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8/10/2019 Module 1 - Introduction Into Operations Management
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8/10/2019 Module 1 - Introduction Into Operations Management
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Operations Management
OM consists of activities such as Scheduling Work, Assigning
Resources ie., people, equipment, Managing inventories, assessing
quality standards etc. OM is a process through which resources
and inputs are converted into more useful products.
Production Management is used for a system where Tangible
goods are produced. OM is more frequently used where inputs
are transformed into intangible services. OM covers serviceoriented organizations such as :- Banks, Airlines, Pollution Control
Agencies, Shopping Malls, Educational Institutions etc.
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Operations Management
Definition of Operations Management.
Operations Management refers to the administration of
business practices to create the highest level of efficiency
possible, within an organization. Operations Management isconcerned with converting materials and labor into goods
and services as efficiently as possible to maximize the
profit of an organization.
Operation Management is the set of activities that create
goods and services through the transformation of inputs
into outputs. - (Slack, 2001)
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Goal of Operations Management:
The goal of Operations Management is to ensure that the input requirements and the
transformation process, in which part of the value addition takes place, to get therequired quantity of the product or services, with the targeted quality, within the
specified time period, is carried out in a most economical way.
Operations System could be either Manufacturing Sector or Services Sector.
Operations Management Plan coordinates and controls all the activities in the operation
system to achieve the stated objectives.
Objectives of Operations Management:
1) The Customer Service Objective: Provide goods or services with the right
specification, at the right cost and at the right time.
2) The Resource Utilization Objective: To achieve agreed levels of utilization of
Materials, Machines and Labour.
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President and/or CEO
ProductEngineering
R & D AccountingVP -
OperationsMarketing Finance
VP -Material VP -Quality GeneralManager IndustrialEngineering
InventoryManagement
DistributionManagement
PurchasingPlant
MaintenanceWork
Standards
ProcessManagement
SupervisorSupervisorSupervisor
Production line associates
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Operations as Service:
The emerging model in the industry is that every organization is in the service
business. This is true whether the organization makes big planes or big mac.This means that the manufacturing operations, as well as every other part of
the organization, are also in the service business, even if the customer is an
internal one.
In Manufacturing, such services are divided into Core and Value-added Services.
Core Services Quality, Flexibility, Speed and Price.
Value-added Services Information, Problem-solving, Sales support and Field
support. Value-added services provided to external customers yield two
benefits:
Differentiate the organization from the competition.
Bind customers to the organization in a positive way.
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Historical Development of OM Industrial revolution Late 1700s
Scientific management Early 1900s
Human relations movement 1930s to 1960s
Management science Mid-1900s
Computer age 1970s
Just-in-Time Systems (JIT) 1980s Total quality management (TQM) 1980s
Reengineering 1990s
Flexibility 1990s
Time-Based Competition 1990s
Supply chain Management 1990s
Global Competition 1990s
Environmental Issues 1990s Electronic Commerce Late 1990s
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Current Issues in OM:
1) Effectively consolidating the operations resulting from mergers.
2) Developing flexible supply chains to enable mass customization of products
and services.
3) Managing global supplier, production and distribution networks.
4) Increased commoditizationof suppliers.
5) Achieving the Service Factory.
6) Achieving good service from service firms.
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Operations Management Strategy:
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Corporate Mission
Business Strategy
Product Service/Plans
Competitive Priorities
Cost, Time, Quality, Flexibility
Production/Operations StrategyPositioning the production system
Product/Service PlansOutsourcing Plans
Process and Technology PlansStrategic allocation of resources
Facility Plan, Capacity, Location and Layout
Assessment ofBusiness Conditions
DistinctiveCompetencies or
Weaknesses
DEVELOPING PRODUCTION/OPERATIONS STRATEGY.
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O ti St t
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Operations Strategy:
Operations Strategy is concerned with setting broad policies and plans for using the resources of a firm to best support
its long-term competitive strategy.
Operations Strategy can be viewed as part of a planning process that coordinates operational goals with those of the
larger organization. Since the goals of the larger organization changes over time, the operation strategy must be designedto anticipate future needs. Should be able to adapt to the customers changing needs for goods/services.
Competitive Dimensions:
Customers today have a lot of choices in terms of what to buy. Different customers are attracted to differentattributes.
The Major Competitive Dimensions that form the competitive position of a firm include the following:
Cost/Price: Could result in commoditization.
Quality: There are two characteristics of a product/service that define quality: Design Quality (Child's Cycle versus
Athlete's Cycle) and Process Quality (Defect free Products and Services).Delivery Speed:
Delivery Reliability:Coping with Changes in Demand: Changes in volume:
- Higher volume Increase production and costs reduce due to economies of scale.
- Lower demand/volume Difficult decisions such as scaling down operations, laying off employees etc.6) Flexibility and New Product Introduction Speed:7) Other Product Specific Criteria (Support):
- Technical Liasion and Support.- Meeting a launch date.
- Supplier after sale support.- Other dimensions Colors size wei ht customization etc .
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Operations Strategy in Manufacturing:
Developing Manufacturing Strategy:
Main Objectives of developing Manufacturing Strategy:
Translate required competitive dimensions into specific performance
requirements for operations.
To make plans necessary to ensure that operations capabilities are sufficient tomeet the production goal.
Operations Strategy in Services:
Order Qualifier & Order Winners.
Order Qualifiersare the characteristics of products or services that is
required in order for the product or service to be considered by a customer.
Order Winnersare the characteristics that will win the bid or the customers
purchase.
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RECAP
Way to remain Competitive through Operations:
1) Price.
2) Quality.
3) Product/Service Differentiation.4) Flexibility.
5) Time.
6) Service.
7) Management & Workers.
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How is Operations Relevant to your Major?
Marketing
How can you do a good job marketing a product if youre unsure
of its quality or delivery Status?
Finance
Most of our capital budgeting requests are from operations,
and most of our cost savings too.
Human Resources
Human Resources are the most important asset of an
organization. Essential to run the operations.
S f P d ti d O ti M t
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Scope of Productions and Operations Management:
Productions/
Operations
Management
Location of
FacilitiesPlant Layout& Material
Handling
Product
Design
Production
Planning
& Control(Planning, Routing,
Scheduling, Dispatching,
Follow up)
Quality
Control
Maintenance
Management
Material
Management
Process
Design