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Session 1.

A & F

Introduction to Operations Management

Introduction to Operations
A. B. C. D. E. F. G. H. I.

Overview Concepts Productivity of conversion process Objectives of production and operations management Major components of production function Short history of production management Organization of production management Manufacturing methods Product life cycle concept.

Introduction to Operations
    

Historical mile stones in P&OM Factors affecting operations management Operations as a system Decision making World class organizations ; what they do

Operations Management
  

Over view To remain competitive in an ever changing global market place. place. Organization should have an efficient operation management. management. Operations management is the management of an organizations productive resources or its production system which converts inputs into an organization products or services. services. Inputs: Inputs: Raw material Technology Manpower Money Machines Information Buildings Other resources P&OM Production and Operations Management

Departments in a Production Organization


        

Manufacturing Plant management Factory manager Production control Materials management Quality control Personnel HRD Administration & Security Finance & Accounting

      

Production Engineering Process planning Tool design Standards Industrial engineering Finished goods Warehouse

The departments can do a line function or a staff function.

Pioneers in Industrial Revolution


1764 1790 1812 1800 1900 J P Morgan Jay Gould Cornelius Vander Built F W Taylor Frank B Gilberth Henry L.Gantt Harrington Emerson 1920 Henry Ford James watt Ele whitney The steam engine Concept of Interchangeable parts Textile Industry Petrol Engine ; Electricity Start of Industrial Empires

1900 1960

Scientific Management Time and Motion Study Gantt Charts Principles of efficiency Automobile revolution

Pioneers in Industrial Revolutions

Scientific management applied from the lower echelons of the organization contributed to improved productivity, efficiency and cost reduction through mass production.

Human Relations and Behavioralism




Hawthorne studies conducted at western Electric Company (1927 1932) helped recognizing 1932) Psychological and sociological factors contributing to motivation and Productivity. Productivity. Operations Managers must create an atmosphere / climate that encourages employees to devote their energy, ingenuity and skill to achieve the organizational objectives

Operational Research
 

Organizations use enormous quantities of manpower, supplies, materials and other resources. resources. During the post world war the concepts of a total systems approach, cross functional team, and complex mathematical techniques were developed for scientifically developing optimal solutions for efficient use of resources A few of such techniques followed are: are: Lenier programming PERT / CPM Forecasting models etc. etc.

Characteristics of Operation Research


1. OR approaches problem solving and decision making from the total systems perspectives. 2. OR does not necessarily use interdisciplinary teams, but it is interdisciplinary; it draws a on techniques from sciences such as biology, physics, chemistry, mathematics, and economics and applies the appropriate techniques from each field to the system being studied. 3. OR does not experiment with the system itself but constructs a model of the system on which to conduct experiments.

Characteristics of Operation Research




Model building and mathematical manipulation provide the methodology that has perhaps been the key contribution of OR. OR. The primary focus is on decision making. making. Computers are used extensively. extensively.

Evolution of Operations Management


The Service Sector: Sector:


Service organizations have now become as important as Production Organizations. More than 2/3rd of employees work in service sector.

Evolution of Operations Management


Some Service Industries: Industries:
       

The telecom industry Postal department Railways Road transport undertakings Banks Airlines Hospitality industry Transport & freight forwarding

Evolution of Operations Management


Some Manufacturing Industries: Industries:
      

Automotive Industries Steel Mills Chemical Factories Pharmaceutical Industries Heavy Engineering Industries Machine Building Industries PetroPetro- Chemical Industries, etc.

Information Technology
The recent developments in IT have contributed enormously in developing information systems, decision support systems, helped in improving the speed of data processing and communication.
    

Real time computers ERP System Internet & e-commerce eRFID Automated Storage and retrieval systems

New Developments in Operations Management


      

Robotics & NC&CC Machines CAD - Computer Aided Design CAM - Computer Aided Manufacture SPC Statistical Process Control JIT/KANBAN Lean Manufacturing ISO/QS/TS standards Time Based Competition

New Developments in Operations Management


     

Process Engineering Out Sourcing Vendor Managed Inventories Third Party Logistics & 4PL Benchmarking Balanced Score Card

Factors Effecting Operations Management


       

Global competition Quality customer service Intelligent customer with high expectation Rapid technological changes High growth of service sector Scarcity of resources Social responsibility investment From domestic to global markets.

Factors Effecting Operations Management


To face the above challenges, companies must make  A commitment to customer responsiveness  Continuous improvement  Faster development of innovative products  World class manufacturing & service  Exceptional quality  Fast and on time delivery  Competitive prices

Operations Management A systems Approach


 

Operations system uses inputs Adds value through conversion and creates an output Output is monitored through the control system./ system. The diagram shows a Systematic Production Model

 

Operations Management A systems Approach

Operations Management A systems Approach




Inputs : External Market Primary resources Outputs of Production System : Direct Outputs  Tangible goods  Intangible Outputs

Typical Production and Operating Systems

Typical Production and Operating Systems

Typical Production and Operating Systems

Value Addition


The core of Production System is conversion / value addition subsystem. The main departments are : Manufacturing Retailing Trucking

Decision Making
  

Operation Managers have to take several decisions for efficient functioning . These can be strategic, operations and control decisions. Strategic Decisions : Product Process Facilities Operating Decisions : Plan Production to meet

 

demand
Control Decisions : Planning Operations & Controlling Operations

Worlds 20 Largest Corporations


Company General Motors WalWal-mart stores Exxon Mobil Ford Motor Daimler Chrysler Mitsui Mitsubishi Toyota Motor General Electric Itochu Home Country U.S. U.S. U.S. U.S. Germany Japan Japan Japan U.S. Japan Annual Revenues ($ billions) 177 167 164 163 160 119 118 116 112 109

Worlds 20 Largest Corporations


Company Home Country Annual Revenues ($ billions) 105 96 94 92 88 88 84 82 80 79

Royal Dutch / Shell Group Sumitomo Nippon Telegraph & Telephone Marubeni AXA International Business Machines BP Amoco Citigroup Volkswagen Nippon Life Insurance

Netherlands Japan Japan Japan France U.S. United Kingdom U.S. Germany Japan

Source: Operations

Management

Chapter No. 1, ,Page No. 5 to 31

by Norman Gaither, Greg Frazier Publisher: Thomson South Western

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