m1. Intro-opn Mangt

7/31/2019 m1. Intro-opn Mangt

1/77

1

Introduction to Operations Management


2/77

What is production?

2


3/77

3

What is a product?


4/77

4

Satisfies someone's need

Some one is willing to buy!


5/77

Product is a result of a process, a set of activities which creates a sellable output

Such a process is called productionProduction is a process and product is the

result

5


6/77

9/2/2012 6

Types of Products

Tangible/Intangible

Consumer /Industrial

Consumer durable & Non-durable

Discrete/Continuous

Standard/Customized


7/77

7


8/77

8


9/77

9


10/77

10


11/77

Products and services Expanded concept of product and activity

that creates it - operation Factory and facility

11


12/77

9/2/2012 12

When does someone buy a product?

Need experience and satisfaction

Choice of a particular product from variety?

Concept of value How can we create value [function/cost]?

Can we define operation now?


13/77

VA/NVAValue is created by value adding activities

Wastes are created by non-value addingactivities

13


14/77

14


15/77

What activities add value?

(Such activities are operations)

Alter physical state-water to ice

Alter form-blacksmith

Alter chemical composition-chemical

products

Alter metallurgical condition-alloys

15


16/77

16

Store, preserve-refrigerate deep freeze

Impart knowledge-teach, train, give

information

Give advice-medical advice, legal opinionGive medical treatment

Transport mangoes from Ratnagiri toMumbai


17/77

What is the result of such activities?

17


18/77

Result of operations (value adding

activities) is a product which may be tangible

or intangible

Product or service

Why do customers buy a product?

Every product is finally a service!

18


19/77

19

What is core service?

Products meeting QCD expectations of customer

What is Value added service?Help external customers use the core

service effectively

Help internal customers perform effectively


20/77

20

1. Information on product and product

performance-safety, cost etc.

2. Problem solving-product support, workers

visiting customers works to learn productperformance for C/CA/PA

3. Sales support- technology demonstration4. Field support-parts replacement, stock

replenishment


21/77

21

Product Vs Service

Result of a process

Tangible

Inventoriable

Customer is away,

product is to bedelivered to the

customer

A process itself

Intangible

Non inventoriable

Customer is on the

shop floor andinvolved in creation

of service


22/77

22

What is management?

Important features of management

Facilitation

Resource allocation

Accountability

Review PDCA

Efficiency & Effectiveness

Visualization & Planning


23/77

23

What is Operations Management? A function of Corporate Management


24/77

24

CORPORATE MANAGEMENT

OPERATIONS HRD FINANCE MARKETING ENGINEERING LOGISTICS


25/77

What is a function?

25


26/77

Function is a set of goal focused activities

Goals are subsets of corporate objectives

Corporate objectives are aimed at

customer satisfaction

customer satisfaction is the result of

meeting customers expectations

26


27/77

27

What are customers expectations?


28/77

28

QCD of the product

How are they fulfilled?

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

Operations Management


29/77

29

Definition of Operations Management

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


30/77

O/M uses tools of OR (Operations

Research), MS (Method Study) & IE(Industrial Engineering), hence closely

associated with these functions

30


31/77

9/2/2012 31

Functions of production management

Planning

Product-selection, design, development

Location, layout

Capacity planning

Production planning


32/77

Organizing

Work-study

Staffing

Materials management

32


33/77

9/2/2012 33

ControllingStores management

Value analysis

Quality control

Maintenance management

Inventory management


34/77

34

Operations Management Objectives

Performance Objectives

Efficiency & Effectiveness

QualityLead times

Capacity utilizationFlexibility


35/77

35

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


36/77

36

Importance of Operations Management

1. Important part of Business education

Central to every business activity

Knowledge of issues in the field is critical in

manufacturing or service, private or public

2. Government is moving towards customer service models


37/77

Reinventing Government in the US -

1990(David Osborne and Ted Gaebler-1992 book

Reinventing Government)It applies the customer service

model to government and the PSUs

37


38/77

In India many of the PSUs are either

getting privatized or following the customer service model as in the US

Customer sensitiveness

Productivity orientation

Importance of conservation Process focus for result

38


39/77

39

This approach focuses on results and

promotes competition inside and outsidegovernment

Reinventing Government initiatives drawfrom the concepts of Supply Chain

Management, TQM, BPR and JIT delivery,

concepts that fall under OM umbrella


40/77

40

3. Operations Management provides a

systematic way of looking at organizationalprocesses

Analytical approach to a situation

Problem solving

Respect for standards


41/77

41

4. O/M presents interesting carrier

opportunitiesLine positions-direct supervision of

operations

Staff positions-Supply Chain Management,

Quality Assurance

Consulting opportunities-BPR, ERP, JIT,

TQM


42/77

42

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

functions of management

Quality Control (prevention of defectives)

Productivity improvement(resource

utilization)

Internal customer concept, who is customer?


43/77

43

6. Competitive edge through O/M to business

and to management professionalsHuge potential to boost the productivity of

the process, offer products at lower cost and

high quality

Meeting the QCD expectations of the

customers with improved flexibility


44/77

44

History of Operations Management

Concept of O/M - an evolution: House hold

trades to factories as investment

opportunities


45/77

45

1910s

Frederic Taylor

Principles of scientific management

Concept of productivity, time study

Frank and Lillian Gilbreth

Motion study


46/77

46

Henry Ford and Henry Gantt

Moving assembly line and activity scheduling,

Gantt Chart

F.W. Harris

Inventory Control, concept of EOQ


47/77

47

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


48/77

48

1940

George B. DantzigSimplex method of linear programming to

solve complex multidisciplinary problems


49/77

49

1950s -1960s Many researchers in US & Western Europe

Extensive development of OR tools likesimulation, waiting line theory, decision theory,

mathematical programming, PERT & CPM

1970


50/77

50

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


51/77

51

1980

Harvard Business School Faculty Manufacturing as a competitive weapon

Tai-ichi Uhno of Toyota Motors,D E Deming & J E Juran

Kanban, Pokayoke, CIM, FMS, CAD/CAM,

robots etc.


52/77

52

Eliyahu M. Goldratt

Synchronous manufacturing-Lean principlesto variety production, Theory Of Constraints:

bottleneck analysis-methodology for solving

problems, goal-performance-constraints


53/77

53

1990

National Institute of Standards and

Technology, American Society of QualityControl and International Organization for

Standardization


54/77

54

Total Quality Management, Balridge quality

award, ISO 9000, Quality FunctionalDeployment, value engineering and

concurrent engineering-modern approach to

product development

Michael Hammer and other major

consulting firms

Business Process Re-engineering

US N C i i


55/77

55

US government, Netscape CommunicationCorporation and Microsoft Corporation

SAP (Germany), Oracle (US) ERPCouncil of Logistics Management, Council

of Supply Chain ManagementSupply chain management,

2000 Amazon, eBay, American Online, Yahoo

E-commerce, Internet, World Wide Web


56/77

56

What is Operations Strategy?

Evaluating most Cost effective methodology of

producing goods while achieving desired Quality

and Delivery objectives


57/77

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 theyare competitive - post war US and Japan

Objectives are flexible to meet changing

expectations of customers

57


58/77

58

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


59/77

59

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


60/77

Process design

Technology selectionCapacity planning

Inventory decisions

60

Infrastructure


61/77

61

Infrastructure

Plant and equipment

Process location

Planning systems, MRP? DRP? ERP?

Control systems, Manual? Automatic?

Computerized?

Quality assurance and controlWork payment structure

Organization of Operations function


62/77

62

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?


63/77

4. Competitive pressure on price line, lead

time and quality

5. Challenges of modern business- pushes

and pulls, customers, suppliers, investors,

workers, government, NGOs

63

COMPETITIVE DIMENTIONS IN


64/77

64

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

productsMake it quick - lead time reduction

Deliver it when promised -OTD


65/77

65

Change its volume -Meeting rising demand

and scaling down

Change it -new product introduction

Support it -competitive dimensions related

to service

COMPETITIVE ADVANTAGE


66/77

66

COMPETITIVE ADVANTAGE

Competitive Advantage creates value for the

customer

Firms profit exceeds the competition

average

Cost advantages-core service is delivered at

lower costDifferentiation advantage (service advantage)

-benefits delivered are superior


67/77

67

Resources

DistinctiveCompetencies

Cost Advantageor

DifferentiationAdvantage

ValueCreation

Capabilities


68/77

68

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 customer base

Reputation of the firm


69/77

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.

69


70/77

70

Capabilities Firm's ability to utilize its resources

effectively

Aspects that are difficult to document

Embedded strengths of the company


71/77

Distinctive Competencies

The firm's resources and capabilitiestogether 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.

71

TIME BASED COMPETITION


72/77

72

TIME BASED COMPETITION

Business organizations seek competitive

advantage 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')

A h d li b lifi


73/77

As the cost and quality become qualifiers

in competitive business. Now focus comes on

time. (concept of 'make it quick')

73


74/77

74

Classical ILO approach to work talks about

work content and ineffective timeTBC 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


75/77

Satisfying 'D' expectation became the

winner characteristic in competitive business

Lead-time came under the scanner of

business managers

75


76/77

76

TBC has a methodology for implementation

Process mappingValue stream mapping

Prioritization with respect to product delivery

Selecting focus area

Reduce NVAs


77/77

Tools used: SMED, KANBAN, 5S, Process

mapping, layout change, Technology,Logistical Management, Supply Chain

Management

m1. Intro-opn Mangt

Documents

Transcript of m1. Intro-opn Mangt