Introduction to OM

Hasmukh Gajjar

Agenda

Whyy studyy Operations

p
Management
g
Evolution of Business
p
Management
g
Evolution of Production/Operations
Meaning of Operation as
A Basic function
A core function
A Transformation process (Input Output Model)

Definition of Production/Operations
Management
Importance of Operations Management
Types of operations

Why
y Study
y Operations
p
Management?
g
OM Provides a Systematic
y
Approach
pp
to
Observing Organizational Processes

Business Education
(understanding of OM
essential to the
students development
as a manager )

Operations
Management

Interesting Career
Opportunities in OM
such as supply chain
consulting and
operations Analyst,

OM Tools have Cross-Functional

Applications

Evolution of Business
Think of past : Evolution of Human and society
Everyone had to struggle to get his/her basic
necessities!
Rise of Barter system
Business firms : catered the different goods and
services
Now
o a days, o
one
e ca
can do his/her
s/ e interesting
te est g job
and rest of his/her needs can be satisfied
through goods or services!
4

Evolution of Production/
O
Operations
ti
Management
M
t
Industrial Revolution
Steam engine
1769 James Watt
Division of labor
1776 Adam Smith
Interchangeable parts 1790 Eli Whitney
Scientific Management
Principles
1911 Frederick W
W. Taylor
Time / motion study
1911 Frank & Lillian Gilbreth
A t scheduling
Act
h d li chart
h t 1912 Henry
H
G
Gantt
5

Evolution of Production/
O
Operations
ti
Management
M
t
Management Science
Linear programming
1947George Dantzig
Digital computer
1951Remington Rand
Simulation, PERT/CPM 1960 Research groups
Waiting line theory
MRP
1960s Joseph Orlicky, IBM

Evolution of Production/
O
Operations
ti
Management
M
t
Quality Revolution
JIT
1970s Taiichi Ohno, Toyota
TQM
1980s W
W. Edwards Deming
Deming,
Joseph Juran, et. al.
Reengineering 1990s Hammer
Hammer, Champy
Information Age
EDI EFT,
EDI,
EFT
1970s
Numerous
CIM
1980s
individuals and
1990
1990s
companies
i
Internet, WWW
1990s
Tim Berners-Lee 7

Evolution of Production/
O
Operations
ti
Management
M
t
Globalization
Worldwide markets
1990s Numerous individuals
and operations
and companies
Supply chain management
Electronic commerce
Mass customization

Meaning of Operations
Three p
perspectives
p
of Operations
p
Function
Operations as a basic function
Operations as a core function
Operations as a transformation Process

Operations as a basic function

Marketing
-identifies/generates
id tifi /
t demand
d
d
-takes the order for a product or service

Operations
-creates and distributes product or service

Finance/Accounting
Fi
/A
ti
-tracks how well the organization is doing
-pays the bills, collects the money
-provides financial resources necessary to
produce, market and distribute product

Product Development
- gives technological specification of its product and services.

10

Operations as a core function

Capital Markets, Stockholders

Workers
W

Operations

Perrsonnel

Purch
hasing

Suppliers

Finance

Marketing
C t
Customers

11

Operations as a
T
Transformation
f
ti Process
P
Inputt
Inp
transformed
resources
Material
Information
Customers

INPUT
Facilities
Staff

Input
transforming
resources

En ironment
Environment

The
transformation
process

Output
Goods

OUTPUT
Output
Services

Environment

12

Illustration of
I
Input
t Output
O t t Model
M d l
Operation

Input Resources

Transformation
Process

Output

Airline

Aircraft, pilots, crew,

passengers

Move passengers

Transported
passengers

Department
Store

Goods for sale, staff,

customer

Display goods, sell

goods, Sales advice

Customers & goods

together

Dentist

Dental surgeons,
g
,
equipments, patients

Check & treat teeth,,

give preventative
advice

Patients with healthyy

teeth & gums

Zoo

Zoo keepers, animals,

customers

Display animal,
educate customers
breed animal

Entertained
/informed customers

Police

Police officers,
information, public

Prevent / solve crime,

arrest criminal

Lawful society, public

with feeling of
security

13

Input: Transformed Resources

Mixture of i)) material,, ii)) information & iii)) customers

Predominantly
materials processors

Predominantly
information processors

Predominantly
customer processors

All mfg. operations

Mining & extraction
Retail operations
Warehouse
Postal services
Container shipping line
Trucking company

Accountants
Bank headquarters
Market research company
Financial analysts
News service
Univ. research unit
Telecom company

Hairdressers
Hotels
Hospitals
Mass rapid transports
Theatres
Theme Parks
Dentists

14

Input: Transforming Resources

Two types: i) facilities and ii) staff

Ferry company

Paper manufacturer

Radio station

Types of
facilities

Ships
O b d navigation
On-board
i ti
equipment
Dry docs
Material-handling equipment
O h
On-shore
building
b ildi
Warehouses

Pulp-making vats
P
Paper-making
ki machines
hi
Reeling equipment
Slitting equipment
Packing machinery
Steam-generating
boilers, warehouses

Broadcasting
equipment
Studios and studio
equipment
transmitters outside
broadcast vehicles

Types of
staff

Sailors, Engineers
Catering staff
On-board shop assistants
Cleaners
Maintenance staff

Operators
Chemists & chemical
engineers
Process plant engineers

Disc jockeys
Announcers
Technicians

15

Different types of
t
transformation
f
ti processes
Material
processors
Physical
properties

Information
processors

Mfg. operations,
mining & extrac.

IInformational
f
i
l
properties

Customer
processors
Hairdressers,
plastic surgeons

Bankk HQ
B
HQs,
accountants

Possession

Retail operations

Financial analysis,
market research

Location

Postal service, port

& distrbtn

Telecom company

Public transport,
taxi

Storage/Acco
modation

Warehouse

Library Archives

Hotels

Physiological
state

Hospitals & other

health care

Psychological
state

Education,
Education
theatres,
psychoanalysts

16

Output: Mixer of goods/services

Tangibility, storability, transportability, simultaneity, customer contact & quality

PSYC
YCHOTHERAPY
Y CLINIC

MANAGE
EMENT
CONSULT
TANCY

COMPU
UTER SYSTEM
MS
SERVICES
S

Tangible
Can be stored
Production precedes
consumption
Low customer
contact
Can be transported
Quality is evident
RESTAURAN
NT

SPECIALIST M
MACHINE TOO
OL
MANUFA
ACTURER

ALUMIN
NIUM SMELTIN
NG

CRUDE OIL PR
RODUCTION

PURE GOODS

Intangible
Cannot be stored
Production and
consumption are
simultaneous
High customer contact
Quality difficult to judge

PURE SERVICES

17

Definition of Production/operations
Management
OPERATIONS MANAGEMENT (OM)
is
the process of managing resources to deliver
Goods & Services to Customers

18

Activities of
O
Operations
ti
Managers
M
ENVIRONMENT
INPUT
TRANSFORMED
RESOURCES
MATERIALS
INFROMATION
CUSTOMERS

Operations
strategy

Improvement

Design
g
INPUT
FACILITIES
STAFF
INPUT
TRASNFORING
SOU C S
RESOURCES

GOODS
OUTPUT
AND
SERVICES

Planning &
control
t l

ENVIRONMENT
19

Activities of Operations Managers

Design

Planning and control

*product design
*aggregate planning
capacity planning
*process
process design
*capacity
*facility location
*inventory control
*facility (layout)design *material requirements
planning
*quality
quality assurance
*scheduling
scheduling resources
*job design
*distribution & logistics
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Importance of OM
Because of the changed operating environment
most of yesterdays ideas are no longer relevant !
Global Competition & Export Orientation
Increased Technological Availability
Shorter Product Life Cycles
Sophisticated Consumers
Market Share
Flexibility
Time

21

Competitive Framework
S
U
P
P
L
I
E
R
S

Inputs THE FIRM

Output

Demand

C
Share

U
S
Prefer T
-ence O

COST
QUALITY Performance MARKET
RESPONSE
DELIVERY
Mkt. M
FLEXIBILITY
Share
E
Output
R
INDUSTRY
Share
Inputs
S
COMPETITORS
Demand
22

Types of Production Processes

PROJECT
e.g. Building construction, Ship manufacturer

JOB SHOP
e.g. Fabrication units, Machine shop

BATCH PROCESS
e.g. Apparel manufacturer, Shoe
manufacturer

ASSEMBLY LINE
e.g. Automobile assembly, Fast food outlet

CONTINUOUS PROCESS
e.g. Oil refinery, Paper industry

PRODUCT-PROCESS MATRIX
One of
a kind

Low Volume
Many Products

High
g Volume
Few Products

Project (Construction)
Very
Jumbled
Flow

Job Shop (Machine shop)

Batch Process
(Apparel Manuf.
Assembly Line
(A
(Auto
assembly)
bl )
Continuous
Process
(Sugar mill)

Rigid
Flow
Bidding
Delivery
Product Design
Flexibility

ProductDifferentiation
Flexibility in
Volumes

Price
Availability

Thank You

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