Introduction to Operations Management

Basic Concept of Production/Transformation

Introduction
Four Functional areas in a Business:- Marketing, Production, Finance and Personnel. Production is the basic function around which all other activities revolve like marketing, storing, personnel, research and development. Thus, very important that Production function must be managed efficiently and effectively. So, as to achieve organizational Goals.

Production
The process by which, raw materials and other inputs are converted into finished products. It involves step by step conversion of one form of materials into another to increase the utility of products or services.
Production and operations management (POM) is the management of an organizations production system. A production system takes inputs and converts them into outputs. The conversion process is the predominant activity of a production system. The primary concern of an operations manager is the activities of the conversion process.

Organizational Model
Finance Sales POM Marketing IB HRM

Engineering

MIS

Accounting

Importance
High Productivity (Controlling the machine and manpower
idle time, reducing wastage)

Higher Quality (meet the quality specifications) Reduction of Wastage (reasons, stages, corrective decisions) Shorter Manufacturing Lead Time (by reducing machine
setup time, making raw materials available in time in sufficient quality of right quantity, reducing rejection rate)

Plant Utilities (services such as lighting, ventilation) Safety and Health (protection of workers from the danger of
industrial accidents)

Better Customer Service (quick response to complaint,

replacement during guarantee period, repair and maintenance facility, quality products, after sale services)

Use of latest Technology (Automation)

Historical Background
The Industrial Revolution Scientific Management The Human Relations Movement Operations Research

The Industrial Revolution

The industrial revolution developed in England in the 1700s. The steam engine, invented by James Watt in 1764, largely replaced human and water power for factories. Adam Smiths The Wealth of Nations in 1776 quoted the economic benefits of the specialization of labor. Thus the late-1700s factories had not only machine power but also ways of planning and controlling the tasks of workers.

 The industrial revolution spread from England to other European countries and to the United Sates. The first great industry in the U.S. was the textile industry. In the 1800s the development of electricity further advanced the revolution. By the mid-1800s, the old cottage system of production had been replaced by the factory system.

Scientific Management
Frederick Taylor is known as the father of scientific management. His shop system employed these steps:
Each workers skill, strength, and learning ability were determined. Stopwatch studies were conducted to precisely set standard output per worker on each task. Material specifications, work methods, and routing sequences were used to organize the shop. Supervisors were carefully selected and trained. Incentive pay systems were initiated.

 In the 1920s, Ford Motor Companys operation embodied the key elements of scientific management:
identical product designs mass production low manufacturing costs automatic assembly lines specialization of labour

Human Relations
In the 1927-1932 period, researchers in the Hawthorne Studies realized that human factors were affecting production. Researchers and managers alike were recognizing that psychological and sociological factors affected production. From the work of behavioralists came a gradual change in the way managers thought about and treated workers.

The Service Revolution

The creation of services organizations accelerated sharply after World War II. Today, more than two-thirds of the U.S. workforce is employed in services. About two-thirds of U.S. GDP is from services. There is a huge trade surplus in services. Thus there is a growing need for service operations management.

Factors Affecting POM

Global Competition Quality, Customer Service, and Cost Challenges Computers and Advanced Production Technology Growth of Service Sector Scarcity of Production Resources Issues of Social Responsibility

Types Of Transformation Systems

Continuous or Flow Production

Intermittent Production

Mass Production Process Production

Project Production Job Production Batch Production

Continuous Production System

Continuous means something that operates constantly without any irregularities or frequent halts (Stops). In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are homogeneous along with the production process and sequence.

Features
Volume of output is large. Identical products are produced. Machines and equipments are arranged according to Product layout Pattern. Special purpose automatic machines are used. Fixed path material handling equipment is used due to the predetermined sequence of operations.

Following chart highlights the concept of a continuous production system.

 The Production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel.

Merits
As the processing of material is continuous there is no waiting period as each work is passed to the next stage immediately. Cost of materials handling are minimized. Quality of output is kept uniform. Any delay at any stage is automatically detected.

Demerits
Very rigid. If there is fault in one operation, the entire process is disturbed.

Suitability
Best suited to the organizations which intend to produce a limited variety of products on a large scale.

Continuous Production is of the following types

Mass Production Flows

Here, company produces different types of products on a large-scale and stock them in warehouses until they are demanded in the market. The goods are produced either with the help of a single operation or uses a series of operations.

Process Production Flows

Here, a single product is produced and stocked in warehouses until it is demanded in the market.

Features
There is a highly automated system for handling materials. Conveyors and automatic transfer machines are used to move the materials from one stage to another. Low-skilled labour and skilled technicians are required. There is very less work-in-progress because material flow is continuous. The production planning and scheduling can be decided well in advance. The full production system is designed to produce only one specific type of item

Types
Analytical Process of Production Synthetic Process of Production Assembling Process of Production

Analytical Process of Production

Raw Material is broken into different products
Finished Product Raw Material Coal Coaltar Finished Product Ammonical Liquor Finished Product

Synthetic Process of Production

Mixing of two or more materials to manufacture a product.
Soap Raw Material Finished Product

Raw material- Castic Soda, acids and perfumes

Assembling Process of Production

Two or more components are combined to manufacture a finished product.
Raw Material Parts

Finished Product

Automobiles, TV

Intermittent Production System

Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). In the intermittent production system, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible.

Following chart highlights the concept of an intermittent production system.

 The work of a goldsmith is purely based on the frequency of his customer's orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. Here, ornaments are not done on a continuous basis.

Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis.

The characteristics of an intermittent production system are listed as follows: The flow of production is not continuous. It is intermittent. Wide varieties of products are produced. The volume of production is small. General purpose machines are used. These machines can be used to produce different types of products. The sequence of operation goes on changing as per the design of the product. The quantity, size, shape, design, etc. of the product depends on the customer's orders

Types

Project production flows

Here, in project production flows, company accepts a single, complex order or contract. The order must be completed within a given period of time and at an estimated cost.

Features
The requirement of resources is not same (it varies). Generally, it slows down when the project is near its completion phase. Many agencies are involved in the project. Each agency performs specialized jobs. Here, coordination between agencies is important because all jobs are interrelated. Delays take place in completion of projects due to its complexity and massiveness. As routing and scheduling changes with fresh orders, proper inspection is required at each stage of production.

Job Production Flows

Here, in job production flows, company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer. The product is produced within a given period and at a fixed cost. This cost is fixed at the time of signing the contract

Features
The production of items takes place in small lots. Sometimes only one product is produced at one time. The items are manufactured strictly as per customer's specifications. Highly skilled labour is required to perform specialized jobs. There is disproportionate manufacturing cycle time. e.g. the time needed to design the product may be more than the manufacturing time.

Batch Production Flows

In batch production flows, the production schedule is decided according to specific orders or are based on the demand forecasts. Here, the production of items takes place in lots or batches. A product is divided into different jobs. All jobs of one batch of production must be completed before starting the next batch of production.

Features
The products are made and kept in stock until their demand arises in the market. General purpose machines and handling equipments, which can do many different jobs quickly are installed. This is because large varieties of items are to be produced. There is a possibility of large work-in-progress due to many reasons. There is a need for detailed production planning and control.

Difference