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OM - Operations Management

The document provides an overview of operations management (OM) including: 1. OM ensures goods and services are created and delivered successfully to customers. It involves planning, organizing, directing, and controlling activities. 2. Operations convert inputs into outputs through processes and value chains. Quantitative models help analyze decisions. 3. Goods are tangible outputs while services are intangible experiences. Quality and customer satisfaction are key focuses in OM.

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Niranjan Patil
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63 views30 pages

OM - Operations Management

The document provides an overview of operations management (OM) including: 1. OM ensures goods and services are created and delivered successfully to customers. It involves planning, organizing, directing, and controlling activities. 2. Operations convert inputs into outputs through processes and value chains. Quantitative models help analyze decisions. 3. Goods are tangible outputs while services are intangible experiences. Quality and customer satisfaction are key focuses in OM.

Uploaded by

Niranjan Patil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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OM –Operations Management

• The OM is the science and art of ensuring that goods and


services are created and delivered successfully to customers .
The conversion Process
Manufacturing organizations generally transform some
tangible inputs into some tangible output
Value-Added: The difference between the cost of inputs and
the value or price of outputs.
Scope of Operations Management
Nature of Operations Management

• Planning provides the basis for future activities by developing


strategies ,goals,and objectives and establishing guidelines
,actions and schedules for meeting them .
• Organizing is the process of bringing together the resources –
people ,materials ,equipments ,technology information and
capital –necessary to perform planned activities .
• Directing is the process of turning plans into realities by
assigning specific tasks and responsibilities to employees
motivating them and co coordinating their effort .
• Controlling –evaluating performances and applying corrective
measures –is necessary to ensure that plans are achieved .
Goods and services

• Goods are tangible –Services are intangible


• Customers participate in many service processes ,activities
and transactions
• Demand for services are more difficult to predict than the
demand for goods .
• Services cannot be stored as physical inventory .
• Service management skills are paramount to a successful
service encounter .
• Service facilities typically need to be in close proximity to the
customer
• Patents do not protect services
Customer Benefit Package

• A customer benefit package is a clearly defined set of


tangible (Goods content) and intangible (Service Content)
features that the customer recognizes ,pays for uses or
experiences .

• A primary good or service is the ‘core’ offering that attracts


customers and responds to their primary wants and needs .

• Peripheral goods or services are those that are not essential


to the primary good or service ,but enhance it .
Processes and value chains

• Processes are the building blocks for the creation of goods and
services .
• A Process is a sequence of activities that is intended to create a
certain result such as a physical good or service or information .
• Support processes purchasing managing inventory ,customer
support R&D
• General management processes –HR/MIS,Finance/Controlling
• e.g. of process-- Sales order process ,Production order process
• A transformation process involves the creation of value in terms
of time ,place ,information ,entertainment ,exchange or form
utility .
Value chain

• A value chain is a network of facilities and processes that


describes the flow of goods and services, information and
financial transactions from suppliers through the facilities and
processes that create goods and services and delivers them to
customers .
• Supply chain is the portion of value chain that focuses
primarily on the physical movement of goods and materials
and supporting flows of information and financial transactions
through the supply ,production and distribution processes .
Quantitative methods in Operations
Management

• Quantitative Tools –Problem specific


Line balancing ,facility Location and layout etc
• Quantitative tools are based on Models
• General Tools –statistical methods and techniques .e.g. linear
programming ,simulation, waiting line theory ..
• A model is basically a set of assumptions that characterize a
decision situation and allow us to draw conclusions about the
real situation through some type of analysis
History
History
History
Quality Revolution

• Post 2nd world war Japan leaned heavily on W Edwards


Deming and Joseph Juran –Embraced Quality .By 1970 their
products ruled the world .
• The Q R started in 1980 ;If Japan can …why cant we ? Quality
became an obsession .
• In 1987 US Govt established the Malcolm Baldridge National
Quality Award .This Baldridge program has been instrumental
in bringing quality to the attention of Top Management
Using Models on OM

• A model is a set assumptions that characterize a decision


situation and allow us to draw a conclusion about the real
situation through some type of analysis

• Using EXCEL we can develop and use a variety of models to


assist us in making key OM decisions .we will learn how to
develop and use models and interpret the results in OM .

• An assumption in BEPV is that the costs and revenues are


occurring simultaneously .Not true .Time is not a critical
variable is an assumption .
What is a Model

• A model can come in many shapes, sizes, and styles. It is


important to emphasize that a model is not the real world
but merely a human construct to help us better understand
real world systems. In general all models have an
information input, an information processor, and an output
of expected results. Key features in common with the
development of any model is that:
• simplifying assumptions must be made;
• boundary conditions or initial conditions must be identified;
• the range of applicability of the model should be
understood.
Quantitative decision tools

• Costs and prices are constant over time –not true


• Unit variable cost and unit prices do not vary .Not true
quantity discounts are frequent.
• Facilities and capacity remains infinite –Not true .As the
output increases or decreases the firm may change
technology requiring variable fixed costs .
• Models are extremely useful if properly applied .
Goods and Services Characteristics
Service Revolution

• 1955 .In US 50% of the work force was employed in service


sector .
• Today it is 4 out of every 5 jobs are in Service sector .
• Moreover the 50% goods producing industries Jobs are
service related /HR/FI etc
• Meaning if you are working in US You are most likely working
in Service sector .
• However Manufacturing is not Dead .It is alive and kicking .
Organization Structure
Scale of services vs. Product Dominance
OM Strategic Decision Areas
The Strategic Decision of Operations Management

1 Design of goods and services.


Associated with quality and human resources.

2 Quality.
The quality or product quality must be
maintained during construction process
products (goods or services).
.
3 The design process and capacity.
Designing processes and capacities related to the
quality, human resources, inventory, scheduling and
maintenance.
4 Site selection
The choice of location associated with supply chain
management.
.
5 Design layout.
The design layout is done after the design process and
capacity.
6 Human Resources (HR) and Design work.
HR factors include safety, health, job description, work
environment and wages
.
7 Supply chain management.
Supply chain management is influenced by site selection
and product quality.
8 Inventory.
Inventory decisions are influenced by design processes
and capacity, human resources, and design layout.
.
9 Scheduling.
Scheduling decisions are influenced by the design
process and capacity, layout and HR.
10 Maintenance.
Maintenance associated with maintaining the quality or
qualities.
Conversion Process
Functions within an Organization
GDP

• GDP
• Rate of Growth
• Infrastructure Development .
• Service Sector Growth
• Shift of Manufacturing Industries
• Out Sourcing
• etc
GDP $1.85 Trillion
.

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