Introduction To Operations Management.pptx

Operation Management

1. Introduction to Operations Management   Meaning Functions of business organization Differentiating features of production system Scope of Operation Management Operation manager and mgt. process Operation manager and decision making, Historical evolution Recent trends in operation mgt

2. Meaning OM involves the planning, coordinating, and executing all activities that create goods and services. Operation management : The management of systems or processes that creates goods and/or provides service

3. Operations Management Create operational systems. Manage (plan, organize, staff, direct and control) the activities relating to the production of goods and/or services with maximum efficiency (at the lowest cost) and effectiveness (in the eyes of the customer). Improve those processes continuously to create competitive advantage.

4. Manage the Process Inputs Outputs > > > > > Conversion Improve the Process Operations Management Create the Process New Product Development Innovation Quality Management Planning & Control Infrastructural Elements Workforce Organization Technology Vertical Integration Structural Elements Capacity Facilities Cost Quality Time Flexibility Service Evaluate On

5. The Operations System The operations system transforms inputs into desired goods and services. OUTPUTS INPUTS PROCESS EXTERNAL FACTORS FEEDBACK Material flow Information Flow

6. Operations Management ~ The Context Business Unit Strategy Marketing Strategy 4 Ps Place Product Price Promotion Competitive Priorities & Positioning Cost, Quality, Time, Flexibility, Service Customer Satisfaction (Internal & External) Market Share Quality Measures Cost Measures Performance Measures Execution Processes Operations Strategy Structural Facility Location Capacity Vertical Integration Process Technology Infrastructural Workforce Quality Policies/Procedures Organizational Structure Corporate Strategy

7. Types of Conversions Physical Chemical Locational Educational Entertained

8. The Organization Organization Finance Operations Marketing

9. Operation Consists of all activities directly related to producing goods or providing services. The production function exists both in manufacturing and service, Inputs are used to obtain finished goods or services using one or more transformation process (storing, transporting, cutting).

10. Food Processor Inputs Processing Outputs Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans Water Cutting Energy Cooking Labor Packing Building Labeling Equipment Table 1.2

11. Hospital Process Inputs Processing Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy Table 1.2

12. Finance The finance function comprises activities related to securing resources at favorable prices and Allocating those resources throughout the organization.

13. Marketing Marketing consists of selling and/ or promoting the goods or services of an organization. makes advertising and pricing decisions. is also responsible for assessing customer wants and needs, and for communicating those to operation and design people.

14. Differentiating features of production system We can differentiate production system by three ways. They are Degree of standardization Type of operation Mfg. operation versus service operations

15. Degree of standardization Production system produces output that ranges from highly standardized to highly customize. Standardized output means that there is a high degree of uniformity in goods or services. Such as radio, television, computer and newspapers. Customized out put means that the product is designed for a specific case or individual. Such as eyeglasses, clothing, surgery, tailoring and etc.

16. Types of operation Project: a set of activities directed towards a unique goal, usually large scale, with a limited time frame. Job shop : An organization that renders unit or lot production or service with varying specifications, according to customer needs. Batch processing: A system used to produce moderate volumes of similar items. Continuous processing: A system that produces highly uniform products or continuous services, often performed by machine.

17. Process-Product Matrix Project Job Shop Batch Line Flow Continuous Discrete Flow Patterns Jumbled Consistent Product Each Unique – Wide Variety Commodity– Little Variety ???? Opportunities for real advantage

18. Mfg operation versus service operations Characteristic Goods Service Customer contact Low High Uniformity of input High Low Labor content Low High Uniformity of output High Low Output Tangible Intangible Measurement of productivity Easy Difficult Opportunity to correct problems High Low Inventory Much Little Evaluation Easier Difficult Patentable Usually Not usual

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

20. Operation manager and decision-making There are some approaches of decision-making. Manager needs to follow the approach to take decision.  Uses Model Quantitative approach Analysis of Trade off System approach Establishing priorities Ethics

21. Models A model is an abstraction of reality. – Physical – Schematic – Mathematical What are the pros and cons of models? Tradeoffs

22. Models Are Beneficial Easy to use, less expensive Require users to organize Increase understanding of the problem Enable “what if” questions Consistent tool for evaluation and standardized format Power of mathematics

23. Limitations of Models Quantitative information may be emphasized over qualitative Models may be incorrectly applied and results misinterpreted Nonqualified users may not comprehend the rules on how to use the model Use of models does not guarantee good decisions

24. It is an attempt to obtain mathematically optimum solution of a managerial problem. Quantitative Approaches Linear programming Queuing Techniques Inventory models Project models Statistical models

25. Analysis of Trade-Offs Operation manager has to take trade off decisions. Such as selecting a piece of equipment, a manager must evaluate the merits of extra features relative to the cost of those features . Decision on the amount of inventory to stock Increased cost of holding inventory Vs. Level of customer service

26. Systems Approach “ The whole is greater than the sum of the parts .” Suboptimization System is a set of interrelated parts that must work together.

27. Pareto Phenomenon A few factors account for a high percentage of the occurrence of some event(s). 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few?

28. Ethical Issues Financial statements Worker safety Product safety Quality Environment Community Hiring/firing workers Closing facilities Worker’s rights

29. Historical Evolution of Operations Management Industrial revolution (1770’s) Scientific management (1911) Mass production Interchangeable parts Division of labor Human relations movement (1920-60) Influence of Japanese manufacturers Table 1.7

30. Trends in Business Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility Ethical behavior Lean Production

31. Significant Developments Division of Labor Standardized Parts Scientific Management Time and Motion Study Efficiency Improvement Wage Incentives Assembly Lines Motivation and Behavioral Issues

32. Significant Developments Operations Research Computers and Information Technology - Computer Aided Design (CAD) - Computer Aided Manufacture (CAM) - Computer Integrated Manufacture (CIM) Flexible Manufacturing Systems (FMS) Cellular Manufacturing JIT, Lean Manufacturing Total Quality Management, Six Sigma Mass Customization