1. Operations Management Facilitator: Rajesh Pandey

2. Objectives  To understand what is Manufacturing Management  Classification of industries and production systems  Emerging challenges for operations 2

3. Introduction Major sectors in a country - Manufacturing, Service and Agriculture In India Manufacturing and Services constitute 75% of the GDP

4. Definition Production and Operations Management ("POM") is about the transformation of production and operational inputs into "outputs" that, when distributed, meet the needs of customers.

5. Purchasing InputsOutputs Vendors Orders Materials flow through a Manufacturing company Receiving Raw Material Storage Conversion Stages In Process Storage Finished Goods Inventory Shipping Distributors Sell to Customers 5

6. Transformations  Manufacturing Transformations  Machine tool mfg  Service Transformations  Bank, garage, restaurant  Differences in terms of  Tangibility  Simultaneous production & consumption  Perishability 6

7. OM incorporates many tasks that are interdependent, but which can be grouped under five main headings:

8. PRODUCT Marketers in a business must ensure that a business sells products that meet customer needs and wants. The role of Production and Operations is to ensure that the business actually makes the required products in accordance with the plan. The role of PRODUCT in POM therefore concerns areas such as: - Performance - Aesthetics - Quality - Reliability - Quantity - Production costs - Delivery dates

9. PLANT To make PRODUCT, PLANT of some kind is needed. This will comprise the bulk of the fixed assets of the business. In determining which PLANT to use, management must consider areas such as: - Future demand (volume, timing) - Design and layout of factory, equipment, offices - Productivity and reliability of equipment - Need for (and costs of) maintenance - Heath and safety (particularly the operation of equipment) - Environmental issues (e.g. creation of waste products)

10. PROCESSES There are many different ways of producing a product. Management must choose the best process, or series of processes. They will consider: - Available capacity - Available skills - Type of production - Layout of plant and equipment - Safety - Production costs - Maintenance requirements

11. PROGRAMMES The production PROGRAMME concerns the dates and times of the products that are to be produced and supplied to customers. The decisions made about programme will be influenced by factors such as: - Purchasing patterns (e.g. lead time) - Cash flow - Need for / availability of storage - Transportation

12. PEOPLE Production depends on PEOPLE, whose skills, experience and motivation vary. Key people-related decisions will consider the following areas: - Wages and salaries - Safety and training - Work conditions - Leadership and motivation - Unionisation - Communication

13. Importance of Operations Management During the past couple of decades, many domestic companies saw their market share decline due to their inability to compete with foreign firms in terms of product design, cost, or quality. Theories to explain this development:  Cultural differences  Government policies  Neglect of human resources  Insufficient investment in technology World-class performance by operations in delivering high- quality, cost-competitive products and services is essential to survival in today's global economy. Of late Auto components, pharma, IT and ITES sectors are showing signs of global competitiveness.

14. THE DRAGON VS THE ELEPHANT 14 IndiaFactorChina 1947Economic race started 1947 1991Liberalisation initiated 1978 5-6%GDP Growth9-10% 100 Cr +Population130 Cr $100Per Capita Income$450 $3-5 bnFDI$45-60bn Rs. 5-7/unitElectric PowerRs. 3/unit 100 unitsProductivity300 units Very StrongTrade UnionsNo TU rights

15. THE DRAGON VS THE ELEPHANT 15 IndiaFactorChina 10 millionTV sets produced40 million 56 mn tonsSteel production578 mn tons $30 bnTextiles production$145 bn $15 bnTextiles exports$80 bn 2 millionAutomobiles production 5.5 million

16. Operations Manager takes decisions on - What to Produce? The Design of Products & Services Where to Produce? Facility Location How Much to Produce? Capacity Planning for Manufacturing & Service Systems How to Produce? Process Design; Work Analysis, Design & Measurement; Layout & Safety.

17. Customer focus…. 17

18. Core services are basic things that customers want from products they purchase. Core Services

19. Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way. Value-Added Services Defination

20. Dealing with Trade-Offs Cost (Value) Quality Delivery (Speed)Flexibility WCM -companies adopt TQM, Pull systems, JIT,TPM 20

21. How do Firms Add Value? Greater productivity – Lower costs and expenses – Lower prices for the customer Higher quality – Better performance – Greater durability, reliability, aesthetics. Better timeliness – Faster response and turnaround – On-time delivery, meet promises Greater flexibility – greater variety – customization for customer needs / desires

22. Operations - Strategy Product/Service Design Process Selection Site Selection Facility Layout Capacity Planning Demand Management MRP/ERP Production Planning and Scheduling Inventory Management Quality control OM Deals With

23. OM and Other Business Functions Marketing What operations can do relative to meeting due dates, product customization, new product introduction.

24. OM and Other Business Functions Understand inventory management, capacity utilization and labour standards to develop accurate cost data, perform audits, and prepare financial reports. Cost accountants must be aware of how JIT works. Need for capital investments. Forecast cash flows. Make-or-buy decision. Plant expansion and/or relocation. Finance

25. OM and Other Business Functions – How jobs are designed? Compensation and incentive programs. Skills of work force. Human Resources

26. OM and Other Business Functions Design and develop software. Major business applications of computers is in production control. Information Technology

27. OM and Other Business Functions Often fail because they run out of working capital. Poor production, planning and inventory management. Entrepreneurs

28. Current Issues in OM Effectively consolidating the operations resulting from mergers. Developing flexible supply chains to enable mass customisation of products and services. Managing global supplier, production and distribution networks.

29. Current Issues in OM (cont’d) Increased “commoditization” of suppliers. Achieving the “Service Factory”. Achieving good service from service firms.

30. That’s it for Today’s Learning. More in next session -