Session 1 Introduction to Production Management, Nature and Scope, Interface with other Functions

Books 1) Operations management By Mahadevan 2) Production Operations management by Kanisha Bedi 3) Production Operations management by Chary 4) Production Operations management by Ashwathapa Bhat

Value-Added Process
The operations function involves the conversion of inputs into outputs
Value added
Inputs Land Labor Capital Transformation/ Conversion process
Feedback

Outputs Goods Services

Control
Feedback
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Feedback

What is Operations
Ops management will address the questions that the organisation faces in its choice of products and manufacturing technology, utilization of capacity , quality, costing and sourcing of raw materials and customer handling policies.

SCOPE Manufacturing, Service and Agriculture are components of the economy About 70 % of GDP is through manufacturing and services Growth is in manufacturing and services

MTR food - Fastest growing veg processed food company in india, market leader - In 2008 it had turnover of USD 20 million, growing at 30% pa - Provides authentic mean solutions to todays consumer - Product Portfolio: Processed foods, ready to eat, ready to cook, frozen, spices, and pickles - Employs about 800 people factory has 8 divisions each with modern manufacturing facilities. Makes use of technology derived from DFRL - -maintains consistency and quality standards - Food is packed in aluminum foils increases shelf life , autoclave process, - Scan through X ray - Large variety of packing material, for range of product and pack sizes. - Major challenge for them is forecasting the demand for food . Forecasting accuracy is important. Forecast is based on experience, seasonal variation and growth - New product development innovation new tastes /preferences and the capacity to translate them to final product - Planning and supply of raw material ingredients.

 An operations system is defined as one in which

several activities are performed to transform a set of inputs into useful output using a transformation process.

Operations Management is
a systematic approach to address all the issues pertaining to the transformation process that converts some inputs into output that are useful, and can fetch revenue to the operations system

Production Management Definition - 1

Planning, implementation, and control of industrial production processes to ensure smooth and efficient operation. Production management techniques are used in both manufacturing and service industries. Production management responsibilities include the traditional five M's: Men , Machines, Methods, Materials, and Money. The design, Operation and Control of systems for the manufacture and distribution of products

 Managers are expected to maintain an efficient production process with a workforce that can readily adapt to new equipment and schedules. Managers may use industrial engineering methods, such as time-and-motion studies, to design efficient work methods. The Managers are responsible for managing both physical (raw) materials and information materials (paperwork or electronic documentation). The production cycle requires that sales, financial, engineering, and planning departments exchange informationsuch as sales forecasts, inventory levels, and budgetsuntil detailed production orders are dispatched by a production-control division. Managers must also monitor operations to ensure that planned output levels, cost levels, and quality objectives are met.

Operations Management
Salient Aspects

A systematic approach using scientific tools & techniques and solution methodologies to analyse problems Addressing several issues varying in terms of time horizon, nature of decisions Addressing design & operational control issues in the transformation process Focusing on keeping costs to the minimum Developing a set of measures to assess performance of the system

A key functional area in an Organisation

Operations

Finance

Operations

Marketing

HRM

Manufacturing & Service

Similarities & Differences
Manufacturing Organisations Service Organisations Differences Physical durable product Intangible, perishable product Output can be inventoried Output cant be inventoried Low customer contact High customer contact Long response time Short response time Large facilities Capital intensive Quality easily measured Small facilities Labour intensive Quality not easily measured Similarities Is concerned about quality, productivity & timely response to its customers Must make choices about capacity, location, layout Has suppliers to deal with Has to plan its operations, schedules and resources Balance capacity with demand by a careful choice of resources Has to make an estimate of demand

Service Operations
Tangibility: Services are performances and actions rather than objects, therefore having poor tangibility Heterogeneity: High variability in the operation system performance Simultaneous Production & Consumption: Degree of customer contact is very high Perishability: Services cannot be inventoried as in the case of manufactured products

Service Manufacturing Continuum

Pure Product Pure Service
Ayurvedic Healing Treatment Legal/Tax Consulting Cyber Caf Telephone Booths Emergency Maintenance Services Facilities Maintenance High quality restaurant meal Fast food in a eat out joint Customised durable goods Fast moving commodities Vending Machines

Food Processing Industry

Inputs
Raw Vegetables Metal Sheets Water Energy Labor Building Equipment

Processing
Cleaning Making cans Cutting Cooking Packing Labeling

Outputs
Canned vegetables

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Hospital Process
Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories

Processing
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy patients

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Scope of Operations Management

Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities Supply chain management And more . . .

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Types of Operations
Table 1.4

Operations
Goods Producing Storage/Transportation

Examples
mining, construction , manufacturing, power generation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Retailing, wholesaling, banking, renting, leasing, library, loans Films, radio and television, concerts Newspapers, radio and television telephone, satellites

Exchange

Entertainment
Communication

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Operations Management
A systems Perspective
Forecasting

PROCESSING
Labour
Process & Product Design Operations Planning & Control Purchasing & Inventory Control Goods

OUTPUT

INPUT

Material

Capital

Material & Capacity Planning

Services

Quality Management

Maintenance Management

Process Improvement

Feedback

MANUFACTURING STRATEGIES
raw materials components semi finished
eng prod
prod

finished goods
prod

make-to-stock
s u p p l i e r

assemble-to-order make-to-order

engineer-to-order

c u s t o m e r

standard

customer driven

INDUSTRY CLASSIFICATION
EXTRACTIVE
MINING

TRANSFORMATIVE
* MACHINERY, CHEMICAL & PHARMA, METALS, TEXTILES * MANUFATURING, CONSTRUCTION, FOOD PRODUCTS, UTILITIES

DISTRIBUTIVE
* TRANSPORTATION & STORAGE * COMMUNICATIONS * WHOLESALE & RETAIL TRADE * POSTAL & COURIER SERVICES

SERVICES
* BANKING/ CREDIT/ FINANTIAL SERVICES, INSURANCE, LEGAL * ACCOUNTING/ BOOK-KEEPING, ENGG./ ARCH, MGT. CONSULTANCY *HOTELS/LODGING, LAUNDRY, REPAIRS and MAINT, ENTERTAINMENT

*MEDICAL/ HEALTH, EDUCATION, WELFARE, RELIGIOUS

Resources of an Enterprise
Machines Methods Materials Men Money

------------------------------------- Time Information

Key Decisions of Operations Managers

What What resources/what amounts When Needed/scheduled/ordered Where Work to be done How Designed Who To do the work

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Some of the challenges faced by operation Department include

Addressing several issues varying in terms of time horizon, nature of decisions Addressing design & operational control issues in the transformation process Developing a set of measures to assess performance of the system Extent of cooperation with other departments Competition after the economic reforms Customer expectations Change: technology, environmental Keeping costs to a minimum low productivity and long lead time customer satisfaction, reducing lead times and meeting due dates

Production and manufacturing: Manuf includes all activities done by a company engaged in Production Manufacturing includes: Demand mgt Field service Product development Production and inventory Quality Procurement Distribution Industrial facilities mgt