1. Operations Management

2. Production Management
A production system is defined as a user of resources to transform inputs into some desired outputs. Goods and Services are outputs
Production is the creation of goods and services

3. What Is Operations Management?
Operations management (OM) is the set of activities that create value in the form of goods and services by transforming inputs into outputs
Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

4. Objectives of OM Effective Quality Right Quantity Reduce Time
Increase profitability
Strategic plans
Reduce cost
Optimize resources
Increase productive
Plan capital requirements

5. Essential Functions
Marketing – generates demand, sales forecast, Plan SCM
Production/operations – create the product, Materials planning, Capacity planning, Quality, etc.,
Finance/accounting – tracks how well the organization is doing, pays bills, collects the money
Human Resources – provides labor, wage and salary administration and job evaluation

6. Characteristics of Goods
Tangible product
Consistent product definition
Production usually separate from consumption
Can be inventoried
Low customer interaction

7. Characteristics of Service
Intangible product
Produced and consumed at same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
Frequently dispersed

8. Difference between Goods and Services
Characteristics
Goods
Services
Tangibility
Tangible
Intangible
Perish ability / Inventory
Not Perishable,
Can be stocked
Perishable
Cannot be stocked
Nature / Consistency
Homogenous
Heterogeneous
Customer Interaction
Less
High
Inseparability
Production and consumption happens at different times
Production and consumption happens simultaneously

9. OM Transformation Process

10. What Operations Managers Do
Basic Management Functions
Planning
Organizing
Staffing
Leading
Controlling

11. Tactical Decisions Strategic Decisions
Quality Control
Demand Forecasting
Supply Chain Management
Production Planning
Inventory Control
Scheduling
Strategic Decisions
Product/Service Design
Process Selection
Capacity Planning
Facility Location
Facility Layout
Job Design

13. The Functions Design of goods and services Managing quality
What good or service should we offer?
How should we design these products and services?
Managing quality
How do we define quality?
Who is responsible for quality?

14. Process and capacity design
What process and what capacity will these products require?
What equipment and technology is necessary for these processes?
Location strategy
Where should we put the facility?
On what criteria should we base the location decision?
Layout strategy
How should we arrange the facility?
How large must the facility be to meet our plan?

15. Human resources and job design
How do we provide a reasonable work environment?
How much can we expect our employees to produce?
Supply-chain management
Should we make or buy this component?
Who should be our suppliers and how can we integrate them into our strategy?
Inventory, material requirements planning, and JIT
How much inventory of each item should we have?
When do we re-order?
Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.

16. Intermediate and short–term scheduling
Are we better off keeping people on the payroll during slowdowns?
Which jobs do we perform next?
Maintenance
How do we build reliability into our processes?
Who is responsible for maintenance?

17. The Evolution First Phase – Factory Systems – Importance's to development of new machines, etc., Second Phase – Manufacturing systems – importance to principles of scientific management Third Phase – Operations Management – Importance to human resource and other resources involved Forth and Fifth Phase – Quality and mass customization – moving towards lean manufacturing

18. The Evolution
Division of labor (Adam Smith 1776; Charles Babbage 1852)
Standardized parts (Whitney 1800)
Scientific Management (Taylor 1881)
Assembly line (Ford/ Sorenson 1913)
Gantt charts (Gantt 1916)
Motion study (Frank and Lillian Gilbreth 1922)
Quality control (Shewhart 1924; Deming 1950)

19. First Digital Computer (Atanasoff 1938)
CPM/PERT (DuPont 1957, Navy 1958)
Material requirements planning (Orlicky 1960)
Computer aided design (CAD 1970)
Flexible manufacturing system (FMS 1975)
Baldrige Quality Awards (1980)
Computer integrated manufacturing (1990)
Globalization (1992)
Internet (1995)
Mass Customization (2000s)

20. New Challenges in OM From To Local or national focus Global focus
Batch shipments
Low bid purchasing
Lengthy product development
Standard products
Job specialization
Global focus
Just-in-time
Supply-chain partnering
Rapid product development, alliances
Mass customization
Empowered employees, teams To

21. The Operation System Inputs Transformation Outputs Feedback loop
Labor, capital, management
Transformation
Economic system transforms inputs to outputs /CONVERSITION PROCESS
Outputs
Goods and services
Feedback loop

22. Operation System – Types

23. Intermittent Production System
Intermittent Manufacturing system products and services at several intervals.
Features
Variety of products are produced in smaller quantities.
Lesser machines and equipments involved
Multi skill operators required
Work in process inventory is high
Process layout is adopted
Examples: Machine shops, hospitals

24. Example: Foundry casting in lathe Example: Food products
Project Production – Involves activities that are related with projects such as construction of roads, bridges, etc.,
Job Shop Production – One or few quantity of products are designed and produced based on the requirements of the customer or based on the job order
Example: Foundry casting in lathe
Batch Production – Limited quantity of products is produced at a time in batches based on the order
Example: Food products

25. Continuous Production System
Continuous Manufacturing system products high quantity of identical products
Features
Low variety
Continuous flow of operation
Heavy equipments
Huge investment
High degree to loss to occur in case of any change
Mass quantity
High standardisation
Example: Electronic goods

26. Mass Production System – A continuous process system which produces more number of outputs at a time. Example Plastic goods Process Production System - Continuous process flow in which the flexibility is zero Example Cement, steel industry

27. Operation Strategy (OS)
Operations strategy is the development of a long-term plan for using the major resources of the firm for a high degree of compatibility between these resources and the firm’s long-term corporate strategy.

28. Operation Strategy (OS)
Operations strategy is the development of a long-term plan for using the major resources of the firm for a high degree of compatibility between these resources and the firm’s long-term corporate strategy.

29. Factors Affecting Globalization Technology Competitive Priorities Cost
Quality
Delivery
Flexibility
Service

30. Supply Chain Management
Managing the supply of Inputs to achieve uninterrupted Production system
Managing the supply of Outputs to increase the customer value
Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage

31. SCN Process

32. Significance of SCM Maximize customer value Reduce cost
Effective production system
Competitive advantage
Goodwill & Image
Market share
Lean Manufacturing

33. Ethics and Social Responsibility
Challenges facing operations managers:
Developing and producing safe, quality products
Maintaining a clean environment
Providing a safe workplace
Honoring stakeholder commitments

34. Recent Trends in OM Ethics Global focus
Environmentally sensitive production
Rapid product development
Mass customization
Empowered employees
Supply-chain partnering
Just-in-time performance