Operations Management

Unit - I

EVALUATION AND FEEDBACK SYSTEM MINOR EXAMINATION PRESENTATION MINOR PROJECT ATTENDANCE TOTAL : 15 : 05 : 10 : 10 : 40

SUGGESTED BOOKS FOR STUDY

Aswathappa & Shridhara Bhat Production and Operations Management R.Panneerselvam Production and Operations Management Mahadevan B. Operations Management : Theory & Practice Chase, Jacobs and Aquilano Operations Management for Competitive Advantage

UNIT I INTRODUCTION AND SCOPE OF OPERATIONS MANAGEMENT [u.k] OPERATIONS MANAGEMENT : THE TRADITIONAL VIEW PERCEIVES OPERATIONS MANAGEMENT AS A SYSTEMATIC APPROACH THAT IS INVOLVED WITH THE MANUFACTURE OF GOODS AND SERVICES. THE MODERN VIEW PERCEIVES OPERATIONS MANAGEMENT AS A SYSTEM DESIGNED TO DELIVER VALUE. TRANSFORMATION APPROACH : OM IS THE BUSINESS FUNCTION THAT MANAGES THAT PART OF THE BUSINESS WHICH TRANSFORMS RAW MATERIALS AND HUMAN INPUTS INTO GOODS AND SERVICES OF HIGHER VALUE.

INPUTS

PROCESS

OUTPUT PERFORMANCE MEASUREMENT

Fig. Operations Management as a Transformation Process

UNIT-I SCOPE OF OPERATIONS MANAGEMENT : OM HAS A NUMBER OF FUNCTIONS TO CARRY OUT THE TRANSFORMATION PROCESS. SOME OF THE FUNCTIONS CAN BE MENTIONED WITH RESPECT TO FOLLOWING : PRODUCT - OM TO ENSURE THAT PRODUCT IS MANUFACTURED AS PER SPECIFICATION AND PLAN. PLANT PLANT AND EQUIPMENT ARE REQD. FOR MANUFACTURING PRODUCT. OM IS TO CONSIDER THAT PLANT MEET SPECIFICATION AND PRODUCTION REQUIREMENT. PROCESS MANY WAYS TO MANUFACTURE A PRODUCT. OM TO CHOOSE BEST WAY. PROGRAM - THE PRODUCTION PROGRAM ENSURES THAT THE SCHEDULE OF PRODUCTION IS MET. PEOPLE OM TO ENSURE SKILLED AND MOTIVATED WORKERS ARE AVAILABLE FOR THE JOB.

UNIT-I Historical Evolution of Operations Management [C, J, A] Table : Historical Summary of OM

Year 1910s Concept Principles of scientific management
Industrial Psychology

Tool Time-study and Work-study concepts

Motion study

Originator Frederick W.Taylor

Moving assembly line

Economic lot size 1930s Quality Control

Activity scheduling chart

EOQ applied to inventory control Sampling, inspection & statistical tables for quality control Activity sampling for work analysis
Simplex method of linear programming

Frank & Lillian Gilbreth Henry Ford & Henry L.Gantt F.W.Harris Walter Shewhart, H.F.Dodge, and H.G.Romig Elton Mayo & L.H.C.Tippett
Operations Research Group(England) and George B.Dantzig

Studies of worker motivation

1940s Multidisciplinary team Approaches to complex system problem

UNIT-I
Year
1950 1960s

Concept

Tool

Originator
Many researchers in U.S.A. & Western Europe.

Extensive development Simulation, Waiting-line of operations research theory, decision theory, tools mathematical programming, project scheduling techniques of PERT & CPM

1970s

Widespread use of computers in business

Shop scheduling, Inventory control, forecasting, project management, and MRP.

Led by Computer manufacturers (particularly IBM); Joseph Orlicky & Oliver Wright were the major MRP innovators

UNIT-I

Year
1980s

Concept
JIT, TQC & Factory Automation

Tools
Kanban, Poka-yokes, CAD/CAM Robots etc.

Originator
Tai-Ichi Ohno of Toyota Motors (Japan), W.E.Deming and J.M.Juran and Engineering disciplines (United States, Germany, and Japan)

Synchronous manufacturing
1990s Total Quality Management

Bottleneck analysis, Theory of constraints

ISO 9000, Quality function development, Value & Concurrent Engineering

Eliyahu M. Goldratt
National Institute of Standards & Technology, American Society of Quality Control & ISO Michael Hammer & major consulting firms(USA)

Business Process Reengineering

Radical change paradigm

UNIT-I
Year 1990s Concept Electronic Enterprise Tool Internet, World Wide Web Originator US Govt., Netscape Communication Corporation, and Microsoft Corporation
SAP (Germany), Oracle(USA) Amazon, eBay, American Online, Yahoo

Supply chain management 2000s E-Commerce

SAP/R3, Client /Server software Internet, World Wide Web

UNIT-I

VALUE DRIVEN APPROACH [u.k] BUSINESSES ARE ORGANIZED NOT ON THE BASIS OF BUSINESS FUNCTIONS, BUT ON THE BASIS OF BUSINESS PROCESSES SO AS TO PROVIDE GREATER VALUE TO CUSTOMERS BY PROVIDING FAST RESPONSES AND EXCEPTIONAL SERVICES. Table1.3 : Core Process Model
Supporting Business Processes Determine Customer Monitor Needs competitive environment Provide after sales service Measure customer satisfaction Understand Customers, Market Segments & the competitive environment

Core Processes

Develop product strategy

Evaluate product Create new Build & test concept product prototypes design or product improvement

Develop new products or product improvements

UNIT-I Table 1.3 : Core process model

Supporting Business Processes Secure Processes & Materials to satisfy demand Manage Strategic Planning Processes Operations Planning & Control Processes Manage Human Resources Manage Product Transformation Processes Manage Information Systems Manage Business Logistics Manage the supply chain process

Core Processes

Manage Financial Resources

Enterprise Management & Business Support Activities

UNIT I THE VALUE CHAIN - THE VALUE CHAIN CONCEPT WAS DEVELOPED BY MICHAEL PORTER. OM DESIGNS AND MANAGES THE VALUE CHAIN FOR MANUFACTURING GOODS AND DELIVERING SERVICES. THE VALUE CHAIN IS MADE UP OF ALL ENTITIES THAT PERTICIPATE IN THE PRODUCTION OF PRODUCT OR SERVICE : SUPPLIER, PURCHASER, TRANSPORTER, WAREHOUSE, CUSTOMER SUPPORT, WORK SYSTEM EACH ENTITY ADDS VALUE TO PRODUCT OR SERVICE. IN THE VALUE CHAIN CONCEPTUAL FRAMEWORK, AS SHOWN IN FIGURE, SOME BUSINESS ACTIVITIES ARE PRIMARY PROCESSES; OTHERS ARE SUPPORT PROCESSES. THIS FRAMEWORK CAN HIGHLIGHT WHERE COMPETITIVE STRATEGIES CAN BEST BE APPLIED IN A BUSINESS. VALUE CHAIN MODEL NEXT PAGE

UNIT I
FIG THE VALUE CHAIN OF A FIRM
ADMINISTRATIVE COORDINATION & SUPPORT SERVICES COLLABORATIVE WORKFLOW INTRANET SUPPORT PROCESS HUMAN RESOURCE MANAGEMENT EMPLOYEE BENEFITS INTRANETS TECHNOLOGY DEVELOPMENT PRODUCT DEVELOPMENT EXTRANET WITH

PARTNERS

PROCUREMENT OF RESOURCES e-COMMERCE WEB PORTALS FOR SUPPLIERS INBOUND LOGISTICS PRIMARY BUSINESS PROCESS OPERATIONS OUTBOUND LOGISTICS MARKETING & SALES CUSTOMER SERVICE COMPETIIVE ADVANTAGE

AUTOMATED JUST-IN-TIME WAREHOUSING

COMPUTER AIDED FLEXIBLE MANUFACTURING

ONLINE POINT OF SALE AND ORDER PROCESSING

TARGETTED MARKETING

CUSTOMER RELATIONSHIP MANAGEMENT

UNIT I

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM IS CONFIGURED AROUND THREE AREAS AS UNDER : FRONT OFFICE OPERATIONS - DIRECT INTERACTION WITH CUSTOMERS THROUGH FACE TO FACE MEETINGS, PHONE CALLS, E-MAIL ETC. CAPTURING QUERIES, REQUESTS, AND PROBLEMS RAISED BY THE CUSTOMER AND SENDING THEM TO BACK OFFICE. BACK OFFICE OPERATIONS - INTERFACING WITH FRONT OFFICE AND CONDUCT OPERATIONS OF PLANNING, MARKETING, ADVERTISING, FINANCE, MANUFACTURING, MAINTENANCE, BILLING ETC. SOLVING QUERIES AND PROBLEMS. BUSINESS RELATIONSHIPS - INTERACTION WITH OTHER COMPANIES AND PARTNERS, SUCH AS SUPPLIERS/VENDORS AND RETAIL OUTLETS/DISTRIBUTORS WHO PROVIDE INFORMATION AND ACTION SUPPORT TO SOLVE CUSTOMER ISSUES, PROBLEMS AND QUERIES.

UNIT-I SYSTEMs PERSPECTIVE OF OPERATION MANAGEMENT [m] A SYSTEMS PERSPECTIVE FACILITATES A COMPREHENSIVE UNDERSTANDING OF THE VARIOUS ASPECTS OF OPERATIONS MANAGEMENT. A SYSTEMS PERSPECTIVE ESSENTIALLY INVOLVES IDENTIFYING THE INPUT, THE OUTPUT, AND THE PROCESSING AND THE FEEDBACK MECHANISMS IN A SYSTEM. THE FIG.1.5 PRESENT A SYSTEMS PERSPECTIVE OF THE OPERATIONS MANAGEMENT FUNCTION. THE BASIC INPUTS IN AN OPERATING SYSTEM ARE LABOUR, MATERIALS, AND CAPITAL. PROCESSING INCLUDES THE VARIOUS ACTIVITIES THAT AN OPERATING SYSTEM UNDERTAKES TO CONVERT THE RAW MATERIALS INTO USEFUL PRODUCTS FOR CUSTOMERS. PRODUCT AND PROCESS DESIGNS ARE AN INTEGRAL PART OF THE CONVERSION PROCESS. ONCE THE PRODUCT & PROCESS DESIGNS ARE FINALIZED, AN OPERATIONS SYSTEM MUST FOCUS ON ENSURING THAT THE DEMAND FOR PRODUCTS AND SERVICES IS MET. OUTPUT OF AN OPERATIONS SYSTEM CONSISTS OF GOODS & SERVICES.

UNIT-I

Forecasting Fig.1.5 Operations management : a system perspective

Output

Input

Labour Material Capital

Quality management

Maintenance management

Process improvement

FEEDBACK

Processing : - Process & product design - Purchasing & inventory control - Operations planning & control - Material and capacity planning

Goods Services

UNIT-I SERVICES FROM AN OPERATIONS MANAGEMENT PERSPECTIVE : INTENGIBILITY - SERVICES DIFFER FROM MANUFACTURING WITH RESPECT TO TANGIBILITY. SERVICES ARE EXPERIENCE OTHER THAN OBJECTS, THEY CAN NOT BE TOUCHED, TESTED OR FELT AS IN THE CASE OF OBJECTS. HETEROGENEITY - HIGH DEGREE OF HETEROGENEITY IS ASSOCIATED WITH SERVICES. IT IS LIKELY THAT NO TWO SERVICES ARE EXACTLY ALIKE. A DENTIST ATTENDING TO TWO CONSECUTIVE PATIENTS HAVING IDENTICAL AILMENTS MAY PROVIDE MORE OR LESS THE SAME TYPE OF SERVICE. NEVERTHELESS, THE TWO PATIENTS MAY HAVE DIFFERENT PERCEPTIONS OF THE QUALITY OF SERVICE AND MAY HAVE DIFFERENT SATISFACTION LEVELS. SIMULTANEOUS PRODUCTION & CONSUMPTION - SERVICES OCCUR IN THE PRESENCE OF THE CUSTOMER. IN THE EXAMPLE OF DENTIST AND THE PATIENT, THE DOCTOR AND THE PATIENT ARE IN THE SYSTEM TOGETHER TO PRODUCE AND CONSUME THE SERVICE.THIS HOLDS FOR EDUCATION, ENTERTAINMENT, TRAVEL, AND HOTEL SERVICES. PERISHABILITY - SERVICES ARE PERISHABLE. THIS IMPLIES THAT THEY CAN NOT BE INVENTORIED.THIRTY MINUTES OF DOCTORs CONSULTING EXPERTISE TODAY CANNOT BE STORED FOR FUTURE USE. POSSIBILITY OF STORING SUPPLY AND USING IT AT A LATER TIME IS VERY COMMON IN MANUFACTURING SYSTEM

UNIT-I

A Comparison of manufacturing and service organizations :

Manufacturing organizations Differences : 1.Physical, durable products 2.Output can be inventoried 3.Low customer contact 4.Long response time 5.Regional, national, international markets 6.Large facilities 7.Capital intensive 8.Quality easily measured Service organizations 1.Intangible, perishable product 2.Output can not be inventoried 3.High customer contact 4.Short response time 5.Local markets 6.Small facilities 7.Labour intensive 8.Quality not easily measured

Similarities : Is concerned about quality, productivity and timely response to its customers Has to plan operations, schedules and resources Must make choices about capacity, location and layout Has suppliers to deal with Has to make an estimate of demand

UNIT-I RELATIONSHIP OF OPERATIONS MANAGEMENT WITH OTHER FUNCTIONAL AREAS IRRESPECTIVE OF TYPE OF BUSINESS, EVERY ORGANIZATION HAS A FEW IMPORTANT ACTIVITIES : OPERATIONS, MARKETING, FINANCE, AND HUMAN RESOURCES MANAGEMENT. Fig. 1.3 The basic functions of an organization

Finance

Operations

Marketing

HRM

UNIT-I MARKETING FUNCTION - UNDERSTAND THE REQUIREMENT OF CUSTOMERS, CREATE A DEMAND FOR THE PRODUCT & SERVICES PRODUCED, MEETING CUSTOMERs REQUIREMENT BY DELIVERING RIGHT PRODUCTS & SERVICES TO CUSTOMERS AT RIGHT TIME. OPERATIONS FUCTION MARKETING FUNCTION MAKES AN ESTIMATE OF NEXT YEARs SALES. THIS INPUT FORMS THE BASIS FOR PRODUCTION PLANNING IN THE OPERATIONS AREA OF BUSINESS. FINANCE FUNCTION - DEPENDING ON THE PRODUCTION PLANS, PROCUREMENT PLANNING IS DONE WHICH LEAD TO A CERTAIN ESTIMATE OF THE FUND REQUIREMENT. THIS FORMS AN IMPORTANT INPUT FOR THE FINANCE FUNCTION. HRM FUNCTION - THE HRM FUNCTION INFLUENCE THE PRODUCTIVE CAPACITY OF LABOUR AVAILABLE IN REAL TIME. IN EVERY MANUFACTURING OR SERVICE ORGANIZATION, THE OPERATIONS FUNCTION FORMS THE CORE OF THE FIRM AS IT TRIGGERS SEVERAL ACTIVITIES IN OTHER FUNCTIONAL DOMAINS. FIG.1.4 ILLUSTRATES THE OPERATIONS FUNCTION AND ITS LINKAGES IN AN ORGANIZATION.

UNIT-I
FIG.1.4 OPERATIONS FUNCTION AND ITS LINKAGES IN AN ORGANIZATION

Customer Layer - Ultimate customer - Dealers - Retailers

Operations support layer - Marketing - Tooling - Planning - Material - Costing - Information techno - Quality logy - Maintenance - Design - Industrial engineering

Layer of innovation - Innovation strategy - Research & development

Core operations layer - Fabrication - Machining - Assembly - Testing - Service delivery system

Supplier layer - Sub-contractors - Suppliers - Other service providers

UNIT-I

OPERATIONS MANAGEMENT FUNCTIONS - THE IMPORTANT FUNCTIONS CAN BE UNDERSTOOD BY : 1. CATEGORIZING THEM UNDER DESIGN ISSUES AND CONTROL ISSUES, AS SHOWN IN TABLE 1.5; AND 2. CLASSIFYING THEM AS LONG TERM ISSUES & SHORT TERM ISSUES, BASED ON THE PLANNING HORIZON DESIGN VS. OPERATIONAL CONTROL ISSUE Table 1.5 : Operations management functions
Design issues
Product design and development

Operational control issues

Forecasting

Process design
Quality management Location and layout of facilities Capacity planning

Production planning and control

Supply chain management Maintenance management Continuous improvements of operations

UNIT-I RECENT TREND IN THE FIELD OF OPERATIONS MANAGEMENT SEVERAL DEVELOPMENTS THAT AFFECT OPERATIONS MANAGEMENT PRACTICES HAVE TAKEN PLACE DUE TO : ECONOMIC POLICIES IN NATIONAL AND INTERNATIONAL LEVEL 1. REDUCTION OF IMPORT TARIFFS ON A WIDE RANGE OF INDUSTRIAL GOODS. 2. REDUCTION OF CUSTOM DUTY OF SEVERAL ITEMS 3. SETTING UP OF NEW FACILITIES BY MNC BUSINESS PROCESS OUTSOURCING IS AN ARRANGEMENT BY WHICH SOME OF THE NON-CORE BUSINESS PROCESSES OF AN ORGANIZATION ARE CARRIED OUT BY THIRD PARTY ON BEHALF OF THE ORGANIZATION.

UNIT-I

BUSINESS PROCESS OUTSOURCING : THE THIRD PARTY IS RESPONSIBLE FOR PLANNING THE RESOURCES AND MANAGING VARIOUS OTHER ASPECTS OF THE BUSINESS PROCESS AND WILL HAVE A CONTRACTUAL OBLIGATION TO DELIVER THE GOODS AND SERVICES AS AGREED BETWEEN IT AND THE ORGANIZATION THAT OUTSOURCED THE ACTIVITY. THE KEY MOTIVATION FOR A FIRM TO OUTSOURCE SOME OF ITS PROCESSES STEMS FROM THREE FACTORS : COST, CAPACITY AND CORE COMPETENCY. COLLABORATIVE COMMERCE THROUGH INTERNET 1. TRADING PARTNERS CAN EXCHANGE VITAL PRODUCTION AND OTHER TECHNICAL INFORMATION FOR MUTUAL BENEFIT. 2. REQUESTS FOR QUOTATIONS AND REQUESTS FOR PROPOSALS CAN BE SUBMITTED THROUGH THE WEB. 3. MANY ORGANIZATIONS STARTED USING WEB FOR SUPPLY CHAIN MANAGEMENT. 4. COLLABORATIVE COMMERCE FIND EXTENSIVE USE IN DESIGN AND NEW PRODUCT DEVELOPMENT.

UNIT-I

OPERATIONS STRATEGY OPERATIONS STRATEGY IS THE PROCESS OF MAKING KEY DECISIONS REGARDING THE OPERATIONS FUNCTION OF AN ORGANIZATION ON THE BASIS OF INPUTS FROM ITS OVERALL CORPORATE STRATEGY. STRATEGIC DECISIONS INCLUDE : THE EXTENT OF CAPACITY TO BE BUILT INTO THE SYSTEM THE TYPE OF PROCESS & MANUFACTURING TECHNOLOGY TO BE USED THE NATURE OF PRODUCTS TO BE MANUFACTURED THE TYPE OF SUPPLY CHAIN TO BE CONFIGURED A STRATEGIC PLANNING EXERCISE ENABLES AN ORGANIZATION TO RESPOND TO THE NEEDS OF THE MARKET IN THE MOST EFFECTIVE MANNER BY : IDENTIFYING PRODUCTS AND SERVICES THAT ARE LIKELY TO SUCCEED IN THE MARKET PLACE ALIGNING THE RESOURCES AND ACTIVITIES IN THE ORGANIZATION TO DELIVER THESE PRODUCTS AND SERVICES

UNIT-I LONG TERM VS. SHORT TERM ISSUE

TYPE OF ISSUE PLANNING HORIZON EXAMPLES

LONG TERM ISSUE

5 TO 10 YRS.

1. DECISION TO LOCATE A MANUFACTURING OR SERVICE DELIVERY FACILITY. 2. PRODUCT LINE DECISION OF A PIPE MILL 3. CAPACITY AUGMENTATION DECISION OF A FACTORY 4. DESIGN DECISION OF PARTICULAR TYPE OF CAR
1. SALES TARGET FOR A PARTICULAR PRODUCT 2. DECISION ON ADVERTISING CAMPAIGN FOR A PARTICULAR PRODUCT

SHORT TERM ISSUE

LESS THAN 3 YRS.

UNIT-I

THE STRATEGY FORMULATION PROCESS : 1. UNDERSTANDING THE COMPETITIVE DYNAMICS AT THE MARKET PLACE. 2.IDENTIFYING ORDER-WINNING AND ORDER-QUALIFYING ATTRIBUTES. 3.DECIDING ON STRATEGIC OPTIONS FOR SUSTAINING COMPETITIVE ADVANTAGE. 4.MATCHING THE STRATEGIC OPTIONS WITH THE RESOURCES, CONSTRAINTS, VALUES, AND OBJECTIVES OF THE ORGANIZATION TO ARRIVE AT THE OVERALL CORPORATE STRATEGY. 5.DEVELOPING THE OPERATIONS STRATEGY ON THE BASIS OF THE CORPORATE STRATEGY. 6.USING THE OPERATIONS STRATEGY TO SELECT APPROPRIATE OPTIONS FOR CONFIGURING AN OPERATIONS SYSTEM AND ESTABLISHING RELEVANT MEASURES FOR OPERATIONAL EXCELLENCE.

UNIT-I OPTIONS FOR STRATEGIC DECISIONS IN OPERATIONS : Fig.2.3 Options for strategic decisions in operations
Product portfolio Process

Strategic options for operations

Supply chain

Technology

Capacity

UNIT-I PRODUCT PORTFOLIO - MEANS DECISIONS REGARDING THE PRODUCTS THAT THE ORGANIZATION WANTS TO PRODUCE, THE NUMBER OF VARIATIONS IN EACH PRODUCT LINE, AND THE EXTENT OF CUSTOMIZATION THAT IT CAN OFFER TO ITS CUSTOMERS. PROCESS DESIGN - PROCESS CHOICES LEAD TO THREE TYPES OF FLOWS : CONTINUOUS STREAMLINED FLOW, INTERMITTENT OR BATCH FLOW, AND JUMBLED FLOW. SUPPLY CHAIN - IT IS THE NETWORK OF ENTITIES SUPPLYING COMPONENTS, RAW MATERIALS, AS WELL AS THOSE DISTRIBUTING THE FINISHED GOODS AND SERVICES OF THE ORGANIZATION TO ITS CUSTOMERS THROUGH ALTERNATIVE CHANNELS. FUNDAMENTALLY TWO TYPES OF SUPPLY CHAINS CAN BE CONFIGURED : EFFICIENT SUPPLY CHAIN - DESIGNED WITH THE MAIN OBJECTIVE OF OVERALL SUPPLY-CHAIN COST MINIMIZATION AND BETTER ASSET UTILIZATION. RESPONSIVE SUPPLY CHAIN - THE KEY OBJECTIVE IS TO DEVELOP A CAPABILITY TO RESPOND FAST TO MARKET REQUIREMENTS. TECHNOLOGY - TECHNOLOGICAL ADVANCEMENTS IN RECENT YEARS HAVE OFFERED NEW OPPORTUNITIES FOR CREATING COMPETITIVE ADVANTAGE.

UNIT-I MANUFACTURING TECHNOLOGY CAN PROVIDE FOLLOWING UNIQUE ADVANTAGES : INCREASED MACHINE UTILIZATION : Computer based operation of systems has enabled high machine utilization in systems. SCHEDULING FLEXIBILITY : Technology often enhances flexibility in scheduling various work orders as it enables organizations to react to changes swiftly. Therefore, organizations can use technology to provide better customer service. EASE OF ENGINEERING CHANGES : Changes in engineering design and process plans can be easily accommodated through the use of technology-based manufacturing and process designs. EASE OF EXPANSION : Technology also provides volume flexibility to the organization and makes it much easier to expand in response to a growing market. REDUCED MANUFACTURING LEAD TIME : Advanced technological features make it possible to cut down lead time. LOWER IN-PROCESS INVENTORY : Several of the benefits discussed here directly translate to lower work-in process inventory and reduced manufacturing cost.

UNIT-I LONG TERM VS. SHORT TERM ISSUE

TYPE OF ISSUE PLANNING HORIZON EXAMPLES

LONG TERM ISSUE

5 TO 10 YRS.

1. DECISION TO LOCATE A MANUFACTURING OR SERVICE DELIVERY FACILITY. 2. PRODUCT LINE DECISION OF A PIPE MILL 3. CAPACITY AUGMENTATION DECISION OF A FACTORY 4. DESIGN DECISION OF PARTICULAR TYPE OF CAR
1. SALES TARGET FOR A PARTICULAR PRODUCT 2. DECISION ON ADVERTISING CAMPAIGN FOR A PARTICULAR PRODUCT

SHORT TERM ISSUE

LESS THAN 3 YRS.

UNIT-I PRODUCTION MANAGEMENT AND OPERATIONS MANAGEMENT PRODUCTION MANAGEMENT MORE USED AS A SYSTEM WHERE TANGIBLE GOODS ARE PRODUCED OPERATIONS MANAGEMENT ARE USED WHERE VARIOUS INPUTS ARE TRANSFORMED INTO INTENGIBLE SERVICES. HENCE OM WILL COVER ORGANIZATIONS LIKE BANKS, AIRLINES, SUPER BAZARS, TEACHING INSTITUTIONS, LIBRARIES ETC. NOW A DAYS, THE TERM OM INCLUDES PM AND PM PRECEDES OM IN THE HISTORICAL GROWTH OF THE SUBJECT. PRODUCTION MANAGEMENT IN A FACTORY INVOLVES : 1. PLANNING - MANPOWER, EQUIPMENT & MONEY 2.ORGANIZING HRM, EQPT. & MACHINERY OTHER INFRASTUCTURE FACILITIES 3. DIRECTING - CHOOSING A METHOD FROM VARIOUS METHODS FOR DIRECTING EFFORTS IN ORGANIZATION 4. CONTROLLING PRODUCTION PROCESS

UNIT-I PRODUCTION SYSTEM MODEL

INPUTS ENVIRONMENT : 1.Legel/Political 2.Social, Economic, Technological MARKET : 1.Competition 2.Product Information 3.Customer desire PRIMARY RESOURCES: 1.Materials 2.People 3.Capital 4.Utilities CONVERSION SUB-SYSTEM OUTPUT

PHYSICAL (Manufacturing) LOCAL SERVICES (Transportation) EXCHANGE SERVICES (Retailing/Whole selling) STORAGE SERVICES (Warehousing) GOVT. SERVICES (Local, State, Central)

GOODS OR SERVICES Feedback information

CONTROL SUB-SYSTEM

UNIT-I

UNIT-I

QUALITY IS BROADLY DEFINED AS THE EXTENT TO WHICH A PRODUCT OR SERVICE IS DELIVERED CONFORMING TO WHAT THE CUSTOMER HAS BEEN LED TO EXPECT. SPEED OF AN ORGANIZATION IS OFTEN MEASURED IN TWO DIMENSIONS : HOW LONG A CUSTOMER MUST WAIT FOR THE PRODUCT ONCE IT IS REQUESTED HOW LONG IT TAKES TO DESIGN, DEVELOP, AND INTRODUCE NEW PRODUCTS. TIMELINESS IS THE ABILITY OF A FIRM TO GET THE RIGHT PRODUCT TO TARGETED CUSTOMERS AT THE MOST DESIRABLE TIME. FLEXIBILITY IS THE INPUT TO THE VALUE EQUATION RELATING TO THE ABILITY OF THE OPERATIONS MANAGEMENT SYSTEM TO GIVE THE CUSTOMER THE DESIRED PRODUCT. DIFFERENCE OF OM WITH OR, MS & IE OM IS A FIELD OF MANAGEMENT OPERATION RESEARCH AND MANAGEMENT SCIENCE ARE THE APPLICATION OF QUANTITATIVE METHODS TO DECISION MAKING INDUSTRIAL ENGG. IS AN ENGINEERING DISCIPLINE. THE OPERATION MANAGERs ROLE TO ACCOMPLISH THE DEPARTMENTs MISSION AS BEST AS POSSIBLE DEPARTMENTs MISSION CAN BE SEGREGATED INTO THREE DECISION AREAS : 1. STRUCTURAL DECISION 2. INFRASTRUCTURAL DECISIONS 3. ORGANISATIONAL DECISIONS

UNIT-I

1. STRUCTURAL DECISIONS LONG-TERM DECISIONS THAT REQUIRE SUBSTANTIAL CAPITAL INVESTMENT AND ARE DIFFICULT TO REVERSE ONCE THEY ARE TAKEN. EXAMPLES : DECIDING ON SIZE OF FACILITIES AND LOCATION OF FACILITY , CHOOSING TYPE OF PROCESSING EQUIPMENT FOR PRODUCTION 2. INFRASTRUCTURAL DECISIONS - TYPICALLY TACTICAL IN NATURE AND FACILITATES THE MANAGEMENT TO DEAL WITH DAY-TO-DAY ISSUE. EXAMPLE : MACHINING LOADING, CHANGING OF DIE IN FORGING UNIT, ASSIGNING PARTICULAR JOB TO A WORKER IN THE PLANT. THE OPERATIONS MANAGER IS ALSO THE SUPPLY CHAIN MANAGER/COORDINATOR. IN A MANUFACTURING FIRM, THEY MUST TAKE CARE OF ENTIRE FLOW OF GOODS AND INFORMATIONS WITHIN THE SUPPLY CHAIN. THE OPERATIONS MANAGER HAS ALSO DUTIES THAT INVOLVE CROSSFUNCTIONAL PARTICIPATION WITH THE BUSINESS PROCESSES INNOVATION PROCESS, HRM, ACCOUNTING, MARKETING, R&D ETC.

UNIT-I

Table 1.4 : Decision areas of Operations Manager

Category Decision area
Products (What?)

Typical questions

Contemporary challenges

Structure

Do we produce How do we design standard or custom products & services products and services? that are easy to Do we make to order or make? make to stock? How do we coordinate design teams that are scattered across the country? What kind of equipment should we use? How much of the processes should be automated? How should processes be configured? How do we exploit new IT developments such as internet for rapid & flexible response to customer needs?

Process (How?)

UNIT-I
Category Decision Area Typical Questions How much is needed? What type? When should capacity be increased or decreased? Contemporary Challenges How do we use flexible capacity options (such as temporary workers, economies of scope for competitive advantage?) Structure Capacity (How much?)

Facilities (Where?)

Where are they located? What products should be produced in each?

How do we prevent defects and errors? How do we improve products & processes?
Should scheduling be centralized or decentralized ? How do we prioritize work and / or customer orders?

How do we manage and exploit global opportunities for locating facilities ?

How can we better learn from customers? How can we improve quality to world class standards ?
How do we use available cost & financial information in scheduling? How do we integrate ERP systems to operations?

Infra Quality structure Management (How to improve?)

Schedule management (When?)

UNIT-I
Category Infrastruc ture Decision Area Typical Questions Contemporary Challenges How do we manage the supply chain for increased value to the customer? What effect does the Internet have? Inventory and What products should supply chain we outsource ? management How many suppliers (How to acquire should we use ? & deliver ?)
Workforce and Productivity (Who?)

People & Organization

What skill level & How can we develop training should high performance employees have? work system? What types of How can we better align compensation and work systems with long reward systems are best? range plans and objectives? Is a hierarchical or teambased work structure better? Should we train in-house or outsource? What structures are best suited for operations in different countries? Should we flatten the organization? Lean manufacturing

Organization (What structure?)

UNIT-I

Category
People and Organization

Decision Area
Strategy (How to manage growth?)

Typical Questions

Contemporary Challenges

How to respond to How can we develop customers special a learning needs? organization in a What information do globalized we need to effectively environment? manage growth? How can we best look at the organization across functional boundaries?

TYPES OF PRODUCTION SYSTEMS Job Production: Here products are manufactured to meet the
requirements of a specific order.

Jumbled flow system - This occurs on account of non-standard and

complex flow patterns characteristic of certain manufacturing systems. The flow pattern is non-standard and complex because there are unique process designs for each and every customer order. Moreover, customer orders are typically for one-off item and organization can not benefit from any batch processing and repetitive manufacturing practices. In reality, two types of manufacturing systems have jumbled flow : project organization system and customized manufacturing system. Batch Production: It is the manufacture of number of identical products either to meet the specific order or to satisfy the demand. A Batch of particular item may be produced only once A Batch may be produced at irregular intervals as per customer order or when the need arises A Batch may also be produced periodically at known intervals

TYPES OF PRODUCTION SYSTEMS

Continuous Production: It is a specialized manufacturing system of identical products on which the machinery and equipment is fully engaged. It is normally associated with large quantities and high rate of demand.

Mass Production Flow Production

Mass production :
The mass production system in the discrete manufacturing industry is an example of continuous and streamlined flow in the manufacturing system. In a mass production system, the volume of production is very high and the number of variations in the final product is low. Therefore, it is possible to organize the entire process by dedicating the required manufacturing resources for each product variant and arranging the resources one after the other as per the manufacturing sequence. The manufacture of electrical components (such as switches), two-wheeler manufacture, healthcare products (such as disposable syringes) all are typical examples of high-volume production.

TYPES OF PRODUCTION SYSTEMS

Flow Production : Continuous Flow System : A continuous flow system is characterized by a streamlined flow of products in the operating system. In such systems, the conversion process begins with the input of raw material at one end. It progresses through the system in an orderly fashion to finally become finished goods. The production process is sequential and the required resources are organized in stages. Examples are manufacture of petrochemicals, steel, pharmaceuticals, cement and glass.

CASE STUDY

Analysing the case should take the following steps: Defining the issue(s) Analysing the case data Build-up cause and effect matrix Generation of alternatives Analysing and evaluating alternatives Selecting the preferred alternative Developing an implementation plan