Production & Operations

Management

Module 1

Sathish Rajamani
[email protected]
09940667419
Objectives of this Module
…
Understand What is Production & Operations
Mgmt (POM ) ?
Convince ourselves on why Mgmt Students
should learn POM – How POM is linked with other
functions
Understand the Importance of Operations in any
Business / Organization
Know how POM has evolved
Relevance of POM in today’s Global Business
What is the Goal of any
Organization ?
What is the Goal of any Organization ?
…
Customer satisfaction
100% Quality
On time delivery
Employee Satisfaction
Customer delight
Service to nation
To become Market Leader
…… And Many more…
What is the Goal of any Organization ?
…

Mainly … it is to …..

MAXIMISE PROFIT
Or Maximise Service
What are the 3 Primary functions in
any Organization ?

1. Finance
2. Marketing ( Distribution )
3. Production / Operations
Production : Refers to Manufacturing Processes
Operations :Used to describe Service Processes
In Standard Usage it refers to Both …
What is Operations Management?
Defined
Operations management (OM) is
defined as the design,
operation, and improvement of
the systems that create and
deliver the firm’s primary
products and services
What is Production & Operations
Management (POM) ?

POM is about Transformation of Production and

Operational INPUTS into OUTPUTS that , when
distributed, meet the needs of the customer
thereby
achieving the required level of Profits / Service
Transformation or Conversion System

Inputs Transformation Outputs

Process
Transformation or Conversion System
…

Inputs Transformation Outputs

Process

•Labour •Machines •Goods

•Materials •Services
•Technology
•Money ….
•Procedures….
Transformation or Conversion System
…

Inputs Transformation Outputs

Process

Feedback

•Machines
•Labour
•Materials •Technology
•Goods
•Money …. •Procedures... •Services
Types of Transformation
Processes
1. Physical
2. Locational
3. Physiological
4. Psychological
5. Informational
6. Exchange
Types of Transformation
Processes
Examples..

1. Physical – Manufacturing, Process

industries
2. Locational – Transportation , Storage
3. Physiological – Health care
4. Psychological- Entertainment, Advertising?
5. Informational – Communication, Software
6. Exchange – Retailing, Financing ?
Lets look at some examples of
different Transformation Systems
1. An Automobile Manufacturing Unit
2. An Hospital
3. An Educational Institution
4. A Bank/Financial institution
5. Software development company
6. Mobile Service provider
7. Social Service Organization
8. A Super Market
9. Garment Manufacturing Unit
10. Film Production Unit
11. Government Treasury Department
12. Internet Service Provider
Lets look at some examples of
different Transformation Systems
…
 Operations is a Basic
Function..
OPERATIONS

MARKETING FINANCE
 Organization Chart- An
example
M a n u f a c t u r i n g O r g a n

O p e r a t i o Fn is n a n c e / A c c o u M n a t ri nk ge t i n HR,g IS & other

support fns.

F a c i l i t i e s D i s b u r s e m e nS t a s l e& s P r o m o t
P r o d u c t i o n &C r e d i t s A d v e r t i s i n g
I n v e n t o r y F C u on nd t s r o M l a n a S g a e l me s e n t
Q u a l i t y A s s C u a r ap ni t ca e l R e q uM i ra e r mk e e t n R t se s e a
& C o n t r o l
P r o c u r e m e n t
E n g i n e e r i n g D e s i g n
I n d u s t r i a l E n g i n e e r i n g
P r o c e s s E n g i n e e r i n g
Operations is The Technical Core

Capital Markets, Stockholders

Finance

Personnel
Suppliers
Purchasing

Workers
Operations

Marketing

Customers
Operations is “In the Middle”
Operations Accounting Human
Manager Manager Resources
 Why Study Operations
Management?
Systematic Approach
to Org. Processes

Business Education Operations Career Opportunities

Management

Cross-Functional
Applications
So…, a thorough understanding of
the Production and Operations
Process is required for the Success
of any Management Professional –
irrespective of their function in an
organization
Introduction to POM

22
 Evolution of POM
Lillian Gilbreth brings psychology
into the mix by studying the
motivations of workers and how
attitudes affected the outcome of a
process.
Sakichi Toyoda receives a patent Frank Gilbreth develops Motion
for a wooden loom Study and invented Process Charting.
philosophy of “KAIZEN” is born Frederick W. Taylor develops the •Taichi Ohno moves to
out of the need to compete. principles of Time Study and the Toyota Motor
standardized work. Company Ltd.
Central figures who •Ohno begins to perfect
originated the idea of the “Just-in-Time”
"Eliminating Waste", concepts introduced by
Kiichiro

1890 Late 1890’s 1908 1937 194 1980 1990

3 1990

Toyota brings
the Toyota
Production
Henry Ford System to the
invents the Before: cars were built in one United States in
moving assembly spot and the workers moved •Toyoda Motor Company collaboration with
line from car to car. This was Ltd. is created.
called the “gypsy production”
GM
•Kiichiro Toyoda builds a
system.
plant at Koromo and
through the imbalance Womack and Jones
caused by piece work, publish “The
After: Ford used a big rope hangs a sign in his new Machine that
and winch to pull the cars Changed the
production shop that
along the assembly line and World “
kept the workers stationary reads “JUST IN TIME”.
How POM has evolved – An Historical
Perspective

Industrial Revolution
Scientific Management
Human Relations
Management Science
Quality Revolution
Information Age
Globalization
 Industrial Revolution
Steam engine 1769 James Watt
Division of labor 1776 Adam Smith
Interchangeable parts 1790 Eli Whitney

Scientific Management
Principles 1911 Frederick W. Taylor
Time / motion study 1911 Frank & Lillian
Gilbreth
Activity scheduling chart 1912 Henry Gant
 Human Relations
Hawthorne studies 1930 Elton Mayo
Motivation theories 1940s Abraham Maslow
1950s Frederick Hertzberg
1960s Douglas McGregor

Management Science
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, PERT/CPM, 1960 Research groups
Waiting line theory
 Quality Revolution
Lean production 1970s Taiichi Ohno
JIT 1980s and Toyota
TQM 1980s W. Edwards Deming,
1990s Joseph Juran, et. al.

Information Age
Mainframe, Database, MRP, MRPII, ERP, SCM, EDI …
 Globalization

Worldwide markets 1990s Numerous individuals

and operations and companies

Take advantage of favorable costs

Gain access to foreign markets
Reduced trade barriers
Changing markets
Relevance of POM in today’s Global
Business ..
There is a great need to …
• Compete on Differentiation
• Compete on Cost
• Compete on Response
• Compete regardless of the Basis
Relevance of POM in today’s Global Business ..
• Compete on Differentiation
Uniqueness can go beyond both the physical
characteristics and service attributes to encompass
everything
that impact customer’s perception of value
• Compete on Cost
Provide maximum VALUE as perceived by CUSTOMER
• Compete on Response
Flexibility, Reliability & Timeliness
• Compete regardless of the Basis
Institutionalization of Ability to CHANGE & to ADAPT