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Introduction To

Operations & ProductionManagement

Lecturer: Muhammad Naveed

Email: naveedmuhammad@hotmail.co.uk

OPM-BBA-BAHRIA

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Introduction

Operations managementOperations Management is a systematic approach to

address all issues pertaining to the transformation

process that converts some inputs into useful output .

Operations managers

The staff of the organization who have particular

responsibility for managing some or all of the resources

which comprise the operationsfunction.

In short operations management refers to the direction and

control of the processes that transform inputs into finished

goods and services.

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Operations in the Organization

Core functions the marketing (including sales) functionresponsible for

communicating the market needs in order to generate

customer requests.

the product/service development functionwhich is

responsible for creating new and modified products and

services in order to generate future customer requests.

the operations functionwhich is responsible for

fulfilling customer requests throughout the production

and delivery of products and services.

Supplier Relationship

Procurement Process

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Support Functions

the accounting and finance function

which provides the information to help

economic decision making and managesthe financial resources of the organization;

the human resources functionwhichrecruits and develops the organizations

staff as well as looking after their welfare.

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Operations FunctionLinkages with other functions

IT

Operations Support Layer

Marketing

Design

Costing

Quality

Planning

Material

Maintenance

Tooling

I E

Ultimate

Customer

Dealers

Retailers

Customer Layer

SuppliersSub-contractors

Other service providers

Supplier LayerInnovationStrategy

Research &

Development

Layer of

Innovation

Service Delivery system

MachiningFabrication

AssemblyTesting

Core Operations Layer

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Operations Management

Working Together

To Deliver Products and Services

Which fulfill Customers Expectations

Production Management

Creation of goods and services

Tangible Product

Hidden or Intangible Products

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The activities of core functions

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Operations As Input-Transformation-Output model

SuppliersInputs

Materials,

Customers,

Information

Transformation Process

Customers

Outputs

Goods,

Services

Records & Control

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Operations ManagementA systems Perspective

INPUT

OUTPUT

Labour

Capital

Material

Goods

Services

Forecasting

Operations

Planning &

Control

Process &

ProductDesign

Material &

Capacity

Planning

Feedback

Purchasing &

InventoryControl

Maintenance

Management

Process

Improvement

Quality

Management

PROCESSING

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Operations Management

Functions

Product Design & Development Forecasting

Process Design Production Planning and ControlQuality Management Supply Chain Management

Location and Layout of facilities Maintenance Management

Capacity Planning Continuous improvement of operations

Design of Operations Operational Control of Operations

Design issues in Operations Management lay down overall constraintsunder which the operations system functions.

Operational Control issues focuses on optimising the use of available

resources in the short-term while delivering goods and services as per plan.

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Examples of Operating Systems

Organization Inputs Transformation Process Outputs

Iron mine Iron ore Drilling, blasting,

separating, crushing,

concentrating

Iron oxide

concentrate, waste

rock

Steel mill Iron oxide pellets,

lime, coal, scrapsteel

Smelting, pouring,

oxygenating, rolling,forming

Steel ingots, slabs,

sheets

Parts

manufacturer

Sheet steel Pressing, punching,

machining, painting,

polishing

Parts ready to

assemble

Automotive

assembly

plant

Parts Welding, bolting,

riveting,

painting, testing

Finished

automobile

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Some Operation Management Activities

at IKEA

IKEA STORE

Home Furniture

Design elegant

products which

can be flat-packed

efficiently

Ensure that the jobs of

all staff encourage their

contribution to business

success

Design a storelayout which

gives smooth

and effective flow

Continually examine and

improve operations

practice

Monitor and enhance

quality of service

to customers

Arrange for fastreplenishment of

productsMaintain cleanliness

and safety

Site stores of an

appropriate size in the

most effective

location

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Some inter-functional relationships

between the operations function andother core and support functions

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Capacity Management

Providing a Service depends on having

Capacity.

Capacity of Resources such as People,

FacilitiesSpace, Equipment

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Most/All Businesses are a mix of

Product and Services

McDonalds

Rover Pakistan International Airline

Pakistan Telecom

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A Comparison Of Various Goods And

Services

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ServiceManufacturing

Pure Product Pure Service

Ayurvedic Healing Treatment

Legal/Tax Consulting

Cyber CafTelephone Booths

Emergency Maintenance Services

Facilities Maintenance

High quality restaurant meal

Fast food in a eat out joint

Customised durable goods

Fast moving commodities

Vending Machines

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Types of OperationsFour Vs

Volume

The level or rate of output from a process

Variety

The range of different products and services

produced by a process, a key characteristic thatdetermines process behavior.

Variation

The degree to which the rate or level of output varies

from a process over time the degree of the visibility which customers

have of the production of the product or serviceor degree of customer contact

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The Visibility Dimension

How much of the operations activities itscustomers experience, or how much the

operation is exposed to its customers.

E.g. bricks and mortar shop operation a high-

visibility operation

Customers experience most of its value-addingactivities.

Relatively short waiting tolerance.

Judge the operation by their perceptions

Relatively high-cost operations

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The implications of the four Vs of operations

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The implications of the four Vs of operations

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Manufacturing & Service

Similarities & DifferencesManufacturing Organisations Service Organisations

Physical durable product Intangible, perishable product

Output can be inventoried Output cant be inventoried

Low customer contact High customer contact

Long response time Short response timeRegional, national, Intl. markets Local markets

Large facilities Small facilities

Capital intensive Labour intensive

Quality easily measured Quality not easily measured

Differences

Similarities

Is concerned about quality, productivity & timely response to its customersMust make choices about capacity, location, layout

Has suppliers to deal with

Has to plan its operations, schedules and resources

Balance capacity with demand by a careful choice of resources

Has to make an estimate of demand

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Operations Management

Challenges & PrioritiesChallenges

Quality Management issues need greater attention

Long lead time for order fulfillment Low labour productivity offsets cost advantages

Priorities

Acquire Capabilities to tolerate product proliferation Relate operations system to Customer/Market

Develop systems and procedures that promote learning

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Productivity Changes

It is value of outputs (good and services)

produced by the values of input resources

(wages, cost of equipment, and the like)used:

Single-Factor Productivity =

Multi-Factor Productivity =

Output

Input

Output

Labour + Energy + Material + Capital + Misc.

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Exercise

A health-check clinic has five employees and

processes 200 patients per week. Each employee

works 35 hours per week. The clinics weekly totalwage bill is 3900 and its total overhead expenses

are 2000 per week.

What is the clinics single-factor labour productivityand its multi-factor productivity?

= patients/labour hour

= patients/