1. Introduction to Production and Operations Management

2. Management Science
…is the study and development of techniques for the formulation and analysis of management and related business problems. Operations research models are often helpful in this process.

3. Operations Management is:
The business function responsible for planning, coordinating, and controlling the resources needed to produce products and services for a company
A management function
An organization’s core function
In every organization whether Service or Manufacturing, profit or Not for profit

4. Operations Research
…is the application of techniques developed in mathematics, statistics, engineering and the physical sciences to the solution of problems in business, government, industry, economics and the social sciences.

5. OM’s Transformation Process
© Wiley 2010

6. Quantitative Methods
…employ mathematical models to reach a wide variety of business decisions.
They give modern managers a competitive edge
Managers do not need to have great mathematical skills
Familiarity allows one to:
Ask the right questions
Recognize when additional analysis is necessary
Evaluate potential solutions
Make informed decisions

7. Qualitative Methods
…like more traditional methods, however, qualitative methods come in many varieties.  Different researchers focus on different sources of data:
One's own immediate experience
Others' experiences, which we might seek to understand through:
their speech or writing,
their other behaviors,
their products - technology, artwork, footprints, etc.

8. New Challenges in Operations Management

9. New Challenges in OM From To Local or national focus Batch shipments
Low bid purchasing
Lengthy product development cycles
Standardized products
Job specialization
Global focus
Just-in-time
Supply chain partnering
Rapid product development
Strategic alliances
Mass customization
Empowered employees
Teams
Use this and the subsequent slide to get students thinking about some of the changes taking place in OM. Try to help them understand both the causes of the changes and the implications. In particular, have them consider the role of information and of information technology.

10. Changing Challenges for the Operations Manager

11. Changing Challenges for the Operations Manager

12. What is POM? Production is the creation of goods and services
Production and/or Operations Management are the activities that transform resources into goods and services
Production Function is the key function in almost all the manufacturing concerns and all other activities revolve around this function.

13. Goods vs. Services

14. Characteristics of Goods
Tangible product
Consistent product definition
Production usually separate from consumption
Can be inventoried
Low customer interaction
© 1995 Corel Corp.
You might pick a company that produces a physical product that will be familiar to the students, ask students to identify the product, and discuss its characteristics. Once the students have identified the physical characteristics of the product, you can ask “What other characteristics does the company believe its product possesses?” This question will often raise the issue of “service.”
Companies which might it be helpful to consider include:
Xerox - an information management company (not just copiers)
McDonalds, Burger King, Wendys - either compare the viewpoints of the three companies, or contrast them to a gourmet restaurant
Volkswagen versus Volvo, Mercedes or Rolls Royce.

15. Characteristics of Services
Intangible product
Produced & consumed at same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
Frequently dispersed
© 1995 Corel Corp.
Here it is probably useful to look to the students to identify both company and product. You might use the approach of taking one characteristic at a time and asking the students to identify a service that has that characteristic:
Unique - wedding planning
High customer interaction - health care
Inconsistent definition - “consulting”
etc.

16. Goods vs. Services Can be resold Can be inventoried
Goods Service
Can be resold
Can be inventoried
Some aspects of quality measurable
Selling is distinct from production
Reselling unusual
Difficult to inventory
Quality difficult to measure
Selling is part of service
At this point, you might approach this and the next several slides by asking students to identify a product (good or service as appropriate) that illustrates each characteristic. You might also ask them to identify products that violate one or more of these distinctions between goods and services.

17. Goods vs. Services - Continued
Goods Service
Product is transportable
Site of facility important for cost
Often easy to automate
Revenue generated primarily from tangible product
Provider, not product is transportable
Site of facility important for customer contact
Often difficult to automate
Revenue generated primarily from intangible service

18. Goods Contain Services / Services Contain Goods
Automobile
Computer
Installed Carpeting
Fast-food Meal
Restaurant Meal
Auto Repair
Hospital Care
Advertising Agency
Investment Management
This slide should help you make the point that a “product” is seldom only a “good” or only a “service” but usually includes some of each. You might also raise the point that as companies are reaching the limit of evolution of the physical (good), they are tending to add information (a service) to their product. Finally, it is important that the student be able to cite examples illustrating each of the ranges shown in the slide.
Consulting Service
Counseling 25 50 75
100
Percent of Product that is a Good
Percent of Product that is a Service

19. Jobs in POM Less than 20% of all jobs are in manufacturing
Almost 80% of jobs are in the service sector
Nearly half of all jobs are in POM
Most POM jobs are professional and/or managerial

20. DEFINITION OF PRODUCTION
Production management deals with decision making related to production processes so that the resulting good & service is produced according to specifications, in the amounts and by the schedule demanded and at minimum cost.

21. Why Study POM? It is one of the 3 critical parts of any organization:
Marketing – generates demand
Operations – creates the product
Finance/accounting – tracks organizational performance, pays bills, collects money
It shows us how goods and services are produced
It shows us what POM managers do
It is the most costly part of any organization

22. Aspects of Production Function
Manufacturing function: selection of factory, location, design & layout, type of products to be produced, research, development of product.
Ancillary Function:- production planning & control, maintenance, purchasing, storekeeping, material handling
Advisory:- work study, method study, operational research, inspection & quality control.

23. 5 P’s of Production Management
PLANT
PROCESS
PROGRAMME
PEOPLE

24. Types of Production
1. JOB PRODUCTION :-Production is according to specific customer order, products are generally non-standarised and heterogeneous in nature.
FEATURES:- wide range of general purpose machines required, different job employed, variations in production, flexible finance, inventory of materials, movement of material.
LIMITATION:-INEFFICIENT use of labour, cost is difficult, irregularity in demand,

25. Types of Production
2. BATCH PRODUCTION :-Production is repetitive in nature and manufacture of a product in batches or lots by a series of operations.
FEATURES:- work is repetitive in nature, one by one process, similar machine are arranged at one place,
LIMITATION:-difficult to decide a proper batch, material handling is longer, production time is longer, high skill required, WIP neede large capital & space.

26. Types of Production
3. MASS OR FLOW PRODUCTION :- CONTIUNOUS PRODUCTION
FEATURES:- continuous flow, one type of machine, standardized tool, volume of production is high,
Limitation:-failure of machine can disturb whole process, specific orders can be handled.

27. OBJECTIVES OF PRODUCTION MANAGEMENT
ULTIMATE OBJECTIVES
Controlling manufacturing costs, proper quality of product, keeping manufacturing schedule,
INTERMEDIATE OBJECTIVES
Maintaining proper machinery & equipment, proper manpower planning, adequate manufacturing services, materials, methods.

28. Functions of Production Management
Production Planning
Limitation of range, availability of resources, different production level, cost & prices, financial problem, managerial expertise.
Production Control
Completion of orders on time, disposal at economic cost, routing, scheduling, inspection activities,
Plant Layout
Demand for the product, maintenance and repairs, obsolescence, size, quality, power, effective cost, labour cost, output.

29. Functions of Production Management
Materials Handling
economy of movement, economy of floor space, planning of handling, handling equipment
Maintenance Policy
Periodic service, partial stripping, total stripping and hauling.
Method Analysis
Simplification & Standardisation

30. Functions of Production Management
Work Measurement
Production of individual workers
Quality control
Total quality methods
Motivating workers
Incentive plans

31. SIMPLIFICATION
Refers to the practice of reducing the variety of components and/or final products. it aims the elimination of all those uses of labour and materials that are not absolutely essential for obtaining more effective production.

32. SIMPLIFICATION
Process includes:- 1. cutting down 2. reduction of frills.
It is related to product design, production method, machines used

33. Refers to setting up of fixed size, types, qualities usually.
STANDARDISATION
Interchangeability of standard components and between different end products.
Refers to setting up of fixed size, types, qualities usually.

34. Benefits of simplification & Standardisation
Benefits from the standpoint of the management
More effective & quicker production
Inspection & quality testing
Specialization of experts
Reduction of capital requirement
Variety of skills
Reduction of machine tools requirement

35. Benefits of simplification & Standardisation
Benefits from the standpoint of the distributers
Reduction in paper work
Easier handling of results
Fewer models & spare parts
Sale increase

36. Benefits of simplification & Standardisation
Benefits from the standpoint of the customers
Lower selling price
Getting speedier delivery
Better quality product
Efficient customer service for spares & repairs

37. Benefits of simplification & Standardisation
Benefits from the standpoint of the employee
possibility of learning specialized job
Reduction in time required to get trained

38. Scope of Production/ Operation Management
Designing the products & packages
Production administration
Execution of plans, policies & decision
Dependent services

39. Problems of Production Management
LOCATION OF PLANT
LAYOUT OF PLANT
PRODUCTION DESIGN
INVENTORY & PRODUCTION CONTROL
PROBLEM OF QUALITY CONTROL
PROBLEM OF COST CONTROL
PROBLEM S OF LABOUR CONTROL

40. BENEFITS OF EFFECTIVE PRODUCTION MANAGEMENT
BENEFITS TO CUSTOMER
BENEFITS TO INVESTORS
BENEFITS TO EMPLOYEES
BENEFITS TO SUPPLIERS
BENEFITSD TO COMMUNITY
BENEFITS TO NATION

41. The Critical Decisions
Quality management
Who is responsible for quality?
How do we define quality?
Service and product design
What product or service should we offer?
How should we design these products and services?
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.

42. The Critical Decisions - Continued
Process and capacity design
What processes will these products require and in what order?
What equipment and technology is necessary for these processes?
Location
Where should we put the facility
On what criteria should we base this location decision?

43. The Critical Decisions - Continued
Layout design
How should we arrange the facility?
How large a facility is required?
Human resources and job design
How do we provide a reasonable work environment?
How much can we expect our employees to produce?

44. The Critical Decisions - Continued
Supply chain management
Should we make or buy this item?
Who are our good suppliers and how many should we have?
Inventory, material requirements planning,
How much inventory of each item should we have?
When do we re-order?

45. The Critical Decisions - Continued
Intermediate, short term, and project scheduling
Is subcontracting production a good idea?
Are we better off keeping people on the payroll during slowdowns?
Maintenance
Who is responsible for maintenance?
When do we do maintenance?

46. Historical/significant events inPOM
Replacement of rule of thumb Selection of right persons for right jobs, their training and development for better performance Harmony between workers and management Specialization of work

47. Historical/significant events inPOM
Division of labour (Adam Smith, The Wealth of Nations, 1776)
Industrial Revolution
Standardization of parts (Eli Whitney, )
Cotton Gin (1792)
Contract with U.S. for muskets (1798)
Some doubt about true interchangeability
Simeon North (Middletown)
John Hall (Harpers Ferry)

48. Significant Events in POM (cont.)
Scientific management (Frederick Taylor )
The Principles of Scientific Management, 1911
Match employees to jobs
Provide the proper training
Provide the proper methods and tools
Establish legitimate incentives

49. Significant Events in POM (cont.)
Taylor’s 4 Principles of Scientific Management:
Replace rule-of-thumb work methods with methods based on a scientific study of the tasks
Scientifically select, train, and develop each worker rather than passively leaving them to train themselves
Cooperate with the workers to ensure that the scientifically developed methods are being followed
Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks

50. Significant Events in POM (cont.)
Coordinated assembly line (Henry Ford )
Gantt charts (Henry Gantt )
Motion studies (Frank and Lillian Gilbreth, 1922)
Quality control (Shewhart, Juran, Feigenbaum, Deming, Taguchi, etc.)
Flexible manufacturing systems (FMS)
Computer integrated manufacturing (CIM)

51. The Productivity Challenge

52. The Economic System Transforms Inputs to Outputs
The economic system transforms inputs to outputs at about an annual 2.5% increase in productivity (capital 38% of 2.5%), labor (10% of 2.5%), management (52% of 2.5%)
Land, Labor, Capital, Management
Goods and Services
Feedback loop
Inputs
Process
Outputs
Ask your students to consider why the rate of growth of productivity in the U.S. is so low. As they identify factors, have them link these factors to the resources of capital, labor, and management.
This may also be a good point at which to introduce the notions of efficiency (doing a job well), and effectiveness (doing the right job). It may be especially helpful to discuss the conditions under which efficiency or effectiveness becomes the more important.

53. Adam Smith on Productivity
…He asserted that ten workers could produce 48,000 pins per day if each of eighteen specialized tasks was assigned to particular workers. Average productivity: 4,800 pins per worker per day. But absent the division of labor, a worker would be lucky to produce even one pin per day.

54. Henry Ford on Productivity
…In 1907, Henry Ford announced his goal for the Ford Motor Company: to create "a motor car for the great multitude." At that time, automobiles were expensive, custom-made machines.
Ford realized he'd need a more efficient way to produce the Model T in order to lower the price. He and his team looked at other industries and found four principles that would further their goal:
Interchangeable parts
Continuous flow
Division of labor
Reducing wasted effort

55. Frank Gilbreth on Productivity
…improved a five-thousand-year-old job and had enabled bricklayers to lay brick faster with less effort and fatigue. On one particularly difficult type of wall, where the previous record had been 120 bricks per hour, his methods allowed them to lay 350 bricks, an increase in productivity of over 190%.

56. Walter Shewhart on Productivity
…the original notions of Total Quality Management and  continuous improvement trace back to a former Bell Telephone employee named Walter Shewhart.  One of W. Edwards Deming's teachers, he preached the importance of adapting management processes to create profitable situations for both businesses and consumers, promoting the utilization of his own creation: the SPC chart. 

57. Key Variables for Improved Labor Productivity
Basic education appropriate for the labor force
Diet of the labor force
Social overhead that makes labor available
Maintaining and enhancing skills in the midst of rapidly changing technology and knowledge
You might first ask students to consider the conditions under which each of the key variables is most important. Once the conditions are identified, you might list the conditions on the board or screen and ask students to develop a method for comparing various countries on the basis of these conditions. Where would they place the U.S.? Developing countries? Etc.

58. Service Productivity Typically labor intensive
Frequently individually processed
Often an intellectual task performed by professionals
Often difficult to mechanize
Often difficult to evaluate for quality
You can use this slide to frame a discussion of service productivity.
Ask students to provide examples of services having each characteristic. Once they have done this, ask if they can think of a way to overcome or change the characteristics for that service so as to increase productivity.

59. Current Trends
U.S. is becoming more of a knowledge intensive service economy
Globalization
Total Quality Control
Need for flexibility and innovation

60. Productivity for Product
Units produced
Productivity =
Inputs used
Output is easy to measure with one product.
Measure of process improvement
Represents output relative to input
Only through productivity increases can our standard of living improve
Input may have many components;-Parts and subassemblies, Labor, Equipment, Knowledge.
The productivity discussion can continue with this slide.
One question for students might be: Why is the present rate of productivity improvement in the U.S. less than in the period 1889 to 1973?
You might also ask them to consider what happens as the rate of productivity improvement approaches zero. Does this simply mean that the standard of living ceases to rise, or are there more ominous manifestations?

61. Productivity Variables
Output Labor + material + energy + capital + miscellaneous
Productivity =
Use a common measure to combine different inputs
This slide can be used to introduce multi-factor productivity.

62. Productivity Measurement Problems
Quality of output should be considered.
If you produce more, but of lower quality, does productivity rise?
External elements may change productivity.
Wireless communication may raise productivity.
Precise units of measure may be lacking.
Ask the students to think about why productivity is so difficult to measure. Have them identify several tasks or jobs, and help them identify some possible productivity measures. Ask them how they would go about making these measurements. Student and faculty productivity certainly provide examples that can generate discussion! You might ask your students if they believe “grades” measure student productivity.

63. THANK YOU