Opn Mgt Introduction (1)
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Operations ManagementIntroduction, Current Issues & Trends
Operations Management Definition
An operations system is defined as one in which several activities are performed to transform a set of inputs into useful output using a transformation process
Operations Management is a systematic approach to address all the issues pertaining to the transformation process that converts some inputs into output that are useful, and could fetch revenue to the operations system
Operations Management (OM) Salient Aspects
OM is a systematic approach using scientific tools & techniques and solution methodologies to analyze problemsOM is about addressing several issues varying in terms of time horizon, nature of decisionsTransformation processes are central to OperationsFocusing on keeping costs to the minimumDeveloping a set of measures to assess performance of the system
Operations Management (OM) Salient AspectsProduction Operations Management is managing of productive resources (Men, Material, Equipments & Facilities) Efficiently & Effectively.MBA graduates are expected to help organizations gain competitive advantage by excelling in meeting customer needs.Whether you are in Marketing, Finance or Operations; effectively serving customers will need knowledge of Operations Management. Serving customers means meeting the requirement in time, with exceptional quality at lowest cost.
SystemPrimary InputResourcesPrimary Transformation FunctionDesired OutputHospitalPatientsDoctors, Nurses, Medicines, EquipmentsHealthcareHealthy IndividualsRestaurantHungry CustomersFood items, Chef, Waiters, EnvironmentWell prepared, Well served foodSatisfied CustomersAutomobile ManufacturingSheet Metal, Steel, PartsTools, Equipments, WorkersFabrication, Assembly.High quality cars.
SystemPrimary InputResourcesPrimary Transformation FunctionDesired OutputCollege, UniversityHigh school Pass outsTeachers, Books, Classrooms.Imparting Knowledge, SkillsEducated IndividualsDepartme-ntal StoreShoppersStock of goods, Display, Sales personsAttract shoppers, Promote products.Sales to satisfied customers.AirlineTravelersAero planes, Crew, Fuel.Move to destinationOn time safe delivery to destination.
Indian Manufacturing Export Potential of Sectors
Sector IndustryCurrent ExportUS $ BnPotential ExportUS $ BnStrengthWeaknessElectrical Electronics1.2515-18Design & Engineering skillsLack of scale, Low domestic demandApparel Manufacture6.125-30Vertical integration, Skilled Labour, Design skillsLack of scale, Operational expertiseAuto components1.120-25Engineering & continuous improvement of skillsFragmented industry, Poor OEM linkageSpecialty chemicals1.612-15Low cost manpower & process innovation skillsApplication R&D, Marketing
Service Operations Salient FeaturesService is intangible while goods is a physical output.In service direct customer involvement in creating output is essential.Customers are on the shop floor when consuming service. Shop floor may be called front office, dinning area, passenger cabin.
Service Operations Salient Features
Tangibility: Services are performances and actions rather than objects, therefore having poor tangibilityHeterogeneity: High variability in the operation system performanceSimultaneous Production & Consumption: Degree of customer contact is very high Perishability: Services cannot be inventoried as in the case of manufactured products
Manufacturing & Service Similarities & DifferencesDifferences
Manufacturing OrganizationService OrganizationPhysical, durable productIntangible, perishable productOutput can be inventoriedOutput can not be inventoriedLow customer contactHigh customer contactLong response timeShort response timeRegional, National, Intentional national marketLocal marketLarge facilitySmall facilityCapital intensiveLabour intensiveQuality easily measuredQuality not easily measured
Manufacturing & Service Similarities & DifferencesSimilarities Is concerned about quality, productivity & timely response to its customers Must 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 resourcesHas to make an estimate of demand
Operations Management Functions
Design of OperationsOperational ControlProduct design & controlForecastingProcess designProduction planning & controlQuality ManagementSupply chain managementLocation & Layout facilitiesMaintenance managementCapacity planningContinuous improvement of Operations.
Operations Management ChallengesCompetitive Pressures due to economic reformsTariff reduction has exposed Indian companies to global competition.Chelliah Committee tax reforms proposed during 1992 94 triggered this processAbolition licensing policies had enabled several new players to enter into business increasing domestic competition and capacity build up.Examples include liberalization of two wheelers and LCV segment in early 1980s and passenger car segment in early 1990s.Indian customers are more demanding in terms of quality, cost and delivery of goods & services
Operations Management ChallengesGrowing customer expectationsExamples: Tariff plans and options provided by mobile operators, options in passenger carCustomers tend to demand more and refine their expectationsManufacturing & Service organizations must learn to respond to these expectationsNeed to develop capabilities to bring newer products and services faster and yet profitably
Operations Management ChallengesTodays businesses are constantly challenged by the rapid technological advancementsExample 1: ATMs & Internet Banking. Customers need not visit a bank branch. Drafts and cheques replaced with electronic payment gateways & fund transfer mechanisms. Example 2: Buying a train ticket. By visiting a Web site like http://www.irctc.co.in/, a customer can accomplish all tasks pertaining to ticket booking and cancellation at leisure. Example 3: Procurement of goods & services. A manufacturing organization can procure goods & services by organizing a reverse auction on the Internet. In 3 to 4 hours, the best price for a component and the supplier willing to provide the component at a desired quality can be located.Example 4: New Product Development. A team of design personnel from across different geographical locations can participate in new product development using technological tools.
Operations Management ChallengesEnvironmental IssuesWhen Government of India announced a scheme for special economic zones (SEZs), it generated controversies and social concerns. Growing industrialization raises concerns regarding the depletion of natural resources and the waste generated from production systems and end-of-life products. Growing urbanization creates societal problems arising out of scarcity of available resources and generation of solid wastes. Consumption of energy and water in countries like India is on the rise. Such a situation requires better practices and newer methods of addressing these requirements using better operational practices. Increasingly, firms are under pressure to take responsibility of restoring, sustaining, and expanding the planets ecosystem instead of merely exploiting it.OM practices must address environmental concerns in order to ensure a sustainable world
Operations Management Implications & PrioritiesRelate operations system to Customer/ MarketAcquire Capabilities to tolerate product proliferationDevelop systems and procedures that promote learningDevelop Green Manufacturing Practices
Operations Management: Trends & Issues - HighlightsOperations Management is a systematic approach to address all issues pertaining to the transformation process that converts some inputs into useful output Globally, India is emerging as an important manufacturing base.Several recent studies point to emerging opportunities for Indian manufacturing to grow and attain a global presence.From an operations management perspective, the notion of a pure product and pure service is just the two ends of the spectrum. In reality, a vast majority of operations share a continuum of products and services.
Operations Management: Trends & Issues - HighlightsDespite several important differences between products & services, from an OM perspective there are several similarities between the twoDecision context in operations management can be broadly classified as Design and operations control issues Long term and short term decisions Some of the challenges faced by operation firms include Need to address increased competition due to economic reformsAddressing the growing expectations of the customersRapid technological advancesEmerging environmental concerns