RAJASHEKAR PATIL

B.E.(MECHANICAL ENGG). M.Tech (PEST). PGDBM. PGDNBT. (Ph.D). Industrial Experience-1year. Authored 07 books for BE Students. Accredited Trainer on H & P. Special officer (ugs-plm center of excellence) Trained more than 1000 faculties in karnataka.
Page 0 of 30

Chapter 1 Operations Management (OM): An Introduction

Page 1 of 30

Terminologies/definition/meaning

Technology layout Process Design Facility Capacity Method study Work measurement Inventory JIT MPS Line balancing Sampling TQM
Page 2 of 30

MANAGEMENT

Combined fields of policy and administration and the people who provide the decisions and supervision necessary to implement the owners' business objectives and achieve stability and growth. The formulation of policy requires analysis of all factors having an effect on short- and long-term profits. The administration of policies is carried out by the Chief Executive Officer, his or her immediate staff, and everybody else who possesses authority delegated by people with supervisory responsibility. Thus the size of management can range from one person in a small organization to multilayered management hierarchies in large, complex organizations.

Page 3 of 30

Production management

the management of those resources and activities of a business that are required to produce goods for sale to consumers or to other organizations. Production management is concerned with the manufacturing industry. The growing interest in the production management task in service industries has led to the use of operations management as a more general term.

Page 4 of 30

What is Operations Management? Defined

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

Page 5 of 30

Why Study Operations Management?

Systematic Approach to Org. Processes

Business Education

Operations Management

Career Opportunities

Cross-Functional Applications

Page 6 of 30

Operations As A Transformation Process

INPUT

Transformation process

OUTPUT

Material Machines Labor Management Capital

Feedback Change/ Resistance/ Balance

Goods or Services at Competitive Prices and Value

Page 7 of 30

Transformation Processes: Name That Sector, Firm, Function

Physical

(manufacturing)

Locational
Exchange Physiological Psychological Informational

(transport/storage)
(retail) (healthcare) (entertainment) (communications)

Page 8 of 30

Typical Manufacturing Company & Divisional Functional Structure

G.M/Pres

R&D
-Research -Product Dev -Engr Services

Operations/ Manufacturing
-Production -Procurement -Logistics -Planning/Sch -Process Dev -Facilities

Marketing
-Product Mktng -Mkt Dev -Service Planning -Order Processing

Sales/Service
-Field Sales -Field Serv -Maj Acct Mgmt -Order Mgmt -Field Admin

Quality
-Training -Regulatory Supp -ISO 9000

Finance
-Gen Acct -Cost Acct -Mgmt Reporting

HR
-Training -Staffing -Compensation

Page 9 of 30

Overview

Introduction Historical Milestones in POM Factors Affecting POM Today Different Ways of Studying POM Wrap-Up: What World-Class Producers Do

Page 10 of 30

Introduction

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.

Page 11 of 30

Organizational Model

Finance Sales POM Marketing

HRM

QA

Engineering

MIS

Accounting

Page 12 of 30

Organization Chart-Major Elements

Manufacturing Organization
Operations Finance/Accounting Disbursements & Credits Funds Management Capital Requirements Marketing Sales Promotion Advertising Sales Market Research

Facilities Production & Inventory ontrol Quality Assurance & Control Procurement Engineering Design Industrial Engineering Process Engineering

Page 13 of 30

Entry-Level Jobs in POM

Purchasing planner/buyer Production (or operations) supervisor Production (or operations) scheduler/controller Production (or operations) analyst Inventory analyst Quality specialist

Page 14 of 30

Historical Milestones in POM

The Industrial Revolution Post-Civil War Period Scientific Management Human Relations and Behaviorism Operations Research The Service Revolution

Page 15 of 30

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 touted 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.

Page 16 of 30

The Industrial Revolution

The industrial revolution spread from England to other European countries and to the United Sates. In 1790 an American, Eli Whitney, developed the concept of interchangeable parts. The first great industry in the U.S. was the textile industry. In the 1800s the development of the gasoline engine and electricity further advanced the revolution. By the mid-1800s, the old cottage system of production had been replaced by the factory system. . . . more
Page 17 of 30

Post-Civil War Period

During the post-Civil War period great expansion of production capacity occurred. By post-Civil War the following developments set the stage for the great production explosion of the 20th century: increased capital and production capacity the expanded urban workforce new Western U.S. markets an effective national transportation system

Page 18 of 30

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. . . . more

Page 19 of 30

Scientific Management

In the 1920s, Ford Motor Companys operation embodied the key elements of scientific management: standardized product designs mass production low manufacturing costs mechanized assembly lines specialization of labor interchangeable parts

Page 20 of 30

Human Relations and Behavioralism

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.

Page 21 of 30

Operations Research

During World War II, enormous quantities of resources (personnel, supplies, equipment, ) had to be deployed. Military operations research (OR) teams were formed to deal with the complexity of the deployment. After the war, operations researchers found their way back to universities, industry, government, and consulting firms. OR helps operations managers make decisions when problems are complex and wrong decisions are costly.
Page 22 of 30

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. Investment per office worker now exceeds the investment per factory worker. Thus there is a growing need for service operations management.
Page 23 of 30

Today's Factors Affecting POM

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

Page 24 of 30

Different Ways to Study POM

Production as a System Production as an Organization Function Decision Making in POM

Page 25 of 30

Production as a System
Production System Conversion Subsystem
Control Subsystem

Inputs

Outputs

Page 26 of 30

Inputs of a Production System

External Legal, Economic, Social, Technological Market Competition, Customer Desires, Product Info. Primary Resources Materials, Personnel, Capital, Utilities

Page 27 of 30

Conversion Subsystem

Physical (Manufacturing) Locational Services (Transportation) Exchange Services (Retailing) Storage Services (Warehousing) Other Private Services (Insurance) Government Services (Federal, State, Local)

Page 28 of 30

Outputs of a Production System

Direct Products Services Indirect Waste Pollution Technological Advances

Page 29 of 30

Production as an Organization Function

U.S. companies cannot compete using marketing, finance, accounting, and engineering alone. We focus on POM as we think of global competitiveness, because that is where the vast majority of a firms workers, capital assets, and expenses reside. To succeed, a firm must have a strong operations function teaming with the other organization functions.

Page 30 of 30

Decision Making in POM

Strategic Decisions Operating Decisions Control Decisions

Page 31 of 30

Strategic Decisions

These decisions are of strategic importance and have long-term significance for the organization. Examples include deciding: the design for a new products production process where to locate a new factory whether to launch a new-product development plan

Page 32 of 30

Operating Decisions

These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits. Examples include deciding: how much finished-goods inventory to carry the amount of overtime to use next week the details for purchasing raw material next month

Page 33 of 30

Page 34 of 30

Control Decisions

These decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance. Examples include deciding: labor cost standards for a new product frequency of preventive maintenance new quality control acceptance criteria

Page 35 of 30

What Controls the Operations System?

Information about the outputs, the conversions, and the inputs is fed back to management. This information is matched with managements expectations When there is a difference, management must take corrective action to maintain control of the system

Page 36 of 30

Wrap-Up: World Class Practice

POM important in any organization Global competition forces rapid evolution of POM Decision based framework focus of course Strategic, Operating, and Control

Page 37 of 30