Operations Management Introduction

Systems perspective
Address all the issues pertaining to the transformation process that converts some INPUTS to OUTPUT that are useful and could fetch revenue to the organization. Service or Manufacturing process Conversion process is supported by relevant management functions like finance, marketing, HR, IT, etc.

Random Fluctuations

INPUT -----------Labour Material Capital

CONVERSION PROCESS ------------------------Process & product Design Operations Planning & Control Purchasing & Inventory Control Material & Capacity Planning

OUTPUT -------------Goods Services

Feedback

Quality Management

Maintenance Management

Process Improvement

Historical milestones growth & development of Operations Management

Manufacturing Management
1776: 1836 1900 1901 1915 Adam Smith Charles Babbage F.W. Taylor H.L. Gantt F.W. Harris Specialisation of Labour & Division of tasks Time Study, economic analysis of resources & facilities Scientific Management Scheduling charts EOQ model

 Production Management
1927 Elton Mayo 1930-1935 1947 G.B. Dandzig 1950 Charnes & Cooper Keeney & Raiffa 1960 Hawthorne Experiment Statistical Quality Control Digital Computer Linear Programming Mathematical Programming Utility Theory & Multi-Attribute Decision Analysis Organizational Behaviour

Operations Management
1970 1975 1980 W. Skinner J. Orlicky E.D. Deming J.M. Juran IT-Based Integrating Operations to Overall Strategy & Policy MRP TQM MRP-I, MRP-II, ERP

 Recent Developments
IT-Based Quality Integration Internet MRP-I, MRP-II, ERP TQM, Kaizen, Six Sigma SCM, Logistics e-business, e-commerce

Operations Management Functions

A. Strategic decisions
Product strategy: customized or standardized Process strategy: volume, variety, technology Location strategy: near supplier or near market Layout strategy: capacity, flow of material Human resource strategy: requirement, specialization Procurement strategy: single or multiple suppliers Integrated manufacturing systems: SCM, TQM

B. Tactical or Operational decisions

Production scheduling: stable or fluctuating production rate Inventory planning: when & how much to order, safety stock level Quality control: quality standards Maintenance & Reliability: repair, preventive maintenance

Manufacturing & Service Organization

Differences:
Manufacturing
Physical, durable product Output can be inventoried Low customer contact Long response time Regional, national, international markets Large facilities Capital intensive Quality easily measurable

Service
Intangible, perishable products Output cannot be inventoried High customer contact Short response time Local markets Small facilities Labour intensive Quality not easily measurable

 Similarities:
Concerned about quality, productivity & timely response to its customers Make choices about capacity, location, layout Has to deal with suppliers Has to make an estimate of demand Has to plan operations, schedules and resources Must balance capacity with demand by a careful choice of resources

Components of operations management

PRODUCT Type, Strategic positioning, Architecture

PROCESS Type, Technology, Physical & information flow

SUPPLY CHAIN Architecture, Physical & information flow, Coordination, delivery, inventory, information systems

Trends & Challenges in Operations Management

Productivity improvement
Resource utilization, efficiency oriented performance, Effectiveness Productivity, Partial & Total Productivity

Global competition Rapid Technological Change Ethical, Workforce diversity Environmental issues