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Production is the process by which, raw

materials & other inputs are

converted into finishedproducts.

(& services)

Manufacturing , the process of

producing only tangible goods.

Introduction

Production & Operations Management

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Overview

Introduction Historical Milestones in OM

Factors Affecting OM Today

Different Ways of Studying OM Wrap-Up: What World-Class Producers Do

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Introduction

Operations management is the management of anorganizations productive resources or its 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 theactivities of the conversion process.

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Organizational Model

Marketing

MISEngineering

HRM

QA

Accounting

Sales

Finance

OM

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A production system model

Inputs Conversion sub-system Outputs

EnvironmentP; L; E; S; T

Market

Competition

Product Inf.

Primary

Resources

Physical (Mfr; Mining)

Locational Services (Transport)

Exchange Services (Ret. WS)

Storage Services (warehousing)

Insurance; Finance; Real Estate

Health; Utilities

Governmental Services / Control

National; State

Control

Sub System

Goods Or

Services

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Production as Organisation Function

Decision Making in Production

Conversion sub system is the core of production, wherein

workers, materials, and Machines are used to convert inputs

into products and services.

Operation Mangers are required to make a series of

decisions in the production function.

They plan, organise, staff, direct and control all the activitiesin the process of converting all the inputs into finished goods.

e.g. Strategic; Operating & Control decisions

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POM Decision & Their Applications

Type ofDecisions

Area ofInvolvement

Nature of Activities

1. Strategic

Decisions

Production

Processes

Long Range

production/Process Plan

Planning Product

Processes &

Prod. Tech.

Facilities Planning

Selecting & Managing

Plan arrangement

Facilities Allocate Resources Optimal dist. Of scarceresources

Capacity Planning &

Facility Location

How Much & Where

Prod Capacity

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POM Decision & Their Applications

Type ofDecisions

Area ofInvolvement

Nature of Activities

3. Control

Decisions

Productivity and

Employees

Efficient & Effective Use

of HR

Planning

and

Total Quality

Control

Plan & Control the

Quality of Prod. /Services

Controlling

Operations

Project Plan &

Control Techniques

Plan Materials &

Capacity Requirement

Maintenance Mgmt.

and Reliability

Plan for Maintenance Of

Machines & Facilities

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Importance of Production Function

High Productivity is key to high standard of living

Production makes significant contribution tosocietys well being

As for Industry; anyone who has created something

with his own hands knows that production is neithercapitalist nor socialist but one thing only ,

it is what creates national wealth, the common

national basis without which no country can exist.

The best brain & hands in the country should

concentrate on creating & producing innovative

products.

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In order to improve productivity

Improve Volume of Production Reduce the rejection rate

Minimise Re-work rate Maintain delivery schedule

Control Idle Machine & Manpower hours Control Overtime hours

Improving Industrial Engineering norms & Standards

Updating Processes and ProceduresMaintain accuracy and timeline of MIS

Decrease Machine set-up time Good house keeping

Check Absenteeism; theft/pilferage and misconduct

Eliminate accidents Effective Grievance Handlin

Efficient training and Team Building

Minimise Inventory & Achieve better yields

Enhance customer satisfaction TQM

Business Process Re- Engineering Automation

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Production Management

It is the application of management principles in a factory.

It has emerged from the concept of manufacturing of

large quantity of products.

The development of large corporations with many owners

created the need for managers.

Many of the pioneers of scientific managementdemonstrated the value of some management techniques,

from a performance and profit point of view.

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Operations Management

It is the process whereby resources or inputs are

converted into more useful products.

Popularly, Production Management is used more for a

system where tangible goods are produced.

Whereas, Operations Management is more frequently

used where inputs are transformed into intangible

services. Such as Bank, Airlines, Insurance, Pollutioncontrol, Police, Army & Educational institutes etc.

Secondly, operations management became more

fashionable after the stupendous growth of services

sector.

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Historical Milestones in OM The Industrial Revolution Post-Civil War Period

Scientific Management

Human Relations and Behaviorism Operations Research

The Service Revolution

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The Industrial Revolution

The industrial revolution developed in England in the1700s.

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 thetasks of workers.

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The Industrial Revolution

The industrial revolution spread from England toother 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 US 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

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Post-Civil War Period

During the post-Civil War period great expansion ofproduction 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 US markets an effective national transportation system

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Frederick Taylor is known as the father of scientificmanagement. 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.

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In the 1920s, Ford Motor Companys operationembodied the key elements of scientific management:

standardized product designs

mass production

low manufacturing costs

mechanized assembly lines

specialization of labor

interchangeable parts

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Human Relations and Behavioralism

In the 1927-1932 period, researchers in theHawthorne 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 andtreated workers.

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The Service Revolution

The creation of services organizations acceleratedsharply after World War II.

Today, more than two-thirds of the US workforce is

employed in services.

About two-thirds of the US 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.

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The Computer Revolution

Explosive growth of computer and communicationtechnologies

Easy access to information and the availability of

more information

Advances in software applications such as Enterprise

Resource Planning (ERP) software

Widespread use of email

More and more firms becoming involved in E-Business using the Internet

Result: faster, better decisions over greater distances

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Today's Factors Affecting OM

Global Competition Quality, Customer Service, and Cost Challenges

Rapid Expansion of Advanced Technologies

Continued Growth of the Service Sector Scarcity of Operations Resources

Social-Responsibility Issues

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Entry-Level Jobs in OM

Purchasing planner/buyer Production (or operations) supervisor

Production (or operations) scheduler/controller

Production (or operations) analyst Inventory analyst

Quality specialist

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Studying Operations Management Operations as a System Decision Making in OM

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Operations as a System

Inputs OutputsConversion

Subsystem

Production System

Control

Subsystem

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Inputs of an Operations System

External Legal, Economic, Social, Technological

Market

Competition, Customer Desires, Product Info. Primary Resources

Materials, Personnel, Capital, Utilities

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Conversion Subsystem

Physical (Manufacturing) Locational Services (Transportation)

Exchange Services (Retailing)

Storage Services (Warehousing) Other Private Services (Insurance)

Government Services (Federal)

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Outputs of an Operations System

Direct Products

Services

Indirect Waste

Pollution

Technological Advances

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Production as an Organization Function

US companies cannot compete with marketing,finance, accounting, and engineering alone.

We focus on OM as we think of global

competitiveness, because that is where the vast

majority of a firms workers, capital assets, andexpenses reside.

To succeed, a firm must have a strong operations

function teaming with the other organizationfunctions.

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Decision Making in OM

Strategic Decisions Operating Decisions

Control Decisions

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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

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Operating Decisions

These decisions are necessary if the ongoingproduction of goods and services is to satisfy market

demands and provide profits.


how much finished-goods inventory to carry

the amount of overtime to use next week

the details for purchasing raw material next month

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Control Decisions

These decisions concern the day-to-day activities ofworkers, quality of products and services, production

and overhead costs, and machine maintenance.


labor cost standards for a new product

frequency of preventive maintenance

new quality control acceptance criteria

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What Controls the Operations System?

Information about the outputs, the conversions, andthe 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

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Wrap-Up: World Class Practice

OM important in any organization Global competition forces rapid evolution of OM

Decision based framework focus of course

Strategic, Operating, and Control

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