Final Book Report Revised

8/3/2019 Final Book Report Revised

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Types of Business Activities

1. Production/Manufacturing-

Production is the process by which raw materials and other inputs are converted intofinished products. It involves receiving inputs in the form of materials, personnel, capital

utilities and information .These inputs are changed into a conversion system into desired

products and services which are called the outputs.

Example:

2. Service

An Industry that comprises of companies that primarily earns revenue through providing

intangible products or services.

Example: Airline, hotel etc.

3. Trading

The term trading implies for an industry which involves pure trading of goods and

services in exchange of money. The Company in this kind of a business purchases the

goods required in bulk from one dealer and sells it to the customer.

Example: Buying and selling of shares and stocks, relation between whole seller and

retailer.

1

INPUT

1. Custome

rs

PROCESS

Capital

Labor

OUTP

UT

1. Product


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Evolution of Operations

Production is the term which precedes operations management. The system and process in a

production setup are not only complex they are hazardous also. There is a greater investment of

the organization in terms of resources involved in manufacturing. All these made it necessary toensure a certain amount of discipline, standardization of processes, proper supervision and thus it

became essential for many owners of the business to make it more systematic.

Development of Factory System of Production: Until the emergence of concept of

Manufacturing there was no such thing as management .It is true that for the most part these

people were owner of business and did not regard themselves as managers as well.

The Development of Larger Corporation:The development of the larger corporationwith many owners made it necessary to hire people from outside to operate business at various

levels.

Growth of Service Sector: The traditional view of manufacturing management began in

8th century when Adam Smith recognized the economic benefits of specialization of labor.

Fredrick Taylor implemented Smith's theories and crusaded for scientific management

throughout the vast manufacturing complex of his day. This traditional view prevailed till about

1930s.

Production management became more widely accepted term from the 1930s through the 1950s.

As Fredrick Taylor's work became more widely known, managers developed techniques that

focused on economic efficiency in manufacturing .However in the 1970s, as the service sector

became more prominent the change in the term from "production" to "operations" management

came into existence.

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Operations

Operations are purposeful actions or activities which are done methodically as a part of a plan of

work by process that is designed to achieve the pre-decided objectives.

Jobs ortasks comprising of one or more elements or subtasks, and which are performed typically

in one location. Operations transform resource ordata inputs into desired goods, services, or

results, and create and delivervalue to the customers

Example:

1) Airline Industry

At an airport, the operation in which customers are involved is processing our ticket and

baggage, moving from ticket desk through security check points and onto your awaiting plane.

This system is planned and organized by an operations manager

2) Financial Consultancy

A financial advisor gathers and provides information to the client and assist in developing a

financial plan. It also involves feedback to control the process.

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http://www.businessdictionary.com/definition/job.htmlhttp://www.businessdictionary.com/definition/task.htmlhttp://www.businessdictionary.com/definition/task.htmlhttp://www.businessdictionary.com/definition/element.htmlhttp://www.businessdictionary.com/definition/location.htmlhttp://www.businessdictionary.com/definition/location.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/data.htmlhttp://www.businessdictionary.com/definition/data.htmlhttp://www.businessdictionary.com/definition/inputs.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/result.htmlhttp://www.businessdictionary.com/definition/create.htmlhttp://www.businessdictionary.com/definition/value.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/task.htmlhttp://www.businessdictionary.com/definition/element.htmlhttp://www.businessdictionary.com/definition/location.htmlhttp://www.businessdictionary.com/definition/resource.htmlhttp://www.businessdictionary.com/definition/data.htmlhttp://www.businessdictionary.com/definition/inputs.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/services.htmlhttp://www.businessdictionary.com/definition/result.htmlhttp://www.businessdictionary.com/definition/create.htmlhttp://www.businessdictionary.com/definition/value.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/job.html


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Operations in management

Operations management is an area of business concerned with the production of goods and

services, and involves the responsibility of ensuring that business operations are efficient interms of using as little resource as needed, and effective in terms of meeting customerrequirements. It consists of tactics such as scheduling work, assigning resources includingpeople, equipment, managing inventories,assessing quality standards, process types decisionsetc. In short it is understood as the process whereby resources of inputs are converted into moreuseful products.

Example of operations management in various fields:

The physical distribution of items to the users or customers.

The arrangement of collection of marketing information.

The selection and the recruitment process.

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Understanding the difference between production

and operation management

Sr no Production Management Operation Management

1. Origin:

Production Management is more often used

where tangible goods are produced

Example: Production of cell phones, cars

etc

Operations Management is more

frequently used where various inputs

are transformed into intangible services

Example: It will cover service

organization such as banks, airlines,educational institutions etc.

2. Involvement:

Production management is just a subset of

operations management

Operations management involves more

than just production

3. Tangibility:

Production Management is more often used

where tangible goods are produced

Example: Production of cell phones, cars

etc.

Operations Management is more

frequently used where various inputs

are transformed into intangible services

Example: It will cover service

organization such as banks, airlines,

educational institutions etc

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A Common example distinguishing production and

operations in a FMCG Sector

A

6

Demand

Order

Processi

ng

Product

Planning

Process

Of

Manufacturi

ng

Quality

Inspectio

n

Packing

F.G.

Inventor

y

R.M

Inventory

Procurement

of R.M

Finished Goods

Inventory

After sales

service

Delivery

Invoices


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Characteristics of Modern Operations Function

The production and operations management of today present certain characteristics which makeit look totally different from what it was in the past. Specifically, todays production system ischaracterized by at least four features which are given below:

1) Manufacturing as Competitive Advantage:

In the past Production Management was considered to be like any other function of theorganization. When demand was high and capacities were inadequate, the concern was tosomehow muster all inputs and use them to produce goods which would be grabbed off theshelves.However, a host of new management techniques were employed by companies to gain acompetitive edge in terms of price, product price and ultimately profit. Some of thesetechniques are Total Quality Management (TQM), Time Based Competition, BusinessProcess Reengineering (BPRE), Just In Time (JIT), Focused Factory, Flexible ManufacturingSystems (FMS), Computer Integrated Manufacturing(CIM) and the Virtual Corporation .

Case Study:

Making products cheaper by better production management:

Walmart has an increased competitive edge in the market due to its productionmanagement techniques. Due to tie ups with its suppliers Walmart has managed to offerproducts at extremely low prices and hence virtually run other supermarket stores out ofbusiness.

2) Services Orientation:

The service sector is gaining greater relevance these days. The production system, thereforeneeds to be organized keeping in mind the peculiar requirements of the service component.The entire manufacturing needs to be geared up to serve:

I. Intangible and perishable nature of the services.

II. Constant interaction with clients and customers.

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III. Small volumes of production to serve the local markets.

IV. Need to locate facilities to serve local markets.

Case Study:

Service oriented customer retention campaign

A recent Media Partners Asia (MPA) report has suggested that digital pay TVpenetration in India may grow from 10% in 2008 to 33% by 2013, and 42% by2018.Tata Sky today has nearly 5 million subscribers out of 22 million in a market ofseven players. The recent Tata Sky campaigns have focused more on the servicesthat are available with the use of its product, rather than marketing conventionalcable tv. While there are many Direct to Home cable service providers, Tata Skyprobably provides the same TV quality that its competitors do but holds a distinctedge in the market due to the added services it provides.

3) Disappearing Smokestacks

Protective labor legislation, environmental movements and the understanding that beingenvironment friendly would mean earning more good will from their customers andprospective customers has now resulted in companies worldwide striving for a greenerimage. Production and manufacturing plants today are more environment friendly.

Case Study:

Striving for a greener planet

In October 2005, Wal-Mart announced it would implement several environmentalmeasures to increase energy efficiency. The primary goals included spending$500 million a year to increase fuel efficiency in Wal-Marts truck fleet by 25%over three years and double it within ten, reduce greenhouse gas emissions by20% in seven years, reduce energy use at stores by 30%, and cut solid waste fromU.S. stores and Sams Clubs by 25% in three years. CEO Lee Scott said that Wal-Mart's goal was to be a "good steward for the environment" and ultimately useonly renewable energy sources and produce zero waste.

4) Small is beautiful

Companies are now moving away from the age old paradigm of conventional massproduction by advocating intermediate technology based on smaller working units,community ownership, and regional workplaces utilizing local labour and resources. Thisemerging trend has led to many tiny manufacturing units sprouting up and providingspecialized and customized services and products.

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Case Study:Outsourcing The latest trend

During the course of a software project companies who are contracted to deliverthe project hire smaller companies to provide customized niche services. WhenEtisalat wanted to set up a call center in Mumbai, they hired Tech Mahindra forthe job. Tech Mahindra hired Siebel for the CRM portion of the project and hiredAvaya Global Connect for the voice infrastructure. Avaya Global Connect in turnhired Interact CRM as consultants to implement the software interface for thevoice infrastructure.

Role of an Operations Manager

THE OPERATIONS MANAGER plays a very important role. His duties do not start and end

with the production. He is involved in all the aspects of operations i.e. right from deciding the

location of his factory till sales of the product manufactured. The entry of MNCs in almost every

sphere of industry has created a sense of competition in the Indian industry. And facing this

competition is possible only when managers are capable of multi tasking. They should also bewilling to take up new responsibilities.

They need to take strategic, operating and controlled decisions.

1) Strategic decisions:

These decisions relate to products, processes and manufacturing facilities. They havelong term significance for the organization.

-Developing production plans including process design

-Selecting and managing production technology

-Planning the arrangement of facilities

-Planning for the optimal distribution of scarce resources among product lines or businessunits

-Answering The How Much and Where questions about production capacity.

2) Operating decisions

These relate to planning production to meet demand. They should provide profits for theorganization.

-Aggregate planning and master production scheduling

-Planning and controlling finished goods inventory

-Planning materials and capacity requirements

-Decisions on what to produce and when?

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-Managing all facets of material systems.

3) Controlled decisions

-These relate to planning and controlling day to day activities

-Planning for effective and efficient use of human resources in operations

-Planning and controlling the quality of products and services

-Planning and controlling projects

Hierarchy

10

Operations Manager

Engineering Maintenance Ground Operations Flight Ope

New Equipment

Modification of EquipmentCommunications Engineering

Station MaintenanceFood and Commissary

Line MaintenanceOverhaul

Flying

CommunicationsDispatching


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SOME LINE AND STAFF JOBS IN OPERATIONS MANAGEMENT

Organizational

Level Manufacturing Industries Service Industries

-------------------------------------------------------------------------------------------

Upper VP of manufacturing VP of operations (airline)

Regional manager of manufacturing Chief administrator

Middle Plant Manager Store Manager

Program Manager Facilities manager

Lower Department Supervisor Branch Manager

Shift Supervisor Department Supervisor

Chief Crew Assistant Manager

Staff Productions Controller System & procedures

Analyst

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Materials manager Purchasing Agent

Quality Manager Inspector

Work Method Analyst Dietician

(hospital)

Process Engineer Customer Service

Manager

Recent Trends in Operations Management

1. Global Market Place:

Globalization has compelled many manufacturing firms to have operations in countrieswhere they have certain economic advantage. As a result there has been a steepcompetition amongst the firms to make their products cost effective.

Example: Many firms across the globe have their manufacturing operations outsourcedto China.

2. Operations Strategy:

More firms these days are emphasizing on strengthening their operations strategy having

realized its importance in the overall success of business.

Example: Just-in-time (JIT) is an inventory strategy that strives to improve a business'sreturn on investment by reducing in-process inventory and associated carrying costs. TheJIT inventory system focus is having the right material, at the right time, at the rightplace, and in the exact amount.

3. Total Quality Management(TQM):

TQM is a management concept coined by W. Edwards Deming. The basis of TQM is toreduce the errors produced during the manufacturing or service process, increasecustomer satisfaction, streamline supply chain management, aim for modernization ofequipment and ensure workers have the highest level of training. One of the principalaims of TQM is to limit errors to 1 per 1 million units produced.

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TQM is a way of thinking about goals, organizations, processes and people to ensurethat the right things are done right first time. This thought process can change attitudes,behavior and hence results for the better.

The total in TQM applies to the whole organization. Therefore, unlike an ISO 9000initiative which may be limited to the processes producing deliverable products, TQMapplies to every activity in the organization. Also, unlike ISO 9000, TQM covers the softissues such as ethics, attitude and culture.

The principles of quality management:

Customer-focused organization, Leadership, Involvement of people, Process approach,System approach to management, Continual improvement, Factual approach to decisionmaking, Mutually beneficial supplier relationships

Flexibility:

Flexibility (Agile/Lean Manufacturing) in manufacturing means the ability to deal withslightly or greatly mixed parts, to allow variation in parts assembly and variations inprocess sequence, change the production volume and change the design of certainproduct being manufactured.

A flexible manufacturing system (FMS) is a manufacturing system in which there issome amount of flexibility that allows the system to react in the case of changes, whetherpredicted or unpredicted. This flexibility is generally considered to fall into twocategories, which both contain numerous subcategories.

The first category, machine flexibility, covers the system's ability to be changed to

produce new product types, and ability to change the order of operations executed on apart. The second category is called routingflexibility, which consists of the ability to usemultiple machines to perform the same operation on a part, as well as the system's abilityto absorb large-scale changes, such as in volume, capacity, or capability.

Most FMS systems consist of three main systems. The work machines which are oftenautomated CNC machines are connected by a material handling system to optimize partsflow and the central control computer which controls material movements and machineflow.

The main advantages of an FMS are its high flexibility in managing manufacturing

resources like time and effort in order to manufacture a new product. The best applicationof an FMS is found in the production of small sets of products like those from a massproduction.

Advantages:

Faster, Lower- cost/unit, Greater labor productivity, Greater machine efficiency,Improved quality, Increased system reliability, Reduced parts inventories, Adaptability to

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CAD/CAM operations. However the only limitation involved is high cost of initialinvestment.

4. Time Reduction:

Cutting down on the delivery cycle time provides a firm with an added advantage over

its competitor and is a necessary tool for survival in todays fast placed and highlycompetitive business environment.

Delivery cycle time (DCT): Delivery cycle time may be defined as the amount of timefrom when an order is received from a customer to when the completed order is shippedis called delivery cycle time. This time is clearly a key concern to many customers, whowould like the delivery cycle time to be as short as possible. However in order to improveon delivery cycle time it is necessary to improve on the Manufacturing cycle time(MCT).

Manufacturing cycle time (MCT):The amount of time required to turn raw materials in

to finished goods is called manufacturing cycle time.

MCT = Process time + Inspection time + Move time + Queue time

Process time:Process time is the amount of time work is actually done on the product.

Inspection time:Inspection time is the amount of time spent ensuring that the product

is not defective.

Move time: Move time is the time required to move materials or partially completed

products from workstation.

Queue time: Queue time is the amount of time a product spends waiting to be worked on,

to be moved, to be inspected, or to be shipped.

Only one of these four activities adds value to the product and that is process time. The

other three activities (inspecting, moving and queuing) add no value and should be

eliminated as much as possible.

5. Technology:

Advancement in technology has led to development of a vast array of new products,processes, materials and components. Automation, computerization, information andcommunication technologies have revolutionaries the way companies operate.Technological advancements have helped in bringing down the cost and time spent on aproduct/business development.

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Example: Industrial automation has helped to cut down on manufacturing cycle time;

video conferencing has helped to cut down on cost and time spent on business travel trip.

6. Worker Involvement:

It looks after assigning responsibilities for decision making and problem solving at lower

levels in the work organization. It helps in employee involvement at a larger scale.Higher the employee involvement in the organization, better the results for the company.

Example: The BPO Industry nowadays have a level 1 Quality control team, they are the

members within a team who looks at the quality and give suggestions for the required

improvement, thus ensuring every individual comes up to the mark and also not avoid to

face the music with the Quality lead.

7. Re-Engineering:

Its a trend involving drastic improvements to improve the performance of a firm. Itinvolves the concept of starting from scratch in redesigning the business process. The re

engineering team must be observant. It must work with the customers. After

understanding what the customer requirements are, it should examine what the process

flow is. It will indicate the direction for the new process. Thus the fundamental

rethinking and radical redesign of business processes to achieve dramatic improvements

in critical contemporary measures of performance, such as cost, quality, service, and

speed is called as Re-Engineering.

Example: Many IT industries have come up with the Outsourcing facility in it. It was a

new concept in early 2000-01 with only few companies giving the facility of providingCustomer Care as an outsourced service. But off late many IT giants have also come up

with this concept.

8. Environmental issues:

Nowadays, each and every person has realized the importance of nature. This impact has

lead todays Operation manager to think more about pollution control and waste disposal

which are key issues in protection of environmental and social responsibility. This makes

the manager to emphasize on reduction of waste, recycling of waste, use of less toxicchemicals and use of biodegradable materials.

A good example could be seen by nowadays mobile service providers which are opting

for e-billing. Also an advertisement shown by the service provider Idea for lessening

the use of papers could be because of the environmental issue of prevention of cutting

down the trees.

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9. Corporation Downsizing (Rightsizing):

Downsizing has been forced on the firms to shed their obesity. This has become

necessary due to competition, need for improved profit and for higher dividend payment

to shareholders. Downsizing refers to the permanent reduction of a company's workforce

and is generally associated with corporate reorganization, or creating a "leaner, meaner"

company. In ordinary terms, downsizing is associated with the layoffs in industries.

Any form of acquisition or layoff could fit into the example of Rightsizing

10.Supply-Chain Management:

It deals with the management of supply-chain, from suppliers to final customers. Supply

chain is the system by which organizations source, make and deliver their products or

services according to market demand. Supply chain management operations and

decisions are ultimately triggered by demand signals at the ultimate consumer level.

Example: Materials flow downstream, from raw material sources through amanufacturing level transforming the raw materials to intermediate products (also

referred to as components or parts). These are assembled on the next level to form

products. The products are shipped to distribution centers and from there on to retailers

and customers.

11. Lean Production:

Production systems have become lean production systems which use minimal amounts of

resources to produce a high volume of high quality good with some variety. These

systems use flexible manufacturing systems and multi-skilled workforce to haveadvantages of both mass production and job production

Example: Many IT industries nowadays are hiring professional for working as a

Software Developer with an added skill of Software Testing. Also they prefer job seekers

having knowledge of more than one Computing Language. This in turn is kind of a Lean

Production system.

***********************************************************************

References:

Books: Production And Operations Management K. Aswathappa & K. Shridhara Bhatt

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URL:

http://www.school-for-champions.com/competition/tqm.htm

http://economictimes.indiatimes.com/Opinion/Comments-Analysis/Level-playing-field-

is-essential-Tata-Sky-MD/articleshow/5704406.cms

http://en.wikipedia.org/wiki/Wal-Mart

http://www.thegreeno.com/green-companies.html

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http://www.thegreeno.com/green-companies.htmlhttp://www.thegreeno.com/green-companies.html

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Final Book Report Revised