module 1 - introduction into operations management

8/10/2019 Module 1 - Introduction Into Operations Management

1/20


2/20

Operations Management

OM consists of activities such as Scheduling Work, Assigning

Resources ie., people, equipment, Managing inventories, assessing

quality standards etc. OM is a process through which resources

and inputs are converted into more useful products.

Production Management is used for a system where Tangible

goods are produced. OM is more frequently used where inputs

are transformed into intangible services. OM covers serviceoriented organizations such as :- Banks, Airlines, Pollution Control

Agencies, Shopping Malls, Educational Institutions etc.


3/20

Operations Management

Definition of Operations Management.

Operations Management refers to the administration of

business practices to create the highest level of efficiency

possible, within an organization. Operations Management isconcerned with converting materials and labor into goods

and services as efficiently as possible to maximize the

profit of an organization.

Operation Management is the set of activities that create

goods and services through the transformation of inputs

into outputs. - (Slack, 2001)


4/20


5/20


6/20

Goal of Operations Management:

The goal of Operations Management is to ensure that the input requirements and the

transformation process, in which part of the value addition takes place, to get therequired quantity of the product or services, with the targeted quality, within the

specified time period, is carried out in a most economical way.

Operations System could be either Manufacturing Sector or Services Sector.

Operations Management Plan coordinates and controls all the activities in the operation

system to achieve the stated objectives.

Objectives of Operations Management:

1) The Customer Service Objective: Provide goods or services with the right

specification, at the right cost and at the right time.

2) The Resource Utilization Objective: To achieve agreed levels of utilization of

Materials, Machines and Labour.


7/20

President and/or CEO

ProductEngineering

R & D AccountingVP -

OperationsMarketing Finance

VP -Material VP -Quality GeneralManager IndustrialEngineering

InventoryManagement

DistributionManagement

PurchasingPlant

MaintenanceWork

Standards

ProcessManagement

SupervisorSupervisorSupervisor

Production line associates


8/20


9/20

9

Operations as Service:

The emerging model in the industry is that every organization is in the service

business. This is true whether the organization makes big planes or big mac.This means that the manufacturing operations, as well as every other part of

the organization, are also in the service business, even if the customer is an

internal one.

In Manufacturing, such services are divided into Core and Value-added Services.

Core Services Quality, Flexibility, Speed and Price.

Value-added Services Information, Problem-solving, Sales support and Field

support. Value-added services provided to external customers yield two

benefits:

Differentiate the organization from the competition.

Bind customers to the organization in a positive way.


10/20

10

Historical Development of OM Industrial revolution Late 1700s

Scientific management Early 1900s

Human relations movement 1930s to 1960s

Management science Mid-1900s

Computer age 1970s

Just-in-Time Systems (JIT) 1980s Total quality management (TQM) 1980s

Reengineering 1990s

Flexibility 1990s

Time-Based Competition 1990s

Supply chain Management 1990s

Global Competition 1990s

Environmental Issues 1990s Electronic Commerce Late 1990s


11/20

Current Issues in OM:

1) Effectively consolidating the operations resulting from mergers.

2) Developing flexible supply chains to enable mass customization of products

and services.

3) Managing global supplier, production and distribution networks.

4) Increased commoditizationof suppliers.

5) Achieving the Service Factory.

6) Achieving good service from service firms.


12/20

Operations Management Strategy:


13/20

Corporate Mission

Business Strategy

Product Service/Plans

Competitive Priorities

Cost, Time, Quality, Flexibility

Production/Operations StrategyPositioning the production system

Product/Service PlansOutsourcing Plans

Process and Technology PlansStrategic allocation of resources

Facility Plan, Capacity, Location and Layout

Assessment ofBusiness Conditions

DistinctiveCompetencies or

Weaknesses

DEVELOPING PRODUCTION/OPERATIONS STRATEGY.


14/20

O ti St t


15/20

15

Operations Strategy:

Operations Strategy is concerned with setting broad policies and plans for using the resources of a firm to best support

its long-term competitive strategy.

Operations Strategy can be viewed as part of a planning process that coordinates operational goals with those of the

larger organization. Since the goals of the larger organization changes over time, the operation strategy must be designedto anticipate future needs. Should be able to adapt to the customers changing needs for goods/services.

Competitive Dimensions:

Customers today have a lot of choices in terms of what to buy. Different customers are attracted to differentattributes.

The Major Competitive Dimensions that form the competitive position of a firm include the following:

Cost/Price: Could result in commoditization.

Quality: There are two characteristics of a product/service that define quality: Design Quality (Child's Cycle versus

Athlete's Cycle) and Process Quality (Defect free Products and Services).Delivery Speed:

Delivery Reliability:Coping with Changes in Demand: Changes in volume:

- Higher volume Increase production and costs reduce due to economies of scale.

- Lower demand/volume Difficult decisions such as scaling down operations, laying off employees etc.6) Flexibility and New Product Introduction Speed:7) Other Product Specific Criteria (Support):

- Technical Liasion and Support.- Meeting a launch date.

- Supplier after sale support.- Other dimensions Colors size wei ht customization etc .


16/20

16

Operations Strategy in Manufacturing:

Developing Manufacturing Strategy:

Main Objectives of developing Manufacturing Strategy:

Translate required competitive dimensions into specific performance

requirements for operations.

To make plans necessary to ensure that operations capabilities are sufficient tomeet the production goal.

Operations Strategy in Services:

Order Qualifier & Order Winners.

Order Qualifiersare the characteristics of products or services that is

required in order for the product or service to be considered by a customer.

Order Winnersare the characteristics that will win the bid or the customers

purchase.


17/20

RECAP

Way to remain Competitive through Operations:

1) Price.

2) Quality.

3) Product/Service Differentiation.4) Flexibility.

5) Time.

6) Service.

7) Management & Workers.


18/20


19/20

How is Operations Relevant to your Major?

Marketing

How can you do a good job marketing a product if youre unsure

of its quality or delivery Status?

Finance

Most of our capital budgeting requests are from operations,

and most of our cost savings too.

Human Resources

Human Resources are the most important asset of an

organization. Essential to run the operations.

S f P d ti d O ti M t


20/20

Scope of Productions and Operations Management:

Productions/

Operations

Management

Location of

FacilitiesPlant Layout& Material

Handling

Product

Design

Production

Planning

& Control(Planning, Routing,

Scheduling, Dispatching,

Follow up)

Quality

Control

Maintenance

Management

Material

Management

Process

Design

module 1 - introduction into operations management

Documents