OPERATIONS MANAGEMENT INTRODUCTION Production Production implies the creation

OPERATIONS MANAGEMENT

INTRODUCTION Production: Production implies the creation of goods and services to satisfy human needs. Manufacturing: Process of producing tangible goods Production: Process of creating both goods and services

Operations: It refers to a function or system that transforms input to outputs of greater value. Operations Transformation process or Conversion process

Operations Management: “Operations management is a discipline that is concerned with the process of designing and operating production systems and subsystems to achieve a company’s goals”. “Operations management is concerned with converting materials and labour into goods and services as efficiently as possible to maximize the profit of an organization”.

Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. Operations management (OM) is the business function responsible for managing the process of creation of goods and services. It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services.

Operations Management Concepts Quality: goods and services that are reliable and perform correctly. • Quality allows customers to receive the performance that they expect. Efficiency: the amount of input to produce a given output. • Less input required lowers cost and waste. Responsiveness to customers: actions taken to respond to customer needs. • Firm can react quickly and correctly to customer needs as they arise.

Importance of Operations Management: • The efficiency and effectiveness of any organisation revolves around how well it manages its operations. • This is all about making the processes work right. • It calls for a greater degree of integration of resources with the capabilities of workforce, as well as with the myriad supply chain management functions, affecting the output.

• It enables an organisation to position the product in the right place in the right way keeping in view the critical cost and time considerations. • Operations managers are critical lynchpins responsible to get the product manufactured or service offered in the most appropriate way and thus, serves the interests of both the organisation and the customer.

Nature of operations ü Operations as a system ü Operations as an organisation function ü Operations as a conversion or transformation process ü Operations as a means of creating utility (Form utility, Place utility, Time utility, Possession Utility, Service utility, Knowledge utility)

Objectives of OM • • Right Quality Right Quantity Right Time Right Manufacturing Cost

Right Quality: Ø The quality of product is established based upon the customers need. Ø The right quality is not necessarily being the best quality. Ø It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. Right Quantity: Ø The manufacturing organisation should produce the products in right number. Ø If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products.

Right Time: Ø Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. Ø So, the production department has to make the optimal utilization of input resources to achieve its objective. Right Manufacturing Cost: Ø Manufacturing costs are established before the product is actually manufactured. Ø Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (preestablished) cost.

Scope of Operations Management • Operations Management includes: Ø Forecasting Ø Capacity planning Ø Scheduling Ø Managing inventories Ø Assuring quality Ø Motivating employees Ø Deciding where to locate facilities Ø Supply chain management Ø etc.

Types of Operations Goods Producing Examples Farming, mining, construction, manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites

OM Needs… • OM is one of three major functions (marketing, finance, and operations) of an organization • We want/need to know how goods and services are produced • We want to know what operations managers do • OM is such a costly part of an organization

• Related activities: Ø managing purchases Ø inventory control Ø quality control Ø storage Ø logistics Ø evaluations and we need to comunicate them with each others.

• OM often includes substantial measurement and analysis of internal processes, because a great deal of focus is on efficiency and effectiveness of processes. • Ultimately, the nature of how operations management is carried out in an organization depends very much on the nature of products or services in the organization.

WHAT OPERATIONS MANAGERS DO (by Henri Fayol): • Plan • Organize • Staff • Lead • Control A primary function of the operations manager is to guide the system by decision making. § System Design Decisions § System Operation Decisions

Characteristics of Operation Management • An organizations core function • Exists In every organization whether Service or Manufacturing, profit or Not for profit. • Most businesses are supported by the functions of operations, marketing, and finance • The major functional areas must interact to achieve the organization goals