ch01 o.m.-introduction
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TRANSCRIPT
OPERATIONSMANAGEMENT
FACULTYProf. M.H.Varma
B.E.(Mech.),DMS,PGDMM,
MBA(SCM)
Scope of Discussions / Objectives
Understanding the basic Concepts of Operational Activities of Organisations in Manufacturing and Services Sectors
Learning Outcomes
On successful completion of the Course, the Students should be able to do the following : -
• Student should be able to differentiate how different Operations
Strategies lead to achieve Competitiveness
• Ability to demonstrate differences between Manufacturing and
Service Processes
• Discuss the Process of Product and Service Design
• Ability to describe the Concepts of SCM, TQM, JIT Tools and
Techniques and it’s overall purpose in the Organisation
• Demonstrate understanding of Planning and Control Processes
of Project Management
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Operations Management- Introduction
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Customer Retention - Key Issues
A Recent Survey says –
•“More than 90 % of unsatisfied customers do not complain”
•“It costs 5 times more to get a new customer than it does to keep a current customer”
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What is Operations Management?Defined
Operations management (OM) is defined as the design, execution and improvement of the systems that create and deliver the firm’s primary products and services
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Why Study Operations Management?
Business Education
Systematic Approach to Org. Processes
Career Opportunities
Cross-Functional Applications
OperationsManagement
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What is a Transformation Process?
Defined A transformation process is defined
as a user of resources to transform inputs into some desired outputs
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Operations as a Process
Transformation(Conversion)
Process
Input Output
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Operations as a Process
TransformationFabrication
Input OutputTransformationAssembly
Fabrication: making the parts
Assembly: putting the parts together
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Operations as a Process
Transformation(Conversion)
Process
EnergyMaterials
LaborCapital
Information
Goods orServices
Feedback information forcontrol of process inputsand process technology
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Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
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What is a Service and What is Goods?
“If you drop it on your foot, it won’t hurt you.” (Goods or service?)
“Services never include goods and goods never include services.” (True or false?)
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OM in the Organization Chart
OperationsOperations
Plant Manager
Plant Manager
OperationsManager
OperationsManager
DirectorDirector
Manufacturing, Production control, Quality assurance, Engineering,
Purchasing, Maintenance, etc
Manufacturing, Production control, Quality assurance, Engineering,
Purchasing, Maintenance, etc
Finance Marketing
Functional Integration
Production/ Operations
Management
Materials Management
Management Information
SystemResearch and Development
Human Resource
Management
Marketing Management
Financial Management
Relation of Operations to its Relation of Operations to its EnvironmentEnvironment
Operations transformation systemSuppliers
HumanResources
Marketing
Accounting Finance MIS
Engineering
SOCIETY
GOVERNMENT
ExternalEnvironment
CUSTOMERS
COMPETITORS
Functions of Operations Managers
Planning
• Plan product and service mix
• Location & Capacity Planning
• Plan equipment procurement
• Generate Master Schedule – What products to make and when
• Decide number of shifts/ number of hours
Organizing
• Centralized or Decentralized operations
• Design hierarchical structure
• Assign responsibility for every activity
• Organize supplier/ subcontractor networks
• Establish maintenance policies
Functions of Operations Managers
Controlling
• Compare costs to budget
• Inspect the Quality levels
• Compare work progress to schedule
• Compare actual labor hours to standards
Directing
• Establish provisions of union contracts
• Establish personnel policies
• Establish employment contracts
• Issue Job assignments and instructions
Functions of Operations Managers
Motivating
• Provide specific objectives/ Goals & challenges
• Encourage through praise, recognition of job achieved
• Motivate through tangible Reward System
Coordinating
• Coordinate through use of forecasts and master schedule
• Recommend corrective actions/ necessary improvement on performance achieved
• Report, inform and communicate (through MIS Reports)
Training and development
• Support employees in training programs
• Encourage suggestion schemes
• Facilitate people involvement/ empowerment
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Core services are basic things that customers want from products they purchase
Core ServicesDefined
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Core Services Performance Objectives
OperationsManagement
Flexibility
Quality
Speed
Price (or cost Reduction)
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Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way
Value-Added ServicesDefined
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Value-Added Service Categories
OperationsManagement
Information
Problem Solving
Sales Support
Field Support
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The Importance of Operations Management
Synergies must exist with other functional areas of the organization
Operations account for 60-80% of the direct expenses that burden a firms profit.
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Historical Evolution of Operations Management
Scientific Management
– F. W. Taylor – “ The Principles of Scientific Management”
Moving Assembly Line
– In 1911- Henry Ford applied the principles of Scientific Management
(Model T)
Hawthorne Studies
– Research Team from HBS – under the leadership of Elton Mayo-
study conducted at Western Electric Company’s Hawthorne Plant
(Chicago)
Operations Research
– Operations Research teams formed in military operations to smoothen
the complex logistics issues (USA & Europe)
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Historical Development of OM
• JIT and TQC
• Manufacturing Strategy Paradigm
• Service Quality and Productivity
• Total Quality Management and Quality Certification
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Historical Development of OM (cont’d)
• Business Process Reengineering
• Supply Chain Management
• Electronic Commerce
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Current Issues in OM
• Coordinate the relationships between mutually supportive but separate organizations.
• Optimizing global supplier, production, and distribution networks.
• Increased co-production of goods and services
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Current Issues in OM (cont’d)
• Managing the customers experience during the service encounter
• Raising the awareness of operations as a significant competitive weapon
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Question Bowl
A major objective of this book is to show how smart
managers can do which of the following?
a. Improve efficiency by lowering costs
b. Improve effectiveness by creating value
c. Increasing value by reducing prices
d. Serving customers well
e. All of the above
Answer: e. All of the above
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Question Bowl
In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following?
a. Displaysb. Stocks of goodsc. Sales clerksd. All of the abovee. None of the above
Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.)
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Question Bowl
In which of the following decades did the concept of quality control originate?
a. 1920’sb. 1930’sc. 1940’sd. 1950’se. 1970’s
Answer: b. 1930’s (Tools such as sampling inspection and statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)