INTRODUCTIONS TO

OPERATIONS AND
SERVICE MANAGEMENT
Operations Management:

Operations and materials management are crucial aspects of business that involve
overseeing processes and resources to ensure efficiency and effectiveness. Let's
break it down:

•Operations management is all about designing, overseeing, and controlling the

production and delivery of goods and services. It's like conducting a symphony
where different elements come together to create a harmonious result. Here are
some key components:
1. Production Planning: Determining what needs to be produced, how much, and
when.
2. Process Management: Ensuring that the methods used in production are
optimized for efficiency and quality.
3. Quality Control: Monitoring and maintaining the quality of products or services.

4. Inventory Management: Keeping track of stock levels to meet demand without

overstocking.

5. Supply Chain Management: Managing the entire network of suppliers and

distributors to ensure a smooth flow of materials.
Materials Management

•Materials management focuses on efficiently handling the raw materials,

components, and finished products within an organization. It encompasses several
functions:
1. Procurement: Acquiring the necessary materials for production at the right cost
and quality.
2. Storage and Warehousing: Managing the storage of raw materials and finished
products, ensuring they are easily accessible when needed.
3. Inventory Control: Keeping track of stock levels, avoiding stockouts or
overstock situations.
4. Distribution: Coordinating the movement of materials from the manufacturer to
the end user.

5. Logistics: Planning and implementing the most effective and cost-efficient

transportation and delivery processes.

•The ultimate goal of operations and materials management is to enhance efficiency,

reduce costs, and ensure that products and services meet or exceed customer
expectations.
DEVELOPMENT STAGES OF OPERATIONS
MANAGEMENT

•Development Stages: Let's break it down:

1. Craft Production Era (Pre-Industrial Revolution):
Before the Industrial Revolution, manufacturing was based on craft
production, where skilled artisans or craftsmen produced goods individually.
Production was typically small-scale, and processes were labor-intensive.

2. Industrial Revolution (Late 18th to early 19th century):

The advent of machinery and steam power marked the beginning of the
Industrial Revolution. Factories emerged, and production shifted from
manual labor to mechanized processes. Interchangeable parts and assembly
lines started to improve efficiency.
3. Scientific Management (late 19th to early 20th century):
 Frederick Taylor's principles of scientific management focused on optimizing
individual tasks through time and motion studies.
 Standardization of work, division of labor, and piece-rate payment systems were
introduced.
 Efficiency became a primary goal.

4. Human Relations Era (1920s to 1930s):

 The Hawthorne studies highlighted the importance of social and psychological
factors in productivity (amount of work, with respect to time).
 Emphasis shifted towards employee satisfaction, motivation, and group dynamics.
5. Post-World War II Period (1940s to 1950s):

 The focus was on mass production (manufacturing of large quantities of standardized

products, often using assembly lines or automation technology) and economies of
scale(cost advantages reaped by companies).
 Total Quality Management (TQM) principles started to gain attention, emphasizing
quality control and continuous improvement.
 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.

6. Lean Manufacturing (1980s onward):

 Inspired by the Toyota Production System, lean manufacturing aimed at eliminating
waste, improving efficiency, and enhancing quality.
 Concepts such as just-in-time (JIT) production were introduced.
7. Globalization and Technology (Late 20th century to present):
 Advances in information technology transformed operations management.
 Globalization led to more complex supply chains, requiring efficient logistics and
coordination.
 Computer-aided design (CAD, to digitally create 2D drawings and 3D models of
real-world products before they're ever manufactured.), Enterprise Resource
Planning (ERP, is a software system that helps you run your entire business,
supporting automation and processes in finance, human resources, manufacturing,
supply chain, services, procurement, and more), and other technologies played a
crucial role in improving operations.
8. Sustainability and Green Operations (21st century):
 Increasing awareness of environmental issues led to a focus on sustainable and
environmentally friendly operations.
 Companies began integrating eco-friendly practices into their supply chains and
production processes.
9. Industry 4.0 (Present and Future):
 Industry 4.0 represents the integration of digital technologies, IoT (Internet of
Things), big data, and artificial intelligence in manufacturing.
 Smart factories, predictive maintenance, and real-time data analytics are
becoming standard practices.
10. Agile and Adaptive Operations (Ongoing):
 Businesses are adapting to rapid changes in consumer demands and market
conditions.
 Agile methodologies, derived from software development, are being applied to
operations to enhance flexibility and responsiveness.
The evolution of operations management is a dynamic process influenced by
economic, technological, and organizational changes. It continues to evolve as
businesses adapt to new challenges and opportunities in the global marketplace.
OPERATIONS VS PROJECTS

•Operations:
 Routine and Ongoing: Operations are the day-to-day activities that keep the
business running. It's like the heartbeat of an organization—consistent, regular,
and essential.
 Repetitive Tasks: Think about manufacturing products, handling customer
service, managing inventory, or running payroll. These are ongoing, repetitive
processes that form the core functions of a business.
 Continuous: Operations don't have a specific start or end date. They're
continuous and sustained to keep the organization functioning.
 Efficiency Focus: The goal of operations is often efficiency, ensuring that things
run smoothly, costs are controlled, and resources are utilized effectively.
•Projects:
 Temporary: Unlike operations, projects have a defined start and end. They are
temporary endeavors with a specific goal to achieve.
 Unique: Projects are often unique and non-repetitive. Once the project is completed,
the product or service is delivered, and the project itself comes to an end.
 Cross-functional: Projects often involve people from different departments or teams
who come together for a specific purpose. It's like a mini-organization within the larger
one.
 Goal-Oriented: The focus of a project is achieving a specific goal, whether it's
developing a new product, implementing a new system, or launching a marketing
campaign. In a nutshell, operations keep the lights on, while projects bring in new lights
or maybe even redesign the entire lighting system. Both are essential, and many
organizations balance the routine of operations with the innovation and change that
projects bring. It's like maintaining the car (operations) while also planning and
executing a road trip (projects). One ensures continuity, and the other drives progress.
Management and decision making in operations management
Functional sub-system of organizations: Marketing, production, finance and personnel
1. Strategic decisions
Long-term decisions, top level management
E.g., Defining the goals, making policies and determination of organizational objectives
2. Tactical decisions
Middle management level
E.g., acquisitions of resources, plant location, new product establishment and monitoring of
budgets
3. Operational decisions
Bottom level of management
E.g., effective and efficient use of existing facilities and resources to carry out the activities
within budget constraints
Management and decision-making play crucial roles in operations management, which is
concerned with designing, overseeing, and controlling the process of production and
redesigning business operations (making changes to the way of business work), in the
production of goods or services. Here are some key aspects of management and decision-
making in operations management:

Design of Operations:

Decision-Making: Decisions about the layout of facilities (operations plan, to arrange

workers, equipment, and machines, increases efficiency in the production process),
technology, and process design impact operational efficiency and effectiveness. Management:
Operations managers oversee the design phase, making decisions related to the configuration
of resources, workflow, and technology.(*Process design is at the heart of operations management (OM). It is the process of
creating and improving systems that convert inputs into outputs. Process design involves understanding how work is done within an organization and then
Capacity 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.(enough raw materials, personnel and equipment to meet forecasted demand.)

Decision-Making: Determining the optimal level of production capacity (the level of

output , maximizes your profits, minimizes your costs.) involves decisions about facility
size, workforce levels, and production technology.

Management: Operations managers regularly assess capacity requirements and make

decisions about expanding, contracting, or modifying production capabilities.
Quality Management:

Decision-Making: Quality decisions involve choosing quality standards (sets of

good management practices), inspection methods, and approaches to continuous
improvement.

Management: Quality managers and teams are responsible for implementing

quality decisions (the process controlling, measuring and improving the quality of
an organization's processes, goods and services) and ensuring that products or
services meet or exceed established standards.
Inventory Management:

Decision-Making: Decisions regarding inventory levels, reorder points, and inventory

control methods impact costs and customer satisfaction.

Management: Operations managers oversee inventory management practices to

balance the costs of holding inventory against the risk of stockouts.

Supply Chain Management:

Decision-Making: Choices regarding supplier selection, transportation methods, and

distribution networks affect the efficiency of the supply chain.

Management: Operations managers collaborate with supply chain partners and make
decisions to optimize the flow of materials and information throughout the supply
chain.
Scheduling and Resource Allocation:

Decision-Making: Decisions about the scheduling of production activities(a plan that helps
facilitate the process of delivering products to customers and the marketplace.), allocation of
resources, and workforce planning are critical for meeting demand. Management: Operations
managers are responsible for creating schedules, allocating resources efficiently, and managing
workforce productivity (measures the output of goods and services that a team can produce in a given time
frame.).

Technology and Innovation:

Decision-Making: Decisions about adopting new technologies, automation, and innovation

impact the competitiveness and efficiency of operations. Management: Operations managers
and technology leaders collaborate to integrate new technologies and innovation into the
operational processes.
Performance Measurement and Continuous Improvement:

Decision-Making: Choices about key performance indicators (KPIs) (a quantifiable

measure of performance over time for a specific objective.) and metrics are essential
for evaluating operational performance.

Management: Continuous improvement teams, led by operations managers, use

performance data to make informed decisions and implement changes to enhance
efficiency and effectiveness.

•Effective management and decision-making in operations management require a

combination of analytical skills, industry knowledge, and strategic thinking. It
involves a continuous cycle of planning, execution, monitoring, and improvement to
ensure that operational objectives are achieved efficiently.