Introduction.pptx

Introduction to Operations Management

What is Operations Management? • Operations management is an area of management concerned with overseeing, designing, and controlling the process of production and redesigning business operations in the production of goods or services. • Operations management is the process of obtaining and utilizing resources to produce useful goods and services, so as to meet the goals of the organization.

Operations management focuses on carefully managing the processes to produce and distribute products and services. Major, overall activities often include product creation, development, production and distribution. (These activities are also associated with Product and Service Management.) A great deal of focus is on efficiency and effectiveness of processes.

The management of systems or processes that create goods and/or provide services. ◦ Planning ◦ Coordinating ◦ Executing

Ensure and allocating financial resources

Produce goods or services

Assess consumer needs, and sell / promote goods or services

Feedback

Outputs

Inputs Workers Managers Equipment Facility

Performanc e

Operations and processes

Goods Services

Materials Land Energy Informatio Lead time The time between ordering a good or service and n receiving it.

OVERVIEW OF OPERATIONS MANAGEMENT MODEL Input: resources raw materials machines personnel capital land/buildings utilities information etc.

Output Transformation Process

Control

Goods or Services

Feedback and Control

Physical Flow

Information Flow

Measurements taken at various points in the transformation process for control purposes are called feedback. The process of comparing outputs to previously established standards to determine if corrective action is needed is called controlling

 Inputs ◦ 5 Ms Man, Methods, Material, Machines, Money

 Transformation/conversion process Cutting, machining, storing, transporting, investing, analyzing

 Output Goods/services Value-added The difference between the cost of inputs and the value or price of outputs.

Automobile factory Input Output steel, plastic Car glass, paint tools Transformation equipment process machines personnel, buildings utilities, etc.

Table 1.2

Inputs

Processing

Outputs

Doctors, nurses

Examination

Healthy

Hospital

Surgery

patients

Medical Supplies

Monitoring

Equipment

Medication

Laboratories

Therapy

Improvement of patients health condition

Table 1.2

Inputs

Processing

Outputs

Knowledge

Lecturing

Future

• Text Book

Tutoring

operations

• Lecture Notes

Assignment

managers

• Handouts

Exam

• Course CD • …… Teaching Evaluation

 Central to the building of a brand name/reputation of the company/firm, as a competitive weapon: * * *

High-quality product/service provider Low cost/good value producer/service provider (e.g.- Micromax) Fast delivery or response/lead time

 Improves the living standards of citizens and wealth of nations: * Has impact on GDP per capital * High-value added

 Improves productivity: *

Effective control of the conversion process of inputs into outputs (e.g., fewer defect output, less wastage of material inputs, effective allocation of staff, will lead to more output per unit time). ** Higher productivity leads to higher profits

 Improves our ability to meet customer needs: *

Ensure provision of high quality products and services at reasonable prices (not just cheap output) * Enables us to provide service to our target customers better than our competitors

Production Management Production management deals with converting raw materials into finished goods or products. Production management means planning, organising, directing and controlling of production activities. Production is defined as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user.”

Characterstics of Production system 1. Production is an organized activity, so every production system has an objective. 2. The system transforms the various Inputs to useful Outputs. 3. It doesn’t operate in Isolation from the other organization system. 4. There exists a feedback about the activities, which is essential to control and improve system performance.

Difference between Production and Operation Management 1. Output Production Management handles manufacturing of products while the operations management covers both products and services. 2. Usage of Output The use of products like computers, cars, etc. can be made over a period whereas the services need to be consumed immediately.

3. Categorization of work To outturn products like cars or computers more capital and fewer labor services are required while in the operations department, more workers and less money is needed. 4. Customer communication There is no participation of clients during the production phase, whereas for services the client communication is a must. 5. Decision Making

5. Decision Making Related to the aspects of production wheras while the operation management deals with the regular business activities.

Dr Felton Lean

What does Operations Manger Do?

Scope of Operations Management  Operations Management includes: ◦ Forecasting ◦ Capacity planning ◦ Scheduling ◦ Managing inventories ◦ Assuring quality ◦ Motivating employees ◦ Deciding where to locate facilities ◦ And more . . .

 Forecasting: Weather, landing conditions, seat demands for flights.  Capacity Planning: How many number of planes in each route?  Scheduling: Scheduling of planes for flights and for routine maintenance, scheduling of pilots and flights attendants.  Quality: Quality of the services, Safety.

 Forecasting: Demands for cars.  Capacity Planning : Number of shifts, level of workforce.  Inventory: Various component, parts.  Scheduling: Scheduling of various types of cars, Scheduling of workforce.  Quality: Quality of products, services.

Responsibilities of Operations Manager Planning – Capacity – Location – Products & services – Make or buy – Layout – Projects – Scheduling Controlling/Improving – Inventory – Quality – Costs – Productivity

Organizing – Degree of centralization – Process selection Staffing – Hiring/laying of – Use of Overtime Directing – Incentive plans – Division of work orders – Job assignments

Productivity 

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Productivity is measure of how much input is required to produce a given output i.e the ratio of output to input Productivity is the output of any production process, per unit of input. To increase productivity means to produce more with less. In factories and corporations, productivity is a measure of the ability to create goods and services from a given amount of labour, capital, materials, land, resources,knowledge, time or any combination of those.

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In factories and corporations, productivity is a measure of the ability to create goods and services from a given amount of labour, capital, materials, land, resources,knowledge, time or any combination of those. Increase productivity on the part of capital and labour. A measure of the efficiency of a person, machine, factory,system, etc., in converting inputs into useful outputs. Dr Felton Lean

Productivity Measurement • Productivity can be measured, the amount of output per unit of input. • In a factory it might be measured based on the number of hours it takes to produce a good. • While in service industry, might be measured based on the income generated by an employee divided his/her salary.

Dr Felton Lean

Operations Marketing Customers

Workers

Finance

Personnel

Purchasing

Suppliers

Capital Markets, Stockholders

TYPES OF MANUFACTURING PROCESSES

INTERMITTENT

JOB

BATCH

CONTINOUS

MASS

PROCESS

JOB System

Variety Intermittent System

Batch Production

Mass System Continuous Production

Volume

Process Production

 Goods are manufactured specially to fulfill orders made by customers rather than for stock.  Intermittent production system are those where the production facilities are flexible enough to handle a wide variety of products and sizes.  Nature of inputs changes with the change in the design of the product.  In the intermittent production system, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular).  Ex:- Machine shops, hospitals.

 Job production is the production of single complete unit by one operator or group of operators. E.g.- Bridge building, dam construction etc.  Whole project is considered as one operation and work is completed on each product before passing on to the next.  There is no assurance of continuous demand for specific items.  Versatile and skilled labour is needed.  High capital investment.  High unit cost of production.

Advantages:  Able to produce unique orders to meet customers’ individual needs.  More likely to motivate workers (see end results)  Fairly simple way of production(one a time)

Disadvantages:  Labor intensiveness and high costs  High selling costs  Not fit for mass production and large demand

 Production schedule can chalked out according to specific orders or on the basis of demand forecast.  Items are processed in lots or batches unlike job production.  In batch type system a new batch is undertaken for production only when the work on all items of a batch is complete.  A batch is not passed to next operation until the work on the previous operation is complete for the whole batch and new batch enters the production line, till all the operation for manufacturing any product are complete.

Advantages:  Suitable for a wide range of similar products  Reducing the need for skilled workers  More standardized products

Disadvantages:  Higher unit costs for small batch  Less motivated workers for repetitive one operation  Careful planning needed to reduce idle machines or worker waiting

 These are also referred to as Repetitive Manufacturing Systems.  These are mass production facilities that produce high volumes of the same products.  The manufacturing happens in Automated, special-purpose equipments.  Production is done on the basis of sales forecast and stock position..  Product(s) follow the same path:

 Process manufacturing is the production of goods by combining supplies, ingredients or raw substances using a formula or recipe. Examples of process manufacturing goods include food, beverages, refined oil, gasoline, pharmaceuticals, chemicals and plastics.When is it used: – Dedicated plant and equipment with zero flexibility – Material handling is fully automated. – Process follows a predetermined sequence of operations – Product differentiation is limited. – Involves high initial investments. Ex:- Chemical plant, Oil and Gas, Petroleum refineries, Sugar mills, etc.

Mass production refers to the process of creating large numbers of similar products efficiently.  When is it used: – Standardization of product and process sequence – Dedicated special purpose machines having high production capacities and output rates – Large volume of products. – Material and parts flow is continuous. – Production planning and control is easy. – Material handling can be completely automatic.