Introduction to operations management

INTRODUCTION TO
OPERATIONS MANAGEMENT
v.pavani

What is operations management?
Operations management is the process which combines
and transforms the resources used in production
subsystem into a value added product/service in a
controlled manner as per the policies of the
organization.

Types of production system
Production system is classified into 3 categories:
 Job production
 Batch production
 Flow/mass production

Job production
It is characterized by high variety/wide range and low
volume.
• One-off or small number of items produced.
• Normally made to customer specifications.
• Often undertaken by small, specialist businesses.
Examples
architects, plumbers, ship builders, road builders.

Advantages
• Customer requirement and changes can be handled.
• Associated with high quality.
• Employees can be better motivated-more job
satisfaction.
• Flexible production method.

Disadvantages
• Individual cost of one unit may be high.
• Often labor-intensive=high labor costs.
• Requires close consultation with the client.
• Usually reliant on high skills.

Batch production
• It involved similar items are produced together.
• Each batch goes through one stage of production
process before moving onto next stage.
• It achieve better use of equipment so as to produce
good quality products more economically than
manufacturing them individually.

Advantages
• Cost savings can be achieved by buying in bulk.
• Still allows customers some choice.
• Products can be worked on by specialist
staff/equipment at each stage.
• Allows a firm to handle unexpected orders.

Disadvantages
• Takes time to switch production of one batch to
another.
• Requires the business to maintain higher stocks of
raw material and work-in-progress.
• Tasks may become boring-reduce motivation.
• Size of batch dependent on capacity allowed.

Flow/mass production
• It is characterized by high volume and low variety.
• Special purpose machines are used in this method of
production.
• Product layout is normally followed in this method of
production.
• Product moves continuously through production
process.
• Time taken in each task must be the same.

Advantages
• Cost per unit of production is reduced through
improved work and material flow.
• Suitable for manufacture large quantities.
• Capital intensive which means it can work constantly.
• Less need for training and skill.

Disadvantages
• Very long set up time and reliant on high quality
machinery.
• High raw materials and finished stock unless can
produced used.
• Keeping employee motivation is difficult.
• Goods are man produced-less differentiation for the
customer.
• Production is shutdown when the process is stopped.

Functions of operations management
• Production planning
• Production control
• Quality control
• Industrial engineering
• Purchasing
• Plant engineer
• Manufacturing
• Inventory control
• Work measurement

Contd…..
• Production planning: It is concerned with routing,
scheduling, work order.
• Production control: Effective utilization of resources so as to
produce product at low cost.
• Quality control: Establish the quality standards and compare
the actual with standards so that we can check the quality of
the product.
• Industrial engineering: Concerned with methods and process
of manufacturing activities and concerned with designing of
jigs, fixtures, tools, gauges etc.
• Purchasing: Purchase manager is responsible for material
requirements for production.

Contd….
• Plant engineer: He is responsible for plants and machines.
• Manufacturing: Actual process of converting input into the
output and it should be in an efficient and effective manner.
• Inventory control: Inventory maintained by the organization
should not be too low or too high. There are several method
for inventory control like EOQ, ABC analysis.
• Work measurement: Two concepts in work measurement.
 Method study: It is concerned with arriving a better method
of study.
Time study: Determine the standard time required for all
operations by ordinary worker.

Challenges in operation management
Challenges in operation management arise from development
that creates a need for new and the more efficient system of
operation management .
The economic reforms in 1990 opened up Indian
markets to oversees companies which in fact posed different
challenges for Indian companies. With time there have been
changes in terms of raising customer expectations,
technological development and growing awareness about
environmental issues. Therefore each of these challenges
needs to be addressed with paper adjustments in strategy,
design and practices of operation management.

Contd…
• Globalization: Globalization become a challenge in the
manufacturing industry and in turn for operations manager.
Firms will have to remain competitive by providing quality
goods and services at lower prices. To overcome the
challenges due to globalization , the operation managers need
to set a specialized product and target market which will keep
the uniqueness of the product/service to be able to compete in
the global market.
• Raising customer expectations: To satisfy customers and
remain competitive in the market, a firm must be able to
supply the right quantity of goods and services as high quality,
at a low price and at the right time.

Contd…
• Technological developments: Technological changes in products and
processes can have major implications for production systems, affecting
competitiveness and quality, but unless technology is carefully integrated
into an existing system, it cannot do more harm than good by raising costs,
reducing flexibility, and even reducing productivity. To overcome this
challenge the manager will have to adapt his skills in view of the recent
developments that have been taken place in production.
• Environmental issues: Operations manager play a critical role in
determining the environmental impact of manufacturing operations through
choice of raw material used, energy consumed, pollutants emitted and
wastes generated. Business organizations are coming under increasing
pressure to reduce their carbon footprint and to generally operate
sustainable processes.

Priorities of operations management
• Economic reforms and liberalization have established the
importance of customer/market.
• Organizations need to relate the operation system to
customer/market.
• In the future addressing emerging environmental concerns
through better operations practices will become a necessity.
 Relate the operation system to the customer market
requirement.
Acquire abilities to tolerate product proliferation.
Develop system and procedures that promote learning.
Develop green manufacturing.

Operation strategy
A plan of action implemented by the firm that describe
how the resources will be employed in the production
of goods/services.

Strategy formulation process
Steps involved in strategy formulation
• Understanding the competitive market dynamics:
Gathering the information regarding the competitors,
expectations of customers, what products offer in the market
place, missing link between customer expectation and offering
and intensity of competition. By analyze those matters can get
positioning in the market place.
• Identifying the order qualifying and order winning
attributes: Set of attributes expected in a product is known as
order qualifying attributes. If these are absent customer will
definitely remove the products in his purchases, if these are
presence there is no guarantee the customer will buy the
product.

Contd…
• Identifying strategic options for sustaining competitive
advantage: After coming the order qualifying and order
winning attributes we can able to sustain the competitive
advantage. Maintaining the competition in the eyes of the
customer. Competitive advantage may be in totality/parts.
• Devise the overall corporate strategy: Match the strategic
options with resources and constraints of business
organization to arrive a corporate strategy.
• Arrive at the operation strategy: Corporate strategy serves
as basis of operational strategy. Operations strategy is what
should be done to produce a product in low cost and reducing
the cost per unit of output.

World class manufacturing
 Just-in-time(JIT)
 Total quality management(TQM)
 Total productivity maintenance(TPM)
 Employee involvement
 simplicity

Contd…
• Just-in-time: It is a strategy that the companies follow in
order to increase the efficiency and decrease the waste by
receiving the materials only when they are needed in the
production process. There by reducing the inventory cost.
• Total quality management: It describes the management
approach to long-run success through customer satisfaction. In
TQM all the members of the organization participate in
improving processes, products, services and culture in the
organization.
• Total productivity management: The objective of the TPM
to increase the productivity/efficiency of plant and equipment
with moderate investment in maintenance.

Contd…
• Employee involvement: If employees are involved
in the several aspects of the organization so that
employee be motivated and put their maximum
efforts to improve the efficiency in the production.
• Simplicity: As business grows, and as more number
of products introduced into the system, the
complexity of manufacturing, management, and
control system do not increase in proportionate terms.

Introduction to operations management

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