Production Management

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OBJECTIVES     

 

Operations Management Why Study Operations Management? Transformation Processes Defined Operations as a Service The Importance of Operations Management Historical Development of OM Current Issues in OM

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What is Operations Management? Defined Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

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Why Study Operations Management? Systematic Approach to Org. Processes

Business Education

Operations Management

Career Opportunities

Cross-Functional Applications

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The consultancy services market % of world revenues of 40 largest firms Financial 6

Marketing/sales 2

Organizational design 11

Operations and process management 31

Benefits/Actuarial 16

IT strategy 17

Corporate strategy 17

Source: Nigel Slack and Michael Lewis 2003 McGraw-Hill/Irwin

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

The Future of Operations – Outsourcing everything – Smart factories – Talking inventory – Industrial army of robots – What’s in the box – Mass customization – Personalized recommendations – Sign here, please

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Production Systems

Under Productive System developed country Food Shelter Goods Health Education Durable care Non Quality Durable Low Low standard Of living

•Change in civilization •Increase productive output

Developed country Transport system

Quality high

High standard Of living

•Need for management McGraw-Hill/Irwin

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Emergence of Operations Management Manufacturing & agricultural Science

Technology

Operation Management

Productive output

Service industries Use principle of Government org Management Resources : Men,Material,Machine(3Ms) McGraw-Hill/Irwin

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What is production ? A process by which goods & services are created  Production is a step By step conversion of one form of material into another form – chemically, mechanically.  Form utility is either created or enhanced(eg wood  chair, chilly powder curry) 

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Production/Service Process Men Machines Plants Services Methods Materials Capital Energy

Production Functions

Production Services Activities

Products Services Information

Add Values Produce outputs

Outputs for satisfaction of Human wants Step by step conversion of one form of Resources Plan, organise direct co- material into another form inputs ordinate control McGraw-Hill/Irwin

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Why Production ? Why Operations Management ? Add Values Quality Services Goods

Quantity Time

Production Activity Services

Products

Place Price

Add Values McGraw-Hill/Irwin

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Manufacturing

=

Production

Manufacturing mgmt =

Production mgmt

Production Mgmt +services = operation mgmt Example of non manufacturing organizations

Hospital

Bank

Transportation software Warehousing farming

Operation in service organization has some unique feature which are :* Non inventor able output of services, since generally no stock is produced * variable demand * mostly labour intensive operations * location of services is directed by the location of the users

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Production Management 1. 2. 3. 4.

Plan Organise Direct Control

Production function

1. Decision making management function

Raw Material

Finished Product

2. Decision managing the process 3. To convert raw material into product McGraw-Hill/Irwin

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Objective of Production Management  





Ultimate Objective Manufacturing cost at pre-establish costs Product quality at specified quality Manufacturing schedule at predetermined period or time

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 

   

Intermediate objective Optimum utilization of various inputs Machinery & eqpt Materials Manpower Manufacturing services

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Summary     

Production has to develop a product : with the correct quality In time At right place At the right price

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Responsibilities of Operations Managers/Production Managers

society

Finance I management N policy Accounting P

Capital Policy Labour

U

Facilities

Engineering T

Material

Marketing

technology control External feedback McGraw-Hill/Irwin

O Transfor mation ProductsU T process services P

Factory

U

hospital

T

Bank, hotel

Internal feedback

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Operations Management Decision Types 

Strategic (long-term)



Tactical (intermediate-term)



Operational planning and control (short-term)

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What is a Transformation Process? Defined A transformation process is defined as a use of resources to transform inputs into some desired outputs

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Transformations 

Physical--manufacturing



Locational--transportation



Exchange--retailing



Storage--warehousing



Physiological--health care



Informational--telecommunications

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What is a Service and What is a Good? 

“If you drop it on your foot, it won’t hurt you.” (Good or service?)



“Services never include goods and goods never include services.” (True or false?)

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OM in the Organization Chart Finance

Operations Operations

Marketing

Plant Plant Manager Manager

Operations Operations Manager Manager

Director Director

Manufacturing, Manufacturing, Production Production control, control, Quality Quality assurance, assurance, Engineering, Engineering, Purchasing, Purchasing, Maintenance, Maintenance, etc etc McGraw-Hill/Irwin

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

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Core Services Performance Objectives Quality

Flexibility

Operations Management

Speed

Price (or cost Reduction)

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Value-Added Services Defined Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way McGraw-Hill/Irwin

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Value-Added Service Categories Problem Solving

Information

Operations Management

Sales Support

Field Support

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The Importance of Operations Management  Synergies

must exist with other functional areas of the organization  Operations account for 60-80% of the direct expenses that burden a firm’s profit. McGraw-Hill/Irwin

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Historical Development of OM 

JIT and TQC



Manufacturing Strategy Paradigm



Service Quality and Productivity



Total Quality Management and Quality Certification

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Historical Development of OM (cont’d) 

Business Process Reengineering



Supply Chain Management



Electronic Commerce

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Current Issues in OM 

Coordinate the relationships between mutually supportive but separate organizations.



Optimizing global supplier, production, and distribution networks.



Increased co-production of goods and services

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Current Issues in OM (cont’d) 

Managing the customer’s experience during the service encounter



Raising the awareness of operations as a significant competitive weapon

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Question Bowl A major objective of this book is to show how smart managers can do which of the following? a. Improve efficiency by lowering costs b. Improve effectiveness by creating value c. Increasing value by reducing prices d. Serving customers well e. All of the above

Answer: e. All of the above

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Question Bowl In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following? a. Displays b. Stocks of goods c. Sales clerks d. All of the above e. None of the above

Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.) McGraw-Hill/Irwin

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Question Bowl In which of the following decades did the concept of quality control originate? a. 1920’s b. 1930’s c. 1940’s Answer: b. 1930’s (Tools such d. 1950’s as sampling inspection and e. 1970’s

statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)

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End of Chapter 1

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