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8/12/2019 1 Opn Mgt Introduction (1)
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Operations ManagementIntroduction, Current Issues & Trends
By
H.S.Pundle
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Operations Management
Definition An operations system is defined as one in which several
activities are performed
to transform a set of inputs into useful output
using a transformation process
Operations Management is a systematic approach to
address all the issues pertaining to
the transformation process that converts some inputs into output thatare useful, and
could fetch revenue to the operations system
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Operations Management (OM)Salient Aspects
OM is a systematic approach
using scientific tools & techniques and solutionmethodologies to analyze problems
OM is about addressing several issues
varying in terms of time horizon, nature of decisions
Transformation processes are central to Operations
Focusing on keeping costs to the minimum
Developing a set of measures to assess performanceof the system
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Operations Management (OM)
Salient Aspects
Production Operations Management is managing ofproductive resources (Men, Material, Equipments &Facilities) Efficiently & Effectively.
MBA graduates are expected to help organizationsgain competitive advantage by excelling in meetingcustomer needs.
Whether you are in Marketing, Finance or
Operations; effectively serving customers will needknowledge of Operations Management. Servingcustomers means meeting the requirement in time,with exceptional quality at lowest cost.
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Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications
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Operations SystemSystem Primary
InputResources Primary
TransformationFunction
DesiredOutput
Hospital Patients Doctors,Nurses,Medicines,Equipments
Healthcare HealthyIndividuals
Restaurant HungryCustomers
Food items,Chef,
Waiters,Environment
Well prepared,Well served food
SatisfiedCustomers
AutomobileManufacturing
Sheet Metal,Steel, Parts
Tools,Equipments,Workers
Fabrication,Assembly.
High qualitycars.
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Operations SystemSystem Primary
InputResources Primary
TransformationFunction
DesiredOutput
College,
University
High school
Pass outs
Teachers,
Books,Classrooms.
Imparting
Knowledge, Skills
Educated
Individuals
Departme-ntal Store
Shoppers Stock ofgoods,Display, Salespersons
Attract shoppers,Promoteproducts.
Sales tosatisfiedcustomers.
Airline Travelers Aero planes,Crew, Fuel.
Move todestination
On timesafedelivery to
destination.
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Indian Manufacturing
Export Potential of SectorsSectorIndustry
CurrentExportUS $ Bn
PotentialExportUS $ Bn
Strength Weakness
ElectricalElectronics
1.25 15-18 Design &Engineering skills
Lack of scale, Lowdomestic demand
ApparelManufacture
6.1 25-30 Vertical integration,Skilled Labour,Design skills
Lack of scale,Operationalexpertise
Autocomponents
1.1 20-25 Engineering &continuousimprovement ofskills
Fragmentedindustry, Poor OEMlinkage
Specialtychemicals
1.6 12-15 Low costmanpower &process innovationskills
Application R&D,Marketing
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Service Operations
Salient Features Service is intangible while goods is a physical
output.
In service direct customer involvement increating output is essential.
Customers are on the shop floor whenconsuming service. Shop floor may be called
front office, dinning area, passenger cabin.
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Manufacturing & Service
Similarities & Differences
DifferencesManufacturing Organization Service Organization
Physical, durable product Intangible, perishable productOutput can be inventoried Output can not be inventoried
Low customer contact High customer contact
Long response time Short response time
Regional, National, Intentional
national market
Local market
Large facility Small facility
Capital intensive Labour intensive
Quality easily measured Quality not easily measured
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Manufacturing & Service
Similarities & Differences
Similarities Is concerned about quality, productivity & timely
response to its customers Must make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice ofresources
Has to make an estimate of demand
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Operations Management
FunctionsDesign of Operations Operational Control
Product design & control Forecasting
Process design Production planning & control
Quality Management Supply chain management
Location & Layout facilities Maintenance management
Capacity planning Continuous improvement ofOperations.
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Operations Management
Challenges Competitive Pressures due to economic reforms
Tariff reduction has exposed Indian companies to global competition.
Chelliah Committee tax reforms proposed during 1992 94 triggeredthis process
Abolition licensing policies had enabled several new playersto enter into business increasing domestic competition andcapacity build up.
Examples include liberalization of two wheelers and LCV segment inearly 1980s and passenger car segment in early 1990s.
Indian customers are more demanding in terms of quality,cost and delivery of goods & services
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Operations ManagementChallenges
Growing customer expectations
Examples: Tariff plans and options provided by
mobile operators, options in passenger car Customers tend to demand more and refine their
expectations
Manufacturing & Service organizations must learn
to respond to these expectations Need to develop capabilities to bring newer
products and services faster and yet profitably
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Operations ManagementChallenges
Todays businesses are constantly challenged by therapid technological advancements Example 1: ATMs & Internet Banking. Customers need not visit a bank
branch. Drafts and cheques replaced with electronic payment gateways &fund transfer mechanisms.
Example 2: Buying a train ticket. By visiting a Web site likehttp://www.irctc.co.in/, a customer can accomplish all tasks pertaining toticket booking and cancellation at leisure.
Example 3: Procurement of goods & services. A manufacturingorganization can procure goods & services by organizing a reverse auction
on the Internet. In 3 to 4 hours, the best price for a component and thesupplier willing to provide the component at a desired quality can belocated.
Example 4: New Product Development. A team of design personnel fromacross different geographical locations can participate in new productdevelopment using technological tools.
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Operations ManagementChallenges
Environmental Issues
When Government of India announced a scheme for special economiczones (SEZs), it generated controversies and social concerns.
Growing industrialization raises concerns regarding the depletion of natural
resources and the waste generated from production systems and end-of-lifeproducts.
Growing urbanization creates societal problems arising out of scarcity ofavailable resources and generation of solid wastes.
Consumption of energy and water in countries like India is on the rise. Sucha situation requires better practices and newer methods of addressing these
requirements using better operational practices. Increasingly, firms are under pressure to take responsibility of restoring,
sustaining, and expanding the planets ecosystem instead of merelyexploiting it.
OM practices must address environmental concerns in order to ensurea sustainable world
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Operations ManagementImplications & Priorities
Relate operations system to Customer/Market
Acquire Capabilities to tolerate productproliferation
Develop systems and procedures thatpromote learning
Develop Green Manufacturing Practices
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Operations Management:Trends & Issues - Highlights
Operations Management is a systematic approach to address allissues pertaining to the transformation process that convertssome inputs into useful output
Globally, India is emerging as an important manufacturing base. Several recent studies point to emerging opportunities for
Indian manufacturing to grow and attain a global presence.
From an operations management perspective, the notion of apure product and pure service is just the two ends of the
spectrum. In reality, a vast majority of operations share a continuum of
products and services.
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Operations Management:Trends & Issues - Highlights
Despite several important differences between products &services, from an OM perspective there are several similaritiesbetween the two
Decision context in operations management can be broadlyclassified as
Design and operations control issues
Long term and short term decisions
Some of the challenges faced by operation firms include
Need to address increased competition due to economicreforms
Addressing the growing expectations of the customers
Rapid technological advances
Emerging environmental concerns
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