Operations:

Operation is a Jobs or tasks consisting of one or more elements or subtasks, performed typically
in one location.Operations transform resource or data inputs into desired goods, services, or
results, and create and deliver value to the customers.
Operations Management
Operations management is the conversion of inputs into outputs, using physical resources, so as
to provide the desired utility/utilities of form, place, possession or state or a combination thereof
to the consumer while meeting the other organizational objectives of effectiveness, efficiency
and adaptability.
transformation processes: A production system can be described in terms of inputs,
transformation process, and outputs. The inputs are materials, manpower, machines, technology,
information, etc. The transformation may be physical, locational, exchange, etc. The outputs may
be products or services.
Environment
Government regulations, competitors,
technology, economy

INPUTS:
Capital,
Materials,
equipment,
Labour,
time

TRANSFORMA
TION:
Creation,
alteration,
transportation,
storage

OUTPUTS:
Goods, facilitati
ng goods,
services

MONITOR AND CONTROL

For pure services An education institution

For pure manufacturing Automobile
For hybrid (quasi) A restaurant
In a manufacturing setting such as a factory,: designing efficient processes to produce the
product, timely acquisition of raw materials, ensuring adequate numbers of properly
trained workers, and proper maintenance of equipment.
In a service setting : ensuring that workers are adequately trained, customer service
locations are equipped as needed and are safe for employees and the public, services are
revised as dictated by customer input or competitive forces

Importance of Operations Management

Supply products to the consumers in desired quantity and quality in a timely and cost
effective manner
Better responsiveness to customers needs

 Effective utilisation of resources (Scarce)

Better Management
Scope of Operations Management
Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees
Deciding where to locate facilities
And more . . .
Operations functions/ operations system
A Manufacturing subsystem that includes all functions required to design, produce, distribute,
and service a manufactured product.
Forecast

Location & Layout

Product design & Analysis, work Study

Inpu
t

Aggregate
Planning

Output

Productio
Scheduling
n Control

Product/
Mat
Line
Balancing
Service
Master
erial
MRP
Production
Lab
Maintenance
Management
Schedule
our
Capacity
Equi Inventory Control
Requirem
Quality Control
pme
ents
nt
Planning
Capi
tal

Historical Development of Operations Management

Pre 1700s

Craft manufacturing

skilled craftspeople produce goods in low volume,

with a high degree of variety

late 1700s

Mass Production

First Industrial revolution

(textile mills)

Man power to machine power, steam engines

1800s

Mass Production

Diesel engines, electricity

Late 1800s

Mass Production

Standardized interchangeable parts

and early
1900

Division of labour (Scientific Management)

Moving assembly (Henry Ford)

Mid
1900s

HR movement

After WWII, managers felt workers are also humans,

OR, service revolution(Banking, Airlines)

Late 1900s

Modern Period

Computers, CAD/CAM, Robotics, AI

Flexible specialization, lean manufacturing, mass
customization

these approaches all seek to combine the high volume and low cost associated with mass
production with the product customisation, high levels of innovation and high levels of
quality associated with craft production
Types of Production System
1. Basis Type of Output
Products [features, reliability, durability]
* TV, Radio, Lathe
Services [ accessibility, timeliness, consistency]
* Transport, Health, Entertainment

2. Basis Type of Flow

Projects [one of a kind product/service]
* Construction of bridge etc

Job shop [ units of different types of products follow

different
sequence thro different shops]
* Hospital, Auto repair
[Batch production
Batch production is the manufacturing technique of creating a group of components at a
workstation before moving the group to the next step in production. Batch production is common
in bakeries and in the manufacture of sports shoes, pharmaceutical ingredients, inks, paints and
adhesives. ]
Flow Shop [ successive units undergo same sequence]
* TV factory, Automobile
[Mass production
Mass production (flow production, repetitive flow production, series production, or serial
production) is the production of large amounts of standardized products, including and especially
on assembly lines. The concepts of mass production are applied to various kinds of products,
from fluids and particulates handled in bulk (such as food, fuel, chemicals, and mined minerals)
to discrete solid parts (such as fasteners) to assemblies of such parts (such as household
appliances and automobiles).]
Continuous process [ no way to identify successive components]
* Postal service, Oil refinery
[continuous production
Continuous production is a method used to manufacture, produce, or process materials without
interruption. This process is followed in most oil and gas industries. Continuous production is
largely controlled by production controllers with feedback. ]
3. Basis Type of Specification
Customized
* Medical care, Legal service
Standardized
* Insurance, Supermarket
Recent Trends in Operations Management
Computer Aided Design
Computer systems assist in the creation, modification, analysis and optimization of a design
Computer Aided Manufacturing
Computers are used either directly to control the processing equipment, or indirectly to support
manufacturing operations
Flexible Manufacturing System
* Form of flexible automation in which several machine tools are linked to the materials
handling system
* Operate depending on the instructions received from the computer with respect to the sequence
and operational specifications of the process
Computer Integrated Manufacturing
* A computer application that connects various computerized systems into a single multifunctional system
* A Central computer controls all aspects of the system
Artificial Intelligence

* Enables computers to exhibit some of the characteristics of human intelligence, like the
capacity for understanding, problem solving etc
Electronic Data Interchange
* Structured transmission of data between organizations by electronic means
* Used to transfer electronic documents from one computer system to another
Supply Chain Management
* Design, planning, execution, control, and monitoring of the movement and storage of
raw materials, work-in-process inventory, and finished goods from point of origin to point of
consumption
Business Process Reengineering
ISO standards
TQM
Lean Manufacturing :
Use of minimal amounts of resources to produce a high volume of high quality goods with some
variety.
Supply Chain Management
Management of supply chain from suppliers to final customers reduces the cost of transportation,
warehousing and distribution throughout the supply chain.
Factors affecting Operations Management Today
1. Reality of global competition
2. Quality, customer service, & cost challenges
3. Rapid expansion of advanced technologies
4. Continued growth of the service sector
5. Scarcity of operations resources
6. Social-responsibility issues
1. Reality of global competition
Changing nature of world business
Spending power
Communication
Trade policies (Free Trade Agreements)
International companies
Fluctuation of international financial conditions
2. Quality, customer service, & cost challenges
Perfect product & service quality (US vs Japan cars)
Outsource
Cheap labour, raw materials
3. Rapid expansion of advanced technologies
Initial cost
Product/service quality
Scrap & materials cost
Faster response to customers
Faster introduction of new products
4. Continued growth of the service sector
Service company exist coz manufacturing sector buys their services
5. Scarcity of operations resources

 Scarcity of funds, employees, raw materials, like titanium, coal, petroleum

products, water
6. Social-responsibility issues
Consumer attitude
Government regulation
Self-interest [Infosys]
6a. Environmental Impact
a. Ozone layer depletion, rain forest depletion
b. Global warming & acid rain
c. Radioactive waste disposal
d. Pollution
e. Energy conservation
f. Recycling
6b. Safety Impact
a. Product safety [Nokia mobile battery, Lenovo, bridgestone]
6c. Employee Impact
a. Fair treatment of employees
b. Employee safety & health programs
c. No discrimination [age, sex, color, race etc.]
d. Benefit programs
Operations Strategy

Corporate Mission
Assessment of global
business conditions

Business Strategy

Distinctive
competencies

Product/ service
plans
Competitive
Priorities
Operations Strategy

Corporate mission is a set of long range goals unique to each organization an including
statements about the kind of business the company wants to be in, who its customers are, its
basic beliefs about business and its goals of growth and profitability.

Business strategy is a long range game plan of an organization and provides a roadmap of how to
achieve the corporate mission.
These strategies are embodied in companys business plan, which includes a plan for each
functional area of the business, production/operations, marketing, Finance. Business strategy is
developed while considering an assessment of global business conditions and the distinctive
competencies or weakness of the companys business units. Global business conditions include
such factors as an analysis of markets, analysis of competition in those markets, and economic,
political, technological an social developments.
Distinctive competencies or weaknesses represent great competitive advantage or disadvantage
in capturing the market. They include automated production technology, skilled and dedicated
workforce, ability to quickly bring new products etc.
Operations strategy is along range game plan for the production of a companys
products/services and provides a road map for what the production or operations functions must
do if business strategies are to be achieved. operations strategy includes
Positioning the production system
Product /service plans
Outsourcing Plans
Process and Technology plans
Strategic Allocation of resources
Facility plans: Capacity, location an layout
Competitive priorities are those which customers want from product/service; thus they can b e
used as tools to capture market share. But all the competitive priorities cannot be used for a
single product.

The degree to which a firm can produce goods and services that meet the test of international
markets while simultaneously maintaining or expanding the wealth of its shareholders.
Competing on Cost

 Standardized products for large markets

Stabilized production process, tight standards, automation (?), focus on added
value operation (simplified procedures /service in airplane cy), training &
coaching for efficiency
Short term & long term productivity actions to be foreseen
Competing on Quality
More than reducing problems & rework costs
Listen to clients expectations for quality
Competing on Flexibility
Adjust to changes in production mix, volume or design
Electronic catalogue + CAD CAM controlled process (windows)
Hand made shoes: scan of feet (12 parameters) => electronically sent to
plant => 3000 digital lasts (master model) => sent to customers home in
weeks (instead of 9 months) at cost of off-the- shelf shoes
Competing on Speed
Build to order production & efficient supply chains
Decision making pushed down in hierarchy (functional teams)
Close contact with suppliers & clients
Factors that Influence OM Decisions
Economic conditions. These include the general health and direction of the economy, inflation
and deflation, interest rates, tax laws, and tariffs.
Political conditions. These include favorable or unfavorable attitudes toward business, political
stability or instability, and wars.
Legal environment. This includes antitrust laws, government regulations, trade restrictions,
minimum wage laws, product liability laws and recent court experience, labor laws, and patents.
Technology. This can include the rate at which product innovations are occurring, current and
future process technology (equipment, materials handling), and design technology.
Competition. This includes the number and strength of competitors, the basis of competition
(price, quality, special features), and the ease of market entry.
Markets. This includes size, location, brand loyalties, ease of entry, potential for growth, longterm stability, and demographics.
Human resources. These include the skills and abilities of managers and workers; special talents
(creativity, designing, problem solving); loyalty to the organization; expertise; dedication; and
experience.
Facilities and equipment. Capacities, location, age, and cost to maintain or replace can have a
significant impact on operations.
Financial resources. Cash flow, access to additional funding, existing debt burden, and cost of
capital are important considerations.
Customers. Loyalty, existing relationships, and understanding of wants and needs are important.
Products and services. These include existing products and services, and the potential for new
products and services.
Technology. This includes existing technology, the ability to integrate new technology, and the
probable impact of technology on current and future operations.
Suppliers. Supplier relationships, dependability of suppliers, quality, flexibility, and service are
typical considerations.

Other. Other factors include patents, labor relations, company or product image, distribution
channels, relationships with distributors, maintenance of facilities and equipment, access to
resources, and access to markets.
SUPPLY CHAIN MANAGEMENT (SCM)
Shridhara Bhat
SCM is applying a total systems approach to managing the flow of information,
materials, services, and funds from the raw materials suppliers through factories,
warehouses to end customers.
Reasons for increased interest in SCM:
(i) Time for materials to travel through the entire supply chain can be quite long. So the
aim is to reduce cycle time, leading to lower inventories, lower costs, greater flexibility,
and better deliveries.
(ii) All avenues for internal cost cutting have already been exhausted by many companies.
SCM now provides the competitive edge.
Gaither, Frazier
SCM: All materials management functions are integrated under one head purchasing,
logistics, inspection, production, material handling, warehousing, and distribution. SCM
underscores the importance of managing the flow of materials.
Materials include raw materials, finished products, components, assemblies,
consumables, and supplies.
The cost of buying, storing, moving, and shipping materials accounts for over 50% of a
products cost.
SCM is a popular perspective today which views the flow of materials from suppliers all
the way to consumers as a system to be managed.
For most companies, the relevant aspect of SCM extends from its direct suppliers to its
direct customers.
Example of supply chain in the automotive industry:
MINING CO. STEEL PLANT STEEL MILL CAR MAKER
(Iron ore)
(Ingots)
(Sheets)
(cut, stamp, assembly)
DEALER CUSTOMER
E-Business and SCM:
# B2B transactions, referred to as E-commerce, include sales, purchases, communication,
order placement, order acknowledgement, etc. over the internet.
# SCM practices are influenced by the increasing popularity of B2B transactions over the
internet. Purchasing personnel can now locate suppliers, obtain quotes, participate in
auctions, and procure materials on-line.
# On-line auctions, exchange websites have developed to assist supply chain managers.
Examples: www.steelauction.com, covisint, etc.
# ERP vendors such as SAP, Baan, Oracle, etc. have now added features to assist

e-business and SCM.

Coyle, Bardi, Langley

Globalization involves global sourcing, global marketing, global manufacturing, global

warehousing and distribution.
SCM, as a concept, developed in the 80s but became popular only in the 90s. It is based
on the systems concept of the 50s and 60s. The focus is on the total systems costs to
arrive at the lowest distribution system cost. The distribution system includes purchasing,
inventory, warehousing, packaging, material handling, transportation, and customer
service.
The initial concentration was on outbound logistics. Later SCM came to include both
outbound and inbound logistics.
Basic characteristics of SCM:
$ Just sufficient inventory (not too little, not too much)
$ Pull systems
$ Minimize end cost (landed cost)
$ Two-way flow of real-time information and
$ Supply chain collaboration (partners, relationships).

Mohanty, Deshmukh

The objective of SCM is to be efficient and cost-effective across the entire system; the
total system-wide costs from transportation and distribution to inventories are to be
minimized.
It is only through integration of the different components in the supply chain that the firm
can significantly reduce costs and improve service levels.
For effective supply chain performance, strategic partnership between suppliers and
manufacturers is essential.
Vendor rationalization is a prerequisite for implementing SCM software since the cost of
training and interfacing with many vendors is very high.
Implementation of SCM system is not easy. Most companies integrate their internal
supply chains first, in order to ensure that the system works within their own organization
before hooking up with others outside.