1.+Intro Opn+Mangt (2)

8/6/2019 1.+Intro Opn+Mangt (2)

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Introduction to Operations Management


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What is a function?

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Function is a set ofgoal foc

used activities

Goals are subsets of corporate objectives

Corporate objectives are aimed at

customer satisfaction

customer satisfaction is the result of

meeting customers expectations

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What are customers expectations?


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QCD of the product

How are they fulfilled?

P,Q,C,D,E,F,S,H,E, the Objectives of

Operations Management


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What is an operation?

Operation is a process of creating a product

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What is a product?


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Satisfies someone's need

Some one is willing to buy!

When does some one buy?

Value?

How value is created or added?


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VA/NVA

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What activities add value?

Alter physical state-water to ice

Alter form-blacksmith

Alter chemical composition-chemical

products

Alter metallurgical condition-alloys

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Store, preserve-refrigerate deep freeze

Impart knowledge-teach, train, information

Give advice-medical advice, legal opinion

Give medical treatment

Transport mangoes from Ratnagiri to

Mumbai


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Production & Operation

Concept ofProduction & Operation

Types ofProducts

Consumer /Industrial

Consumer durable & Non-durable

Discrete/Continuous

Standard/Customized

Tangible/Intangible


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What is operation?

Product? Service?

Production? Operation?

Factory? Facility?

What is core service?

Products meeting QCD expectations of

customer


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What is Value added service?

Help external customers use the core

service effectively

Help internal customers perform effectively

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1. Information on product and product

performance-safety, cost etc.

2. Problem solving-product support, workers

visiting customers works to learn product

performance for CCA/PA

3. Sales s

upport- technology demonstration

4. Field support-parts replacement, stock

replenishment


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Product Vs Service

Result of a process

Tangible

Inventoriable

Customer is away,

product is to be

delivered to the

cu

stomer

A process itself

Intangible

Non inventoriable

Customer is on the

shop floor and

involved in creation

of service


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What is management?

Important features of managementFacilitation

Resource allocation

Accountability

Review PDCA

Efficiency & Effectiveness

Visualization & Planning


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What is Operations Management?

Definition: Design, operation and

improvement of systems that create and

deliver the firms primary products and

services

O/M is a function of general management

O/M is a line function


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O/M uses tools of OR (Operations

Research), MS (Method Study) & IE

(Industrial Engineering), hence closely

associated with these functions

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Operations Management Objectives

Performance Objectives

Efficiency & Effectiveness

Quality

Lead times

Capacity utilization

Flexibility


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Cost Objectives

Explicit [visible] costs: material, labor, scrap,

rework, maintenance

Implicit [invisible]costs: inventory, stock-outs,

shortages, delayed deliveries, mat.handling,

inspection, grievances, dissatisfaction,opportunity


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Importance of Operations Management

1.Business education is incomplete without the

study of Operations Management

Central to every business activity

Knowledge of issues in the field is critical for

a manager whether the business ismanufacturing or service, private or public


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2. Reinventing Government in the US -1990

David Osborne and Ted Gaebler-1992 book

Reinventing Government

It applies the business customer servicemodel to government and the PSUs

In India many of the PSUs are either getting

privatized or following the Business

customer service model as in the US


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This approach focuses on results and

promotes competition inside and outside

government

Reinventing Government initiatives draw

from the concepts ofSupply Chain

Management, TQM, BPR and JIT delivery,

concepts that fall under OM umbrella


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3. Operations Management provides a

systematic way of looking at organizational

processes

Analytical approach to a situation

Strategizing

Problem solving


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4. O/M presents interesting carrier

opportunities

Line positions-direct supervision of

operations

Staff positions-Supply Chain Management,

Quality AssuranceConsulting opportunities-BPR,ERP


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5. Concepts and tools of O/M are used in all

functions of management

Quality Control

Productivity improvement

Internal customer focus


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6. Competitive edge through O/M to business

and to management professionals

Huge potential to boost the productivity of

the process, offer products at lower cost andhigh quality

Meeting the QCD expectations of the

customers with improved flexibility


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History of Operations Management

Concept ofO/M - an evolution: House hold

trades to factories as investment

opportunities


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1910s

Frederic Taylor

Principles of scientific management

Concept of productivity, time study

Frank and Lillian Gilbreth

Motion study


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Henry

Ford and

Henry Gantt

Moving assembly line and activity scheduling,

Gantt Chart

F.W.Harris

Inventory Control, concept ofEOQ


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1930s

Walter Shewhart & H.F. Dodge and H.G.

Romig

Quality control, sampling inspection &

statistical tables for quality control

Elton Mayo & L.H.C. Tippet

Hawthorne studies of worker motivation


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1940

George B. Dantzig

Simplex method of linear programming to

solve complex multidisciplinary pro

blems


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1950s -1960s

Many researchers in US & Western Europe

Extensive development of OR tools like

simulation, waiting line theory, decision theory,

mathematical programming,PERT & CPM


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1970

Many computer manufacturers lead by IBM

in US

Wide spread use of computers in business for

production scheduling, inventory control,

forecasting, project management, MRP

Mc Donald's restaurants in US

Service Quality and Productivity, mass

production in service sector


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1980

Harvard Business School Faculty

Manufacturing as a competitive weapon

Tai-ichi Uhno of Toyota Motors,

D E Deming & J E Juran

Kan

b

an,P

okayoke,

CIM,F

MS,

CAD/CAM,

robots etc.


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Eliyahu M. Goldratt

Synchronous manufacturing-Lean principles

to variety production, Theory Of Constraints:

b

ottleneck analysis-methodology for solvingproblems, goal-performance-constraints


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1990

National Institute of Standards and

Technology, American Society of Quality

Control and International Organization for

Standardization


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Total Quality Management, Balridge quality

award, ISO 9000,Quality Functional

Deployment, value engineering and

concu

rrent engineering-modern approach toproduct development

Michael Hammer and other major

consulting firms

Business Process Re-engineering


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US government, Netscape Communication

Corporation and Microsoft Corporation

SAP (Germany), Oracle (US)

Su

pply chain management,SAP/R3,

client/server software

2000

Amazon, eBay, American Online, Yahoo

E-commerce, Internet,World Wide Web


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What is Operations Strategy?

Evaluating most Cost effective methodology

of producing goods while achieving desired

Quality and Delivery objectives

A planning process to organize the resources

to fulfill the long term objectives of operations,

which are focused on organizational objectives

Organizational objectives are dynamic as

they are competitive - post war US

and Japan


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Objectives are flexible to meet changing

expectations of customers

Operations strategy is a process by which

key operations decisions are made that are

consistent with overall strategic objectives of

the firm

Operations Strategy leads to operational

excellence


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What are operational decisions?

Decisions are at the core of a strategy.

Operational Decisions are the strategic

options selected by the organization.

Product & Process

Product portfolio- products, product line,

extent of customization

Product design


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Process design

Technology selection

Capacity planning

Inventory decisions

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Infrastructure

Planning systems

Control systems

Quality assurance and control

Work payment structure

Process location

Organization of Operations function


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Relevance of Operations Strategy

1.Changing expectations of customers due to

the competitive dynamics

2. Need for a cost effective plan to respond to

these changes

3. Need for adaptation to competitive

priorities,Quality? Cost? Delivery?


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4. Competitive pressure on price line, lead

time and quality

5. Challenges of modern business- pushes

and pu

lls, cu

stomers, su

ppliers, investors,workers, government, NGOs

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COMPETITIVE DIMENTIONS IN

OPERATIONS STRATEGY

Make it cheap- cost reduction, post war

demand for volumes

Make it good- quality and reliability as a

dimension, Competition from Japanese

products

Make it quick- lead time reduction

Deliver it when promised-OTD


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Change its volume-Meeting rising demand

and scaling down

Change it-new product introduction

Support it-competitive dimensions related

to service


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COMPETITIVE ADVANTAGE

Competitive Advantage creates value for

the customer

Firms profit exceeds the competition

average

Cost advantages-core service is delivered

at lower cost

Differential advantage-benefits delivered are

su

perior


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Resources

Distinctive

Competencies

Cost Advantage

orDifferentiation

Advantage

Value

Creation

Capabilities


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Resources

Firms resources and capabilities are to be

superior to competition- Without this superiority,

any advantage quickly would disappear

Patents and trademarks

Proprietary know-how

Installed customerbase

Reputation of the firm


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Brand equity-is the value that customers

PERCEIVE in a brand. It is measured based

on how much trust a customer has in the

brand.

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Capabilities

Firm's ability to utilize its resources

effectivelyAspects that are difficult to document

Embedded strengths of the company


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Distinctive Competencies

The firm's resources and capabilities

together form its distinctive competencies

competencies enable innovation, efficiency,

quality, and customer responsiveness, all of

which can be leveraged to create a costadvantage or a differentiation advantage.

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TIME BASED COMPETITION

Business organizations seek competitiveadvantage to attract customers

Focus of the competition changed with time

post war focus in the US was cost (concept

of 'make it cheap')

Japanese introduced quality focus in 1980s

(concept of 'make it better')


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As the cost and quality become qualifiers

in competitive business. Now focus comes ontime.(concept of 'make it quick')

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Classical ILO approach to work talks about

work content and ineffective time

TBC as an initiative puts the focus on NVA

elimination/reduction

As the NVAs shrink changes occur in O/S

Productivity goes up, Output rises,

Business prospers


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Satisfying 'D' expectation became the

winner characteristic in competitive business

Lead-time came under the scanner of

business managers

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TBC has a methodology for implementation

Value stream mapping

Process mapping

Prioritization with respect to prod

uct delivery

Selecting focus area

Reduce NVAs


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Tools used: SMED, KANBAN,5S,Process

mapping, layout change, Technology,

Logistical Management,Supply Chain

Management

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Documents

1.+Intro Opn+Mangt (2)