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Operation Management
Production Defined
11/2/2017 2
Production/ Operations Management
Definition
2
Functional subsystems of org.
11/2/2017 4
Operations managers: responsible for the transformation process from
inputs to outputs. The Plan, Direct and coordinate within the operations of
the organization
11/2/2017 5
Functions of POM/ Role of Managers
Capacity
Location
Layout
Planning Projects
Products and services
Make or buy
Scheduling
Degree of centralization
Organizing Subcontracting
Hiring/laying off
Staffing Use of overtime
Incentive plans
Directing Issuance of work orders
Job assignments
Inventory control
Quality control
Controlling Work-in process control
Process control
Emerging Role of the Production & Operations Manager in India
today
Increased attention to
technology management To take part in the
in view of JVs of MNCs implementation & use of
with domestic companies ERP software in the
organization
New Responsibilities
To act as supply chain of Operations To automate the processes
managers in forging Managers according to the
long-term strategic requirements of the
relationships with organization
suppliers
To enhance the R & D effort
of the organization for
To act as a member of becoming self-reliant in
the concurrent developing new
engineering team in technologies
new product design
Operations
Business Education/ Increase Competitive
Career Opportunities Management Advantage/Survival
Cross-Functional
Applications
3
Types of Management Decisions
No. of decisions
taken increase
14
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
New Challenges in OM
From To
Global focus
Just-in-time
Local or national focus
Supply chain partnering
Batch shipments
Rapid product
Low bid purchasing development
Lengthy product Strategic alliances
development cycles Mass customization
Standardized products Empowered employees
Teams
Job specialization
New Challenges in OM
Common Characteristics
Entail customer satisfaction as a key measure of effectiveness
Production System
Conversion
Inputs Outputs
Subsystem
Control
Subsystem
Operations as a System (Detailed
Transformation view)
Operations as a System (detailed
view)
Control systems
Tight QC on raw materials
Machine settings adjustment
Change of tools
Proper allocation of operators to machines with matching skills
Change in production plans (volume)
Rigid in-process quality program to avoid rework
Environment
Internal(top management) and external(legal, political & Socio
Economic conditions) environment system takes feedback from
the environment
Types of Production system
Output type Products and services (customized and
standardized services)
Type of flow
Projects complex one of a kind product or service eg. Dam etc
Job shop units of different type of products flow through diff.
sequence and diff. shops. Eg. Hospital, auto repair. Requires more set
up time, more inventory, varying quality etc
Flow shop successive units of output go through the same sequence of
operations using specialized equipments positioned on a production line
eg. TV production
Batch Process jobs passes through functions in batches each having a
different routing. Shorter production runs, flexible machinery.
Continuous process extreme flow of input in a flow shop is sometimes
treated as a continuous process in which there is constant flow of
materials eg. Oil refining, Chemical processing
Transformations/ Conversion sub
systems
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Other Private Services Healthcare, Insurance, Finance etc
Govt. Services Local, State, Central
5 Ps of Transformation:
Product what to produce, Technology reqd. to produce, R&D prototype to Manufactured
product, Value engineering
Plant Location, capacity, equipments reqd., Maintenance and operation
Processes Type of Manufacturing process, customization, product flexibility, process
time
Programs Forecasting, Integration (process planning, design, manufacture, systems
dev), Production coordination (MRP, JIT etc)
People who?, skills?, location?, numbers?, deployment?, Motivations?, Legal rights? 5
Examples of Production Systems
System Inputs Conversion Output
(desired)
Hospital Patients Health Care Healthy
MDs, Nurses Individuals
Medical Supplies
Equipment
Restaurant Hungry Customers Prepare Food Satisfied
Food, Chef Serve Food Customers
Servers
Atmosphere
Automobile Sheet Steel Fabrication High Quality
Plant Engine Parts and Assembly Automobiles
Tools, Equipment of Cars
Workers
University High School Grads Transferring Educated
Teachers, Books of Knowledge Individuals
Classroom and Skills
6
Key OM Concepts
Efficiency - Doing something at the lowest possible cost
8
The Transformation Process
For a Service Organization (An MBA Institute)
Random disturbances
Strikes of students, Quality of
Quality of inputs teachers or staff outputs
monitored Undue interference of monitored
Raw minds the government in the
(students) working of institutions
Teachers
Class rooms Enlightened students with:
Transformation Good communication skills
Computer lab Process Pleasant personalities
Library Leadership qualities
Good analytical ability
Projectors
Team spirit
(OHP, LCD etc)
Decision making abilities
Administrative Computer skills
Feedback Mechanisms
staff
Success at placement interviews
Grades obtained in examinations OUTPUTS
INPUTS
Rising career graph of alumni in the industry
Number of applications for admission
in the institute
Ratings of surveys
The Transformation Process For a Hybrid Service &
Manufacturing Organization
(A Restaurant)
Random disturbances
High turnover of chefs, Quality of
Customers Quality of inputs waiters, etc. outputs
Building monitored Inflation monitored
Chef Governments taxation
Vegetables policy
Furniture
Customers satisfied with:
Mutton, Transformation Good preparation of the
chicken, Process food
pork, etc. Pleasant behavior and
Cooking oil, personality of the waiter
Spices, etc. Genuine prices charged
Waiters
Manager
Feedback Mechanisms
Rising Revenues OUTPUTS
INPUTS Repeat Customers
Appreciation of customers
The Transformation Process For a Purely Manufacturing
Organization
(A Refrigerator Manufacturer)
Random disturbances
High turnover of workers Quality of
Machines & Quality of inputs and managers outputs
Equipments monitored Recession monitored
Building Governments taxation
Components, policy
parts, sub- Strikes instigated by trade
assemblies, etc. unions Customers satisfied with:
Transformation Good cooling performance
Workers Less consumption with
Process
Office infrastructure electricity
(computers, Good after-sales service
furniture, etc.) New advanced features
Packaging
material Feedback Mechanisms
Capital Rising sales volume
Managers Lesser customer complaints
Positive response of customers in
INPUTS the feedback forms OUTPUTS
Productivity
Outputs
Productivi ty =
Inputs
Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Ways to increase Productivity
Increased Output eg. altering the layout design to improve output
Decreased input for same output eg. Finding out a substitute material
Proportionate increase in o/p> increase in i/p eg. introducing 1 more
product in portfolio
Proportionate decrease in o/p< decrease in i/p eg. dropping 1 unprofitable
product
Increase in o/p with dec in i/p introduction of advanced techniques
Example
10,000 Units Produced
More and more firms becoming involved in E-Business using the Internet