OPERATION MANAGEMENT

Lalhlimawma
Roll no-14

Define Operational Management :

Operation management is the business function that manages that part of a business that
transforms raw materials and human inputs in to goods and services of higher value. Operation
management is a business activity that deals with the production of goods and services. The
term operation includes management of materials, machines, and inventory control and storage
functions. Operations management includes a set of activities performed to manage the
available resources in an efficient manner in order to convert inputs in to desired outputs.

Nature of OM
● PROCESS ORIENTATION: Operational management is a process-oriented, emphasizing the
design, analysis and improvement of processes to optimize operational efficiency and
effectiveness.
● INTEGRATION OF FUNCTIONS: Operational management integrates various functional
areas within an organization, such as production, procurement, inventory management,
quality assurance, logistics, and customer service, to ensure smooth and coordinated
operations.
● RESOURCE OPTIMIZATION: Operational management focuses on optimizing resources,
including labour, materials, equipment, and technology, to maximize productivity, minimize
costs, and achieve operational efficiency.
● TIME SENSITIVITY: Operational management recognizes the importance of time in
delivering products and services, emphasizing timely production, delivery, and
responsiveness to customers demands.
● QUALITY FOCUS: Operational management places a strong emphasis on quality control
and assurance to ensure consistent and reliable product and service delivery, meeting or
exceeding customer expectations.
● CONTINUOUS IMPROVEMENT: Operational management embraces a culture of
continuous improvement, implementing methodologies such as Lean Six Sigma, Total
Quality Management(TQM), and Kaizen to eliminate waste, enhance efficiency, and drive
innovation.
● DECISION-MAKING: Operational management involves making informed decisions
regarding capacity planning, resource allocation, process design, technology adoption,
risk management, and performance measurement to optimize operations and achieve
organizational objectives.

Scope of OM
The scopes of operational management are:
● 1) Facility layout planning: This step involves deciding how best to utilize the space in a
factory or office to optimize workflow.
● 2) Workforce planning and management: This includes ensuring that there are enough
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employees with the right skills to do the work required and managing employee
performance.
● 3) Inventory management: This encompasses everything from raw materials to finished
products and ensuring that inventory levels are maintained at an optimum level.
● 4) Scheduling: This is creating a production schedule that meets customer demand while
maximizing efficiency.
● 5) Quality control: Quality control is essential to ensuring that products meet customer
expectations and standards.
● 6) Transportation and logistics: Operations managers must plan to move goods from
suppliers to customers efficiently.
● 7) Maintenance: Regular maintenance is necessary to keep equipment and facilities
running smoothly.
● 8) Project management: Many operations require project management to ensure that they
are completed within time and budget.

CAPICITY PLANNING
Capacity planning in operations management is the process of balancing demand for a good or
service with the ability of a manufacturer or organization to produce enough to meet demand
TYPES OF CAPACITY PLANNING IN OM
Types of Capacity Planning in Operations Management are:
. Design Capacity Planning: This type focuses on determining the maximum output or
capacity a system or process can achieve under ideal conditions. It helps set performance
benchmarks and identify potential bottlenecks.
. Effective Capacity Planning: Effective capacity planning considers realistic constraints,
such as equipment breakdowns, planned maintenance, and workforce availability.It
determines the achievable output levels under practical conditions.
3.Actual Capacity Planning: Actual capacity planning reflects the actual output achieved in real-
time. It considers unforeseen disruptions, resource constraints, and other factors that affect the
actual capacity of a system or process.

MATERIALS PLANNING REQUIREMENT (MRP)

Material requirements planning (MRP) is a production planning and inventory control system
used to manage manufacturing processes. These systems are in place so that a manufacturing
facility will always have enough stock for the manufacturing process. The management of time
and resources is pivotal to this process. Most MRP systems are software-based, however, it is
possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
. Ensure materials are available for production and products are available for delivery to
customers.
. Maintain the lowest possible level of inventory.
. Plan manufacturing activities, delivery schedules and purchasing activities.
THE TYPES OF INVENTORY TECHNIQUES
Types of inventory techniques are:
● Just-in-time inventory :Just-in-time (JIT) inventory involves holding as little stock as
possible, negating the costs and risks involved with keeping a large amount of stock on
hand. The premise is that goods and materials are ordered and used only when they are
needed.
● Just-in-case stock control :Just-in-case (JIC) stock control is an inventory management
technique deployed to protect against unexpected demand surges and supply chain
disruptions. It enables businesses to reduce the risk of stockouts - and the lost sales that
come with them - as well as negotiate fairer prices with suppliers.
● ABC inventory management: ABC inventory analysis aims to identify the inventory that is
earning you profit by classifying goods into different tiers. It's loosely based on the Pareto
principle - the concept that the majority of successes come from a minority of efforts. This
inventory management technique enables you to make informed decisions around budget
allocation, marketing, and purchasing at the product level. This inventory management
technique enables you to make informed decisions around budget allocation, marketing,
and purchasing at the product level.
● SDE Classification: Under this analysis, 'S' stands for scarce items which are in short
supply, 'D' refers to those items which are available easily in the market but they are
difficul to acquire while 'E' represents easily available items, these items can be purchased
easily from the local market.
● HML Classification: In HML analysis H stands for High value items, M stands for Medium
value items and L stands for Low value items.Items are classified based on the unit value
of the items.HML analysis helps to keep a control on consumption of materials at
departmental level.
● SOS Analysis: S stands for Seasonal items and 'OS' stands for off-seasonal items. The
enterprise will be able to enjoy the benefits of favourable market conditions if they
purchase the inventory during off season as the cost of ordering will be reduced. During
off season those inventories may be processed and sold in the market and they may earn
higher.

TOTAL QUALITY MANAGEMENT

Total quality management (TQM) is the continual process of detecting and reducing or
eliminating errors in manufacturing.
It streamlines supply chain management, improves the customer experience, and ensures that
employees are up to speed with training.
A core definition of total quality management (TQM) describes a management approach to long-
term success through customer satisfaction. In a TQM effort, all members of an organization
participate in improving processes, products, services, and the culture in which they work.

TOOLS OF TOTAL QUALITY MANAGEMENT:

The tools of total quality management are:
• Check List - Check lists are useful in collecting data and information easily. Check list also
helps employees to identify problems which prevent an organization to deliver quality products
which would meet and exceed customer expectations. Check lists are nothing but a long list of
identified problems which need to be addressed. Once you find a solution to a particular
problem, tick it immediately. Employees refer to check list to understand whether the changes
incorporated in the system have brought permanent improvement in the organization or not?
● Pareto Chart: The credit for Pareto Chart goes to Italian Economist - Wilfredo Pareto.
Pareto Chart helps employees to identify the problems, prioritize them and also determine
their frequency in the system. Pareto Chart often represented by both bars and a line
graph identifies the most common causes of problems and the most frequently occurring
defects. Pareto Chart records the reasons which lead to maximum customer complaints
and eventually enables employees to formulate relevant strategies to rectify the most
common defects.
● The Cause and Effect Diagram - Also referred to as "Fishbone Chart" (because of its
shape which resembles the side view of a fish skeleton) and Ishikawa diagrams after its
creator Kaoru Ishikawa, Cause and Effect Diagram records causes of a particular and
specific problem. The cause and effect diagram plays a crucial role in identifying the root
cause of a particular problem and also potential factors which give rise to a common
problem at the workplace.
● Histogram - Histogram, introduced by Karl Pearson is nothing but a graphical
representation showing intensity of a particular problem. Histogram helps identify the
cause of problems in the system by the shape as well as width of the distribution.
● Scatter Diagram - Scatter Diagram is a quality management tool which helps to analyze
relationship between two variables. In a scatter chart, data is represented as points, where
each point denotes a value on the horizontal axis and vertical axis. Scatter Diagram shows
many points which show a relation between two variables.
● Graphs - Graphs are the simplest and most commonly used quality management tools.
Graphs help to identify whether processes and systems are as per the expected level or
not and if not also record the level of deviation from the standard specifications.

JUST IN TIME(JIT) PRODUCTION?

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders
from suppliers directly with production schedules. Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving goods only as they need them for the
production process, which reduces inventory costs. This method requires producers to forecast
demand accurately.

ISO 9000
● ISO 9000 is a series of standards, developed and published by the International
Organization for Standardization. It defines, establishes and maintains an effective quality
assurance system for manufacturing and service industries.
● The ISO 9000 standard is the most widely known and has perhaps had the most impact of
the 13,000 standards the ISO has published. It serves many different industries and
organizations as a guide to quality products, service and management.
● The one standard in the ISO 9000 series of standards that an organization can earn a
certification in is the ISO 9001 individual standard. By earning that certification, an
organization shows it is compliant with its industry's ISO 9000 standards. To be certified,
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an outside examiner must check the organization's practices.

JOB SHOP PRODUCTION

A job shop is a type of manufacturing process in which small batches of a variety of custom
products are made. In the job shop process flow, most of the products produced require a unique
set-up and sequencing of process steps.A job shop is a manufacturing system that handles
custom/ bespoke or semi-custom/bespoke manufacturing processes, such as small to medium-
size customer orders or batch jobs.Such a process is called "job production." Job shops typically
move on to different jobs when each job is completed.

QUALITY ASSURANCE
The quality assurance process helps a business ensure its products meet the quality standards
set by the company or its industry. Another way to understand quality assurance (QA) is as a
company's process for improving the quality of its products.
Many businesses view their QA program as a promise to internal stakeholders and customers
that the company will deliver high-quality products that provide a positive user experience

AGGREGATE PLANNING
Aggregate planning is a strategic process businesses employ to synchronize production,
workforce, and inventory levels with anticipated demand over a specified timeframe, typically
ranging from a few months to a year. Aggregate planning serves as a vital link between strategic
and operational planning, aiming to optimize resources while minimizing costs.
Key components include forecasting demand, adjusting production capacity, managing inventory,
planning workforce needs, and creating production schedules. The primary goal of aggregate
planning is to strike a balance between production capabilities and customer demand. By
aligning these factors, organizations can effectively navigate seasonal fluctuations or changes in
the market, ensuring they meet customer requirements in a cost-efficient manner.