MBC L1 - 3

Production/Operations Management

• It 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 policies of the organization.

Production/Operations Management

• part of an organization, which is concerned with the transformation of a range of inputs into the required having the requisite quality level.

Production Management

• the set of interrelated management activities, which are involved in manufacturing certain products.

Operations Management

• interrelated management activities involved in services management.

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

• activities listed under production and operations management functions.

Production and Operation Management (POM)

• is the management of an organization’s production system.

Production System

• takes inputs and converts them into outputs.

Conversion Process

• is the predominant activity of production system.

Operations manager

The primary concern of an _____ is activities of the conversion.

Production

• it involves manufacturing of a tangible product.

• Used in the narrow sense.

• Applied to manufacturing organizations, such as industry.

• It will have closing stock at the end of an accounting year.

• Demand for product is regular.

Operation

• involves rending of kind of services, such as electricity, cooking gas, etc.

• Used in a broad sense.

• Applied to non-manufacturing organizations, such as bank, insurance, agriculture, etc.

• There is nothing like closing stocks.

• Demands for services fluctuate time to time.

Production

• 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.”

• It’s a value addition process.

Production

• Edwood Buffa defines it as “a process by which goods and services are created.”

Production System

• it’s that part which produces products of an organization’s.

• 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.

1. It has an objective.

2. It transforms the various inputs into outputs.

3. It does not operate in isolation from the other organization system.

4. There exists feedback about the activities (which is essential to control and improve system performance).

Production System characteristics:

Production Management

E. S. Buffa defines it as “it 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.”

Produce goods of right quality and quantity at the right time and right manufacturing cost

Objective of production management.

Right Quality

• product established based upon the customer’s needs.

• It is not necessarily “best quality.”

• It is determined by the cost of the product and technical characteristics as suited to the specific requirement.

Right Quantity

• manufacturing organization should produce the product in the right number.

• If they are produced in excess of demand, capital will block up in the form of inventory and if quantity is produced in short of demand, it leads to shortage.

Right Time

• timeliness of delivery is one of the important parameter.

Right Manufacturing Costs

• are established before the product is actually manufactured.

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 orgs, these products are physical goods while in others, it is service.

• Examples are bus and taxi services, tailors, hospital, etc.

Operating System

Everett E. Adam & Ronald J. Ebert defined this as “a part of an organization that produces the organizations physical goods and services.”

Ray Wild

Who defines an operating system as “ a configuration of resources combined for the provision of goods and services.”

Operation

Is defined in terms of the mission it serves for the organization, technology it employs, and the human and managerial processes it involves.

• can be categorized into manufacturing and service.

Manufacturing operations

A conversion process that includes manufacturing yields a tangible output: a product.

Conversion process

• ____ that includes service yields an intangible output: a deed, performance, effort.

1. Planning

2. Organizing

3. Controlling

4. Behaviour

5. Model

Operation Managers are concerned with:

Planning

• it established a course of action and guide future decision-making.

• The operations manager defines the objectives for the operations subsystem of the organization, and the policies, and the procedures for achieving the objectives.

• This stage includes clarifying the role and focus of operations i the organization’s overall strategy.

• Also involves product planning, facility designing, and using the conversion process.

Organizing

• activities that establish 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.

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 this by measuring actual outputs and comparing them to planned operations management.

• _____ costs, quality, and schedules are the important functions here.

Behaviour

• operation manager are concerned with how their efforts to plan, organize, and control affect this. They also want to know how the ____ of subordinates can affect management planning, organizing, and controlling actions.

• Their interest lies in decision-making behavior.

Model

• Operations managers can simplify their difficulties using ____ like aggregate planning for examining how best to use existing capacity in short-term, break-even analysis to identify even volumes, linear programming and computer simulation for capacity utilization.

1. Customer Service

2. Resource Utilization

Objective of operation management

Customer Service

• first objective of operating systems is ____ to the satisfaction of customer wants.

• It is a key objective of operations management.

• The operating systems must provide something to a specification which can satisfy the customer in terms of cost and timing.

• The primary objective cab be satisfied by providing “the right thing at a right price at the right time.”

Customer service objective

• to provide agreed/ adequate levels of customer service (and hence customer satisfaction) by providing goods or services with the right specification at the right cost and at the right time.

resource utilization objective

• to achieve adequate levels of resource utilization (or productivity) example to achieve agreed levels of utilization of materials, machines, and labor.

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

Activitie slisted under production and operations management functions.

Location of facilities

• a long-term capacity decision which involves a long-term commitment about the geographically static factors that affect a business organization.

• It’s an important strategic level decision-making for an organization.

• It deals with the questions such as “where our main operations should be based?”

Plant Layout

• Refers to the physical arrangement of facilities.

• It’s the configuration of departments, work centers and equipment in the conversion process.

• The overall objective of the plant layouts is to design a physical arrangement that meets the required output quality and quantity most economically.

Plant Layout

According to James Moore: “it is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipments, and all other supporting services along with the design of best structure to contain all these facilities.”

Material Handling

• refers to the “moving of materials from the store room to the machine and from one machine to the next during the process of manufacture.”

• It is also defined as the “art and science of moving, packing, and storing of products in any form.”

• It is a specialized activity for a modern manufacturing concern, with 50 to 75 of the cost of production.

Product Design

• deals with conversion of ideas into reality.

• Every business organization has to design, develop, and introduce new products as a survival and growth strategy.

• Developing new products and launching them in the market is the biggest challenge faced by the organizations.

Process Design

• is a macroscopic decision-making of an overall process route for converting the raw material into finished goods.

• These decisions encompass the selection of a process, choice of technology, process flow analysis, and layout of the facilities.

Product Planning and Control

• can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders.

Planning

• deciding in advance what to do, how to do it, when to do it, and who is to do it.

• It bridges the gap from where we are, to where we want to go.

Routing

• may be defined as the selection of path which each part of the product will follow, which being transformed from raw material to finished products.

Scheduling

• determines the programmed for the operations.

• It may be defined as “the fixation of time and date for each operation” as well as it determines the sequence of operations to be followed.

Dispatching

• concerned with the starting the processes.

• It gives necessary authority so as to start a particular work, which has already been planned under “Routing” and “scheduling.”

Quality Control

• may be defined as “a system that is used to maintain a desired level of quality in a product or service.”

• It is a systematic control of various factors that affect the quality of the product.

• It aims at the prevention of defects at the source, relies on effective feedback system, and corrective action procedure.

Quality Control

• can also be defined as “that industrial management technique by means of which product of uniform acceptable quality is manufactured.”

• It is the entire collection of activities which ensures that the operation will produce the optimum quality products at minimum cost.

Material Management

• is the aspect of management function which is primarily concerned with the acquisition, control, and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view.

Maintenance Management

• in modern industry, equipment and machinery are a very important part of the total productive effort.

• Therefore, their idleness or downtime becomes very expensive.

• Hence, it’s important that the plant machinery should be properly maintained.

Operation management

Understood as the process whereby resources or inputs are converted into useful products.

1. The industrial revolution

2. Scientific management

3. Human relation movement

4. Operation research

5. Computers and advanced production technology

6. Service revolution

Six historical Developments

1. Design of goods and services

2. Quality

3. Design process and capacity

4. Site selection

5. Design layout

6. Human resource and design work

7. Supply chain management

8. Inventory

9. Scheduling

10. Maintenance

Strategies of operation management

Design of goods and services

Associated with quality and human resources.

Quality

• must be maintained during the construction process products.

Design Process and Capacity

• related to the quality, human resources, inventory, scheduling, and maintenance.

Site Selection

• choice of location associated with supply chain management.

Design Layout

• is done after design process and capacity.

Human Resource and Design Work

Include safety, health, job description, work environment, and wages.

Supply Chain management

• is influenced by site selection and product quality.

Inventory

Decisions are influenced by design processes and capacity human resources, and design layout.

Scheduling

• decision is influenced by the design processes and capacity, layout and HR.

Maintenance

• associated with maintaining the quality or qualities.

Manufacturing System

• devoted to the transformation of raw materials into marketable goods.

• Employs series of value-adding processes to convert raw materials into more useful forms, and eventually into finished product.

• Backbone of the national economy.

• Discipline built upon a collection methodological tool brought together to affect an integrated or total approach to problem solving in manufacturing engineering and management with productivity improvement as its overall objectives.

Manufacturing layouts

• configuring the plant site with line, building, major facilities, work area, aisles, and other pertinent features such as department boundaries.

Process Layout

• are found primarily in job shops or firm that produce customized products.

1. Land

2. Labor

3. Capital

4. Entrepreneurship

Factors of production

Land

• overall natural resources.

Labor

• human capital and technology

Capital

• wages, fund, equipment, payment of interest, present value of investment owner’s returns.

Entrepreneurship

• ownership capital, profit, organizer, innovator, older as to create new willing risk, producer and distributors, return to entrepreneurship.

Adam Smith

• recognized the economic benefits of specialization of labour.

• He recommended breaking pf jobs down into subtasks and recognize workers to specialized tasks in which they would become highly skilled and efficient.

• 18th century

18th century

• the traditional view of manufacturing management began in…

F. W. Taylor

• implemented Smith’s theories and developed scientific management.

• Early 20th century.

20th century - 1930

From _____, many techniques were developed prevailing the traditional view.