operations management
Post on 18-Jan-2015
240 Views
Preview:
DESCRIPTION
TRANSCRIPT
MODULE 1
OPERATIONS MANAGEMENT
WHAT IS OPERATIONS MANAGEMENT ?
‘Operations Management is about the way organisations produce goods and services’
They are all operations
Back office operation in a bank
Kitchen unit manufacturing operation
Retail operation
Take-out / restaurant operation
Examples of Operations
The best way to start understanding the nature of ‘operations’ is to look around you
Everything you can see around you has been processed by an operation
Every service you consumed today (radio station, bus service, lecture, etc.) has also been produced by an operation
Operations Managers create everything you buy, sit on, wear, eat, and throw away
Concept of Operations Management
• Prior to 1900– Cottage industry produced custom-made goods.– Watt’s steam engine in 1785.– Whitney’s standardized gun parts in 1801.– Industrial Revolution began at mid-century.
HISTORICAL DEVELOPMENT
HISTORICAL DEVELOPMENT
• Adam Smith is the first person who introduced Production Management in 1776.– Emphasized the division of labour– This effected in turn for improving the quality & quantity of
goods.
• Charles Babbage in 1883 introduced the principle of limiting skills as a basis for pay fixation.
• Also agreeing on Adam Smith’s theory.
• Management techniques by F M Taylor.– The workers should not be allowed to evolve their
own operations.– Proper selection, training and development
programmers given to workers to get the best result.– Close cooperation and understanding between
workers and management.– Importance of specialization & expertise to carry
different operations.
HISTORICAL DEVELOPMENT
• In 1914 F W Harris introduced the economic lot size method to control the inventory of an Enterprise.
• In 1931 Walter Schewart introduced statistical quality control. Applied in second World War.
• In 1934 L H C Tippet developed ‘Sampling Theory’. Applied in Production Analysis in 1950.
HISTORICAL DEVELOPMENT
HISTORICAL DEVELOPMENT OF OM (CONT.)• Other Management Pioneers
– Frank and Lillian Gilbreth• Motion study and industrial psychology
– Henry L. Gantt• Scheduling and the Gantt chart
• Hawthorne Studies– Yielded unexpected results in the productivity of Western
Electric plant workers after changes in their production environment.
– Led to recognition of the importance of work design and employee motivation.
HISTORICAL DEVELOPMENT OF OM (CONT.)• Operations Research (Management Science)
– Outgrowth of WWII called for logistics control and weapons-systems design.
– Seeks to obtain mathematically optimal (quantitative) solutions to complex problems.
• OM Emerges as a Field– 1950–1960, OM moved beyond industrial engineering and
operations research to the view of the production operation as a system.
HISTORICAL DEVELOPMENT OF OM (CONT.)• Operations Management in Services
– OM concepts can apply to both manufacturing and service operations.
• Integration of Manufacturing and Services– Conducting world class operations requires compatible
manufacturing and service operations.
OPERATIONS MANAGEMENT’S REMIT
• Operations is not just concerned with what goes on at the point of production…, but is also directly concerned with supplying the materials, the location and layout of facilities, the programming of operations and the motivation of employees.
WHAT IS OPERATIONS MANAGEMENT?
• Operations Management– Management of the conversion process which transforms inputs
such as raw material and labor into outputs in the form of finished goods and services.
Transformation ProcessTransformation Process(components)(components)
InputsInputs(customers(customers
and/orand/ormaterials)materials)
OutputsOutputs(goods(goods
andandservices)services)
The Activities of Operations Management
OUTPUTTransformationGOODS AND
SERVICESINPUT
INPUT TRANSFORMED
RESOURCES• MATERIALS • INFORMATION • CUSTOMERS
• FACILITIES
• STAFF
INPUT TRANSFORMING
RESOURCES
Operations Management Operations management: The management of the efficient transformation of
inputs into outputs to effectively satisfy customers. The active role of operations:
– Inputs become Outputs after some Transformation (Process or Operation)
– Food processing example:
Inputs Transformation Outputs
Energy, Raw vegetables Cleaning Clean vegetables
Energy, Metal sheets Cutting/Rolling/Welding Cans
Energy, Vegetables Cutting/Chopping Cut vegetables
Energy, Water, Vegetables Cooking Boiled vegetables
Energy, Cans, Boiled vegetables Placing Can food
INTRODUCTION TO OPERATIONS
Operations Management-Definition
Operations management (OM) is defined as the design,
operation, and improvement of the systems that create and
deliver the firm’s primary products and services.
OPERATIONS MANAGEMENT• Systematic direction, control, and evaluation of the entire range of processes that transform inputs into finished goods
or services.
• Environmental factors -culture, political, and market influences
• Inputs -HR, capital, materials, land, energy, information, customer
• Transformations -convert inputs into outputs
OPERATIONS MANAGEMENTOPERATIONS MANAGEMENT– Refers to the management of the production system that
transforms inputs into finished goods and services.• Production system: the way a firm acquires inputs then
converts and disposes outputs.• Operations managers: responsible for the transformation
process from inputs to outputs.– Operations management seeks to increase the quality,
efficiency, and responsiveness of the firm.• Seeks to provide a competitive advantage.
OPERATIONS MANAGEMENT CONCEPTSOPERATIONS MANAGEMENT CONCEPTS– Quality: goods and services that are reliable and perform
correctly.• Quality allows customers to receive the performance that
they expect.– Efficiency: the amount of input to produce a given output.
• Less input required lowers cost and waste.– Responsiveness to customers: actions taken to respond to
customer needs.• Firm can react quickly and correctly to customer needs as
they arise.
Business Operations Overlap
Marketing
Operations
Finance
• Operations Management includes:– Forecasting– Capacity planning– Scheduling– Managing inventories– Assuring quality– Motivating employees– And more . . .
SCOPE OF OPERATIONS MANAGEMENT
Types of Operations
Operations ExamplesGoods Producing Farming, mining, construction ,
manufacturing, power generation
Storage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,
hotels, airlines
Exchange Retailing, wholesaling, banking,
renting, leasing, library, loans
Entertainment Films, radio and television,
concerts, recording
Communication Newspapers, radio and television
newscasts, telephone, satellites
THE TRANSFORMATION PROCESS WITHIN OM
ROLE OF OM WITHIN AN ORGANIZATION
TOP-DOWN APPROACH TO OM STRATEGY• Operations 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
OM’S CONTRIBUTIONS TO SOCIETY• Higher Standard of Living
– Ability to increase productivity– Lower cost of goods and services
• Better Quality Goods and Services– Competition increases quality
• Concern for the Environment– Recycling and concern for air and water quality
• Improved Working Conditions– Better job design and employee participation
THE EMERGENCE OF OM• Operations management has been gaining increased
recognition in recent years for several reasons, includinga) the application of OM concepts in service operations, b) an expanded definition of quality, c) the introduction of OM concepts to other functional areas
such as marketing and human resources, and d) the realization that the OM function can add value to the
end product.
WHAT OPERATIONS MANAGERS DO
Planning Organizing Staffing Leading Controlling
Basic Management FunctionsBasic Management Functions
TEN CRITICAL DECISIONS
Ten Decision Areas Design of goods and servicesDesign of goods and services Managing qualityManaging quality Process and capacity Process and capacity
design design Location strategyLocation strategy Layout strategyLayout strategy Human resources and Human resources and
job design job design Supply chain Supply chain
management management Inventory managementInventory management SchedulingScheduling MaintenanceMaintenance
THE CRITICAL DECISIONS
Design of goods and services What good or service should we offer? How should we design these products and services?
Managing quality How do we define quality? Who is responsible for quality?
THE CRITICAL DECISIONS
Process and capacity design What process and what capacity will these products
require? What equipment and technology is necessary for these
processes?
Location strategy Where should we put the facility? On what criteria should we base the location decision?
THE CRITICAL DECISIONS Layout strategy
How should we arrange the facility? How large must the facility be to meet our plan?
Human resources and job design How do we provide a reasonable work environment? How much can we expect our employees to produce?
THE CRITICAL DECISIONS
Supply chain management Should we make or buy this component? Who are our suppliers and who can integrate into our e-
commerce program?
Inventory, material requirements planning, and JIT How much inventory of each item should we have? When do we re-order?
THE CRITICAL DECISIONS
Intermediate and short–term scheduling Are we better off keeping people on the payroll during
slowdowns? Which jobs do we perform next?
Maintenance Who is responsible for maintenance? When do we do maintenance?
top related