Introduction to Production and Operations Management S. Ajit
Introduction to Operations Management
Nov 18, 2014
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Introduction to Production and Operations Management
S. Ajit
Definition
The design, operation and improvement of the transformation process, which converts the various inputs into the desired outputs of products and services.
S. Ajit
Transformation Process
Transformation Process OutputInput
Quality of inputs monitored
Quality of outputs monitored
Random disturbances
Feedback mechanism
S. Ajit
Transformation Process
• For pure services – An MBA institution
• For pure manufacturing – Automobile
• For hybrid – A restaurant
Functional Subsystems
Operations
Marketing
HR Finance
Operations Function
Forecast
Output
Product/Service
Maintenance Management
Location & Layout
Product design & Analysis, work Study
Inventory Control
AggregatePlanning
Master ProductionSchedule
Scheduling
Line Balancing
Production Control
MRP
Capacity Planning
Input
MaterialLabourEquipmentCapital
Quality Control
Types of Production System
1. Basis – Type of Output
1. Products [features, reliability, durability]
* TV, Radio, Lathe
2. Services [ accessibility, timeliness, consistency]
* Transport, Health, Entertainment
Types of Production System
2. Basis – Type of Flow1. Projects [one of a kind product/service]
* Construction of bridge etc
2. Job shop [ units of different types of products follow different sequence thro’ different shops]
* Hospital, Auto repair
3. Flow Shop [ successive units undergo same sequence]* TV factory, Automobile
4. Continuous process [ no way to identify successive components]
* Postal service, Oil refinery
Types of Production System
3. Basis – Type of Specification
1. Customized
* Medical care, Legal service
2. Standardized
* Insurance, Supermarket
Recent Trends in Operations Management
• Long term success– Investment in technology
• Improves efficiency and productivity
• Competitive Advantage
• Cost Advantage
• Manufacturing-focussed to Customer-focussed
Recent Trends in Operations Management
• Computer Aided Design• Computer Aided Manufacturing• Flexible Manufacturing System• Computer Integrated Manufacturing• Artificial Intelligence• Electronic Data Interchange• Business process Reengineering• Supply Chain Management• ISO standards
Computer Aided Design Computer systems assist in the creation, modification, analysis and optimization of a design
Computer Aided ManufacturingComputers are used either directly to control the processing equipment, or indirectly to support manufacturing operations
Flexible Manufacturing System
* Form of flexible automation in which several machine tools are linked to the materials handling system
* Operate depending on the instructions received from the computer with respect to the sequence and operational specifications of the process
Computer Integrated Manufacturing
* A computer application that connects various computerized systems into a single multi-functional system
* A Central computer controls all aspects of the system
Artificial Intelligence* Enables computers to exhibit some of the characteristics of human intelligence, like the capacity for understanding, problem solving etc
Electronic Data Interchange* Structured transmission of data between organizations by electronic means * Used to transfer electronic documents from one computer system to another
Supply Chain Management* Design, planning, execution, control, and monitoring of the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption
Business Process Reengineering
ISO standards
Factors affecting Operations Management Today
1. Reality of global competition
2. Quality, customer service, & cost challenges
3. Rapid expansion of advanced technologies
4. Continued growth of the service sector
5. Scarcity of operations resources
6. Social-responsibility issues
Factors affecting Operations Management Today
1. Reality of global competition– Changing nature of world business
• Spending power
• Communication
• Trade policies (Free Trade Agreements)
– International companies
– Fluctuation of international financial conditions
Factors affecting Operations Management Today
2. Quality, customer service, & cost challenges
– Perfect product & service quality (US vs Japan cars)
– Outsource• Cheap labour, raw materials
Factors affecting Operations Management Today
3. Rapid expansion of advanced technologies
– Initial cost
– Product/service quality
– Scrap & materials cost
– Faster response to customers
– Faster introduction of new products
Factors affecting Operations Management Today
4. Continued growth of the service sector– Service company exist coz manufacturing sector
buys their services
5. Scarcity of operations resources– Scarcity of funds, employees, raw materials, like
titanium, coal, petroleum products, water
Factors affecting Operations Management Today
6. Social-responsibility issues– Consumer attitude
– Government regulation
– Self-interest [Infosys]
Factors affecting Operations Management Today
6. Social-responsibility issues
6a. Environmental Impacta. Ozone layer depletion, rain forest depletion
b. Global warming & acid rain
c. Radioactive waste disposal
d. Pollution
e. Energy conservation
f. Recycling
Factors affecting Operations Management Today
6. Social-responsibility issues
6b. Safety Impacta. Product safety [Nokia mobile battery, Lenovo,
bridgestone]
6c. Employee Impacta. Fair treatment of employees
b. Employee safety & health programs
c. No discrimination [age, sex, color, race etc.]
d. Benefit programs
Developing Operations StrategyCorporate Mission
Assessment of global business conditions
Business StrategyDistinctive
competencies
Product/ service plans
Competitive Priorities
Operations Strategy
Competitive Priority
Definition Ways of Creating
Low Production Cost
Unit cost of product/service including labour, material
Redesign of Product/service
New Technology
Increase in Production volume
Reduction of scrap
Reduction of inventory
Competitive Priorities• That customers want form product/service• Tool to capture market share• All of these cannot be used for a single product
Competitive Priority
Definition Ways of Creating
Delivery Performance
Fast delivery Larger finished goods inventory
Faster Production rates
Quicker shipping method
On-time delivery
More realistic promises
Better information systems
Control of production orders
Competitive Priorities
Competitive Priority
Definition Ways of Creating
High quality products / services
Customer perception of degree of excellence
Improve Appearance
Malfunction or defect rate
After sales service
Customer service & flexibility
Ability to quickly change, customer responsiveness
Use of advanced technology
Increase in capacity
Lean manufacturing
Competitive Priorities
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