PGDM:

Operations and
Supply Chain
Management
Objectives & Books
1. Course Outcomes:

APPLY the acquired knowledge, facts and techniques of Operations and Supply
Chain Management in different ways in solving business cases and practical
problems.

EXAMINE the use of concepts in Operations and Supply Chain Management in

different business scenarios.

RECOMMEND solutions to the business cases in Operations and Supply Chain

Management.

ELABORATE upon different operational issues in manufacturing organizations

where the decision-making element is emphasized.

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Books
Core books for Reading:
Operations Management Theory & Practice, B. Mahadevan, Pearson, Third
Edition.

Supply Chain Management - Strategy, Planning & Operation, Sunil Chopra,

Peter Meindl, D. V. Kalra, Pearson Education, Sixth Edition.

Reference Books:
Production and Operations Management, R B Khanna, PHI, New Delhi.
Second edition.

Production & Operations Management, S N Chary, McGraw Hill. Sixth

Edition.

Operations Now - Supply Chain Profitability & Performance, Byron J. Finch,

McGraw Hill.

Pedagogy, assessment
3
Topics
1. Introduction to Operations Management:
Definition of Operation Management, Nature, Significance of Operations
Management, Facilities location: Factors affecting location decisions, Strategic
importance of location decision, Role, and Functions of Production Planning &
Control.

2. Operations Processes:
Types of Processes & Operations systems, Continuous & Intermittent flow
systems, Process Product Matrix: Job Production, Batch Production, Assembly
line and Continuous Flow

3. Inventory Planning and Control:

Concept of inventory, Need for Inventory, types of Inventories, Inventory costs,
Inventory control ABC Analysis, VED, HML, FSN, GOLF, SOS.

4
Topics
4. Introduction to Quality Management:

Definitions of Quality from various perspectives, Introduction to TQM, Concept

of Lean Management, Introduction to Six Sigma, DMAIC Approach.

5. Introduction to Supply Chain Management:

Supply Chain Concept, Product, Money and Information Flows in Supply Chain

SCM Enablers: Facilities, Inventory, Transportation, Information, Sourcing,

Pricing.

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Unit 1: Introduction to Operations
Management

Definition of Operation Management, Nature, Significance of Operations

Management,

Facilities location: Factors affecting location decisions, Strategic importance

of location decision,

Role and Functions of Production Planning & Control.

6
1: Intro to Operations Management
Operations management:

Operations management is a systematic approach to addressing issues in

the transformation process that converts inputs into useful, revenue-
generating outputs.

Important aspects:

Systematic approach:
It involves understanding the nature of issues and problems to be studied;
establishing measures of performance; collecting relevant data; using
scientific tools, techniques, and solution methodologies for analysis; and
developing effective as well as efficient solutions to the problem at hand.

Addressing various issues that an organization faces:

These issues vary in terms of the time frame, the nature of the problem, and
the commitment of the required resources. E.g. a machine breaks down,
where to locate the plant. 7
1: Intro to Operations Management
Operations management: Important aspects:

Transformation processes are central to operations systems:

The transformation process ensures that inputs are converted into useful
outputs. Therefore, the focus of operations management is to address the
design, planning, and operational control of the transformation process.

Keep costs to a minimum and obtain revenue in excess of costs through

careful planning and control of operations:
Operations management involves the development of performance
evaluation systems and methods through which the operating system can
make improvements to meet targeted performance measures.

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1: Intro to Operations Management
Significance of Operations management & systems perspective:
Ref: Mahadevan page 12

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1: Intro to Operations Management
Operations Management Functions:

Design Issues:
Product and service design
Process design
Quality management
Location and layout of facilities
Capacity planning

Operational Control Issues:

Forecasting
Operations planning and control
Supply chain management
Maintenance management
Continuous improvement of Operations 10
1: Intro to Operations Management
Facilities location:
Location decisions pertain to the choice of appropriate geographical sites
for locating various manufacturing and/or service facilities of an organization.

Competitiveness of location:

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1: Intro to Operations Management
Facilities location:

A location planning exercise requires three steps:

1. Identify the set of factors that could influence the location decision.

2. Establish the relative importance of these measures for the location

decision.

3. Develop a methodology to assess the impact of these factors

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1: Intro to Operations Management
Factors affecting location decisions:

Market-related issues
Market for products and services
Raw material availability
Number and proximity of suppliers
Availability of skilled labour
Quality of infrastructure
Demand supply gap
Nature of competition

Cost-related issues:
Factor costs of inputs
Transportation costs
Taxes and other tariff issues 13

Cost of manufacture/service
1: Intro to Operations Management
Factors affecting location decisions:

Regulatory and Policy issues:

Government and economic stability
Quality of legal and other institutions
Trading blocks and trading agreements

Other issues:
Culture
Climate
Quality of life

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1: Intro to Operations Management
Facilities location: Strategic importance of location decision:

Location is strategically important because:

1. Attracting and retaining talent

2. Real estate costs

3. Clusters: Access to talent pool, regulatory bodies, investors and economies of

scale.

4. Regulation and tax

5. Growth or a change in corporate strategy, technology or leadership

6. Accessibility
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1: Intro to Operations Management
Role and Functions of Production Planning & Control (PPC):

Production planning and control may be defined as the coordination of a

series of functions according to a plan which will, economically utilize the
plant facilities and regulate the orderly movement of goods through their
entire manufacturing cycle, from the procurement of all materials to the
shipping of finished goods at a predetermined rate.

The process of planning and subsequently controlling all aspects of

manufacturing and production. Includes ordering material, scheduling
employees and work on the machines, and even distributing goods to end
customers.

All processes that occur within the production facility rely on each
other or on properly carrying out production planning and control.

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1: Intro to Operations Management
Functions of Production Planning and Control: Major functions:

1) Materials Management:

One of the functions of production planning and control is the specific

measure of materials that are needed for production within a certain
time period.

Accurately determine the amount of material required as it essential to

eliminate waste, high inventory levels, and other inventory carrying
costs.

This also prevents the risk of stock-outs and running out of materials.

Cost-effective and timely manner.

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1: Intro to Operations Management
2) Equipment:

PPC ensures the proper functioning of equipment. This includes

analyzing equipment downtime to identify any bottlenecks and
inefficiencies within the production process.

This will ensure that production is flowing smoothly, staying efficient,

and orders are completed on time.

This also looks at equipment maintenance schedules

3) Methods:

Analysis of possible alternatives to production processes as well as

various schedules that production can follow.

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A production planning and scheduling software can be used
1: Intro to Operations Management
4) Routing:

PPC ensures that raw materials are transformed into finished goods
using the best route possible.

Eliminating useless steps or excessive motion through the shop floor

are the main objective of this component.

5) Estimating:

After the process sheet for operations is made available, operation times
are then estimated.

The function is then carried out using analysis on areas of operations such
as routing, raw materials etc.

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1: Intro to Operations Management
6) Dispatching:

Involves the execution of the production schedule, release of materials,

components, and tools to the machine operators

7) Expediting (also called Follow-Up) :

Involves checking the progress of production, follow up of materials,

work in progress, and assembly.

Identify bottlenecks in the production process and work to remedy them to

ensure that the production plan is executed as planned.

8) Evaluation:

Helps to identify areas where productivity is still lacking and where

improvements could be made, determine what needs to be changed and 20
then implement strategies to improve those areas.
1: Intro to Operations Management
Assignment:

End of session Q &A

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Unit 2: Operations Processes
Types of Processes & Operations systems

Continuous & Intermittent flow systems

Process Product Matrix: Job Production, Batch Production, Assembly line

and Continuous Flow

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2: Operations Processes
Types of Processes & Operations systems :

A manufacturing process uses manufacturing methods, machinery, and

labour to transform raw material into a finished product.

However, for each business, these will differ slightly, based on their
products, the business' ethos, and the resources and facilities they have
available.

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2: Operations Processes
FIVE TYPES Of Manufacturing Processes:

1) Repetitive Manufacturing

Basic manufacturing that creates the same product on an assembly line is

engaged in the repetitive manufacturing process. These will produce the
same or very similar products continuously.

E.g. : Mass production industries like Automotive, Electronics, Durable

consumer goods.

This type is often used for make-to-stock production or in a high volume,

sales order-oriented environment like automotive.

Robots and other automated high-volume manufacturing equipment are

used to increase throughput and decrease manufacturing costs in these types
of factories. 24
2: Operations Processes
2) Discrete Manufacturing

Discrete manufacturing is the cousin of repetitive manufacturing.

It too runs on production lines, but the finished goods that are created
during this process often vary considerably.

When switching between different product models, the assembly line

configuration must often be changed. This is known as a changeover
and carries setup costs in the form of time, labour, and resources.

E.g. Computer industry: Technology develops at a rapid rate &

customers demand mass customization. The manufacturing process for
producing newer computers and laptops will require modifications to the
assembly line to produce and assemble orders that call for the latest
electronic components.

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2: Operations Processes
3) Job Shop Manufacturing
In the job shop manufacturing process, production areas, like workstations
and workshops, are used instead of an assembly line.

Each worker may add something to the product when it passes through
their station, before it is moved on to another, and until eventually the final
product is finished. This is ideal for custom manufacturing because it tends
to be slower and produces a low volume of highly customized products.

E.g. A job shop that builds custom cabinets. Workers will be stationed at
their workstations like one may in charge of sawing the lumber, another of
applying resin, others in charge of polishing the varnish, and others still in
charge of assembly.

Though used for low-technology products, also used in the advanced

manufacturing of fighter jets and rockets for the aerospace and defense
industry to maintain secrecy.
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2: Operations Processes
4) Continuous Process Manufacturing

This is very similar to repetitive manufacturing because it runs 24/7,

creates the same or similar products repeatedly, and creates larger order
quantities.

The key difference here is that the raw materials used are gases, liquids,
powders, and slurries, instead of solid-state components.

E.g. a pharmaceutical company that produces tablets in larger

quantities.

Other traditional industrial manufacturing industries that widely utilize

continuous processes include Chemicals/industrial gases, Fertilizers,
Power stations, Oil refining etc.

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2: Operations Processes
5) Batch Process Manufacturing
The batch process of manufacture differs quite a bit from continuous
process manufacture and is more similar to discrete and job shop
manufacturing. In between batches, the equipment will be cleaned and
left alone until another batch is required.

The raw materials used are more similar to continuous process

manufacturing as they are liquids, gases, powders, and slurries too.

E.g. A sauce manufacturer capable of creating BBQ, ketchup,

mayonnaise sauces

Managing the Manufacturing Process:

The manufacturing process you choose is dependent on manufacturing
industry and the type of product you are looking to create.
Sometimes a hybrid manufacturing approach combining multiple
manufacturing processes can be useful if you want to create an
assortment of products. 28
2: Operations Processes
Continuous & Intermittent flow systems:
Three types of flows in manufacturing systems: continuous, intermittent,
and jumbled.

1. Continuous Flow Systems (Mahadevan Page 222 diagram paper

manufacturing)

A continuous flow system is characterized by a streamlined flow of products

in the operating system from raw material to finished goods in an
orderly/sequential fashion.

Continuous flow is largely a result of technological constraints and a high

volume of production.

E.g. Manufacturing of petrochemicals, steel, pharmaceuticals, cement,

glass etc.
The reason for continuous flow is technological constraint of the process like
once the manufacturing process begins, it cannot be stopped until finished 29
product comes out of the system.
2: Operations Processes
2. Intermittent flow systems: (Mahadevan Page 226 diagram)
Each product may have a different variety and hence different processing
requirements and sequences of operations, the flow will become
complicated.

This manufacturing process is characterized as mid-volume, mid-variety

systems.

Discrete (distinct items that can be seen, touched and counted like nuts &
bolts, wires) and process industries (raw material passes though chemical,
physical, biological process) have alternative ways by which they can address
the flow complexities arising out of a mid-volume, mid-variety scenario.

In the case of discrete manufacturing systems, the entire manufacturing

set-up can be split into units in which similar processing requirements can
be combined and manufacturing resources arranged to cater to these
requirements.

One batch of components may be produced in one of these units and 30

another batch in yet another unit.
2: Operations Processes
2. Intermittent flow systems:

In the case of process industries (E.g. Paper manufacturing), one way to

minimize this flow complexity is to operate the system in batches. In one
batch, one set of variations is manufactured and in the next batch,
another set of variations is manufactured.

In between these two batches, the necessary set-up and changeover of

resources are made to facilitate smooth production and maximize productivity.
Such an arrangement results in intermittent flow systems.

3. Jumbled flow: Non-standard & complex flow patterns due to

customization. E.g. Projects organizations & Customized manufacturing
systems.

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2: Operations Processes
Process Product Matrix: (Mahadevan Page 230 diagram)

The organization has alternative process choices and options between

process choices and flow patterns in a manufacturing system. The
culmination of all these ideas is the process product matrix.

One dimension of the matrix represents product characteristics (degree

of customization and the volume of production) and the other process
characteristics (complexity and divergence in the process).

When organizations have a high volume of production, the flow will be

streamlined. Similarly, when the variety is high, the flow will be jumbled. As
shown in the figure, these two situations represent the two extremes in the
figure and are not applicable. Each combination has unique operations
management issues to be addressed.

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2: Operations Processes
Process Product Matrix: (Mahadevan Page 230 diagram)

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2: Operations Processes
1) Job Production:

Job or unit production involves the manufacturing of a single complete

unit with the use of a group of operators and process as per the customer s
order. This is a special order type of production. The product is
usually costly and non-standardized.

Customers do not make a demand for exactly the same product on a

continuing basis and therefore production becomes intermittent. E.g.
Shipbuilding, electric power plant, dam construction

Characteristics of Job Production:

The product manufactured is custom-made or non-standardised.
The volume of output is generally small.
Variable path materials handling equipment are used.
A wide range of general-purpose machines like grinders, drilling, press,
shaper, etc. is used. 34
2: Operations Processes
Advantages of Job Production:
It is flexible and can adapt easily to changes in product design.
A fault in one operation does not result in a complete stoppage of the
process.
It is cost-effective and time-effective since the nature of the operations in a
group is similar.
Has reduced material handling since machines are close in a cell.
The waiting period between operations is also reduced and also results
in a reduced work-in-progress inventory.

Disadvantages of Job Production:

Job shop manufacturing is the most complex system of production e.g.
ship building involves the fabrication and assembly of thousands of parts
A complex schedule of activities is required to ensure the smooth flow of
work without any bottlenecks.
Raw materials and work-in-progress inventories are high due to uneven
and irregular flow of work.
Workloads are unbalanced, the speed of work is slow and unit costs 35
are high.
2: Operations Processes
2) Batch Production:
Batch production pertains to repetitive production. It refers to the
production of goods, the quantity of which is known in advance.

Identical products are produced in batches on the basis of customer

demand or expected demand for products.

This method is generally similar to job production except for the quantity
of production. Instead of making one single product as in case of job
production, a batch or group of products are produced at one time. One
batch of products may not resemble with the next batch.

The batch production is a mixture of mass production and job

production.
Machines turn out different products at intervals, each product being
produced for a comparatively short time using mass-production methods.
Both job production and batch production are similar in nature, except
that in batch production the quantity of product manufactured is 36
comparatively large.
2: Operations Processes
Advantages of Batch Production:
The work is of a repetitive nature.
There is a functional layout of various manufacturing processes.
One operation is carried out on the whole batch and then is passed on to
the next operation and so on.
The same type of machines are arranged at one place.
It is generally chosen where trade is seasonal or there is a need to
produce a great variety of goods.

Disadvantages of Batch Production:

Work-in-progress inventory is high and large storage space is required.
Due to frequent changes in product design, no standard sequence of
operation can be used. Machine set-ups and tooling arrangements have
to be changed frequently.
The main problem in batch production is the idle time between one
operation and the other. The work has to wait until a particular operation is
carried out on the whole batch. 37
2: Operations Processes
3. Assembly line:
An assembly line is a production process that breaks the manufacture of
goods into steps that are completed in a pre-defined sequence.
Assembly lines are the most commonly used method in the mass
production of products.
They reduce labour costs because unskilled workers are trained to
perform specific tasks.

Characteristics of Assemble Line:

Manufacturing of goods is a lengthy process as it requires several smaller
parts to be assembled. Smaller parts when attached or assembled in a
particular sequence of stages lead to the formation of the finished
product.

Assembly line production ensures that there are multiple stages defined in
the manufacturing process, and at each stage, a smaller part is
attached.

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2: Operations Processes
Advantages of Assembly Line:

Time to manufacture goods has reduced.

Higher efficiency of output as each stage is driven by an expert worker.

Assembly lines are enhanced by concepts like JIT (just in time) ensure a
streamlined, smooth & continuous flow of production.

People management has become easier as each worker has their role
clearly defined and is unique from other workers working at different
stages of production.

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2: Operations Processes
4. Continuous Flow:
Continuous flow is a Lean method that allows you to move a single
product through every step of your process instead of grouping work
items into batches. The method is called this way because it allows you to
send goods to the market continuously.

Continuous flow is a way of moving products through the manufacturing

process so that each product is being made one at a time.

Benefits of continuous flow:

Creates a work environment where team members can get into the
zone, find their mental flow, and achieve work goals more easily. They
stalled by needing to wait around for more parts to arrive or to work at
a frenzied pace to get the latest batch through their work cell.
Allows the parts and products to move through the manufacturing
process smoothly.
Allows your team members to identify small problems before they
become larger problems that affect more people and more products.
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2: Operations Processes
Assignment:

End of session Q &A

41