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

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 demonstrate Ability toProcesses differences between Manufacturing and Service of Product Service Design Discusstothe Processthe Concepts and SCM, TQM, JIT Tools and of Ability describe overall purpose in the Organisation Techniques and its Demonstrate understanding of Project Management of Planning and Control Processes

Operations Managemen Introduction

Customer Retention Key Issues

A Recent Survey says
90 % More thando notof unsatisfied customers complain times to get a It costs 5than it more to keep anew customer does current customer

What is Operations Management? Defined

Operations management (OM) is defined as the design, execution and improvement of the systems that create and deliver the firms primary products and services

Why Study Operations Management?

Systematic Approach to Org. Processes

Business Education

Operations Management

Career Opportunities

Cross-Functional Applications

What is a Transformation Process? Defined

A transformation process is defined as a user of resources to transform inputs into some desired outputs

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Operations as a Process
Input Transformation (Conversion) Process Output

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Operations as a Process
Input Transformation Fabrication Transformation Assembly Output

Fabrication: making the parts Assembly: putting the parts together

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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

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Transformations

Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications

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What is a Service and What is Goods?

If you drop it on your foot, it wont hurt you. (Goods or service?)

Services never include goods and goods never include services. (True or false?)

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OM in the Organization Chart

Finance Operations Operations Operations Operations Manager Manager Marketing

Plant Plant Manager Manager

Director Director

Manufacturing, Production control, Manufacturing, Production control, Quality assurance, Engineering, Quality assurance, Engineering, Purchasing, Maintenance, etc Purchasing, Maintenance, etc

Functional Integration
Financial Management Human Resource Management Marketing Management

Production/ Operations Management

Materials Management

Research and Development

Management Information System

Relation of Operations to its Environment

SOCIETY
Human EngineeringMarketing Resources

External Environment

Suppliers

Operations transformation system

Accounting Finance MIS

CUSTOMERS

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, recognition of job achieved Motivate through tangible Reward System Coordinate through use of forecasts and master schedule Recommend corrective actions/ necessary improvement on performance achieved Report, inform and communicate (through MIS Reports) Support employees in training programs Encourage suggestion schemes Facilitate people involvement/ empowerment

Coordinating

Training and development

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

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Core Services Performance Objectives

Quality

Flexibility

Operations Management

Speed

Price (or cost Reduction)

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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

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Value-Added Service Categories

Problem Solving

Information

Operations Management

Sales Support

Field Support

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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.

Historical Evolution of Operations Management

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Scientific Management F. W. Taylor The Principles of Scientific Management Moving Assembly Line In 1911- 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 Companys Hawthorne Plant (Chicago)

Operations Research Operations Research teams formed in military operations to smoothen the complex logistics issues (USA & Europe)

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Historical Development of OM

JIT and TQC Manufacturing Strategy Paradigm Service Quality and Productivity Total Quality Management and Quality
Certification

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Historical Development of OM (contd)

Business Process Reengineering Supply Chain Management Electronic Commerce

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Current Issues in OM

Coordinate the relationships between

mutually supportive but separate organizations. and distribution networks. services

Optimizing global supplier, production, Increased co-production of goods and

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Current Issues in OM (contd)

Managing the customers

experience during the service encounter operations as a significant competitive weapon

Raising the awareness of

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

Answer: e. All of the above

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Question Bowl
In the Input-Transformation-Output Relationship, a typical input for a Department Store is which of the following? a. Displays b. Stocks of goods c. Sales clerks d. All of the above e. None of the above

Answer: e. None of the above (The above are considered Resources of a department store. The correct answer is Shoppers.)

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Question Bowl
In which of the following decades did the concept of quality control originate? a. 1920s b. 1930s c. 1940s Answer: b. 1930s (Tools such d. 1950s as sampling inspection and e. 1970s

statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)