stress is that highly dependable systems can help increase speed performance. Once more, think
about it the other way round – ‘how can an operation which is not dependable ever promise its
customers fast response?’ See the figure below.
 4. Flexibility:
How quickly the operation can change to meet new demands.

Operation manager must be flexible. He should not be laughing and in funny mood all the time but
he should also go for angry mood some time as well, when needed.
This is a more complex objective because we use the word ‘flexibility’ to mean so many different
things. The important point to remember is that flexibility always means ‘being able to change the
operation in some way’. The chapter identifies some of the different types of flexibility
(product/service flexibility, mix flexibility, volume flexibility, and delivery flexibility). It is
important to understand the difference between these different types of flexibility, but it is more
important to understand the affect flexibility can have on the operation. Guess what! There are
external and internal affects.

 Externally the different types of flexibility allow an operation to fit its products and services
to its customers in some way. Mix flexibility allows an operation to produce a wide variety of
products and services for its customers to choose from. Product/service flexibility allows it develop
new products and services incorporating new ideas which customers may find attractive. Volume
and delivery flexibility allow the operation to adjust its output levels and its delivery procedures in
order to cope with unexpected changes in how many products and services customers want, or
when they want them, or where they want them.
 Once again, there are several internal affects associated with this performance objective.
The chapter deals with the three most important, namely flexibility speeds up response, flexibility
saves time (and therefore money), and flexibility helps maintain dependability. See the figure
below.

5. Cost
Level of finance consumed by the operation is called cost.
When you have the ability to finance then everything is going well. Recession is a test for operation
manager. During recession most of the operation managers go for downsizing and some manager
handle it very easily.
"If managed properly, high quality, high speed, high dependability and high flexibility can not only
bring their own external rewards, they can also save the operation cost."