5/2/2015SHARDA1 PRODUCTION AND OPERATIONS MANAGEMENT SHARDA
UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH
[email protected] Slide 2 LearningHours Contact 40 Guided
Study 25 Assessment 10 Total 75 5/2/2015SHARDA2 Slide 3 OBJECTIVE
OF THE PAPER: The objective of this paper is to help the students
to become effective managers in the competitive global environment.
After studying it the students placed in various organizations
whether manufacturing or service are supposed to take care of the
very basic unit of the work that is process. They need to accept
the challenge of both managing and understanding the
interrelatedness of the enterprise wide activities. Summing up the
aim of this course is to prepare the truly global operation manager
equipped with all type of weapons to take care of the limited
resources of an enterprise and transform them to the revenue and
profit. PREREQUISITE: The basic knowledge of elementary math and
statistics at least up to class XII level 5/2/2015SHARDA3 Slide 4
Teaching/Learning Approach The students will learn through a
combination of face to - face contact and guided study. Personal
contact sessions will include Presentations, Case Study analysis
and Quizzes. Guided study will include text readings and the use of
a wide range internet based resources. 5/2/2015SHARDA4 Slide 5
TopicsCoverLect ures UNIT 1 1.Introduction Meaning and function of
Production Management, Production system Production Organization
Chart, Decision Making in Production Operation, Production
Departments with various other departments and their importance. 2.
Strategies Responsibility of Production Manger. Interdependencies
of Operation strategies and decision making produce to stock and
produce to order strategies, concept of using mixed strategies,
advantages of having mixed strategies. 8 UNIT 2 3. Long term
planning/strategy Facility location and facility layout. Factors
affecting the location of facility, different types of layouts,
product focused, process Focused, cellular and mixed layouts.
Introduction to the methods for determining the location and layout
of a facility. 4. Intermediate term planning/ strategy Capacities
Planning, aggregate planning, hire and fire strategy etc.
Identification and segregation of the operations based on the
strategy selected 8 UNIT3 5. Shop floor control Resource planning,
sequencing and scheduling, concept of JIT, manufacturing and
assembly line balancing, preparation of Gantt Chart. 6. Project
Management CPM, PERT forward pass and backward pass computations,
resource leveling, resource allocation, and crashing of the
project. 8 UNIT4 7. Inventory Management Inventory definition,
types and models, managing the inventory, classification of
inventories, MPS, MRP, ERP. 8. Work Study & Productivity
Productivity improving techniques, Cost reduction approach, Work
and Method study, Work Order, Production Control and its importance
8 UNIT 5 9. Quality Concepts Production Quality Concepts and
Internal Customer Approach, Introduction to the tools of quality
management. 10. Safety Management Evolution of safety concepts,
Electrical & Chemical hazards, ionizing and non ionizing
Radiation, Personal protection, Material handling and shop floor
design concepts, Environmental safety, fire prevention,
introduction to OHSAS standards. 8 5/2/2015SHARDA5 Slide 6
SUGGESTED READINGS 1) Adam Jr Everetl E. R J Production and
Operations Management (Prentice-Hall, 2000, 5th Edition) 2) Chary -
Production and Operations Management (Tata McGraw-Hill, 1997, 9th
Edition) 3) Hill T- Operations Management (Palgrave, 2000) 4)
Johnston R et al Cases in Operations Management (Pitman, 1993) 5)
McGregor D Operations Management (McGraw-Hill, 1960) 6) Morton -
Production and Operations Management (Vikas) 7) Haleem A-
Production and Operations Management (Galgotia books, 2004) 8) Bedi
Kanishka - Production & Operations Management (Oxford
University Press, 2 nd Edition) 5/2/2015SHARDA6 Slide 7 Assignment
1 Last for submission 30 th Jan 2012 1. Discuss the differences in
scheduling systems for mass and batch production. 2.Take any
manufacturing (Textile or Automobile) or Service (Banking or
Hospital) organization and draw a schematic diagram of its overall
process of input, Conversion & output. 3.The government is
considering for expanding the local fire fighting system. Discuss
the factors which you think crucial for such decision.
5/2/2015SHARDA7 Slide 8 BUSINESS Every business wants to be
remarkable to innovate, to build customer relationships, to grow
and profit. In a perfect world, you could devote all your time to
achieving those goals. But in the real world, challenges loom
margin pressures, regulatory compliance and risk, massive amounts
of diverse information, and an increasingly mobile, fragmented
workforce 5/2/2015SHARDA8 Slide 9 BUSINESS So how do you bring your
real-world business a little closer to your perfect-world vision?
You need solutions that enable efficient, collaborative,
action-oriented decision making and your people need the right
information to do their jobs. 5/2/2015SHARDA9 Slide 10 PRODUCTION
AND OPERATIONS MANAGEMENT 1.Introduction Meaning and function of
Production Management, Production system Production Organization
Chart, Decision Making in Production Operation, Production
Departments with various other departments and their importance. 2.
Strategies Responsibility of Production Manger. Interdependencies
of Operation strategies and decision making produce to stock and
produce to order strategies, concept of using mixed strategies,
advantages of having mixed strategies. 5/2/2015SHARDA10 Slide 11
Disclaimers This is a course offered in the Sharda University MBA
Program, and I will make adjustments to the topics to be covered in
the course of study. Your feedback in this process is valuable, and
will motivate me in continuous course improvement. Please do not
hesitate to let me know, throughout the course, how I can improve
the course and the your learning experiences in PRODUCTION AND
OPERATIONS MANAGEMENT! 5/2/2015SHARDA11 Slide 12 PRODUCTION AND
OPERATIONS MANAGEMENT: CONCEPTS AND APPLICATIONS OBJECTIVE: The
objective of this COURSE is to help the students to become
effective managers in the competitive global environment. After
studying it the students placed in various organizations whether
manufacturing or service are supposed to take care of the very
basic unit of the work that is process. They need to accept the
challenge of both managing and understanding the inter-relatedness
of the enterprise with wide activities. 5/2/2015SHARDA12 Slide 13
5/2/2015SHARDA13 Many firms have demonstrated that operations
management can be an effective competitive weapon. In conjunction
with well-conceived marketing and financial plans, these firms have
made major penetrations into markets worldwide. This course is
designed to address the key operations issues in service and
manufacturing organizations that have strategic as well as tactical
implications. The specific objectives include: Slide 14
5/2/2015SHARDA14 1. To understand the role of operations management
in the overall business strategy of a firm. 2. To understand the
interdependence of the operating system with other key functional
areas of a firm. 3. To help managers in all functional areas better
control their operational processes. 4. To identify and evaluate
the key factors and the interdependence of these factors in the
design of effective business and operating systems. 5. To identify
and evaluate a range of tools appropriate to analyze and improve
the business processes and operating systems of the firm. 6. To
understand the application of operations management policies and
techniques to service and manufacturing firms. Slide 15 PRODUCTION
AND OPERATIONS MANAGEMENT: CONCEPTS AND APPLICATIONS Summing up the
aim of this course is to prepare the truly global operation manager
equipped with all type of weapons to take care of the limited
resources of an enterprise and transform them to the revenue and
profit. 5/2/2015SHARDA15 Slide 16 You should Study Supply Chain if
you. want to make your business run faster need to resolve a supply
chain bottleneck want to streamline your procurement need to know
what new products your competitors may be taking advantage of want
to solve a logistics challenge need to find the best supply chain
management advice and services want to network and further your
career need to upgrade your materials handling equipment want to
compare new distribution service providers with your current
supplier 5/2/2015SHARDA16 Slide 17 5/2/2015SHARDA17 Slide 18
5/2/2015SHARDA18 1. Free your heart from hate. 5. Expect less. 4.
Give more. 3. Live simple. 2. Free your mind from worry. Remember
these simple guidelines for happiness. Slide 19 Thought for the Day
Where ignorance is our master, there is no possibility of real
peace Shri Dalai Lama 5/2/2015SHARDA19 Slide 20 5/2/2015SHARDA20
Supply Chain Begins With A typical supply chain begins with
ecological and biological regulation of natural resources, followed
by the human extraction of raw material, and includes several
production links (e.g., component construction, assembly, and
merging) before moving on to several layers of storage facilities
of ever- decreasing size and ever more remote geographical
locations, and finally reaching the consumer. Slide 21 Supply Chain
Management Increasingly, supply chain management is being viewed
not as a business function, but as a business approach. Supply
chain management focuses on the management of the relationships
between firms in the supply chain. Because these relationships can
be complex, all business functions need to be involved.
5/2/2015SHARDA21 Slide 22 Whats the Problem? Some indications that
supply chains have problems include: - Growing inventories of
components and materials - Growing costs for expediting or
accelerated delivery of components or materials shortages - Growing
costs for return or restocking of unneeded components or materials
- Growing costs of scrapping obsolete inventory 5/2/2015SHARDA22
Slide 23 Supply Chain Drivers Intellectual property (brand
presence) Forecasts (accuracy) Procurement (who, where, when?)
Inventory (JIT ?) Logistics (how, when?) Capacity Quality/safety
Schedule Cost 5/2/201523SHARDA Slide 24 Key Impact Areas Marketing:
Missed opportunities Delayed product launches Reduced agility
Sales: Padded delivery times Procurement: Inaccurate forecasting
Inventory: Over-stocking Operations: Inaccurate forecasting
Over-production Management Decisions: Wrong/ineffective decisions
Non-optimal production scheduling Unnecessary interventions
5/2/201524SHARDA Slide 25 5/2/2015SHARDA25 Questions? Slide 26
INTRODUCTION Production / operations management is the process,
which combines and transforms various resources used in the
production / operations subsystem of the organization into value
added product / services in a controlled manner as per the policies
of the organization. Therefore, it is that part of an organization,
which is concerned with the transformation of a range of inputs
into the required (products / services) having the requisite
quality level. 5/2/2015SHARDA26 Slide 27 5/2/2015SHARDA27 What is
Operations Management? Defined Operations management (OM) is
defined as the design, operation, and improvement of the systems
that create and deliver the firms primary products and services
Slide 28 Operations Management The set of interrelated management
activities, which are involved in manufacturing certain products,
is called as production management. If the same concept is extended
to services management, then the corresponding set of management
activities is called as operations management 5/2/2015SHARDA28
Slide 29 Operations Management 5/2/2015SHARDA29 Slide 30 CONCEPT OF
PRODUCTION Production function is that part of an organization,
which is concerned with the transformation of a range of inputs
into the required outputs (products) having the requisite quality
level. Production is defined as the step-by-step conversion of one
form of material into another form through chemical or mechanical
process to create or enhance the utility of the product to the
user. Thus production is a value addition process. At each stage of
processing, there will be value addition. Edwood Buffa defines
production as a process by which goods and services are created.
5/2/2015SHARDA30 Slide 31 PRODUCTION SYSTEM The production system
of an organization is that part, which produces products of an
organization. It is that activity whereby resources, flowing within
a defined system, are combined and transformed in a controlled
manner to add value in accordance with the policies communicated by
management. 5/2/2015SHARDA31 Slide 32 PRODUCTION SYSTEM The
production system has the following characteristics: 1. Production
is an organized activity, so every production system has an
objective. 2. The system transforms the various inputs to useful
outputs. 3. It does not operate in isolation from the other
organization system. 4. There exists a feedback about the
activities, which is essential to control and improve system
performance. 5/2/2015SHARDA32 Slide 33 Classification of Production
System Production systems can be classified as: Job Shop, Batch,
Mass and Continuous Production systems. 5/2/2015SHARDA33 Slide 34
JOB SHOP PRODUCTION Job shop production are characterized by
manufacturing of one or few quantity of products designed and
produced as per the specification of customers within prefixed time
and cost. The distinguishing feature of this is low volume and high
variety of products. A job shop comprises of general purpose
machines arranged into different departments. Each job demands
unique technological requirements, demands processing on machines
in a certain sequence. 5/2/2015SHARDA34 Slide 35 JOB SHOP
PRODUCTION Characteristics: The Job-shop production system is
followed when there is: 1. High variety of products and low volume.
2. Use of general purpose machines and facilities. 3. Highly
skilled operators who can take up each job as a challenge because
of uniqueness. 4. Large inventory of materials, tools, parts. 5.
Detailed planning is essential for sequencing the requirements of
each product, capacities for each work centre and order priorities.
5/2/2015SHARDA35 Slide 36 JOB SHOP PRODUCTION Advantages Following
are the advantages of job shop production: 1. Because of general
purpose machines and facilities variety of products can be
produced. 2. Operators will become more skilled and competent, as
each job gives them learning opportunities. 3. Full potential of
operators can be utilized. 4. Opportunity exists for creative
methods and innovative ideas. 5/2/2015SHARDA36 Slide 37 JOB SHOP
PRODUCTION Limitations Following are the limitations of job shop
production: 1. Higher cost due to frequent set up changes. 2.
Higher level of inventory at all levels and hence higher inventory
cost. 3. Production planning is complicated. 4. Larger space
requirements. 5/2/2015SHARDA37 Slide 38 BATCH PRODUCTION Batch
production is defined by American Production and Inventory Control
Society (APICS) as a form of manufacturing in which the job passes
through the functional departments in lots or batches and each lot
may have a different routing. It is characterized by the
manufacture of limited number of products produced at regular
intervals and stocked awaiting sales. 5/2/2015SHARDA38 Slide 39
BATCH PRODUCTION Batch production system is used under the
following circumstances: 1. When there is shorter production runs.
2. When plant and machinery are flexible. 3. When plant and
machinery set up is used for the production of item in a batch and
change of set up is required for processing the next batch. 4. When
manufacturing lead time and cost are lower as compared to job order
production. 5/2/2015SHARDA39 Slide 40 BATCH PRODUCTION Advantages
Following are the advantages of batch production: 1. Better
utilization of plant and machinery. 2. Promotes functional
specialization. 3. Cost per unit is lower as compared to job order
production. 4. Lower investment in plant and machinery. 5.
Flexibility to accommodate and process number of products. 6. Job
satisfaction exists for operators. 5/2/2015SHARDA40 Slide 41 BATCH
PRODUCTION Limitations Following are the limitations of batch
production: 1. Material handling is complex because of irregular
and longer flows. 2. Production planning and control is complex. 3.
Work in process inventory is higher compared to continuous
production. 4. Higher set up costs due to frequent changes in set
up. 5/2/2015SHARDA41 Slide 42 MASS PRODUCTION Manufacture of
discrete parts or assemblies using a continuous process are called
mass production. This production system is justified by very large
volume of production. The machines are arranged in a line or
product layout. Product and process standardization exists and all
outputs follow the same path. 5/2/2015SHARDA42 Slide 43 MASS
PRODUCTION Characteristics Mass production is used under the
following circumstances: 1. Standardization of product and process
sequence. 2. Dedicated special purpose machines having higher
production capacities and output rates. 3. Large volume of
products. 4. Shorter cycle time of production. 5. Lower in process
inventory. 6. Perfectly balanced production lines. 7. Flow of
materials, components and parts is continuous and without any back
tracking. 8. Production planning and control is easy. 9. Material
handling can be completely automatic. 5/2/2015SHARDA43 Slide 44
MASS PRODUCTION Advantages Following are the advantages of mass
production: 1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing. 3. Less
skilled operators are required. 4. Low process inventory. 5.
Manufacturing cost per unit is low. 5/2/2015SHARDA44 Slide 45 MASS
PRODUCTION Limitations Following are the limitations of mass
production: 1. Breakdown of one machine will stop an entire
production line. 2. Line layout needs major change with the changes
in the product design. 3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
5/2/2015SHARDA45 Slide 46 CONTINUOUS PRODUCTION Production
facilities are arranged as per the sequence of production
operations from the first operations to the finished product. The
items are made to flow through the sequence of operations through
material handling devices such as conveyors, transfer devices, etc.
5/2/2015SHARDA46 Slide 47 CONTINUOUS PRODUCTION Characteristics:
Continuous production is used under the following circumstances: 1.
Dedicated plant and equipment with zero flexibility. 2. Material
handling is fully automated. 3. Process follows a predetermined
sequence of operations. 4. Component materials cannot be readily
identified with final product. 5. Planning and scheduling is a
routine action. 5/2/2015SHARDA47 Slide 48 CONTINUOUS PRODUCTION
Advantages Following are the advantages of continuous production:
1. Standardisation of product and process sequence. 2. Higher rate
of production with reduced cycle time. 3. Higher capacity
utilisation due to line balancing. 4. Manpower is not required for
material handling as it is completely automatic. 5. Person with
limited skills can be used on the production line. 6. Unit cost is
lower due to high volume of production. 5/2/2015SHARDA48 Slide 49
CONTINUOUS PRODUCTION Limitations Following are the limitations of
continuous production: 1. Flexibility to accommodate and process
number of products does not exist. 2. Very high investment for
setting flow lines. 3. Product differentiation is limited
5/2/2015SHARDA49 Slide 50 5/2/2015SHARDA50 Questions? Slide 51
PRODUCTION MANAGEMENT Production management is a process of
planning, organizing, directing and controlling the activities of
the production function. It combines and transforms various
resources used in the production subsystem of the organization into
value added product in a controlled manner as per the policies of
the organization. 5/2/2015SHARDA51 Slide 52 PRODUCTION MANAGEMENT
E.S. Buffa defines production management as, Production management
deals with decision making related to production processes so that
the resulting goods or services are produced according to
specifications, in the amount and by the schedule demanded and out
of minimum cost. 5/2/2015SHARDA52 Slide 53 Objectives of Production
Management The objective of the production management is to produce
goods services of right quality and quantity at the right time and
right manufacturing cost. 1. RIGHT QUALITY The quality of product
is established based upon the customers needs. The right quality is
not necessarily best quality. It is determined by the cost of the
product and the technical characteristics as suited to the specific
requirements. 2. RIGHT QUANTITY The manufacturing organization
should produce the products in right number. If they are produced
in excess of demand the capital will block up in the form of
inventory and if the quantity is produced in short of demand, leads
to shortage of products. 5/2/2015SHARDA53 Slide 54 Objectives of
Production Management The objective of the production management is
to produce goods services of right quality and quantity at the
right time and right manufacturing cost. 3. RIGHT TIME Timeliness
of delivery is one of the important parameter to judge the
effectiveness of production department. So, the production
department has to make the optimal utilization of input resources
to achieve its objective. 4. RIGHT MANUFACTURING COST Manufacturing
costs are established before the product is actually manufactured.
Hence, all attempts should be made to produce the products at
pre-established cost, so as to reduce the variation between actual
and the standard (pre-established) cost. 5/2/2015SHARDA54 Slide 55
OPERATING SYSTEM Operating system converts inputs in order to
provide outputs which are required by a customer. It converts
physical resources into outputs, the function of which is to
satisfy customer wants i.e., to provide some utility for the
customer. In some of the organization the product is a physical
good (hotels) while in others it is a service (hospitals). Bus and
taxi services, tailors, hospital and builders are the examples of
an operating system. 5/2/2015SHARDA55 Slide 56 OPERATING SYSTEM
Everett E. Adam & Ronald J. Ebert define operating system as,
An operating system (function) of an organization is the part of an
organization that produces the organizations physical goods and
services. Ray Wild defines operating system as, An operating system
is a configuration of resources combined for the provision of goods
or services. 5/2/2015SHARDA56 Slide 57 Concept of Operations An
operation is defined in terms of the mission it serves for the
organization, technology it employs and the human and managerial
processes it involves. Operations in an organization can be
categorized into manufacturing operations and service operations.
Manufacturing operations is a conversion process that includes
manufacturing yields a tangible output: a product, whereas, a
conversion process that includes service yields an intangible
output: a deed, a performance, an effort. 5/2/2015SHARDA57 Slide 58
Distinction between Manufacturing Operations and Service Operations
Following characteristics can be considered for distinguishing
manufacturing operations with service operations: 1. Tangible /
Intangible nature of output 2. Consumption of output 3. Nature of
work (job) 4. Degree of customer contact 5. Customer participation
in conversion 6. Measurement of performance. 5/2/2015SHARDA58 Slide
59 Distinction between Manufacturing Operations and Service
Operations Manufacturing is characterized by tangible outputs
(products), outputs that customers consume overtime, jobs that use
less labour and more equipment, little customer contact, no
customer participation in the conversion process (in production),
and sophisticated methods for measuring production activities and
resource consumption as product are made. 5/2/2015SHARDA59 Slide 60
Distinction between Manufacturing Operations and Service Operations
Service is characterized by intangible outputs, outputs that
customers consumes immediately, jobs that use more labour and less
equipment, direct consumer contact, frequent customer participation
in the conversion process, and elementary methods for measuring
conversion activities and resource consumption. Some services are
equipment based namely rail- road services, telephone services and
some are people based namely tax consultant services, hair styling.
5/2/2015SHARDA60 Slide 61 A Framework for Managing Operations
Managing operations can be enclosed in a frame of general
management function. Operation managers are concerned with
planning, organizing, and controlling the activities which affect
human behavior through models. 5/2/2015SHARDA61 Slide 62 A
Framework for Managing Operations PLANNING Activities that
establishes a course of action and guide future decision-making is
planning. The operations manager defines the objectives for the
operations subsystem of the organization, and the policies, and
procedures for achieving the objectives. This stage includes
clarifying the role and focus of operations in the organizations
overall strategy. It also involves product planning, facility
designing and using the conversion process. 5/2/2015SHARDA62 Slide
63 A Framework for Managing Operations ORGANIZING Activities that
establishes a structure of tasks and authority. Operation managers
establish a structure of roles and the flow of information within
the operations subsystem. They determine the activities required to
achieve the goals and assign authority and responsibility for
carrying them out. 5/2/2015SHARDA63 Slide 64 A Framework for
Managing Operations CONTROLLING Activities that assure the actual
performance in accordance with planned performance. To ensure that
the plans for the operations subsystems are accomplished, the
operations manager must exercise control by measuring actual
outputs and comparing them to planned operations management.
Controlling costs, quality, and schedules are the important
functions here. 5/2/2015SHARDA64 Slide 65 A Framework for Managing
Operations BEHAVIOUR Operation managers are concerned with how
their efforts to plan, organize, and control affect human behavior.
They also want to know how the behavior of subordinates can affect
managements planning, organizing, and controlling actions. Their
interest lies in decision-making behavior. 5/2/2015SHARDA65 Slide
66 A Framework for Managing Operations MODELS As operation managers
plan, organize, and control the conversion process, they encounter
many problems and must make many decisions. They can simplify their
difficulties using models like aggregate planning models for
examining how best to use existing capacity in short-term, break
even analysis to identify break even volumes, linear programming
and computer simulation for capacity utilization, decision tree
analysis for long-term capacity problem of facility expansion,
simple median model for determining best locations of facilities
etc. 5/2/2015SHARDA66 Slide 67 Objectives of Operations Management
Objectives of operations management can be categorized into
customer service and resource utilizations. CUSTOMER SERVICE The
first objective of operating systems is the customer service to the
satisfaction of customer wants. Therefore, customer service is a
key objective of operations management. The operating system must
provide something to a specification which can satisfy the customer
in terms of cost and timing. Thus, primary objective can be
satisfied by providing the right thing at a right price at the
right time. These aspects of customer service-specification, cost
and timing. They are the principal sources of customer satisfaction
and must, therefore, be the principal dimension of the customer
service objective for operations managers. 5/2/2015SHARDA67 Slide
68 Objectives of Operations Management Manufacture Goods of a
given, requested or Cost, i.e., purchase price or cost of obtaining
goods acceptable specification Timing, Supply Goods of a given,
requested or Cost, i.e., purchase price or cost of obtaining
acceptable specification goods. Timing, i.e., delivery delay from
order or request to receipt of goods. 5/2/2015SHARDA68 Slide 69
Objectives of Operations Management Service Treatment of a given,
requested or Cost, i.e., cost of movements acceptable specification
Timing, i.e., 1. Duration or time required for treatment. 2. Wait
or delay from requesting treatment to its commencement. Transport
Management of a given, requested Cost, i.e., cost of movements.
Timing, i.e., or acceptable specification 1. Duration or time to
move. 2. Wait or delay from requesting to its commencement.
5/2/2015SHARDA69 Slide 70 MANAGING GLOBAL OPERATIONS The term
globalization describes businesses deployment of facilities and
operations around the world. Globalization can be defined as a
process in which geographic distance becomes a factor of
diminishing importance in the establishment and maintenance of
cross border economic, political and socio-cultural relations. It
can also be defined as worldwide drive toward globalized economic
system dominated by supranational corporate trade and banking
institutions that are not accountable to democratic processes or
national governments. 5/2/2015SHARDA70 Slide 71 MANAGING GLOBAL
OPERATIONS There are four developments, which have spurred the
trend toward globalization. These are: 1. Improved transportation
and communication technologies; 2. Opened financial systems; 3.
Increased demand for imports; and 4. Reduced import quotas and
other trade barriers. 5/2/2015SHARDA71 Slide 72 5/2/2015SHARDA72
Questions? Slide 73 SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT
Production and operations management concern with the conversion of
inputs into outputs, using physical resources, so as to provide the
desired utilities to the customer while meeting the other
organizational objectives of effectiveness, efficiency and
adoptability. It distinguishes itself from other functions such as
personnel, marketing, finance, etc., by its primary concern for
conversion by using physical resources. 5/2/2015SHARDA73 Slide 74
SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT Following are the
activities which are listed under production and operations
management functions: 1. Location of facilities 2. Plant layouts
and material handling 3. Product design 4. Process design 5.
Production and planning control 6. Quality control 7. Materials
management 8. Maintenance management. 5/2/2015SHARDA74 Slide 75
Meaning and function of Production Management Management is the art
and science of getting things done through others, generally by
organizing and directing their activities on the job. A manager is
therefore someone who defines, plans, guides, assists, and assesses
the work of others, usually people for whom the manager is
responsible in an organization. 5/2/2015SHARDA75 Slide 76 Meaning
and function of Production Management A managers role is to run his
or her function properly. It may be as large as the entire company,
as is the case for the CEO (chief executive officer). It may be as
small as the mail room. Whatever the area of responsibility,
management represents the sum of a set of tasks. Being a manager
comes down to doing these tasks well and consistently.
5/2/2015SHARDA76 Slide 77 5/2/2015SHARDA77 Production Organization
Chart Decision Making in Production Operation, Production
Departments with various other departments and their importance.
Slide 78 Production system Production Organization Chart
SHAREHOLDERS BOARD OF DIRECTOS GENERAL MANAGER - SECRETARY Sales /
Legal / Finance/ Manufac- Engi- / Research Personnel
5/2/2015SHARDA78 Slide 79 Production system Production Organization
Chart ORGANISATION CHART FOR P.P.C. DEPARTMENT P.P.C. Production
Planning Production Control Inventory Control Order Booking Stores
management Production budget / Dispatching Expediting Material
Records Quality Control Methods Machines Handling Receiving Tools
and Jigs Operation Layout Time estimating Scheduling
Standardization Simplification 5/2/2015SHARDA79 Slide 80
5/2/2015SHARDA80 Slide 81 Production system Production Organization
Chart Production system Production Organization : Each workers
skill, strength, and learning ability were determined. Stopwatch
studies were conducted to precisely set standard output per worker
on each task. Material specifications, work methods, and routing
sequences were used to organize the shop. Supervisors were
carefully selected and trained. Incentive pay The organizational
chart has been designed to be an interactive guide to jobs
available within a typical pork production system (i.e. Production,
Environment, Purchasing & Facilities). 5/2/2015SHARDA81 Slide
82 Organization Chart Qualified Manufacturing Teams Jobs President
Production Scheduling Engineering Planning Shipping Receiving
Tooling Manufacturing CNC Programming Document Control Inspection
Raw Material Purchasing Finished Goods Inventory Accounting Quality
Assurance Finance Human Resources Qualified Manufacturing Teams
Customer Account Managers Part Manufacturing Form: Q16 Rev -
10/14/00 Organization Chart.xls 5/2/2015SHARDA82 Slide 83
Production Departments with various other departments and their
importance 5/2/2015SHARDA83 Slide 84 PRODUCTION AND OPERATIONS
MANAGEMENT 2. Strategies Responsibility of Production Manger.
Interdependencies of Operation strategies and decision making,
produce to stock and produce to order strategies, concept of using
mixed strategies, advantages of having mixed strategies.
5/2/2015SHARDA84 Slide 85 PRODUCTION AND OPERATIONS MANAGEMENT -
Strategies Learning Objectives Understanding the role of operations
strategy as a source of competitive strength in a global
marketplace Linking marketing strategy to operations strategy
through the use of competitive priorities Distinguish between the
make-to-stock, standardized-services, assembly-to-order, make-
to-order, and customized-services strategies and how they relate to
competitive priorities 5/2/2015SHARDA85 Slide 86 PRODUCTION AND
OPERATIONS MANAGEMENT - Strategies Strategic planning Strategic
planning is the process of thinking through the current mission of
the organization and the current environmental conditions facing
it, then setting forth a guide for tomorrows decisions and results.
Operations strategy Operations strategy is concerned with setting
broad policies and plans for using the resources of the firm to
best support the firms long-term competitive strategy.
5/2/2015SHARDA86 Slide 87 POM - Strategies Operations Management
Decisions Consider first the Strategic (long-term) decisions Well
the relevant points over here are: - How will we make the product?
- Where do we locate the facility or facilities? - How much
capacity do we need? - When should we add more capacity? - The
other types of decisions would be- -Tactical (intermediate-term)
decisions: - Well, the relevant points over here are- - How many
workers do we need? - When do we need them? Should we work overtime
or put on a second shift? When should we have material delivered?
Should we have material delivered? Should we have a finished goods
inventory? 5/2/2015SHARDA87 Slide 88 POM - Strategies Operational
Planning & Control (short-term) decisions: Well, the relevant
points over here are- What jobs do we work on today or this week?
Who do we assign to what tasks? What jobs have priority? An
operations strategy can be viewed as part of a planning process
that coordinates operational goals with those of the larger
organization. Since the goals of the larger organization change
over time, the operations strategy must be designed to anticipate
future needs. 5/2/2015SHARDA88 Slide 89 POM - Strategies An
operations strategy involves decisions that relate to: the design
of a process; and, the infrastructure needed to support the
process. Process design includes: 1) the selection of appropriate
technology; 2) sizing the process over time; 3) the role of
inventory in the process; and, 4) locating the process.
Infrastructure decisions involve: 1) the logic associated with the
planning and control systems; 2) quality assurance and control
approaches; 3) work payment structures; and, 4) the organization of
the operations function. 5/2/2015SHARDA89 Slide 90 POM - Strategies
Now then, what is a strategy? Well, simply stated:- Strategy is a
common vision that unites an organization, provides consistency in
decisions, and keeps the organization moving in the right
direction. Strategy formulation consists of four basic steps:
Defining a primary task. The primary task is usually expressed in a
firms mission statement. The mission may be accompanied by a vision
statement that describes what the organization sees itself
becoming. 5/2/2015SHARDA90 Slide 91 POM - Strategies Assessing core
competencies. Core competency is what a firm does better than
anyone else, its distinctive competence. Based on experience,
knowledge, and know-how, core competencies represent sustainable
competitive advantages. For this reason, products and technologies
are seldom core competencies. 5/2/2015SHARDA91 Slide 92 POM -
Strategies The advantage they provide is short-lived, and other
companies can readily purchase, emulate or improve on them. Core
competencies are more likely to be processes, a companys ability to
do certain things better than a competitor. Thus, while a
particular product is not a core competence, the process of
developing new products is. Core competencies are not static. They
should be nurtured, enhanced, and developed over time. Close
contact with the customer is essential to ensuring that a
competence does not become obsolete. 5/2/2015SHARDA92 Slide 93 POM
- Strategies Positioning the firm. No firm can be all things to all
people. Strategic positioning involves making choices choosing one
or two important things on which to concentrate and doing them
extremely well. A firms positioning strategy defines how it will
compete in the marketplace-what unique value it will deliver to the
customer. An effective positioning strategy considers the strengths
and weaknesses of the organization, the needs of the marketplace,
and the position of competitors. 5/2/2015SHARDA93 Slide 94 POM -
Strategies Senior management, with input and participation from
different levels of the organization, develops a corporate
strategic plan. 5/2/2015SHARDA94 Slide 95 5/2/2015SHARDA95
Questions? Slide 96 Responsibility of Production Manger
5/2/2015SHARDA96 Slide 97 Production Manager Production managers
coordinate all the people and equipment involved in the
manufacturing process. Production managers oversee all stages of
the production process 5/2/2015SHARDA97 Slide 98 Managers must
monitor the Essential Six business principles: Value for customers
organization, competitive advantage, control, profitability, and
ethical practices. A businessand its managers must create a
specific kind of value for customers. Management is responsible for
keeping the company organized. Managers decide what basis the
company will compete on. Managers are responsible for control. They
must know the companys goals and assign tasks that will move
everyone toward those goals. The most basic goal of management is
to make money for the business owners. Managers must hold
themselves to the highest ethical standards. 5/2/2015SHARDA98 Slide
99 Responsibility of Production Manger Production Manger in all
business areas and organizational activities are the acts of
getting people together to accomplish desired goals and objectives.
Production Manger comprises planning, organizing, staffing, leading
or directing, and controlling production aspects an organization or
effort for the purpose of accomplishing a goal. Resourcing
encompasses the deployment and manipulation of human resources,
technological resources, and natural resources. - Because
organizations can be viewed as
systemsplanningorganizingstaffingleadingcontrollingorganizationResourcinghuman
resourcestechnologicalnatural resourcessystems 5/2/2015SHARDA99
Slide 100 Responsibility of Production Manger Production Manger can
also be defined as human action, including design, to facilitate
the production of useful outcomes from a system. This view opens
the opportunity to 'manage' oneself, a pre-requisite to attempting
to manage others in Production Unit 5/2/2015SHARDA100 Slide 101
Responsibility of Production Manger Production Manger: Require an
extensive knowledge of Production Systems, roles and skills.
decisions are generally of a long-term nature decisions are made
using analytic, directive, conceptual and /or behavioral /
participative processes are responsible for strategic / operational
decisions. have to chalk out the plan and see that plan may be
effective in the future. are executive in nature in Middle
management 5/2/2015SHARDA101 Slide 102 5/2/2015SHARDA102 Questions?
Slide 103 5/2/2015SHARDA103 Interdependencies of Operation
strategies and Decision making Slide 104 Decision Making in
Production Operation The common element of the business definitions
is that the quality of a product or service refers to the
perception of the degree to which the product or service meets the
customer's expectations. Quality has no specific meaning unless
related to a specific function and / or object. Quality is a
perceptual, conditional and somewhat subjective attribute.
5/2/2015SHARDA104 Slide 105 Decision Making in Production Operation
5/2/2015SHARDA105 A generic decision-making framework for assigning
resources of a manufacturing system to production tasks. Resources
are broadly defined production units, such as machines, human
operators, or material handling vehicles; and tasks are activities
performed by resources. In the specific context, resources
correspond to individual machines; tasks correspond to operations
to be performed on parts.. Slide 106 Decision Making in Production
Operation 5/2/2015SHARDA106 The framework assumes a hierarchical
structure of the system and calls for the execution of four
consecutive steps to make a decision for the assignment of a
resource to a task These steps are: 1) establishment of
decision-making criteria, 2) formation of alternative assignments,
3) estimation of the consequences of the assignments, and 4)
selection of the best alternative assignment. Slide 107 Decision
Making in Production Operation 5/2/2015SHARDA107 This framework has
been applied to manufacturing unit as an operational policy that
decides what task will be executed on which resource of production.
Simulation runs provide some initial results of the application of
this policy. the policy provides flexibility in terms of system
performance and computational criteria. Slide 108 5/2/2015SHARDA108
Partner Local customization what the people want ? Local
production, Low cost producer? Has a gap in product line
complimented by global brand ? May do all production May lead Joint
Venture into neighboring countries Supplier capability, not cost,
often key Suppliers have production process expertise Slide 109
5/2/2015SHARDA109 Questions? Slide 110 5/2/2015SHARDA110 Process
Analysis Process Flowcharting Types of Processes Process
Performance Metrics Strategies - OBJECTIVES Slide 111
5/2/2015SHARDA111 Process: Is any part of an organization that
takes inputs and transforms them into outputs Cycle Time: Is the
average successive time between completions of successive units
Utilization: Is the ratio of the time that a resource is actually
activated relative to the time that it is available for use Slide
112 5/2/2015SHARDA112 Process flowcharting is the use of a diagram
to present the major elements of a process The basic elements can
include tasks or operations, flows of materials or customers,
decision points, and storage areas or queues It is an ideal
methodology by which to begin analyzing a process Slide 113
Flowchart Symbols Tasks or operations Examples: Giving an admission
ticket to a customer, installing a engine in a car, etc. Decision
Points Examples: How much change should be given to a customer,
which wrench should be used, etc. Purpose and Examples
5/2/2015SHARDA113 Slide 114 Examples: Sheds, lines of people
waiting for a service, etc. Examples: Customers moving to a seat,
mechanic getting a tool, etc. Storage areas or queues Flows of
materials or customers Purpose and Examples Flowchart Symbols
5/2/2015SHARDA114 Slide 115 5/2/2015SHARDA115 Yes No Goof off Go to
school today? Walk to class Drive to school Slide 116
5/2/2015SHARDA116 Single-stage Process Stage 1 Stage 2Stage 3
Multi-stage Process Slide 117 5/2/2015SHARDA117 A buffer refers to
a storage area between stages where the output of a stage is placed
prior to being used in a downstream stage Stage 1Stage 2 Buffer
Multi-stage Process with Buffer Slide 118 5/2/2015SHARDA118
Blocking Occurs when the activities in a stage must stop because
there is no place to deposit the item just completed If there is no
room for an employee to place a unit of work down, the employee
will hold on to it not able to continue working on the next unit
Starving Occurs when the activities in a stage must stop because
there is no work If an employee is waiting at a work station and no
work is coming to the employee to process, the employee will remain
idle until the next unit of work comes Slide 119 5/2/2015SHARDA119
Bottleneck Occurs when the limited capacity of a process causes
work to pile up or become unevenly distributed in the flow of a
process If an employee works too slow in a multi- stage process,
work will begin to pile up in front of that employee. In this is
case the employee represents the limited capacity causing the
bottleneck. Pacing Refers to the fixed timing of the movement of
items through the process Slide 120 5/2/2015SHARDA120 Produce to
stock and produce to order strategies Slide 121 5/2/2015SHARDA121
Make-to-order Only activated in response to an actual order Both
work-in-process and finished goods inventory kept to a minimum
Make-to-stock Process activated to meet expected or forecast demand
Customer orders are served from target stocking level Slide 122
5/2/2015SHARDA122 Operation time = Setup time + Run time Throughput
time = Average time for a unit to move through the system Velocity
= Throughput time Value-added time Slide 123 5/2/2015SHARDA123
Cycle time = Average time between completion of units Throughput
rate = 1. Cycle time Efficiency = Actual output Standard Output
Slide 124 5/2/2015SHARDA124 Productivity = Output Input Utilization
= Time Activated Time Available Slide 125 5/2/2015SHARDA125 Suppose
you had to produce 600 units in 80 hours to meet the demand
requirements of a product. What is the cycle time to meet this
demand requirement? Answer: There are 4,800 minutes (60 minutes/
hour x 80 hours) in 80 hours. So the average time between
completions would have to be: Cycle time = 4,800/600 units = 8
minutes. Slide 126 5/2/2015SHARDA126 Perform activities in parallel
Change the sequence of activities Reduce interruptions Slide 127
5/2/2015SHARDA127 Slide 128 5/2/2015SHARDA128 Slide 129
5/2/2015SHARDA129 Slide 130 Concept of Using Mixed Strategies Many
marketplaces are now highly volatile and demand is difficult to
predict. The acceleration of technological and fashion changes has
additionally resulted in extremely short product life cycles. In
this new environment non-availability means that in the event of
non-supply the particular sales opportunity is lost forever.
Consequently the focus in supply chain management must shift from
the idea of cost as the order winner to responsiveness as the
market winner. The implication is that the emphasis in supply chain
management in the future must be on agility. 5/2/2015SHARDA130
Slide 131 Concept of Using Mixed Strategies Agility implies the
ability of the supply chain to react quickly to changes in market
demand be they changes in volume, variety or mix. The
characteristics of the agile supply chain have been described
elsewhere, but it is useful to contrast agility with the philosophy
of lean operations. Lean thinking is most often associated with the
car assembly industry and Japan in particular. Agility &
leanness are not opposing philosophies, rather they work best in
certain contexts. 5/2/2015SHARDA131 Slide 132 Concept of Using
Mixed Strategies Manufacturing companies usually have a mix of
discrete and flow type manufacturing processes. An alternative to
implementing multiple modules like flow and discrete for
manufacturing, which may make the implementation complex, the
process-mix can be handled to a large extent using Discrete
Manufacturing module alone, resulting in lowering of implementation
and support cost. The shop floor operations of any manufacturing
entity are normally a mixed bag of discrete, flow, and processing
at the outside vendor (subcontracting) etc. Implementing multiple
modules of Oracle (Flow Manufacturing, Discrete Manufacturing) to
handle the operations will make the implementation very complex and
costly. Also the data and setup requirements for modules like flow
manufacturing are quite demanding. This paper provides an
alternative option to model the mixed mode manufacturing setup
(combination of OSP, in-house discrete, in-house cell
manufacturing) using conventional WIP and BOM modules, and simplify
the setup by not having to use Flow or Network routings. This will
reduce the implementation and maintenance cost but will give fairly
accurate results. 5/2/2015SHARDA132 Slide 133 5/2/2015SHARDA133 Mix
mode manufacturing Concept and Relevance: The key to success in
manufacturing today is its agilitythe ability to precisely
anticipate and swiftly respond to fluctuating market demands. As
the supply chain becomes more demand- oriented, manufacturers are
under pressure to bring products to market in the shortest span of
time, at the right price, and adhering to the customers
specifications. Moreover, during hard economic times, organizations
scramble to find business, any business to help ride out of storm
is welcome. To achieve this, more and more companies are pursuing
mixed- mode manufacturing and employing different production
strategies for different product lines. One will therefore mostly
find that the shop operations are a combination of different
manufacturing techniques like discrete manufacturing, repetitive
manufacturing, outside processing, single piece flow manufacturing,
etc. Slide 134 Concept of Using Mixed Strategies DISTINGUISHING
ATTRIBUTES / LEAN SUPPLY / AGILE SUPPLY Typical Products /
Commodities / Fashion Goods Marketplace Demand / Predictable /
Volatile Product Variety / Low / High Product Life Cycle / Long /
Short Customer Drivers / Cost / Availability Profit Margin / Low /
High Dominant Costs /Physical Costs / Marketability Stock out
Penalties / Long Term / Contractual Immediate and Volatile
Purchasing Policy / Buy Goods / Assign Capacity Information
Enrichment / Highly Desirable / Obligatory Forecasting mechanism /
Algorithmic /Consultative 5/2/2015SHARDA134 Slide 135 Single Piece
Flow: In this kind of manufacturing process, pieces flow in single
piece for each operation rather than lots. Once the first operation
is complete on that piece, it has to be moved on for the second
operation and the next piece is moved on for first operation.
5/2/2015SHARDA135 Slide 136 Advantages of having mixed strategies.
Synchronous Manufacturing is in direct opposition with traditional
manufacturing approaches characterized by use of economic order
quantities, high capacity utilization, and high inventory. In
changing from a traditional environment to one of synchronous
production, cultural issues will emerge quickly, as well as
resistance to change. A managing change program is needed to
accompany the effort. Piecemeal approaches generally do not work or
achieve significant results. Quite often we will hear top
executives claiming to be using Synchronous Manufacturing
strategies and when we visit the site, we will discover a pilot
cell off in a corner, or a lean manufacturing environment instead.
Wide scale use produces wide scale results, and very little true
results will be achieved if Synchronous Manufacturing is treated as
a "fad of the month." However, just like anything else, Synchronous
Manufacturing is no panacea, nor should it be embraced as a
religion. It is an operational strategy that, if implemented
properly, will provide a new dimension to competing: quickly
introducing new customerized high quality products and delivering
them with unprecedented lead times, swift decisions, and
manufacturing products with high velocity. 5/2/2015SHARDA136 Slide
137 Advantages of having mixed strategies. The benefits generally
are higher flexibility, lower costs, higher quality, lower
inventory, and shorter lead times. The characteristics of
synchronous processes are: Make to order Synchronized production
Just-In-Time materials/pull scheduling in early stages Synchronized
scheduling in later stages Short cycle times Highly flexible and
responsive processes Highly flexible machines and equipment Quick
changeover Continuous flow work cells Collocated machines,
equipment, tools and people Compressed space Multi-skilled
employees Empowered employees High first-pass yields with major
reductions in defects 5/2/2015SHARDA137 Slide 138 Pit Falls A lot
of ERP packages have separate modules for discrete, flow,
repetitive, etc. In order to map the shop floor operations ideally,
one many need to implement a plethora of modules. This makes the
implementation costly due to high licensing, consulting and
maintenance cost, and training cost. Also, the implementation
timelines will go up and benefits of accrual of the implementation
gets delayed. The master data requirements and the accuracy of data
that these multiple modules demand are also very high and it is
quite difficult in lot of cases to really generate that data with
the existing processes and systems. One has to really do due
diligence on whether we really need that level of accuracy in terms
of replicating the exact shop floor scene in Oracle. Can we
sacrifice some accuracy in terms of replicating the shop floor
model exactly in our ERP system, but reap the benefits like a
simpler and cost effective implementation with a non complex system
to handle during its life cycle. 5/2/2015SHARDA138 Slide 139
5/2/2015SHARDA139 CASE STUDY : Dr.Chowdary has been in the field of
hospital administration for last 18 years. Recently he has been
posted as chief of a district Head Quarters Hospital. After
assuming the position, Dr.Chowdary came to know that everything is
not good at the hospital and came across certain critical problems.
Some of them are. (a) Storage of medical and non-medical items (b)
Poor patient feeding-patients have complained about the quality of
food. Production and Operations Management (c) Non availability of
Ambulance, when needed. (d) Break down of X-ray facility since long
time. Dr.Chowdary decided to take assistance of a management hand
to solve the above problems and many more small problems that
bother him in every day business. Dr.Chowdary gave an
advertisement. Called candidates for interview and could not
satisfy from the answers given by the candidates. One fine morning
a neatly dressed young man came to Dr.Chowdary and told him that he
is useful to Dr.Chowdary in solving the problems in the Hospital.
He told Dr.Chowdary that he is working as a production manager in
local medium sized factory. Dr.Chowdary laughed at him and said,
You see young man in spite of my 18 years of experience in the
hospital, I am not in a position to understand their administrative
problems. Q. You being a production manager of a manufacturing
concern, how do you help me? Think that you are the young man who
has approached Dr.Chowdary and explain how do you answer
Dr.Chowdary. Slide 140 5/2/2015SHARDA140 Questions? Slide 141
5/2/2015SHARDA141 Slide 142 5/2/2015SHARDA142
