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• The structure of manufacturing industry has been significantly changes in the past few years
• Sales and profit are also on the increase
• Gradual increase in the cost of labour
• Cut down waste and improve productivity to remain competitive in the market
Sector of industry Current export Potential export Requirement to meet
this target
Electrical and $ 1.25 billion $ 15 to $ 18 billion Design and
Electronics manufacturing
capability
Apparel Manuf. $6.10 billion $ 25 to $ 30 billion Operational
Excellence, Labor
productivity, design
and innovation skills
Auto components $1.10 billion $ 20 to $ 25 billion Sales and marketing
capability, manuf.
Capability to meet
world class
competitiveness
Specialty Chemicals $1.60 billion $ 12 to $ 15 billion Low cost manpower
and process
innovation skills
Source: Based on Made in India: The next Big Manufacturing Export story(Mumbai: Confederation of
India Industry and McKinsey & co. 2004)
Service as a part of Operations Management
Service sector growth rates 2008-09 2009-10 2010-11 2011-12 2012-13
in GDP
Trade, Transport, hotels and 16.9 16.5 17.2 18.0 25.1
communication
• The figure indicate the growth important of service's in Indian economy and need apply
management practices to plan and control operations in the service sector.
• Pure product or pure service – not separate entities.
Goods Services
• Intangibility –can not touched, feel the product, tasted, felt as in the case of objects
• Simultaneous production and Consumption- together to produce and consume the service
• Perishability – no inventory
A comparison of Manufacturing and Service Organization
Finance
Operations
Marketing HRM
Operations as a system
• The essence of the operations function is to add value during transformation system.
• Value added: Different between the cost of inputs and the value or price of output
Input Output
Land, Materials,
Transformation/ Outputs, Goods,
Labour, Capital,
Conversion Process Services
Information
Control
Measurement & Feedback
Competitiveness
Productivity= output/input
Total Output
Productivity All inputs
• If the production is only one product, the output can be either the total
units of the product or the total value(Rs) of the product.
• If we production for more than one products, the output unit is the total
value (Rs) of all products.
• Compute the multifactor productivity measure for 8 hours a day in which the useable
product was 300 units, produced by 3 workers who used 600 kg of materials, workers
have an hourly wage of $20, material cost is $1 per kg, overhead cost is 1.5 times labor cost.
• ATT sys., the output process is valued at $110 per unit. The cost of labor is $ 50 per hour
including benefits. The A/C department provided the following information about the
process foe week:
Units produced 1102
Labor $ 12158
Materials $ 20,829
Overhead $ 9,414
Calculate multifactor productivity rate and labor productivity ratio.