Operations Management

Syllabus
• Q1
– Case
– Operations / Processes / System / Whole
– Systems Approach
– CPSET
– MTS/ATS/MTO/ATO/ETO
– Jobbing/Batch/Mass/Assembly Line/Continuous Flow/Project
– Time/Cycle Time/LeadTime/Setup/Operation(Piece,Batch)
– Strategy
• Q2 Location-Layout
• Q3 Capacity-Inventory
• Q4 DM / RP / SOP / AP / MPS
• Q5 MRP-CRP / Scheduling / Vendor Management
• Q6 Quality
• Q7 Shortnotes
– Productivity / Workstudy / Service Operations / Supply Chain
– Delivery / Flexibility / Agility / Resilience / Sustainability & Continuity / Anti-Fragility
– Production-Consumption-Prosumption
– Value Analysis & Engg (EV-AV-CV-UV)
– Reduce-Recycle-Reuse Resources
 Operations Management

Management of systems or processes that

create goods and/or provide services.
– Planning

– Coordinating

– Executing

– Control

– And ..
Operations: A Transformation Process

Feedback

Inputs Outputs

Workers
Managers Performance
Goods
Equipment Operations and Services
Facility processes
Materials
Land
Energy
Information
Goods-Service Continuum

Steel production Home Auto Repair Maid Service Teaching

Automobile remodeling Appliance Manual car Lawn
fabrication Retail sales repair wash mowing

High percentage goods Low percentage goods

Low percentage service High percentage service
 Manufacturing vs. Service

Characteristic Manufacturing Service

Output Tangible Intangible
Uniformity of output High Low
Uniformity of input High Low
Labor content Low High
Measurement of productivity Easy Difficult
Customer contact Low High
Opportunity to correct quality
problems before delivery High Low
Evaluation Easy Difficult
Patentable Usually Not Usually
 Scope of Operations Management

• Operations Management includes:

– Forecasting
– Capacity planning
– Scheduling
– Managing inventories
– Assuring quality
– Motivating employees
– Deciding where to locate facilities
– And more . . .
Airline Company

• Forecasting: Weather, landing conditions, seat demands

for flights.
• Capacity Planning: How many number of planes in each
route?
• Scheduling: Scheduling of planes for flights and for
routine maintenance, scheduling of pilots and flights
attendants.
• Quality: Quality of the services, Safety.
Automobile Factory

• Forecasting: Demands for cars.

• Capacity Planning : Number of shifts, level of

workforce.

• Inventory: Various component, parts.

• Scheduling: Scheduling of various types of cars,

Scheduling of workforce.

• Quality: Quality of products, services.

Responsibilities of Operations Manager

Planning Organizing
– Capacity
– Degree of centralization
– Location
– Process selection
– Products & services
Staffing
– Make or buy
– Hiring/laying off
– Layout
– Use of Overtime
– Projects
Directing
– Scheduling
Controlling/Improving – Incentive plans
– Inventory – Issuance of work orders
– Quality – Job assignments
– Costs
– Productivity
Reasons to Study Operations Management

• > 50% jobs in industry are opns mgmt.

related :
– Customer Service
– Quality Assurance
– Production Planning & Scheduling
– Inventory Management
– Logistics
• OM activities = core of all businesses
• All Other Functional Areas are related with
OM
Operations as Technical Core

Capital Markets, Stockholders

Finance
Purchasing

Personnel
Suppliers

Workers
Operations

Marketing

Customers
Supporting Functions

– Purchasing
– Accounting
– Personnel/Human
Industrial
resources Engineering

– Public relations Maintenance

– Maintenance Distribution

– Industrial engineering
– Distribution Purchasing Public
Operations Relations

Legal
Personnel

Accounting MIS
Decision Making

System Design System Operation

– capacity – personnel
– location – inventory
– product and – scheduling
service planning – project
– arrangement of management
departments – quality assurance
– acquisition and
placement of
equipment
 Simple Supply Chain

Suppliers’ Direct Final

Producer Distributor
Suppliers Suppliers Consumer

Supply Chain:
Sequence of activities/organizations involved in producing and
delivering a good or service.
Important Trends
• Operations Strategy
• Working with fewer Resources
• Lean Production
• Cost Control and Productivity
• Quality and process Improvement (Delivery/Flexibility)
• Increased Regulation and Product Liability
• Ethical Behavior
• Increasing use of Internet,e-com
• Management of Technology/People & Structures
• Globalization & Anti-Globalization
• Supply Chain
• Agility/Resilience/Sustainability-Continuity/Anti-Fragility
Operations Strategy and Competitiveness
Operations Strategy and Competitiveness

• Operations Strategy

– Operations Strategy in Mfg

– Operations Strategy in Services

• Meeting the Competitive Challenge

• Productivity Measurement
 Operations Strategy

Customer Needs Corporate Strategy

Alignment

Operations Strategy Core

Competencies

Decisions

Processes, Infrastructure, and Capabilities

 Operations Priorities

• Productivity
• Cost
• Quality
• Delivery Speed Reliability
• Flexibility Coping with changes in Demand,
Product Mix, New Products
• Agility
• Resilience
• Sustainability & Continuity
• Anti-Fragility
 Dealing with Trade-offs

Cost
Traditional
Flexibility Delivery Approach

Quality
Plant within a Plant (PWP)

World Class Manufacturing FOCUS FOCUS

Advanced Approaches FOCUS FOCUS

Trade-offs
 World-Class Manufacturing

World-class manufacturers no longer view cost,

quality, speed of delivery, and even flexibility as
tradeoffs.
They have become order qualifiers.

What are the order winners in today’s market?

 Service Breakthroughs

• Service can be an
“order winner” Travel
Warranty Planning

Leases

Roadside Loaner
Assistance Vehicles
A Framework for Manufacturing Strategy

Customer Needs

Strategic Vision New and Current

Products

Performance Priorities
and Requirements

Quality, Dependability,
Speed, Flexibility, and Price

Enterprise Capabilities
Operations & Supplier Capabilities

Technology Systems People R&D CIM JIT TQM Distribution

Support Platforms
Financial Management Human Resource Management Information Management
 Strategy Begins with Priorities

• Consider the case of a Laptop Manufacturer.

1.How would we segment the market according to product group?

2. How would we identify product requirements, demand patterns, and

profit margins for each group?

3. How do we identify order winner and order qualifiers for each group?

4. How do we convert order winners into specific performance reqmts?

Competition Us
(Them) Differentiation (Core Competencies)
 Manufacturing’s Role in Corporate Strategy

• Stage 1--Internally Neutral

– Minimize manufacturing’s negative potential
– Management control systems
• Stage II--Externally Neutral
– Achieve parity with competitors
– Follow industry practice
• Stage III--Internally Supportive
– Support the business strategy
• Stage IV-- Externally Supportive
– Manufacturing-based competitive advantage
Four Stages of Service Firm Competitiveness
• Stage I. Available for Service
– Reactive, non-performance-based survival

• Stage II. Journeyman

– Firm neither sought nor avoided
– Reliable but uninspired operation
• Stage III. Distinctive Competence Achieved
– Reputation for meeting customers’ expectations
– Customer-focused operations--management support
• Stage IV. World Class Service Delivery
– Firm name synonymous with service excellence--focus on delighting rather than satisfying
customers
– Continuous learning and improvement of operations
 Productivity

• Place less emphasis on short-term financial payoffs and invest more in

R&D.
• Revise corporate strategies to include responses to foreign competition.

– greater investment in people and equipment

• Knock down communication barriers within organizations and recognize
mutuality of interests with other companies and suppliers.
• Recognize that the labor force is a resource to be nurtured, not just a cost to
be avoided.

• Get back to basics in managing production operations.

– Build in quality at the design stage.
– more emphasis on process innovations rather than focusing sole
attention on product innovations.
 Competitiveness Drivers

• Product Development
– Teams speed development and enhance
manufacturability
• Waste Reduction (JIT Philosophy)
– WIP, space, tool costs, and human effort
• Improved Customer-Supplier Relationships
– Borrowed from Japanese Keiretsu
• Improved Leadership
– Strong, independent boards of directors