1. Bangalore 1 MBA, Semester 2 Operations Management Ms. Aarti Mehta Sharma

2. Bangalore 2 Module 1 Importance Scope

3. Bangalore 3 FedEx Why are they successful? –Fast –On-time deliveries –Relatively low cost –Technology in shipment tracking

4. Bangalore 4 Operations Management Is the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

5. Bangalore 5 diff from…. Operations research / Management Sciences / Industrial Engineering OM uses the above tools to take decisions

6. Bangalore 6 A manager is … … someone who plans, acquires and manages resources needed to meet specific objectives. PLANS ACQUIRES MANAGES

7. Bangalore 7 Organisation Chart

8. Bangalore 8

9. 9 OM’s Transformation Process

10. Bangalore 10 Operations Management Management of the conversion process which transforms inputs such as raw material and labour into outputs in the form of finished goods and services. Inputs(materials,employeesand/orcustomers) Transformation Process Outputs (Products and services)

11. Bangalore 11 Transformation process at a Food Processor InputsProcessOutput Raw Vegetables Metal Sheets Water Energy Labour Building Equipment Cleaning Making cans Cutting Cooking Packing Labelling Canned vegetables

12. Bangalore 12 Transformation process at a Hospital InputsProcessOutput Doctors Nurses Building Medical supplies Equipment Labs Examination Surgery Monitoring Medication Therapy Healthy patients

13. Bangalore 13 Transformational Value – as a competitive advantage To add value –Increase product value at each stage –Value added is the net increase between output product value and input material value Provide an efficient transformation –Efficiency – perform activities well at lowest possible cost

14. Bangalore 14 Types of Operations Operations Examples Goods ProducingFarming, mining, construction, manufacturing, power generation Storage/TransportationWarehousing, trucking, mail service, moving, taxis, buses, hotels, airlines ExchangeRetailing, wholesaling, banking, renting, leasing, library, loans EntertainmentFilms, radio and television, concerts, recording CommunicationNewspapers, radio and television newscasts, telephone, satellites

15. Bangalore 15 Differences between Manufacturers and Service Organizations Services: Intangible product Product cannot be inventoried High customer contact Short response time Labor intensive

16. Bangalore 16 Differences between Manufacturers and Service Organizations Manufacturers: Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive

17. Bangalore 17 Similarities-Service/Manufacturers All use technology Both have quality, productivity, & response issues All must forecast demand Each will have capacity, layout, and location issues All have customers, suppliers, scheduling and staffing issues

18. Bangalore 18 Goods vs. Services DifferencesGoods (Produce a car) Services (Teach a class) OutputTangibleIntangible Customer contactLowHigh Uniformity of inputHighLow Labor contentLowHigh Quantity of OutputHighLow Measurement of productivity EasyDifficult Quality assuranceEasyDifficult

19. Bangalore 19 USA (Apr 2009)

20. Bangalore 20 Why OM ? For long-run success companies must place much important on their operations –The 1950-1960 era was the U.S. golden era where primary opportunities were marketing –The 1970-1980 U.S. companies experienced a large decline in productivity growth – international firms began to challenge in many markets –The 1970-1980 era saw U. S. firms lagging behind in methods and processes –The resurgence of American business in the 1990’s capitalized on improved operations

21. Bangalore 21 Scientific management- 1900s time line YearConceptToolOrigination 1910Principles of scientific management Time study work study Taylor (US) Industrial Psychology Motion studyFrank and Lillian Gilbreth(US) Moving Assembly Line Activity Scheduling Chart Henry Ford and Henry Gantt (US) Economic Lot Size EOQ applied to Inv control Harris (US)

22. Bangalore 22

23. Bangalore 23 Competitive Priorities Competitive advantage denotes a firm’s ability to achieve market and financial superiority over its competitors. Competitive priorities represent the strategic emphasis that a firm places on certain performance measures and operational capabilities within a value chain.

24. Bangalore 24 Based on … Cost Quality Time Flexibility Innovation

25. Bangalore 25 Competitive Priorities Every organization is concerned with building and sustaining a competitive advantage in its markets (see BMW). A strong competitive advantage is driven by customer needs and aligns the organization's resources with its business opportunities. A strong competitive advantage is difficult to copy, often because of a firm’s culture, habits, or sunk costs.

26. Bangalore 26 Time Line for Operations Strategies

27. Bangalore 27 1930s ConceptToolOrigination Quality Control Sampling Inspection and stat tables for quality control Shewhart, Dodge and Romig(US) Hawthorne studies Activity sampling for work analysis Mayo and Tippett (England )

28. Bangalore 28 1940s,50s and 60s ConceptToolOrigination Multidiscipli nary team approaches Linear Programming OR groups (England) and Dantzig (US) OR ToolsSimulation, Waiting line theory,decision theory,PERT,CPM US AND Europe

29. Bangalore 29 1970s ConceptToolOrigination Widespread use of computers in business Shop Scheduling, inventory control, forecasting, MRP Company mfrers - IBM Service Quality and Productivity Mass Production in the service sector Mc Donalds

30. Bangalore 30 1980s ConceptToolOrigination Strategy Paradigm Mfg as a competitiv e weapon Harvard Bus School faculty (US) JIT,TQC and factory automation Kanban, pokayokes CAD/CAM Tai-Chi onho of Toyota (Japan), Deming and Juran Synchronou s mfg Bottleneck analysis, theory of constraints Goldratt (Israel)

31. Bangalore 31 1990s ConceptToolOrigination TQM,BPRConcurrent Engg,improvem ent paradigm Michael Hammer and US consulting firms Electronic Enterprise Internat, World Wide Web US Government, Netscape, Microsoft SCMSAP, client / server software SAP(Germany), ORACLE(US)

32. Bangalore 32 2000s E Commerce – Internet, Amazon, eBay, Yahoo ! Outsourcing and FLATTENING of the world

33. Bangalore 33 Index Of Industrial Production abstract number, the status of production in the industrial sector for a given period of time as compared to a reference period of time. single representative figure to measure the general level of industrial activity in the economy. Short-term indicator of industrial growth till the actual results from Annual Survey of Industries (ASI) become available.

34. Bangalore 34 ?

35. Bangalore 35

36. Bangalore 36

37. Bangalore 37 www.mospi.nic.in Government for policy planning purposes Industrial Associations, Research Institutes and Academicians. Mining, Manufacturing and Electricity

38. Bangalore 38 Define Competitive advantage Choose one of these : Dominos, ICICI Prudential, TVS Bike,VLCC, ITC, Wonder La,Amity,B - and list the main activities the operations manager must manage. What is each company’s competitive advantage ? What do Operations Managers do?  role demands  planning  decisions  coordination  systems  role demands  planning  decisions  coordination  systems

39. Bangalore 39 Read “The Goal” - Eliyahu M. Goldratt “Jack Welch and the GE Way” - Robert Slater