OPERATIONS MANAGEMENT

FACULTY
Prof. M.H.Varma
B.E.(Mech.),DMS, PGDMM, MBA(SCM)

Scope of Discussions / Objectives

Understanding the basic Concepts of Operational Activities of Organisations in Manufacturing and Services Sectors

Learning Outcomes
On successful completion of the Course, the Students should be able to do the following : -

Student should be able to differentiate how different Operations Strategies lead to achieve Competitiveness Ability to demonstrate differences between Manufacturing and Service Processes Discuss the Process of Product and Service Design Ability to describe the Concepts of SCM, TQM, JIT Tools and Techniques and its overall purpose in the Organisation Demonstrate understanding of Planning and Control Processes of Project Management

Operations ManagementIntroduction

Customer Retention - Key Issues

A Recent Survey says

More than 90 % of unsatisfied

customers do not complain

It costs 5 times more to get a new

customer than it does to keep a current customer

What is Operations Management? Defined

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

Why Study Operations Management?

Systematic Approach to Org. Processes

Business Education

Operations Management

Career Opportunities

Cross-Functional Applications

What is a Transformation Process? Defined

A transformation process is defined as a user of resources to transform inputs into some desired outputs

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Operations as a Process
Input Transformation (Conversion) Process Output

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Operations as a Process
Input Transformation Fabrication Transformation Assembly Output

Fabrication: making the parts

Assembly: putting the parts together

Operations as a Process
Energy Materials Labor Capital Information Feedback information for control of process inputs and process technology Transformation (Conversion) Process Goods or Services

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Transformations

Physical--manufacturing

Locational--transportation
Exchange--retailing

Storage--warehousing
Physiological--health care

Informational--telecommunications

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What is a Service and What is Goods?

If you drop it on your foot, it wont hurt you. (Goods or service?)

Services never include goods and goods never include services. (True or false?)

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OM in the Organization Chart

Finance Operations Marketing

Plant Manager

Operations Manager

Director

Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc

Functional Integration
Financial Management Human Resource Management

Production/ Operations Management

Marketing Management

Materials Management

Research and Development

Management Information System

Relation of Operations to its Environment

SOCIETY
Human Engineering Marketing Resources

External Environment

Suppliers

Operations transformation system

CUSTOMERS

Accounting

Finance

MIS

COMPETITORS

GOVERNMENT

Functions of Operations Managers

Planning

Plan product and service mix Location & Capacity Planning Plan equipment procurement Generate Master Schedule What products to make and when Decide number of shifts/ number of hours

Organizing

Centralized or Decentralized operations Design hierarchical structure

Assign responsibility for every activity

Organize supplier/ subcontractor networks Establish maintenance policies

Functions of Operations Managers

Controlling

Compare costs to budget Inspect the Quality levels Compare work progress to schedule Compare actual labor hours to standards

Directing

Establish provisions of union contracts Establish personnel policies

Establish employment contracts

Issue Job assignments and instructions

Functions of Operations Managers

Motivating

Provide specific objectives/ Goals & challenges

Encourage through praise, recognition of job achieved

Motivate through tangible Reward System

Coordinating

Coordinate through use of forecasts and master schedule Recommend corrective actions/ necessary improvement on performance achieved Report, inform and communicate (through MIS Reports)

Training and development

Support employees in training programs Encourage suggestion schemes Facilitate people involvement/ empowerment

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Core Services Defined Core services are basic things that customers want from products they purchase

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Core Services Performance Objectives

Quality

Flexibility

Operations Management

Speed

Price (or cost Reduction)

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Value-Added Services Defined Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way

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Value-Added Service Categories

Problem Solving

Information

Operations Management

Sales Support

Field Support

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The Importance of Operations Management

Synergies

must exist with other functional areas of the organization Operations account for 60-80% of the direct expenses that burden a firms profit.

Historical Evolution of Operations Management

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Scientific Management F. W. Taylor The Principles of Scientific Management Moving Assembly Line In 1911- Henry Ford applied the principles of Scientific Management (Model T)

Hawthorne Studies
Research Team from HBS under the leadership of Elton Mayostudy conducted at Western Electric Companys Hawthorne Plant (Chicago)

Operations Research Operations Research teams formed in military operations to smoothen the complex logistics issues (USA & Europe)

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Historical Development of OM

JIT and TQC Manufacturing Strategy Paradigm Service Quality and Productivity Total Quality Management and Quality
Certification

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Historical Development of OM (contd)

Business Process Reengineering

Supply Chain Management Electronic Commerce

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Current Issues in OM

Coordinate the relationships between

mutually supportive but separate organizations.

Optimizing global supplier, production,

and distribution networks.

Increased co-production of goods and

services

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Current Issues in OM (contd)

Managing the customers

experience during the service encounter

Raising the awareness of

operations as a significant competitive weapon

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Question Bowl
A major objective of this book is to show how smart managers can do which of the following? a. Improve efficiency by lowering costs b. Improve effectiveness by creating value c. Increasing value by reducing prices d. Serving customers well e. All of the above

Answer: e. All of the above

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Question Bowl
In the Input-Transformation-Output Relationship, a typical input for a Department Store is which of the following? a. Displays b. Stocks of goods c. Sales clerks d. All of the above e. None of the above

Answer: e. None of the above (The above are considered Resources of a department store. The correct answer is Shoppers.)

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Question Bowl
In which of the following decades did the concept of quality control originate? a. 1920s b. 1930s c. 1940s Answer: b. 1930s (Tools such d. 1950s as sampling inspection and e. 1970s

statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)