Introduction To World Class

Manufacturing & Information Age

Competition

WCM- I
Prof. Rajesh Nagare
rajesh.n@rajeev.edu.in
Introduction
 Production Operations Management is managing of
productive resources (Men, Material, Equipments &
Facilities) Efficiently & Effectively.
 MBA graduates are expected to help organizations
gain competitive advantage by excelling in meeting
customer needs.
 Whether you are in Marketing, Finance or
Operations; effectively serving customers will need
knowledge of Operations Management. Serving
customers means meeting the requirement in time,
with exceptional quality at lowest cost.
Introduction
 Production Operations Management provides
interesting career opportunities – Directly
supervising Operations OR Operations
Management specialists like (SCM) Supply
Chain Management, ERP ( Enterprise
Resource Planning), QA (Quality Assurance),
Purchasing.
 Production Operations Management is defined
as the design, operation & improvement of
the system that creates & delivers firm’s
primary products & services.
Introduction
 Production is the process by which goods &
services are produced.
 Manufacturing management brings together
Men, Machines & Material to provide goods &
services. There by satisfying customer needs.
 Operations includes both Manufacturing as
well as Service Organizations.
 Operations may be defined as process of
changing input into output; thereby adding
value.
Service & Goods Production
 Service is intangible while goods is a
physical output.
 In service direct customer involvement
in creating output is essential.
 Customers are on the ‘shop floor’ when
consuming service. Shop floor may be
called front office, dinning area,
passenger cabin.
Introduction
 Effectiveness of production process can be
efficiency with which input is converted into
output.
 Productivity=output/input.
 Essentially production/operations
management is concerned with management
of productivity.
 Reduce conversion cost, idling resources,
defective goods, lower throughput time.
Functions of Manufacturing Management
 Planning:
 Product selection & design.
 Process selection.
 Facility location, Material handling.
 Capacity planning.
 Forecasting.
 Organizing:
 Work-study & job design.
 Controlling:
 Inventory control, Quality control.
 Cost control, Production control.
 Introduction

T2

T1
T2
Warehouse
OEM Retailer Customer
T2 Distributor
T1 Dealer

T2
Supply Chain Distribution Network

Production Operations Management is concerned with managing all these

individual processes Effectively
Introduction
 Within Operations Management the
decisions can be divided into 3 broad
areas.
 1) Strategic:
 Long term decisions
 How to make the product?
 Where to locate the facility?
 How much capacity to be created?
Introduction
 2) Tactical Decisions:
 Medium term.
 Decisions made at strategic stage become preconditions.
 How many workers do we need?
 When do we need the material?
 How much inventory do we hold?
 3) Operational Planning & Control Decisions:
 Day to day planning.
 Scheduling, Priority
 What job to do?
 Whom do we assign?
Production System
 Production system uses resources to
transform inputs into some desired
output (Product or Services).
 Inputs may be raw material; customers
or finished products from another
system.
Transformations
 Physical--manufacturing
 Locational--transportation
 Exchange--retailing
 Storage--warehousing
 Physiological--health care
 Informational--telecommunications
Production System
System Primary Resources Primary Desired
Input Transformation Output
Function

Hospital Patients Doctors, Healthcare Healthy

Nurses, Individuals
Medicines,
Equipments
Restaurant Hungry Food items, Well prepared, Satisfied
Customers Chef, Well served food Customers
Waiters,
Environment
Automobile Sheet Metal, Tools, Fabrication, High quality
Manufacturing Steel, Parts Equipments, Assembly. cars.
Workers
Production System
System Primary Resources Primary Desired
Input Transformation Output
Function
College, High school Teachers, Imparting Educated
University Pass outs Books, Knowledge, Skills Individuals
Classrooms.

Departme- Shoppers Stock of Attract shoppers, Sales to

ntal Store goods, Promote satisfied
Display, Sales products. customers.
persons

Airline Travelers Aero planes, Move to On time

Crew, Fuel. destination safe
delivery to
destination
.
Historical Development of OM
Year Concept Originator

1910’s Principals of scientific management. F.W.Taylor

Time & motion study. F.W.Taylor
Economic Order Quantity (EOQ). F.W.Harris
Conveyor Line Henry Ford
!930’s Quality Control, SPC, Sampling Walter
Shewhart

1970’s Wide spread use of Computers in business. IBM

Historical Development of OM
Year Concept Originator

1980’s JIT, Kanban, Lean Manufacturing Taichi Ohno, TPS

1990’s Total Quality Management (TQM). Japanese

Business Process reengineering Manufacturers
Supply chain Management SAP
2000’s E – Commerce; B to B; B to C Amazon, Yahoo.
E Bay
Typical Organization Structure

Operations

Manufacturing Quality Assurance Materials Management

Maintenance PPC
Introduction To Materials Management
 Value of supply chain has been recognized
long back. In 401 BC a Greek General while
addressing his army of 14,000 men; fighting
1,300 miles away from Greece said “ The
survival of the Greek army depends not only
on it’s discipline, training & morale but also
on it’s supply chain”.
 Today survival of most firms depends on
intelligent supply chain decisions. Lot of brain
power & technology is applied to improve
supply chain performance.
What Is A Supply Chain
 Supply Chain consists of all parties involved
directly or indirectly in fulfilling customer request.
 It includes Manufacturer, Transporter,
Warehouses, Retailers & Customers themselves.
 Within Manufacturing it includes all functions
involved in receiving & fulfilling customer request.
 Functions included are New Product Development,
Marketing, Operations, Distribution, Finance &
customer service.
 Emerging Business Trends in
Information Age
Area Industrial Age Business Information Age Business
Economic - Assembly Line - Customization of Products
Production - Fluid Markets &
- Stable Markets & Global Suppliers
Local Suppliers - International Competition
- Domestic
Competition
Organizational -Inside Out (Bottom Up) - Outside In (Top Down)
- Complex Busi. Processes -Reusable, Simple Processes
- Intra-organizational -Inter-organizational
Communication
Communication
-Domestic Reach &
Ambitions
- Global Reach & Ambitions
 Emerging Business Trends in
Information Age
Area Industrial Age Business Information Age Business

Technical -Mechanical Technology -Electronic Technology

-Proprietary Standards - Open, Inter-operable
-Predictable Innovation Standards
-Rapid Unpredictable
Innovation

Socio- -Authoritarian, Hierarchical -Horizontal, Team Consensus

Cultural -Business Task Focus - Business Process Focus
-Individual Responsibility -Team Responsibility
Business Challenges of Information Age
 Managing Uncertainty
- Consumers to competitors, competitors to partners
resulting unconventional competition
 Understanding Customers
-Analyze customer expectation information captured at
each level(research, design, manufacturing,
distribution, marketing etc) of Product Life Cycle with
help of IT
 Understanding Globalization of Business
- Union of small firms all over globe expert in their
respective fields can give tough competition to the
industry giants
Operating Environment of
Information Age Business
 Business Process Orientation- combination of the
specialization benefits from functional expertise with speed,
efficiency, quality of integrated business process

Links to Customers & Suppliers –
JIT with extensive use of IT infrastructure
 Customer Segmentation- low cost standardized products &
services are transformed into customized with improved quality,
high variety & low volume
 Global Scale- Act Global think local with union across globe
 Managing Innovation- innovation is need of time for survival
due to shrinkage of Product Life Cycle
 Knowledge Workers- both blue & white collar workers act
together implementing new ideas & designs for max profit
Globalization Characteristics

 Tightly Linked Global Financial Market

 Global sourcing of inputs, marketing &
distribution of production, and manufacturing
of products & final products
 Increased pressure for improved product
quality at reduced price
 Business evolution towards more
comprehensive & continuous global
coordination & integration
Strategic Issues relative to
Global Business Environment
 Cost quality improvement through
coordinated manufacturing- JIT & TQM

 Cost quality improvement through concurrent

engineering- product redesign at all levels

 The order cycle- faster delivery of quality product

or services after receiving the order

 After sales customer support- efficient & fast

skilled technical service with add on like training, free
upgrades & excellent communications
Strategic Issues relative to
Global Business Environment
 The design cycle- innovative new designs at
continuous intervals with short lead times

 Globally coordinated flexible manufacturing –

CKD units, increased local content, export hubs

 Globally coordinated R & D – Global Patents &

other quality regulations are used to get the
innovative products/ services
 World Class Manufacturing
Matrix required for India
Exporters World Class
Global
Manufacturers

Markets
Domestic Multinational
Local Players

Local Global

Competitors
 Manufacturing Challenges of Information Age
 Time based competition
 Managing knowledge
Business Objectives Flexibility

Product Innovation Product Technology

Product Diversity Product Mix

Customer requirement Design

Market Share Volume

Meeting Delivery dates Routing & sequencing

 Flexible Manufacturing Parameters for meeting Business Objectives
Problems in the Manufacturing Industry

 Problem of coordination

 Need of control

 Fragmented information structure

 Insufficient process ability of available

information
What does it mean to be a world-class
Manufacturer?

It means being successful in your chosen market against any competition—

regardless of size, country of origin or resources.
 What does it mean to be a world-class
Manufacturer?

It means matching or exceeding any

competitor on
 Quality
 Innovation
 Lead-time
 Flexibility
 Cost
 Customer service
What does it mean to be a world-class
Manufacturer?

It means you are in control and your competitors struggle to emulate your
success.
 Are you a world class manufacturing
company?

What does it take to be world class? First and

foremost, you must be in control— In control of your
markets and customers, in control of your
processes and resources information. Being in control
doesn’t necessarily mean you make all the decisions,
but it does mean you are prepared and will not be
thrown by unexpected changes in demand,
technology,circumstance or competition.

Take a test to know if you are a world class manufacturing

company by clicking on the globe given on the right.
7 steps to world class
Manufacturing
1. Focus on ‘Competitive Quality’
2. Implement Lean manufacturing
3. Achieve cost efficiency
4. Reduce Time-to-Market
5. Exceed Customer Expectations
6. Streamline Outsourcing Processes
7. Have a global perspective
 1. Focus on ‘Competitive Quality’

Today’s dynamic and turbulent business environment has

shifted the focus of the organizations from “Quality” to
Click on topics given below
“Competitive quality”. With ever changing customer
requirements, quality is no more a competitive weapon. Every
Assessment of performance
organization has quality today. What separates a world class
Continuous improvement guidelines
organization from others is - how better you are from the
Model of Continuous improvement
rest of your competitors.
SMAIC in action
Measures of Mfg. excellence
Benchmarking - technique Everybody in the organization must think and demonstrate
Manufacturing best practices that they can do better. The need of the hour is to constantly
TQM Rolling plan challenge the status-quo and develop a constructive level
Benchmarking with Japan of dissatisfaction with the present performance.
BPR
Kaizen
PDCA
Reliability improvement
FMEA
Six sigma
 2. Implement Lean
Manufacturing systems

Lean manufacturing is an overall methodology that seeks to minimize the

resources required for production by eliminating waste (non-value added
activities) that inflate costs, lead times and inventory requirements, and
Click on topics given below emphasizing the use of preventive maintenance , quality improvement
Lean Management programs, pull systems and flexible work forces and production facilities.
Non-Value Adding Activities Principles of lean include zero waiting time, zero inventory, scheduling
Reducing set-up time (internal customer pull instead of push system), batch to flow (cut batch
Five S-technique sizes), line balancing and cutting actual process times.
Just In time
Total Productivity Maintenance
TPM Checklist
Supplier quality improvement
Supplier evaluation
Supplier best practices
Supply chain
Takt Time
Taguchi Methods
Root cause analysis
Kanban
Value Chain Mapping
 3. Achieve cost efficiency

Although recent developments in planning and customer

relationship management have focused more on top-line
benefits (increased revenue), the bottom line is still greatly
dependent on controlling costs. Companies with a lower
Click on topics given below operational cost structure enjoy an obvious advantage in
Quality,Cost & Profit
profitability and the ability to adjust pricing to meet
Cost of Quality competitive pressures if necessary to maintain or gain
Quality Cost-Function Wise market share.
Non-Value Adding Activities
Gemba Kaizen - A low cost approach
Costs are really just part of the scoreboard. When a
Analysis of variance
company implements world-class operational processes, it
Controlling variation
improves multiple measurements simultaneously,including
Mistake Proofing
Pokayoke
cost, lead times, inventory and customer service.
Reducing Defectives through FMEA
Waste Assessment
Waste Reduction
Design of experiments
 4. Reduce Time-to-Market

 Customers now penalize suppliers that infringe on their time,

whether through delays, mistakes or inconveniences. Today’s
customers demand operations that are airborne, on-line and
real- time. Soon is not the answer the customers want to
hear. They count the speed of response time as a Key
Click on topics given below Value Dimension.
Time based competition

Creativity & innovation Good ideas are not enough; well-managed processes for
Niche Marketing bringing new products to market faster than the competitors
can lead to significant competitive advantages. Bringing
SCAMPER
products faster into the market does represent some
New product development
element of risk, which can be properly evaluated.
Risk Analysis

Risk Management

Ten commandments of time

 5. Exceed Customer Expectations

Click on topics given below

Are you a customer driven org.

The ultimate key to success in any business enterprise is to
Customer expectations
please your customers. The most successful companies don’t
Exceeding expectations just meet customer expectations, they exceed them and beat
Competitive Edge the competition by setting the standards at a level that
Customer supplier model makes it difficult, if not impossible, for others to surpass.
Internal health
Quality
Quality MIS
Quality management principles
Customer satisfaction measurement
Customer loyalty
Customer practices of global leaders
Customer survey forms
Quality Function Deployment
 6. Streamline Outsourcing
Processes
Outsourcing of manufacturing operations is a common
practice today because it offers flexibility—the ability to
change products or processes rapidly—and can often save
money by exploiting economies of scale or other favorable
cost factors the contractor has to offer.
Click on topics given below
For manufacturers, the fastest and easiest way to achieve
Process classification framework this goal is through partnerships with companies that
have attained superior capabilities in particular phases of
Principles of outsourcing
the process-like production.

By partnering with world-class contract manufacturers you

can reap the benefits almost immediately—well-managed
processes, high quality, on time deliveries—and increase
your performance and deliver to meet your customer’s
expectations.At the same time time you can focus your
own resources on things that you do best-product
innovation,design,marketing,distribution sales or
manufacturing.
 7. Have a Global perspective

Click on topics given below There’s no question the world is shrinking, and virtually
every business is now involved in some form of
International Marketing international trade—whether marketing and selling to
Shingo prize for Mfg. Excellence
customers in other countries or simply using parts or
materials that are produced elsewhere. Customers today
are looking for world class products.

The companies wanting to become world class

manufacturing must follow the international standards in
quality. One of the best framework to follow in this
regard is The Shingo Prize which is awarded to
companies who have attained manufacturing excellence.
Thank You