The document discusses operations management, which involves managing an organization's resources and production system to convert inputs into products or services. It outlines the key departments in an organization and differences between manufacturing and service operations. Factors like global competition, technology, and social responsibility impact operations management. The evolution of the field is also summarized, from the industrial revolution to modern trends like lean production and outsourcing. Decision-making approaches in operations management include using models, quantitative analysis, trade-off analysis, and prioritizing factors.
3. PROCESSING/OPERATIONS
INPUT OUTPUT
“Operations Management is the management of an
organization’s productive resources or its
production system, which converts inputs into
products or services.”
The essence lies in “adding value”
4. VALUE ADDITION
Difference between the cost of input and value of
output
The value of output is measured by the prices that
the customers are willing to pay for those goods or
services
5. Difference between Manufacturing and Service
Organizations
Major points of differentiation are as follows:
1. Degree of Customer Contact
2. Uniformity of Input
3. Uniformity of Output
4. Measurement of Productivity
5. Production and Delivery
6. Quality Assurance
7. Amount of Inventory
8. Output
6. Factors Affecting Operations Management
Global Competition
Quality, customer service and cost challenges
Rapid expansion of advanced technologies
Growth of service sector
Social Responsibility issues
Scarcity of capital, materials etc.
7. Evolution of Operations Management
Following are the historical developments that
impacted evolution of Operations Management
The Industrial Revolution
Scientific Management
The HR Movement
Decision Models and Management Science
Influence of Japanese Manufacturers
Trends in Business
Other Important Trends
8. Industrial Revolution
Era of pre-1700: Age of Cottage Systems
Industrial Revolution (1700, England)
Substitution of human
power with machines.
Ample supplies of coal and iron ore
Development of steam engine and electricity
Emergence of other industries and more factories.
Economies of scale was observed
Opportunities for jobs
Establishment of
factory system
9. Post- Civil War Period
Post Civil war period set the platform for great
expansion of production capacity
Large workforce for rapidly developing industries:
Abolition of slave labour, migration of farmers
from rural to urban areas, influx of immigrants
during 1865-1900
Development of extensive rail lines- effective and
economic transportation system
All the above factors played pivotal role in
production explosion of the early 20th century
10. Scientific Management
Father of Scientific Management: Frederick Winslow
Taylor- emphasized on maximising output
Science Management: Observation, measurement,
analysis and improvement of work methods.
Thrust on identifying the best method for doing each
job, training of workers, planning, cooperation
between management and workers.
11. Human Relations and Behavioralism
Earlier workers were forced to work under rigid
conditions and controls
Emphasis was laid on the human motivation.
Hawthorne studies conducted by Elton Mayo
established the notion to encourage employees.
Theory X and Theory Y approach introduced by
Douglas McGregor
12. Decision Models and Management Science
The factory movement was accompanied by the
development of several quantitative techniques (inventory
management, sampling and quality control)
WW-II generated immense pressures on manufacturing
output.
After the war, efforts to develop and refine quantitative
tools for decision making continued.
Operations research was developed to address management
issues.
13. It uses quantitative techniques, models to evaluate
alternatives and provide an optimal solution for
informed decision making
Following are its characteristics:
1) Problem solving and decision making approach
2) Draws techniques from science
3) Builds a model for experiment
4) Extensive use of computers
14. Influence of Japanese Manufacturers
Many Japanese manufacturers developed and
refined management practices that increased their
productivity and quality of products
Focussed on continuous improvement, workers
empowerment and achieving customer satisfaction.
Approaches like JIT, Kaizen etc were introduced
15. Trends in Business
Information technology has had huge impact on the ways an organization manages
operations.
Operating decisions can be made more quickly because of more information and
easy access to data
Eg: Enterprise Resource Planning (SAP, PeopleSoft, Oracle)
Communication technologies have helped to manage international affairs easily.
E-commerce and E-business
Management of technology (medical diagnosis, production planning and
scheduling, data processing, communication)
Globalization: NAFTA, GATT
Agility: Ability of an organization to respond quickly to demands or opportunities
Outsourcing: Obtaining a product or service from outside the organization.
16. Other Important Trends
Six Sigma: Process for reducing costs, improving
quality and increasing customer satisfaction.
Total Quality Management
Lean Productions
17. Scope of Operations Management
Forecasting
Capacity planning
Location planning
Facility planning
Selection of technology
Managing inventory
Scheduling
Motivating and Training Employees
18. Decision Making
Operations managers make a number of key
decisions like:
What
What resources/what amounts
When
Needed/scheduled/ordered
Where
Work to be done
How
Designed/ Resource allocation
Who
To do the work
19. General Approaches to Decision Making
The decisions involve many possible alternatives that can
affect the profitability of the organization.
To take the aforesaid decisions, various tools are
available to the managers.
These include:
Models
Quantitative Approaches
Analysis of Trade-offs
Systems Approach
Establishing Priorities
Ethics
20. Models
A model is an abstraction of reality.
– Physical (toy cars, globe etc)
– Schematic (graphs, blueprints, charts etc)
– Mathematical (EOQ model, transportation model)
What are the pros and cons of models?
21. Advantages of Models
Models omit unimportant details so that attention
can be concentrated on the important aspects of a
situation.
Easy to use
Less expensive than dealing with the actual situation
Increase understanding of the problem
Serves as a consistent tool
Provides a standardized format for analyzing a
problem
22. Limitations of Models
Models can be incorrectly applied and the results
misinterpreted
Use of models do not guarantee good decisions
23. Quantitative Approaches
Attempt to obtain mathematically optimal solutions
to managerial problems
Linear Programming (allocation of resources)
Queuing Techniques (analyzing situations in which
waiting lines form)
Inventory Models (control inventories)
Project Models (PERT and CPM to coordinate large
projects)
24. Tradeoffs
Decision makers deal with decisions by listing the
advantages and disadvantages of a course of action
to understand the consequences of the decision.
This helps to “net out” the potential impacts of the
trade-offs on their decision.
Eg: Cost of equipment vs benefits
Increased cost of storing inventory vs meeting
customer demands
25. Establishing Priorities
Certain factors are more important than other
factors.
Manager should examine each situation, searching
for the factors that will have the greatest impact and
give them highest priority.
Pareto Principle: A few factors account for a high
percentage of the occurrence of some events.
26. Systems Approach
System : A set of interrelated parts that must work
together.
“The whole is greater than the sum of its individual
parts”
27. Ethics
In making decisions, managers must consider how their decisions
will affect shareholders, management, employees, customers,
community and the environment.
Financial statements (represent information accurately)
Safety of Workers (adequate training, maintaining equipment in
good working condition)
Quality (avoiding hidden defects)
Environment (not harming the environment)
Community (not affecting the quality of life of the community)
Avoiding false pretences
Workers’ Rights (dealing with workers’ problems quickly and fairly)
