Lecture outline

 Learning objectives of the course

 Course descriptions-topics to be covered
 Evaluation scheme
 Chaper 1
 Historical evolution of the course
 Role of PPC in organizations

 Strategy formulation and deployment

 Learning Objectives
 Student will be able to
 Describe strategic importance of PPC and
operations for any organization
 Describe the relationships of PPC with other
functions in an organization
 Develop a skill set of analytical tools to solve
practical problems of production planning in
different industries
 Topics to be covered

Topics to be covered Learning Objectives

Ch 1 Introduction to the function of Student will be able to demonstrate the importance of
PPC and developing strategy to be PPC in an organization. He/she will equipped with
successful methods to formulate and deploy strategy.
Student will be able to make a choice of economic
Ch 6 & Ch 1S Production process process under given level of production requirement
selection, design and technology using break even analysis. He/she will be able to make
decisions process analysis for identifying the scope for
improvement.
Student will be able to judicially decide on strategies
for aligning capacity with demand. He/she will also be
Ch 7 Capacity and facility planning
able to design layout of the plant for meeting different
objectives such as efficiency or effectiveness.
Student will be able to decide the appropriate location
Ch 7S Facilities location of a facility to meet different objectives using
mathematical tools as well as qualitative factors.
 Topics to be covered

Topics to be covered Learning Objectives

Student will be able to forecast for operations management using
Ch 12 Forecasting different mathematical methods.

Student will be able to use classic analysis of inventory control

for economic operation management. He shall be able to decide
Ch 13 Role of Inventory on the choice of inventory management system and also decide
management on the safety stock using probabilistic models. He shall be able
to classify items based on their importance and accordingly
choose the appropriate inventory control model.
Ch 14 & 14S Aggregate Student will be able to use hierarchy in planning decision for
sales and operations effective aggregate planning and developing master schedule.
planning
Student will be able to use appropriate short-term scheduling
rules to solve different situations in operations. Student will be
Ch 17 Production
also be equipped to deal with more complex scheduling
scheduling
situations involving n-jobs of one machine, n-jobs on 2 machines
and use of theory of constraints.
Topics to be covered
Topics to be covered Learning Objectives
Student will be able to use project
scheduling techniques such as
Ch 9 Managing projects
PERT/CPT for effective project
management.
Student will be able to design
services to meet different
Ch 5 Designing services
requirements using tools such as
waiting line analysis etc.
Student will be equipped with
different HR strategies to manage the
Ch 8 HR in Operations
operations. Student will be able to
Management
use time and motion studies for job
design.
Topics to be covered

Topics to be covered Learning Objectives

MRP, Batching of discrete variable demand,
Ch 15 Resource Planning Extensions to MRP, JIT systems.
Systems

Students will be equipped with quality

Ch 2, Ch3 and Ch 3S Quality
management and control tools such
management and methods of
sampling plans, OC curve, SPC and Control
Quality control
Charts.
Student will be able to demonstrate the role
of lean production and JIT for effective
Ch 16 Lean Production operations management.

Student will be equipped with analytical

procedures to aid the new product design
Ch 4 Designing products activity. Student will be able to design
products for specific aims such as design for
manufacturing or design for reliability.
Evaluation components

Component Duration Marks

Mid Test 90 Min. 90

Quizes To be announced for 30

each quiz
Assignments To be announced for 30
/case studies each assignment

Compre 180 Min 80

exam
 Text Book

 Russel, R.S. and Taylor III, B.W., (2015),

Operations Management along the
Supply Chain, WSE, 8th Edition.
 Chapter 1
Operations and supply chain
management introduction
 Organization as
Transformation Process
INPUT
•Material
OUTPUT
•Machines TRANSFORMATION
•Goods
•Labor PROCESS
•Services
•Management
•Capital

Feedback

Task at hand: Design, operation, and improvement of productive

systems
 The Material Flow Cycle

Cycle time

95% 5%

Input Wait for Wait to Move Wait in queue Setup Run Output
inspection be moved time for operator time time
 WHY & HOW TO STUDY
AN INDUSTRIAL SYSTEM

Measure/estimate performance, Improve operation

Prepare for failures

System

Experiment Experiment with

Experiment with a
with the a physical model
Model of the system
actual system of the system

Mathematical
Simulation
Models
 PPC and its relation to
operations management
 Operations management is a broader term
encompassing both services and manufacturing while
the term PPC is relevant only in manufacturring
 In modern times, the organizations involve in a
continuum of manufacturing and services and
operations have represented what PPC function does
traditionally
 So, the course will have a broader operations focus in
mind as well
Continuum from Goods
to Services

Source: Adapted from Earl W. Sasser, R. P. Olsen, and D. Daryl Wyckoff,

Management of Service Operations (Boston: Allyn Bacon, 1978), p.11.
 Evolution of industrial
systems
 Craft production
 process of handcrafting products or
services for individual customers
 Division of labor
 dividing a job into a series of small tasks
each performed by a
 Scientific management
 systematic analysis of work methods
 different worker
 Evolution of industrial
systems (cont.)

 Mass production
 high-volume production of a standardized
product for a mass market
 Interchangeable parts
 standardization of parts initially as
replacement parts; enabled mass
production
 Lean production
 adaptation of mass production that prizes
quality and flexibility
 Historical Journey of
industrial developments
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Frank and Lillian
Scientific Time and motion studies 1911 Gilbreth
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
 Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human 1940s Abraham Maslow
Relations Motivation theories 1950s Frederick Herzberg
1960s Douglas McGregor
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
Operations Operations research
line theory, decision 1950s
Research groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others
 Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
1980s
management) Joseph Juran
Quality
Strategy and Wickham Skinner,
Revolution 1990s
operations Robert Hayes
Business process Michael Hammer,
1990s
reengineering James Champy
 Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
Globalization WTO, European Union, 1990s Numerous countries
and other trade 2000s and companies
agreements
Internet Internet, WWW, ERP, 1990s ARPANET, Tim
Revolution supply chain Berners-Lee SAP,
management i2 Technologies,
ORACLE,
PeopleSoft
E-commerce 2000s Amazon, Yahoo,
eBay, and others
 Impact of E-Business

Benefits of E-Business Impact on Operations

 Access to customers  Demand increases; order fulfillment
and logistics become major issues;
worldwide production moves overseas
 Logistics change from delivering to a
store or distribution center to
 Middlemen are delivering to individual homes;
eliminated consumer demand is more erratic and
unpredictable than business demand
 Outsourcing increases; more alliances
 Access to suppliers and partnerships among firms are
worldwide formed; supply is less certain; global
supply chain issues arise
 Lec 2

 Measures of performance
 Barriers to improve performance
 Importance of PPC to support corporate
strategy
 Methods of strategy formulation and
deployment
 Case study
MEASURES OF
PERFORMANCE
The concepts of
 efficiency,
 effectiveness
 productivity, .
 WHY & HOW TO STUDY
AN INDUSTRIAL SYSTEM

Measure/estimate performance, Improve operation

Prepare for failures

System

Experiment Experiment with

Experiment with a
with the a physical model
Model of the system
actual system of the system

Mathematical
Simulation
Models
 Efficiency

 Measures the resources expected to be

consumed as compared to the resources
actually consumed.
 Hence, it focuses on the input side of the
system. (Doing the things right)
 Effectiveness

 Measures what the system sets out to

accomplish (objective) with what was actually
accomplished; plan vs. actual
 Hence, effectiveness is an output measure.
(Is the output “right” - right quality, right
quantity, on time, etc.)
 Shortly, effectiveness means doing the
right thing.
 Productivity

Productivity-- a broader concept

than efficiency;
It refers to effective use of a
given set of resources

Roy D. Shapiro, Core

Reading: Process Analysis,
HBP No. 8007 (Boston:
Harvard Business School
Publishing, 2013).
Competitiveness and
Productivity

Measures of Productivity
 Productivity Increase

 Become efficient
 output increases with little or no increase in input
 Expand
 both output and input grow with output growing
more rapidly
 Achieve breakthroughs
 output increases while input decreases
 Downsize
 output remains the same and input is reduced
 Retrench
 both output and input decrease, with input
decreasing at a faster rate
 What are the factors that
affect productivity?

Training Methods

Technology Management

31
 Barriers to improve
performance

 Economies of Scale
 Capital Investment
 Access to Supply and Distribution
Channels
 Learning Curve
 Example: Single Factor Productivity

10,000 Units Produced

Sold for $10/unit

What is the
500 labor hours labor productivity?

Labor rate: $9/hr

33
 Example: Labor Productivity

10,000 units / 500hrs = 20 units/hr

 (10,000 units * $10/unit) / 500hrs = $200/hr

 10,000 units / (500hrs * $9/hr) = 2.2 unit/$

 (10,000 units * $10/unit) / (500hrs * $9/hr) = 22.22

The last one is unit-less

 Example: Multi-Factor Productivity

10,000 Units Produced

Sold for $10/unit

500 labor hours

Labor rate: $9/hr

Cost of raw material: $30,000

Overhead: $15,500 35
 Example : Multi-Factor Productivity

Output
MFP = Labor + Materials + Overhead

(10,000 units) * ($10)

MFP =
(500)*($9) + ($30,000) + ($15,500)

MFP = ?

36
DEVELOPING STRATEGIES

1-37
 Strategies to gain Competitive
Advantage

1. Differentiation – better, or at
least different
2. Cost leadership – cheaper
3. Response – more responsive
 Strategic Planning
Mission
and Vision

Corporate
Strategy

Marketing Operations Financial

Strategy Strategy Strategy
1-39
 Four Steps for Strategy
Formulation
 Defining a primary task
 What is the firm in the business of doing?
 Assessing core competencies
 What does the firm do better than anyone else?
 Determining order winners and order qualifiers
 What wins the order?
 What qualifies an item to be considered for purchase?
 Positioning the firm
 How will the firm compete?
 Cost
 Quality
 Flexibility
 Speed
1-40
 PPC’s Role in Corporate
Strategy

 It provides support for a differentiated

strategy
 It serves as a firm’s distinctive competence
in executing similar strategies better than
competitors

1-41
Strategy Deployment

Translating corporate
strategy into measurable
objectives

1-42
 Top-down Approach

 Operations Strategy Decisions

 Strategic (long-range)
 Facility Location, Long-Range
Capacity Planning
 Tactical (medium-range)
 Facility Layout, Acquisition of
resources
 Operational planning
and control (short-range)
 Scheduling work-force and
machinery

1–43
BALANCED SCORECARD
Copyright 2006 John Wiley & Sons, Inc. 1-45
Balanced Scorecard

Radar Chart Dashboard

 Strategy formulation case study

Visualize This (VT) is a small start-up company specializing in virtual reality and computer
visualizations. Located in the research park of a major university, the company was founded by
Isaac Trice, a university professor, and staffed with the brightest of his former students. By all
accounts the technology is cutting edge. Facilities include a lab of 14 high-end computer
workstations adjacent to a CAVE (computer-aided virtual environment) and a small office. A
conference room and central lobby are shared with other tenants in the building. Originally the
company had partnered with the Swedish firm Salvania to create virtual environments for
medical and industrial design. Trice and his staff would develop the software for each
application, create a visual database supported with engineering or medical data, and run
design sessions for their clients in the CAVE. Salvania provided the capital, generated the
clients, and handled the business end of the operations. In its first two years of business, VT
completed four projects. With each project, VT advanced its skills in visualization and
developed customized tools to help its clients design intricate products. The clients were
pleased but did not anticipate repeating the intensive design process for several years.
Unfortunately, Salvania was unable to remain solvent and dissolved its partnership
with VT. VT was able to keep its workstations (whose salvage value was low), but gave up its
rights to the CAVE and furloughed all but three employees. To stay afloat, VT needed new
clients and a steady stream of income.
Trice lists the following possibilities:

• Designing computer-based training sessions for bank tellers of an international

finance institution
•Conducting software certification for the sales staff of a large software vendor
• Designing virtual reality tours through history for a major museum
• Developing Web-based virtual models for a women’s clothing retailer
• Creating virtual catalogues in which a customer can enlarge, rotate, and dissect a
product online.

1 Help Professor Trice formulate a strategy for his

company by going through the steps of strategy formulation.
2. Compare the processes required to satisfy each customer
on Trice’s client list. Consider the mix of equipment
and personnel, the length and scope of each
project, and the potential for future business. How do
the requirements differ from the projects already
completed by VT?
3. Which projects would you recommend to VT? Why?
1 Help Professor Trice formulate a strategy for his
company by going through the steps of strategy formulation.
2. Compare the processes required to satisfy each customer
on Trice’s client list. Consider the mix of equipment
and personnel, the length and scope of each
project, and the potential for future business. How do
the requirements differ from the projects already
completed by VT?
3. Which projects would you recommend to VT? Why?