Introduction To Operations Management
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Introduction
Production Operations Management is managing of productive resources (Men, Material, Equipments & Facilities) Efficiently & Effectively. MBA graduates are expected to help organizations gain competitive advantage by excelling in meeting customer needs. Whether you are in Marketing, Finance or Operations; effectively serving customers will need knowledge of Operations Management. Serving customers means meeting the requirement in time, with exceptional quality at lowest cost.
Introduction
Production Operations Management provides interesting career opportunities – Directly supervising Operations OR Operations Management specialists like (SCM) Supply Chain Management, ERP ( Enterprise Resource Planning), QA (Quality Assurance), Purchasing. Production Operations Management is defined as the design, operation & improvement of the system that creates & delivers firm’s primary products & services.
Introduction
Production is the process by which goods & services are produced. Manufacturing management brings together Men, Machines & Material to provide goods & services. There by satisfying customer needs. Operations includes both Manufacturing as well as Service Organizations. Operations may be defined as process of changing input into output; thereby adding value.
Service & Goods Production
Service is intangible while goods is a physical output. In service direct customer involvement in creating output is essential. Customers are on the ‘shop floor’ when consuming service. Shop floor may be called front office, dinning area, passenger cabin.
Introduction
Effectiveness of production process can be efficiency with which input is converted into output. Productivity=output/input. Essentially production/operations management is concerned with management of productivity. Reduce conversion cost, idling resources, defective goods, lower throughput time.
Functions of Manufacturing Management
Planning:
Organizing:
Product selection & design. Process selection. Facility location, Material handling. Capacity planning. Forecasting. Work-study & job design.
Controlling:
Inventory control, Quality control. Cost control, Production control.
Introduction T2 T2 T2
T1 OEM T1
Warehouse Distributor Dealer
Retailer
Customer
T2 Supply Chain
Distribution Network
Production Operations Management is concerned with managing all these individual processes Effectively
Introduction
Within Operations Management the decisions can be divided into 3 broad areas. 1) Strategic:
Long term decisions How to make the product? Where to locate the facility? How much capacity to be created?
Introduction
2) Tactical Decisions:
Medium term. Decisions made at strategic stage become preconditions. How many workers do we need? When do we need the material? How much inventory do we hold?
3) Operational Planning & Control Decisions:
Day to day planning. Scheduling, Priority What job to do? Whom do we assign?
Production System
Production system uses resources to transform inputs into some desired output (Product or Services). Inputs may be raw material; customers or finished products from another system.
Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
Production System System
Primary Input
Resource s
Primary Transformatio n Function
Desired Output
Hospital
Patients
Healthcare
Healthy Individuals
Restaurant
Hungry Customers
Doctors, Nurses, Medicines, Equipment s Food
Well prepared, Well served food
Satisfied Customers
Fabrication, Assembly.
High quality cars.
Automobile Manufacturin g
Sheet Metal, Steel, Parts
items, Chef, Waiters, Environme Tools, nt Equipment s, Workers
Production System System
Primary Input
College, Universit y
High school Teachers, Pass outs Books, Classrooms.
Departme Shoppers -ntal Store
Airline
Travelers
Resources
Stock of goods, Display, Sales persons Aero planes, Crew, Fuel.
Primary Transformati on Function
Desired Output
Imparting Knowledge, Skills
Educated Individual s
Attract shoppers, Promote products.
Sales to satisfied customer s.
Move to destination
On time safe delivery to destinati
Historical Development of OM Year
Concept
Originator
1910’s
Principals of scientific management. Time & motion study. Economic Order Quantity (EOQ). Conveyor Line
F.W.Taylor F.W.Taylor F.W.Harris Henry Ford
!930’s
Quality Control, SPC, Sampling
Walter Shewhart
1970’s
Wide spread use of Computers in business.
IBM
Historical Development of OM Year
Concept
Originator
1980’s
JIT, Kanban, Lean Manufacturing
Taichi Ohno, TPS
1990’s
Total Quality Management (TQM). Business Process reengineering Supply chain Management
Japanese Manufacturers SAP
2000’s
E – Commerce; B to B; B to C
Amazon, Yahoo. E Bay
Typical Organization Structure Operations Manufacturing
Quality Assurance
Maintenance
Materials Management
PPC
Introduction To Materials Management
Value of supply chain has been recognized long back. In 401 BC a Greek General while addressing his army of 14,000 men; fighting 1,300 miles away from Greece said “ The survival of the Greek army depends not only on it’s discipline, training & morale but also on it’s supply chain”. Today survival of most firms depends on intelligent supply chain decisions. Lot of brain power & technology is applied to improve supply chain performance.
What Is A Supply Chain
Supply Chain consists of all parties involved directly or indirectly in fulfilling customer request. It includes Manufacturer, Transporter, Warehouses, Retailers & Customers themselves. Within Manufacturing it includes all functions involved in receiving & fulfilling customer request.
Functions included are New Product Development, Marketing, Operations, Distribution, Finance & customer service.
Supply Chain
Customer walking into a retailer to purchase a detergent. Customer Retailer 3rd party logistic Distributor Logistic Manufacturer Tier1 supplier Tier 2 supplier.
Supply Chain
Draw Supply Chain for : Supplier walking into a Super Market. Online purchase like Dell Computers & Amazon. COM. Online booking of Air ticket. Purchase of vegetables, fruits at Reliance fresh.
Supply Chain
Supply Chain is dynamic. Involves constant flow of product, information & funds. It is a Network or Web of many suppliers & distributors.
Objectives of a Supply Chain
Maximize overall value generated. Value is the difference between finals product’s worth to the customer & cost supply chain incurred to fulfill customer requirement. Value is correlated to supply chain profitability or supply chain surplus ( Total profit to be shared by all).
Objectives of a Supply Chain
Cost of supply chain includes cost of production, storage, transportation, cost to convey information, Funds transfer …. Etc. Success to be measured in terms of supply chain profitability & not individual stage. Focus on individual stage may lead to reduction in overall supply chain
Measuring SC performance
Inventory turns = Cost of goods sold p.a. Average aggregate inventory value
Inventory in Number of days = 365* Average aggregate inventory value
Cost of goods sold
Introduction
Production Operations Management is managing of productive resources (Men, Material, Equipments & Facilities) Efficiently & Effectively. MBA graduates are expected to help organizations gain competitive advantage by excelling in meeting customer needs. Whether you are in Marketing, Finance or Operations; effectively serving customers will need knowledge of Operations Management. Serving customers means meeting the requirement in time, with exceptional quality at lowest cost.
Introduction
Production Operations Management provides interesting career opportunities – Directly supervising Operations OR Operations Management specialists like (SCM) Supply Chain Management, ERP ( Enterprise Resource Planning), QA (Quality Assurance), Purchasing. Production Operations Management is defined as the design, operation & improvement of the system that creates & delivers firm’s primary products & services.
Introduction
Production is the process by which goods & services are produced. Manufacturing management brings together Men, Machines & Material to provide goods & services. There by satisfying customer needs. Operations includes both Manufacturing as well as Service Organizations. Operations may be defined as process of changing input into output; thereby adding value.
Service & Goods Production
Service is intangible while goods is a physical output. In service direct customer involvement in creating output is essential. Customers are on the ‘shop floor’ when consuming service. Shop floor may be called front office, dinning area, passenger cabin.
Introduction
Effectiveness of production process can be efficiency with which input is converted into output. Productivity=output/input. Essentially production/operations management is concerned with management of productivity. Reduce conversion cost, idling resources, defective goods, lower throughput time.
Functions of Manufacturing Management
Planning:
Organizing:
Product selection & design. Process selection. Facility location, Material handling. Capacity planning. Forecasting. Work-study & job design.
Controlling:
Inventory control, Quality control. Cost control, Production control.
Introduction T2 T2 T2
T1 OEM T1
Warehouse Distributor Dealer
Retailer
Customer
T2 Supply Chain
Distribution Network
Production Operations Management is concerned with managing all these individual processes Effectively
Introduction
Within Operations Management the decisions can be divided into 3 broad areas. 1) Strategic:
Long term decisions How to make the product? Where to locate the facility? How much capacity to be created?
Introduction
2) Tactical Decisions:
Medium term. Decisions made at strategic stage become preconditions. How many workers do we need? When do we need the material? How much inventory do we hold?
3) Operational Planning & Control Decisions:
Day to day planning. Scheduling, Priority What job to do? Whom do we assign?
Production System
Production system uses resources to transform inputs into some desired output (Product or Services). Inputs may be raw material; customers or finished products from another system.
Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
Production System System
Primary Input
Resource s
Primary Transformatio n Function
Desired Output
Hospital
Patients
Healthcare
Healthy Individuals
Restaurant
Hungry Customers
Doctors, Nurses, Medicines, Equipment s Food
Well prepared, Well served food
Satisfied Customers
Fabrication, Assembly.
High quality cars.
Automobile Manufacturin g
Sheet Metal, Steel, Parts
items, Chef, Waiters, Environme Tools, nt Equipment s, Workers
Production System System
Primary Input
College, Universit y
High school Teachers, Pass outs Books, Classrooms.
Departme Shoppers -ntal Store
Airline
Travelers
Resources
Stock of goods, Display, Sales persons Aero planes, Crew, Fuel.
Primary Transformati on Function
Desired Output
Imparting Knowledge, Skills
Educated Individual s
Attract shoppers, Promote products.
Sales to satisfied customer s.
Move to destination
On time safe delivery to destinati
Historical Development of OM Year
Concept
Originator
1910’s
Principals of scientific management. Time & motion study. Economic Order Quantity (EOQ). Conveyor Line
F.W.Taylor F.W.Taylor F.W.Harris Henry Ford
!930’s
Quality Control, SPC, Sampling
Walter Shewhart
1970’s
Wide spread use of Computers in business.
IBM
Historical Development of OM Year
Concept
Originator
1980’s
JIT, Kanban, Lean Manufacturing
Taichi Ohno, TPS
1990’s
Total Quality Management (TQM). Business Process reengineering Supply chain Management
Japanese Manufacturers SAP
2000’s
E – Commerce; B to B; B to C
Amazon, Yahoo. E Bay
Typical Organization Structure Operations Manufacturing
Quality Assurance
Maintenance
Materials Management
PPC
Introduction To Materials Management
Value of supply chain has been recognized long back. In 401 BC a Greek General while addressing his army of 14,000 men; fighting 1,300 miles away from Greece said “ The survival of the Greek army depends not only on it’s discipline, training & morale but also on it’s supply chain”. Today survival of most firms depends on intelligent supply chain decisions. Lot of brain power & technology is applied to improve supply chain performance.
What Is A Supply Chain
Supply Chain consists of all parties involved directly or indirectly in fulfilling customer request. It includes Manufacturer, Transporter, Warehouses, Retailers & Customers themselves. Within Manufacturing it includes all functions involved in receiving & fulfilling customer request.
Functions included are New Product Development, Marketing, Operations, Distribution, Finance & customer service.
Supply Chain
Customer walking into a retailer to purchase a detergent. Customer Retailer 3rd party logistic Distributor Logistic Manufacturer Tier1 supplier Tier 2 supplier.
Supply Chain
Draw Supply Chain for : Supplier walking into a Super Market. Online purchase like Dell Computers & Amazon. COM. Online booking of Air ticket. Purchase of vegetables, fruits at Reliance fresh.
Supply Chain
Supply Chain is dynamic. Involves constant flow of product, information & funds. It is a Network or Web of many suppliers & distributors.
Objectives of a Supply Chain
Maximize overall value generated. Value is the difference between finals product’s worth to the customer & cost supply chain incurred to fulfill customer requirement. Value is correlated to supply chain profitability or supply chain surplus ( Total profit to be shared by all).
Objectives of a Supply Chain
Cost of supply chain includes cost of production, storage, transportation, cost to convey information, Funds transfer …. Etc. Success to be measured in terms of supply chain profitability & not individual stage. Focus on individual stage may lead to reduction in overall supply chain
Measuring SC performance
Inventory turns = Cost of goods sold p.a. Average aggregate inventory value
Inventory in Number of days = 365* Average aggregate inventory value
Cost of goods sold
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