HUT310: MANAGEMENT FOR ENGINEERS

MODULE 5
OPERATIONS MANAGEMENT
 OPERATIONS MANAGEMENT
• A manufacturing organization engages in converting a variety of
inputs into products that are useful for individuals and
organizations.
• A service organization responds to the requirements of customers
and satisfies their needs through a service delivery process.
• An operations system is defined as one in which several activities
are performed to transform a set of inputs into a useful output using
a transformation process.

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Elements of Operations System

• Open system interacts with its environment.

• Closed system do not interact with its environment.

3
 OPERATIONS MANAGEMENT
• Operations management refers to the activities, decisions and
responsibilities of managing the resources which are dedicated to the
production and delivery of products and services.
• Operations Managers are hose who are responsible for overseeing
and managing the resources that make up the operations function

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OBJECTIVES OF OPERATIONS MANAGEMENT

1. Customer Service
2. Resource utilization

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SCOPE OF OPERATIONS MANAGEMENT

1. Plant location
2. Plant layouts
3. Material Handling
4. Product design
5. Process design
6. Production and planning control
7. Quality control
8. Materials management
9. Maintenance management 6
 SCOPE OF OPERATIONS MANAGEMENT

• Plant Location: Plant location refers to the choice of region and the
selection of a particular site for setting up a business or factory. But the
choice is made only after considering cost and benefits of different
alternative sites. It is a strategic decision that cannot be changed once
taken. If at all changed only at considerable loss, the location should be
selected as per its own requirements and circumstances. Each individual
plant is a case in itself. Businessman should try to make an attempt for
optimum or ideal location.
• Plant layout : It may be defined as a technique of locating machines,
processes and plant services within the factory so as to achieve the right
quantity and quality of output at the lowest possible cost of manufacturing.
It involves a judicious arrangement of production 7 facilities so that
workflow is direct.
 SCOPE OF OPERATIONS
MANAGEMENT
• Material handling : It is the movement, protection, storage and control of
materials and products throughout their lifespan of manufacturing,
warehousing, distribution, consumption, and disposal. Material handling
encompasses a range of components to keep the supply chain running. This
includes a variety of equipment types (manual, semi-automated, and
automated) and systems (single-level storage, multi-level storage, conveyors,
etc.).
• Product design : It is the transformation of an idea, needs, or requirements
by consumers or the market place into a product that satisfies these needs.
• Process design : Process planning is defined as the systematic determination
of the methods by which a product is to be manufactured economically and
competitively. It consists of devising, selecting and 8specifying processes,
machine tools and other equipment to convert raw material into finished and
assembled products.
 SCOPE OF OPERATIONS MANAGEMENT
• Production and planning control : Routing is the selection of path where
each part of the product will follow, which being transformed from raw
material to finished products. Scheduling is the fixation of time and date for
each operation as well as it determines the sequence of operations to be
followed.
• Quality control : Quality is defined as fitness for purpose. Controlling in an
organization is he process of setting standards, measuring actual performance
and taking corrective action. Quality control is the means by which actual
quality performance is observed and then compared it with standard quality
performance and then taking action if the observed quality performance is
different from the standard quality performance.
• Materials management : Aspect of management 9 function which is
concerned with acquisition, control and use of materials needed and flow of
goods and services connected with the production process.
 SCOPE OF OPERATIONS MANAGEMENT

• Maintenance management : maintenance is a set of

organized activities that are carried out in order to
keep an item in its best operational condition with
minimum cost acquired. Activities of maintenance
function could be either repair or replacement
activities, which are necessary for an item to reach its
acceptable productivity condition and these activities,
should be carried out with a minimum possible cost.
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MARKETING MANAGEMENT
Marketing
■ Marketing is an organizational function and set
processes for creating,communicating and delivering
value to customer and for managing customer
relationships in way that benefit the organization
and its stakeholders
Marketing
management
■ The art and science of choosing target markets and
getting,keeping and growing customers through
creating,delivery and communicating superior customer
value
■ Marketing management is the process of planning and
executing the conception,pricing,promotion,and distribution
of ideas,goods,and services to create exchange that satisfy
indivitual and organizational goals (philip kotler)
Marketing
management task
■ Developing marketing strategies
and plan
■ Capturing marketing insights
■ Connecting with customers
■ Building strong brands
■ Shaping the market offering
■ Delivering value
■ Communicating value
■ Creating long term growth
Market segmentation- is the act of dividing a market into
smaller group of buyers with distinct needs,Characteristics or behaviors
who might require separate production or marketing mixes

■ Geographical segmentation- nations,states,country etc

■ Demographic segmentation- age,education,income,family,occupation
■ Behavioral segmentation
■ Psychographic segmentation-value and beliefs,lifestyle,hobbies
 Forcasting
Can be difined as an estimate of future events,that can be obtained by systematically
combining past and present data in a predetermined way and arrive at the future
data

Sources of forcasting data

1. Primary data
2. Secondary data
Sales forcasting- sales forcasting is the method of
accurate determination of the demands of sales
Purpose of sales forcasting
■ Determines the volume of production and production rate
■ It forms the basis for production budget,labour budget,meterial budget etc
■ It suggest the need For plant expansion
■ It suggest the needs for production method
Limitations
■ Lack of efficient and experianced forecasters
■ Lack of demand history
■ Change in consumer ‘needs ,fashion, style etc
■ Complex psychology of consumer
Essentials of good sale forecasting sysytem
■ Simplicity
■ Accuracy
■ Availability
■ Stability
■ Economy
Demand forecasting methods

Qualitative method Quantitative method

■ Jury of executive opinion ■ Moving average method
■ The delphi technique ■ Regression analysis

■ Sales force opinion

■ Survey of customers buying
 Difference between qualitative and quantitative

Qualitative
■ This method is used when situation is vague and little data available
■ Methods are used for new production
■ Mathematical techniques are not used in qualitative methods

Quantitative
■ This method is used in stable situation where historical data is available
■ Quantitative methods are used existing products
■ Quantitative methods involve mathematical techniques
FINANCIAL MANAGEMENT

⚫Financial management is that managerial activity

which is concerned with planning and controlling of
the firm's financial resources.
⚫In other words, it is concerned with acquiring,
financing and managing assets to accomplish the
overall goal of a business enterprise (mainly to
maximize the shareholder's wealth).
⚫In today's world where positive cash flow is more
important than book profit. Financial management
can also be defined as planning for the future of a
business enterprise to ensure a positive cash flow.
Some experts also refer to financial management as
the science of money management.
 IMPORTANCE OF FINANCIAL MANAGEMENT
⚫ Financial management is indeed, the key to successful business operations.

Without proper administration of finance, no business enterprise can reach its

full potentials for growth and success. Financial management is all about
planning investment, funding the investment, monitoring expenses against
budget and managing gains from the investments. Financial management
means management of all matters related to an organization's finances.
⚫ The best way to demonstrate the importance of good financial management is

to describe some of the tasks that it involves the following.

1. Taking care not to over-invest in fixed assets
2. Balancing cash-outflow with cash-inflows
3. Ensuring that there is a sufficient level of short-term working capital
4. Setting sales revenue targets that will deliver growth
5. Increasing gross profit by setting the correct pricing for products or services
6. Controlling the level of general and administrative expenses by finding
more cost-efficient ways of running the day-to-day business operations,and
7.Tax planning that will minimize the taxes a business has to pay.
Objectives of financial management

1.Profit maximization
2.Wealth/value maximization
3.Proper estimation of total financial
requirements
4.Proper utilization of finance
5.Proper coordination
6.Reduce cost of capital
7.Reduce operating risks
 Functions of financial management

Step 1 • Estimating capital requirement

Step 2 • Determining capital structure
Step 3
• Estimating cash flow
Step 4
• Investment decisions
Step 5
• Dividend decisions
Step 6
• Checking the performance
 Capital
⚫ Capital generally refers to saved-up financial wealth, especially which used to start or maintain a
business. Capital is necessary for an enterprise to keep it dynamic and covers money, land,
building, machinery, materials, etc., develops products, keeps workers and machines at work and
is necessary for the firm's progress and creating value. Every business needs funds for two
purposes for its establishment and to carry out its day-to-day operations. Capital required for a
business can be classified under two main categories viz., fixed capital and working capital.

⚫ Fixed capital

Long terms funds are required to create production facilities through purchase of fixed assets
such as land, plant and machinery, building, furniture, etc. Investments in these assets represent
that part of firm's capital which is blocked on permanent or fixed basis and is called fixed capital.
The 'fixed' capital cannot be disposed of without breaking up the business.

⚫ Working capital

Funds are also needed for short-term purposes for the purchase of raw material, payment of wages
and other day-to-day expenses, etc. These funds are known as working capital. From the
viewpoint of manufacturing process, working capital means that part of capital, which is required
to keep the flow of production smooth and continuous. Working capital, being lifeblood for
enterprise, its management becomes a crucial exercise. The need of working capital arises due to
the time gap between production and realization of cash from sales. difference between working
and fixed capital is that working capital is more liquid. Working capital is needed for the following
purposes.

1.Adequate working capital is required to continue uninterrupted business operations.

2.For the purchase of raw materials, components and spaces,
3.To pay wages and salaries.
4.To incur day to day expenses and overhead costs such as fuel, power.
5.To meet the selling costs as packing, advertising, etc.
6.To provide credit facilities to the customers.
7.To meet the short-term obligation of a business enterprise.
 Assets

⚫ Assets are the resources acquired by the business from the funds available
either by owners of the business or others. It includes all rights or properties
which a business owns, Cash investments, stock of raw materials, land,
building, patent rights, etc., are some examples of assets Types of assets may
be categorized as follows.

⚫ Current assets
Current assets include cash and other assets that, under normal
husmess conditions, can be converted into cash within a short time frame
(i.c., 1 year or less) Current assets include cash in hand, cash in bank,
accounts receivable, etc

⚫ Fixed assets
Fixed assets have relatively permanent existence and are not readily
converted into cash. Fixed assets are held for the purpose of earning income
and they are not sold in the course of business. Fixed assets include land,
building, equipment and machinery, furniture, transport vehicles, etc.

⚫ Other assets
Other; assets are those which do not fell into either current assets or
fixed assets categories. Other assets include patents, copyrights, franchises,
goodwill, etc
Functional budget

1. Sales budget
2. Production budget
3. Capital expenditure budget
4. Selling and distribution cost budget
5. Administration expenses budget
6. Cash budget
HUMAN RESOURCE MANAGEMENT
ENTREPRENEURSHIP
 ENTREPRENEU
RSHIP
• Process of starting a new enterprise and operating it,
so as to create a product, having value for people by
giving necessary time and effort, and bearing all the
financial risks, difficulties and challenges, with an
intention to make profit.
 CONCEPT OF ENTREPRENEURSHIP
• It is an innovation function.
• It is a leadership rather than an ownership.
• The process of innovation may be in the form of:
• Introduction of a new product.
• Use of a new method of production.
• Opening a new market.
• The conquest of new source of supplying raw
materials.
 ENTREPREN
EUR
• .A person with a unique idea, who takes initiative of
developing a new venture, arranges all the resources
and is ready to bear all the risks and takes all the
necessary decisions to provide products and services
that has value to the customer
TYPES OF ENTREPRENEUR
• 1) According to types of business:
• Business entrepreneurs.
• Trading entrepreneurs.
• Industrial entrepreneurs.
• Corporate entrepreneurs.
• Agricultural entrepreneurs.
TYPES OF ENTREPRENEUR
• 2)According to use of technology:
• Technical entrepreneurs.
• Professional entrepreneurs.
• Non-technical entrepreneurs.
• High tech entrepreneurs.
TYPES OF ENTREPRENEUR
• 3)According to motivation of entrepreneurs:
• Pure entrepreneurs.
• Induced entrepreneurs.
• Motivated entrepreneurs.
• Spontaneous entrepreneurs.
TYPES OF ENTREPRENEUR
• 4)According to growth:
• Growth entrepreneurs.
• Super growth entrepreneurs.
• 5)According to stages of development:
• 1st generation entrepreneurs.
• Modern entrepreneurs.
• Classical entrepreneurs.
TYPES OF ENTREPRENEUR
• 6)According to scale of operation:
• Small scale entrepreneurs.
• Large scale entrepreneurs.
 CHARECTERISTICS OF A SUCCESSFUL
ENTREPRENEUR
1. High degree of commitment.
2. High energy level.
3. Foresightedness.
4. Desire for responsibility.
5. Risk taking ability.
6. Leadership and managerial skills.
7. Value for achievement over money.
8. Open-mindedness and optimism.
 CHARECTERISTICS OF A SUCCESSFUL
ENTREPRENEUR
9. Systematic planning.
10. Problem solving.
11. Concern for high quality of works.
12. Information seeking.
13. Efficiency orientation.
14.Concern for employee welfare.
15.Persistence.
16. Self confidence.
WAGE EMPLOYMENT ENTREPRENEURSHIP

*Work for others. *Own boss.

*Follow instructions. *Make own plans.

*Routine job. *Creative activity.

*Earning is fixed. *Earning is flexible.

*Does not create wealth. *Creates wealth, contribute to GDP.

*Government service *Industry

Public sector Trade
Private sector. Service enterprise.
 CHARECTERISTICS OF
ENTREPRENEURSHIP

ECONOMIC
INNOVATION RISK
ACTIVITY

PROFIT TEAMWORK
 ENTREPRENEURAL
PROCESS
IDEA DEVELOPING
GENERATION BUSINESS RESOURCING
MODEL

PROMOTION ACTUALIZATION HARVESTING

IMPORTANCE OF ENTREPRENEURSHIP
• Reduces poverty level.
• Increases employment.
• Fulfills the demand of people.
• Helps to develop economic condition of a
country.
 CAUSES OF FAILURE OF
ENTREPRENEURSHIP
• Lack of visible concept.
• Lack of market knowledge.
• Lack of technical skill.
• Lack of speed capital.
• Lack of business knowledge.
• Lack of motivation.
• Time pressure & distractions.
CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Corporate Social Responsibility
Corporate Social Responsibility (CSR) focuses on the idea that a business has
social obligations above and beyond making profit and follows a decision to
expand traditional governance arrangements to include accountability to the full
range of stakeholders.
Scope of CSR
CSR is a way of integrating the economic, social, and environmental imperatives
of business activities. The term corporate citizenship denotes the extent to which
business enterprises meet the (a) legal, (b) ethical. (c) economic and (d) voluntary
/ discretionary responsibilities, placed on them by their stakeholders.
Definition of CSR
CSR is the continuing commitment by business to behave ethically and contribute
to economic development while improving the quality of the life of the workforce
and their families as well as of the local community and society at large.
Need for CSR
Corporate Social Responsibility is an important business strategy because, to
some extent.

● A consumer wants to buy products from companies he trusts,A supplier wants

to form business partnership with companies he can rely on,
● An employee wants to work for a company he respects.
● Other concerns want to establish business contacts with companies seeking
feasible solutions and innovations in areas of common concern.
Need for CSR
Corporate social responsibility is basically a new business strategy to reduce
investment risks and maximise profits by taking all the key stakeholders into
confidence. It is a tool to increase the reputation of the company in the eyes of
society. It is certainly a business approach that creates a long term consumer and
employee value by not only creating a 'green strategy' on natural environment but
also considering every dimension of how a business operates in social, cultural
and environment. The company should meet the needs of its all stakeholders
(consumer, employees, shareholder. clients and other related persons) without
sacrificing the ability to meet the needs of the future stakeholders.
Significance of CSR to Sustainability of Business
The CSR is important to the corporate to sustain in the environment and thus has the following
significance:
1. Reduction in operative cost: Corporate social responsibility helps companies in reduction
in operating cost, this may include recycling, water conservation, energy efficiency etc.
2. Increased Sales and Customer Loyalty: The customers also recognize those companies
which are socially responsible. This results in increased sales and content customers.
3. Higher productivity and Quality: Company as an essential of its triple bottom line, focuses
on improving the working conditions of employees. people in its suppy/distribution chain,
which helps in increased productivity with better quality.
4. Access to Capital: The companies with strong CSR have increased access to capital that
might not otherwise have been available. Even the lending institutions are cautious and are
considering this as an important parameter of granting loans.
5. Boost in Brand Image and Reputation: CSR is an essential brand building tool used by
companies to enhance its reputation amongst the stakeholders.
 INTELLECTUAL
PROPERTY RIGHTS
INTELLECTUAL PROPERTY RIGHT

Intellectual property (IP) is a category of property that

includes intangible creations of the human intellect.
There are many types of intellectual property, and some
countries recognize more than others. The best-known
types are copyrights, patents, trademarks, and trade
secrets.
 Types of intellectual property rights

Copyright:- protects artistic expressions like music. films. plays.

photos artwork. works of architecture and other creative works. The
term "creative works" is defined very broadly for copyright purposes.
such that copyright may be used to protect functional texts such as
user guides and product packaging as well as works of art.
 Types of intellectual property rights

Design rights:- protect the shape and form of a product, i.e.,

what it looks like (whereas the functionality of a product how
it works - is protected by a patent). Companies in vest a great
deal of time and money in coming up with new and attractive
designs that attract consumers into buying their products.
Design is now widely recognized as a key determinant of
commercial success.
 Types of intellectual property rights

Trademarks:- signs that are capable of distinguishing the

goods or services of one enterprise from those of others.
Trademarks are indispensable tools in today's business world.
They help companies expand their market share and they
help consumers identity the products they want to buy in a
crowded market place
A patent is an intellectual property (IP) right for a
technical invention. It allows you to prevent others from
using your invention for commercial purposes for up to
20 years. You decide who is allowed to produce, sell or
import your invention in those countries in which you
own a valid patent.
 Inventions and patents

An invention is a new solution to a technical problem and can be

protected through patents. Patents protect the interests of inventors
whose technologies are truly groundbreaking and commercially
successful, by ensuring that an inventor can control the commercial use
of their invention.

An individual or company that holds a patents has the rights to prevent

others from making ,selling,retailing or importing that technology .This
creates opportunities for inventors to sell, trade or license their patented
technologies with others who may want to use them.

The criteria that need to be satisfied to obtain a patent are set out in
national IP laws and may differ from one country to another. But
generally, to obtain a patent an inventor needs to demonstrate that their
technology is new (novel), useful and not obvious to someone working in
the related field. To do this, they are required to describe how their
technology works and what it can do.
*A patent can last up to 20 years, but the patent holder
usually has to pay certain fees periodically throughout that 20-
year period for the patent to remain valid.

*The patent holder may decide to abandon the patent, at

which point the technology falls into the public domain and
may be freely used.
 Patent information

To recognizing and rewarding inventors for their commercially successful

technologies. patents also tell the world about inventions.

To gain patent protection for their invention, the inventor must provide a
detailed explanation of how it works. In fact, every time patent is granted, the
amount of technological information that is freely available lo the general
public
 The International Patent System

A patent is a private right that is granted by a government

authority I only has a legal effect in the country (or region) in
which it is granted. So inventors or companies that want to
protect their technology in foreign markets need to seek
patent protection for their new technologies in those
countries.
 How patents can support inventors and improve lives

1. Patents recognize and reward inventors for their commercially

successful inventions. As such they serve as an incentive for
inventors to invent. With a patent, an inventor or small business
knows there is 1. a good chance that they will get a return on the
time, effort and money they invested in developing a technology.
In sum. it means they can earn a living , from their work.

2. . When a new technology comes onto the market. society as a

whole stands to benefit both directly. because it may enable us to
do something what was previously not possible, and indirectly in
terms of the economic opportunities (business development and
employment) that can flow from it.

3. The revenues generated from commercially successful patent-

protected technologies make it possible to finance further
technological research and development (R&D), thereby improving
the chances of even better technology becoming available in the
future.
4.A patent effectively turns an inventor's know-how into a
commercially tradable asset. opening up opportunities for
business growth and job creation through licensing and joint
ventures

5.Holding a patent also makes a small business more attractive to

investors who play a key role in enabling the commercialization of
a technology
THANK YOU