Significance of Operations Management

Submitted by, Abhijith Abhilash Amruta Anup Aparanji charan

Operations management is:

The business function responsible for planning, coordinating, and controlling the resources needed to produce products and services for a company.

Continued...
A management function. An organizations core function. In every organization whether Service or Manufacturing, profit or Not for profit

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

Organization

Finance

Production/ Operations

Marketing

Typical organisational chart

Role of OM
OM Transforms inputs to outputs. Inputs are resources such as
People, Material, and Money,

Outputs are goods and services

Examples of operations
Operations
Goods Production

Examples
Farming, Mining, Construction, Manufacturing, Power Generation Warehousing, Trucking, Mail Service, Moving, Taxis, Buses, Hotels, Airlines Retailing, Wholesaling, Banking, Renting, Leasing, Library, Loans Films, Radio, Television, Concerts, Recordings Newspapers, Radio and Television, Newscasts, Telephone, Satellites

Storage / Transportation

Exchange

Entertainment Communication

OMs Transformation process

Feedback and control

Physical Flow Flow Information

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.

OMs Transformation role:

To add value
Increase product value at each stage.
Value added is the net increase between output product

value and input material value.

Provide an efficient transformation

Efficiency means performing activities well for least possible cost

Food processor
Inputs Processing Outputs

Raw Vegetables
Metal Sheets Water Energy Labor Building Equipment

Cleaning
Making Cans Cutting Cooking Packing Labeling

Canned Vegetables

Hospital process
Inputs
Doctors Hospital Medical Supplies Equipment Laboratories

Processing
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy Patients

Manufacturing and Service Characteristics

characteristics
Output Customer contact Uniformity of input Labour content Uniformity of output Measurement of productivity Opportunity to correct quality problems

manufacturing
Tangible Low High Low high Easy

Service
Intangible High Low High Low Difficult

high

low

On the other hand..

Both use technology Both have quality, productivity, & response issues Both must forecast demand Both will have capacity, layout, and location issues Both have customers, suppliers, scheduling and staffing issues Manufacturing often provides services Services often provides tangible goods

Hybird organisations
Some organizations are a blend of service/manufacturing/quasi-manufacturing Quasi-Manufacturing (QM) organizations.

QM characteristics include
Low customer contact & Capital Intensive

OM decisions
All organizations make decisions and follow a similar path
First decisions very broad Strategic decisions
Strategic Decisions set the direction for the entire company; they are broad in scope and long-term in nature

OM decisions
Following decisions focus on specifics - Tactical decision
Tactical decisions: focus on specific day-to-day issues like resource needs, schedules, & quantities to produce are frequent

Strategic decisions less frequent Tactical and Strategic decisions must align

Operations managers and decision making

Tools for Decision Making
Analysis of trade offs System approach Quantitative approaches

Analysis of tradeoffs
Buying a new machine Additional Investment
Higher Productivity Better Quality More Flexibility

Having more inventory Higher Carrying Costs More Obsolescence

Better Customer

Service

Systems approach
Any business or other organization must be described by an open system model that includes interactions between the enterprise and its external environment.
Inputs Transformation process Communication system Outputs

Quantitative approach
Linear programming Transportation model Inventory models Waiting line models Statistical models

Recent Trends
Global Competition
Global Market Global Suppliers

Operations Strategy
Quality based Time based

Flexibility
Variety of products High Volume as well as Low Volume

Cycle Time Reduction

The less time RM (Raw Material), WIP (Work In Process), FG (Finished Goods) spend in the Manufacturing and Logistics process, the less opportunity they have to absorb costs.

Recent trends
Business Process Re-engineering
Value added and NVA activities

Supply Chain Management

NOT from RM storage to FG warehouse From the original suppliers to final consumers

Workers Involvement
Workers are not costs, they are assets

Lean Manufacturing
Inventory is waste

Total Quality Management

Thank you