intro operations management
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Operations Management
Facilitator:
Dr Pramod Shetty
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Introduction
Major sectors in a country - Manufacturing , Service andAgriculture
In India Manufacturing and Services constitute 75% of the GDP
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Definition
Production and Operations Management
("POM") is about the transformation of
production and operational inputs into
"outputs" that, when distributed, meet the
needs of customers.
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Inputs Outputs
Goods
Services
Labor & Capital
Feedback
forcontrol
Transformation:Transformation:
Network of activities
Flow Units(Material, Information,
Knowledge, etc.)
Resources
Operations
Management
Operations as a Transformation Process
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Transformations
Manufacturing Transformations
Machine tool mfg
Service Transformations
Bank, garage, restaurant
Differences in terms of
Tangibility
Simultaneous production & consumption Perishability
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PRODUCTMarketers in a business must ensure that a business sells products
that meet customer needs and wants. The role of Production and
Operations is to ensure that the business actually makes the required
products in accordance with the plan. The role of PRODUCT in POM
therefore concerns areas such as:
- Performance
- Aesthetics
- Quality- Reliability
- Quantity
- Production costs
- Delivery dates
POM incorporates many tasks that are
interdependent, but which can be grouped under five
main headings:
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PLANTTo make PRODUCT, PLANT of some kind is needed. This will
comprise the bulk of the fixed assets of the business. In determining
which PLANT to use, management must consider areas such as:
- Future demand (volume, timing)
- Design and layout of factory, equipment, offices
- Productivity and reliability of equipment
- Need for (and costs of) maintenance
- Heath and safety (particularly the operation of equipment)
- Environmental issues (e.g. creation of waste products)
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PROCESSESThere are many different ways of producing a product.
Management must choose the best process, or series of
processes. They will consider:
- Available capacity
- Available skills
- Type of production
- Layout of plant and equipment
- Safety- Production costs
- Maintenance requirements
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PROGRAMMES
The production PROGRAMME concerns the
dates and times of the products that are to be
produced and supplied to customers. The
decisions made about programme will be
influenced by factors such as:
- Purchasing patterns (e.g. lead time)- Cash flow
- Need for / availability of storage
- Transportation
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PEOPLE
Production depends on PEOPLE, whose skills,
experience and motivation vary. Key people-relateddecisions will consider the following areas:
- Wages and salaries
- Safety and training
- Work conditions- Leadership and motivation
- Unionisation
- Communication
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Importance of Operations Management
During the past couple of decades, many domesticcompanies saw their market share decline due to theirinability to compete with foreign firms in terms of productdesign, cost, or quality.
Theories to explain this development: Cultural differences
Government policies
Neglect of human resources
Insufficient investment in technology
World-class performance by operations in delivering high-quality, cost-competitive products and services is essential tosurvival in today's global economy.
Of late Auto components, pharma, IT and ITES sectors are
showing signs of global competitiveness.
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VS THE ELEPHANT
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India Factor China
10 million TV sets produced 40 million
56 mn tons Steel production 578 mn tons
$30 bn Textiles production $145 bn
$15 bn Textiles exports $80 bn
2 million Automobilesproduction
5.5 million
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What to Produce? The Design of Products &
Services
Where to Produce? Facility Location
How Much to Produce? Capacity Planning
for Manufacturing & Service Systems
How to Produce? Process Design; Work
Analysis, Design & Measurement; Layout &
Safety.
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Customer focus.
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Core services are basic things that customers wantfrom products they purchase.
Core Services
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Value-added services differentiate theorganization from competitors and buildrelationships that bind customers to the firmin a positive way.
Value-Added Services
Defined
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Dealing with Trade-Offs
Cost(Value)
Quality
Delivery (Speed)Flexibility
WCM -companies adopt TQM, Pull systems, JIT,TPM
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How do Firms Add Value?
Greaterproductivity Lower costs and expenses
Lower prices for the customer
H
igherquality Better performance Greater durability, reliability, aesthetics.
Bettertimeliness Faster response and turnaround
On-time delivery, meet promises
Greaterflexibility greater variety
customization for customer needs / desires
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OM and Other Business Functions -Marketing
What operations can do relative to meetingdue dates, product customization, new
product introduction.
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OM and Other Business Functions - Finance
Understand inventory management, capacityutilization and labour standards to developaccurate cost data, perform audits, and preparefinancial reports.
Cost accountantsmust be aware of how JITworks.
Need for capital investments.
Forecast cash flows. Make-or-buy decision.
Plant expansion and/or relocation.
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OM and Other Business Functions - IT
Design and develop software.
Major business applications of computers
is in production control.
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OM and Other Business Functions -
Entrepreneurs
Often fail because they run out of
working capital.
Poor production, planning and inventory
management.
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Current Issues in OM
Effectively consolidating the operationsresulting from mergers.
Developing flexible supply chains to enablemass customisation of products and services.
Managing global supplier, production anddistribution networks.
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Current Issues in OM (contd)
Increased commoditization of suppliers.
Achieving the Service Factory.
Achieving good service from service firms.
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