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OPERATION 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 is concerned with converting materials and labour into goods and services as efficiently as possible to maximize the profit of an organization.

PRODUCTION AND OPERATIONS

HISTORY OF OPERATION MANAGEMENT:- The history of production and operation systems began

around 5000 B.C. when Sumerian priests developed the ancient system of recording inventories, loans, taxes, and business transactions. The next major historical application of operation systems occurred in 4000 B.C.

In 1883, Frederick W. Taylor introduced the stopwatch method for accurately measuring the time to perform each single task of a complicated job.

The idea of the production line has been used multiple times in history prior to Henry Ford: the Venetian Arsenal (1104), Smith pin manufacturing in the Wealth of Nations (1776) or Brunel's Portsmouth Block Mills (1802). Ransom Olds was the first to manufacture cars using the assembly line system

PHASES OF OPERATION MANAGEMENT:-

Empiricism (learning from experience) Analysis (scientific management) Synthesis (development of mathematical

problem solving tools) Isolated Systems with Single Objective (use

of Integrated and Intelligent Systems, and WWW)

Integrated Complex Systems with Multiple Objectives (development of ecologically sound systems, environmentally sustainable systems, considering individual preferences)

OPERATIONS MANAGEMENT

Operation system is either manufacturing sector or service sector.

The input requirements and the transformation process, in which part of the value addition takes place to get the required quantity of the product or services with the targeted quality within the specified time period, is carried out in a most economical way.

Operation Management Plan coordinates and controls all the activities in the operation system to achieve the stated objectives.

UNDERSTANDING THE OPERATION MANAGEMENT:-

The operation system includes both manufacturing sector as well as service sector, but when you use the word PM, you should be careful to note that it refers to the manufacturing sector but not the service sector.

Suppose, you are designing a layout for the hospital you should say that you are applying Operations Management Technique not the Production Management Technique.

NATURE / SCOPE / INTRODUCTION :

Know the production & operation function as process of value addition.

Recognize the distinction between product & services.

Understand all organizations as conversion system whether in manufacturing or service sectors.

Identify problems of decision making in operations management.

Distinguish functions & requirements of different departments.

Facilities required for production & operation.

PRODUCTION AND OPERATION FUNCTION

Creation Customer Service Profit(produce a product or service that creates

profit and revenue for the company) Evaluation(self-evaluating entity that monitors the

quality, quantity, and cost of goods produced) Tasks(include forecasting, scheduling, purchasing,

design, maintenance, people management, flow analysis, reporting, assembly and testing)

Fulfilment

STRATEGIC IMPORTANCE OF THE PRODUCTION FUNCTION

• Effective production and operations management can:• Lower a firm’s costs of production.• Boost the quality of its goods and services.• Allow it to respond dependably to customer demands.• Enable it to renew itself by providing new products.

TOP-DOWN APPROACH TO OM STRATEGYOperations Strategy Decisions

Strategic (long-range)

Needs of customers(capacity planning)

Tactical (medium-range)

Efficient scheduling of resources

Operational planning and control (short-range)

Immediate tasks and activities

PRODUCTION PROCESSES

• Synthetic production system Combines a number of raw materials or parts or transforms raw materials to produce finished products.

• Example: Dell’s assembly line

• Continuous production process Generates finished products over a lengthy period of time.

• Example: Steel industry

• Intermittent production process Generates products in short production runs, shutting down machines frequently or changing their configurations to produce different products.

• Example: Most services

THE JOB OF PRODUCTION MANAGERS• OVERSEE THE WORK OF PEOPLE AND MACHINERY TO CONVERT INPUTS (MATERIALS AND RESOURCES) INTO FINISHED GOODS AND SERVICES.• FOUR MAIN TASKS:

PLANNING THE PRODUCTION PROCESS

• Begins by choosing what goods or services to offer customers.

• Convert original product ideas into final specifications.

• Design the most efficient facilities to produce those products.

SELECTING THE MOST APPROPRIATE SITE

Systematic Layout Planning All space allocation should be in adjacent

basis and on priority basis.

IMPLEMENTING THE PRODUCTION PLAN

Make, Buy, or Lease Decision

• Choosing whether to manufacture a needed product or component in house, purchase it from an outside supplier, or lease it.

• Factors in the decision include cost, availability of reliable outside suppliers, and the need for confidentiality.

Selection of Suppliers

• Based on comparison of quality, prices, dependability of delivery, and services offered by competing companies.

Inventory Control

• Perpetual inventory Systems continuously monitor the amounts and locations of stocks.

Just-in-Time Systems

• Management philosophy aimed at improving profits and return on investment by minimizing costs and eliminating waste through cut- ting inventory on hand.

Materials Requirement Planning

• Computer-based production planning system by which a firm can ensure that it has needed parts and materials available at the right time and place in the correct amounts.

CONTROLLING THE PRODUCTION PROCESS

• Production control Creates a well-defined set of procedures for coordinating people, materials, and machinery to provide maximum production efficiency.

Production Planning

• Determining the amount of resources (including raw materials and other components) an organization needs to produce a certain output.

Routing

• Determining the sequence of work throughout the facility and specifying who will perform each aspect of the work at what location.

OM’S CONTRIBUTIONS TO SOCIETY

Higher Standard of LivingAbility to increase productivityLower cost of goods and services

Better Quality Goods and ServicesCompetition increases quality

Improved Working ConditionsBetter job design and employee participation

TOTAL QUALITY MANAGEMENT:-

Quality is important in all functional areas of an organization.

Quality is now much more than the technical requirements for manufactured goods.

Service quality (customer relationships) is equally important.

Quality

ANY QUESTIONS?

Thank You!