OPERATIONS

MANAGEMENT

(OM)

CBMEC 2
 Contents of this Lesson

● Definition
● Evolution of OM
● Objectives of Production/Operations
Management
● Nature of Production/Operations Management
● Scope of Production and Operation
Management
● Functions of OM
● Importance of OM
 01
Definitions
● Production
● Operation
● Operation Management
● Production Management
● Production & operation Mgt
 PRODUCTION
referring to the
activities of
manufacturing goods
 Are purposeful action (or activities)
methodically done as part of a plan
of work by a process that is
designed to achieve practical ends
and concrete objectives

Operations
Operation Management
As the process, whereby resources,
flowing with in a define system, are
combined and transformed by a
controlled manner to add value in
accordance with policies
communicated by management.
Consists of tactics such as scheduling,
work, assigning resources including
people and equipment, managing
inventories, assuring quality standards,
process-type decisions that include
capacity decision, maintenance policies,
equipment selection. Worker training
options, and the sequence for making
individual items in a product-mix set.
 Production
Management
Deals with decision making
related to a production process 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.
 Production & Operations
Management (POM)

is defined as
the design, operation, and
improvement of the systems
That create and deliver the firm’s
primary products and
service
Evolution
of OM
Evolution
of OM
Evolution
of OM
Evolution
of OM
Evolution
of OM
Evolution
of OM
 02
OBJECTIVES
Objectives of Production/Operations
Management

1. Maximum customer satisfaction through

quality, reliability, cost and delivery time
2. Minimum scrap/rework resulting in
better product quality
3. Minimum possible inventory levels (ex.
Optimum inventory level)
4. Maximum utilization of all kinds of
resources needed
 Objectives of Production/Operations
Management

5. Minimum cash outflow

6. Maximum employee satisfaction
7. Maximum possible production
(ex. outputs)
8. Higher operating efficiency
Objectives of Production/Operations
Management

9. Minimum production cycle time

10. Maximum possible profit or return
on investment
11. Concern for protection of
environment
12. Maximum possible productivity
 03
NATURE
 Nature of Production Mgt.

As a conversion or
as a system Transformational
process
 Nature of Production Mgt.

as an as a means
organizational of creating
function utility
Production/Operations as a System:
Elements or parts

01 02 03

Inputs Conversion Outputs

process or
transformati
on process
 Production/Operations as a System:
Elements or parts

04 05 06

Transportation Communication Control or

subsystem subsystem decision
making
subsystem
 Production/Operations as a
Conversion / Transformation Process
● The conversion or transformation
subsystem is the core of a production
system because it consists of processes or
activities wherein workers, materials,
machines and equipment are used to
convert inputs into outputs.

● The conversion process may include

manufacturing process such as cutting,
drilling, machining, welding, painting, etc.
and other processes such as packing,
selling, etc.
Transformations

● Physical : as in manufacturing operations

● Locational : as in transportation operations
● Exchange : as in retail operations
● Storage : as in warehousing operations
● Physiological :as in health care
● Psychological :as in entertainment
● Informational :as in communication
 Production/Operations as a
Means of Creating Utility-
Types of Utility:

Form Utility Place Utility Time Utility

This is created by Changing the place This is created by

changing the sixe, of inputs or storage or
shape, form, weight, transporting the inputs preservation of raw
color, of inputs in order from the source of materials or finished
to make the outputs their availability to the goods so that same
more useful to the place of their us to be can be used at a later
customer. converted into time.
 Production/Operations as a
Means of Creating Utility-
Types of Utility:

Possession Services Utility Knowledge

Utility Utility
Created by Created by Created by
transferring the rendering some imparting
possession or service to the knowledge to a
ownership of an item customer. person. (Ex. ads,
from one person to (Ex. Doctor, Lawyer) sales presentation)
another.
Nature of Operation Management

Dynamic

Transformational Process

Continuous Process

Administration
 04
SCOPE
 Scope of Production/Operation Management

01 03
02 04
Location Product
Facilities Plan layout & Production &
Design
Materials PLanning
Handling Control
It deals with the Deals with
questions such Physical conversion of
ideas into reality.
Process of
as “Where our arrangement of
facilities - that Introduce new planning the
main operations production in
meets the required products as a
should be output quality and survival and advance.
based?” quantity most growth strategy
economically.
 Scope of Production/Operation Management

05 07

06 Maintenance
Quality
Materials Management
Control Management
A system that is Concerned with the
used to acquisition, control
maintain a and use of materials
desired level of needed to flow of
quality in a goods and services
product r connected with the
services. production process
 The Scope of
Operation
Management

● Increase Productivity
● Raises Revenue
● Achievement of Organization Goals
● Improve Customer Satisfaction
● Reduce Investment Need
● Enhance Goodwill
● Improve Innovation
 The Main Objectives of
Materials Management

To minimize To purchase, receive, To cut down costs through

material transport and store simplification,
cost materials efficiently & standardization, value
to reduce related analysis, import
cost substitution, etc.

To trace new sources of

supply and to develop To reduce investment tied in
cordial relations with them in the inventories for use in
order to ensure continuous other productive purposes
supply at reasonable rates and to develop high
inventory turnover ratios.
 05
FUNCTIONS
 FUNCTIONS OF OPERATIONS
MANAGEMENT

FINANCE

STRATEGY
OPERATION

PRODUCT
MAINTAINING DESIGN
QUALITY
 06
IMPORTANCE
 IMPORTANCE OF OPERATIONS
MANAGEMENT
Improves Improves
Helps to achieve
Goodwill Employee
the objectives productivity

Able to Presence of
Improve the
utilize motivation of the
resources employees organization
RESPONSIBILITIES OF OM
Manufacturing vs Service
❖ Managing each and every aspects of organizations efficiently
is the key role of OM
❖ It focuses on raising the profit of organizations by maintaining
a proper balance between cost & revenue. This process
ensures that all resources like raw materials and labours are
efficiently utilized by organization for production of its goods &
services.
❖ OM monitors and controls the entire production system of
organization
❖ OM are responsible for fulfilling all requirements of customers
by delivering products as per their needs.
❖ They take all crucial decisions relating to production process
like product design, production planning, inventory control,
quality control, capacity, etc.
❖ They work towards strengthening and enhancing the
production system to minimize the wastage and maximize the
output.
—CONCLUSION
SUMMARY ASSESSMENT
1. Administration of business activities for attaining higher efficiency.
2. Customers will gain confidence in their products which will improve their market
image.
3. It is also define as the “Art and Science of moving, packing and storing of products
in any form.
4. Process of planning the production in advance.
5. t keeps on changing as per market trends and demands
6. referring to the activities of not manufacturing physical goods
7. the design, operation, and improvement of the systems That create and deliver the
firm’s primary products and service
8. It takes into account all technological changes and builds a strong base of
knowledge and operations.
9. “Where our main operations should be based?”
10. A system that is used to maintain a desired level of quality in a product r services.
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