PPT on introduction of production and operation management

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Introduction to Operations Management PRASENTED BY Diwansh rastogi Future Institute Bareilly

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What is Operations Management?

3 Basic Functions of Business Organizations:

3 Basic Functions of Business Organizations Ensure and allocating financial resources Produce goods or services Assess consumer needs, and sell / promote goods or services

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Operations function consists of all activities directly related to producing goods or providing services.

Operations: A Transformation Process:

Operations: A Transformation Process Workers Managers Equipment Facility Materials Land Energy Information Goods Services I nputs Outputs Operations and processes Feedback Performance Lead time The time between ordering a good or service and receiving it.

Operations Management:

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

Operations = Transformation Process:

Operations = Transformation Process Inputs 5 Ms Management, Methods, Material, Machines, Maintenance Also: Personnel , information & energy 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.

Example: Food Processor:

Example: Food Processor Inputs Processing Outputs Raw Vegetables Metal Sheets Water Energy Labor Building Equipment Cleaning Making cans Cutting Cooking Packing Labeling Canned vegetables Consumer Feedback

Example: Hospital:

Example: Hospital Inputs Processing Outputs Healthy patients Doctors, nurses Hospital Medical Supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy Improvement of patients health condition

Example: BA 3352:

Example: BA 3352 Inputs Processing Outputs Knowledge Text Book Lecture Notes Handouts Course CD …… Lecturing Tutoring Assignment Exam Future operations managers Teaching Evaluation

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Manufacture or Service Operations?

Manufacturing or Service?:

Manufacturing or Service? Tangible Act Production of goods Delivery of services “ perceptible by the senses especially the sense of touch” WordNet ® 2.0, © 2003 Princeton University

Goods-Service Continuum:

Goods-Service Continuum Steel production Automobile fabrication Home remodeling Retail sales Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing High percentage goods Low percentage service Low percentage goods High percentage service Figure 1.3

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Manufacturing vs. Service Characteristic Manufacturing Service Output Uniformity of output Uniformity of input Labor content Measurement of productivity Customer contact Opportunity to correct quality problems before delivery Evaluation Patentable Table 1.3 Tangible High High Low Easy Low High Easy Usually Intangible Low Low High Difficult High Low Difficult Not Usually

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What does Operations Manger Do?

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

Example: Airline Company:

Example: Airline Company 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.

Example: Automobile Factory:

Example: Automobile Factory 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.

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Responsibilities of Operations Manager Products & services Planning – Capacity – Location – – Make or buy – Layout – Projects – Scheduling Controlling/Improving – Inventory – Quality Organizing – Degree of centralization – Process selection Staffing – Hiring/laying off – Use of Overtime Directing – Incentive plans – Issuance of work orders – Job assignments – Costs – Productivity Table 1.6

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Why is Operations Management Important?

Reasons to Study Operations Management:

Reasons to Study Operations Management 50% or more of the jobs in industry are operations management-related: Customer Service Quality Assurance Production Planning Scheduling Inventory Management Logistics Operations Management activities are at the core of all business organizations. All Other Functional Areas are interrelated with Operations Management

Operations as Technical Core:

Operations as Technical Core Operations Finance Capital Markets, Stockholders Marketing Customers Workers Suppliers Purchasing Personnel

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The Overlapping of Three Major Functions Figure 1.5 Operations Finance Marketing Budgeting Economic analysis of investment proposals Provision of funds …… Financial indicators Competitor Customer preference Trend of technology …… Judgment of manufacturability Fulfillment lead time

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Where is Operations Management from?

Evolution of Operations Management:

Evolution of Operations Management Highly skilled workers use simple, flexible tools to produce small quantities of customized goods. PROBLEMS: slow & costly, no economies of scale Craft Production Mass Production Lean Production

Evolution of Operations Management:

Evolution of Operations Management Low-skilled workers use specialized machinery to produce high volumes of standardized goods. PROBLEMS: rigid; not easy to accommodate changes in volume, product, or process; volume over quality CONCEPTS: interchangeable parts, division of labor Craft Production Mass Production Lean Production

Evolution of Operations Management:

Evolution of Operations Management Craft Production Mass Production Lean Production Using minimal amount of resources to produce high volume, high-quality goods w/ some variety PROBLEMS: more stress, no safety nets, more skill for fewer advancement opportunities CONCEPTS: quality, involvement, teamwork

Classification of Operations:

Classification of Operations 1.Based on Demand Pattern: a) Make-to-Order (e.g. Airplane / Film Developing/……) Assembly-to-Order (e.g. Car/ Fast food/……) b) Make-to-Stock (e.g. Clothes/ Toys/……) Assembly-to-Stock (e.g. Electronic Products/ TV Sets/……)

Classification of Operations:

Classification of Operations 2.Based on Type of Conversion Process: Type of Conversion 1.Project Shop 2.Job Shop (Batch Shop) 3.Assembly Line 4.Continuous Process Goods House Building Printing Shop Automobile Oil Refinery Food Process Service Landscaping Dept. Store Airport Gas Station TV Channels

Major Characteristics of Operations Process:

Major Characteristics of Operations Process Type of Conversion 1.Project Shop 2.Job Shop (Batch Shop) 3.Assembly Line 4.Continuous Process Product Mix Size Few Many (Several) Few Single Production Volume Single or Few Low (Medium) High Very High

Project Shop Production (e.g. Shipbuilding, Aircraft building):

Project Shop Production (e.g. Shipbuilding, Aircraft building) Product mostly standard- can be customized Both general and specialized purpose equipment is used Large size operation Single item production runs Production schedule is fixed and definite-planned well in advance Formal quality control in most aspects-clear standards Firms compete on quality, price, technology, capacity, and delivery speed.

Job Shop Production Facility:

Job Shop Production Facility Custom Products- each job could be different New products introduced constantly and easily No clear flow pattern through facility Mostly general purpose equipment is used Impossible to balance capacities with demand - equipment, will be idle. Usually small to medium size operation .

Job Shop Production Facility (II):

Job Shop Production Facility (II) Short production runs Large work in process is typical Highly skilled workers typically utilized Informal quality control through each worker-final inspection Firms compete on technical competence and flexibility to market change more than absolute price.

Batch Flow Process (e.g. garment manufacturing):

Batch Flow Process (e.g. garment manufacturing) Several similar product lines- some customization. New products in same “family” introduced routinely and easily. One basic flow pattern- some products may skip steps in process. General purpose equipment is predominant- some special purpose. Size of operation can vary- usually medium sized

Batch Flow Process (II):

Batch Flow Process (II) Capacity measure somewhat fuzzy- can be used. Short to medium length production runs. Workers typically medium to lower skilled. Quality control can be formal- emphasis on worker for Q.C. Products often compete in market based on price and quality (of design).

Assembly Line Process (e.g. auto assembly plant):

Assembly Line Process (e.g. auto assembly plant) Standard products- some opportunities for selected options. New product introduced infrequently. Product flow pattern is rigid – inflexible. Can be either machine or worker paced. Capacities almost always balanced. Specialized equipment is used. Usually capital intensive. Large size operation.

Assembly Line Process (II):

Assembly Line Process (II) Difficult to alter capacity of plant incrementally. Work-in-process does not sit idle. Lower skilled workers typically used. Facility usually operated as a cost center. Formal quality control system- workers important in Q.C. Products compete on the basis of price and quality (of consistency).

Continuous Flow Process (e.g. paper mill):

Continuous Flow Process (e.g. paper mill) Standard products- little customization of products. New products introduced infrequently- expensive to do. Product flow pattern is rigid – inflexible. Specialized equipment is used. Capacities are almost always balanced. Very capital intensive- automation is usually evident. Usually very large size operation.

Continuous Flow Process (II):

Continuous Flow Process (II) Easy to measure capacity. Difficult and expensive to alter capacity. Very long production run length. Lower to medium skilled workers used- some technicians. Facility usually operated as a cost center- not profit center. Formal quality control system. Products usually compete in market based upon price alone.

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Project Shop Job Shop Batch Flow Shop Assembly Line Continuous Flow 1) In which are new Products introduced more frequently? 2) In which is it easier to measure plant capacity? 5) In which is it easier to increase capacity incrementally? 6) In which will machine capacity more likely to be maximized? 7) In which are worker skill levels apt to be highest?

Job Shop vs. Assembly Line (II):

Job Shop vs. Assembly Line (II) 9) Which is likely to make the fewest number of different products? 10) Which is more machine paced? 11) Which is more likely to employ long production runs? 12) In which is an individual incentives system less likely?

Job Shop vs. Assembly Line (III):

Job Shop vs. Assembly Line (III) 13) Which is typically more capital intensive? 14) In which is forward/backward integration more common? 15) Which makes “standard products”? 16) Which employs a product flow pattern? 17) Which is more likely to employ the more formal Q.C. techniques? 18) In what is competition in the industry less likely to be based on price alone?

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Where are we going?

Trends in Business:

Trends in Business Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Agility The ability of an organization to respond quickly to demand or opportunities.

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Suppliers’ Suppliers Direct Suppliers Producer Distributor Final Consumer Simple Product Supply Chain Supply Chain: A sequence of activities and organizations involved in producing and delivering a good or service.

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Trends Impacting Operations Management From To Massification Relatively simple task process Long delivery cycles (people can wait) Loyal employees (want to be let) Functional hierarchical, self-contained units Customization Complex, High-Tech Operations Short delivery cycles (time is money) Empowered employees (value-driven) Complex, cross-functional, matrix (networked) organizations

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From To Margins in production (manufacturing) Service quality important Multiple vendors (suppliers) competing on price (commodity) Quality costs more Regulated markets Domestic markets Margins after-market (service) Service quality critical (uptime, customer interface) Few, strategic, value-added suppliers (service partners) Quality costs less Competitive markets Global markets

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Labor/management conflicts Controlled situation Distinction between customers, suppliers, competitors Labor/management collaboration Ambiguity & uncertainty Distinction blurred

Today's Factors Affecting OM:

Today's Factors Affecting OM Global Competition Quality, Customer Service, and Cost Challenges Rapid Expansion of Advanced Technologies Continued Growth of the Service Sector Scarcity of Operations Resources Social-Responsibility Issues

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