OPERATIONS MANAGEMENT MODULE I INTRODUCTION OVERVIEW UNDERSTANDING OPERATIONS

OPERATIONS MANAGEMENT MODULE- I INTRODUCTION & OVERVIEW

UNDERSTANDING OPERATIONS MGMT. • ANY BUSINESS ACTIVITY IS AN OPERATION • EVERY BUSINESS ACTIVITY TRANSFORMS SOME INPUTS TO DESIRED OUTCOME • THE OUTCOME COULD BE A PRODUCT, OR A SERVICE OR SIMPLY AN INFORMATION OR AN EXPERIENCE • OPERATIONS COMPRISE OF SUCH TRANSFORMATION PROCESSES • OPERATIONS MANAGEMENT IS ABOUT OPTIMUM UTILIZATION OF THOSE TRANSFORMATION PROCESSES

1 -3 Operations Management: Conceptual Model INPUTS TRANSFORMATION PROCESS OUTPUT OR OUTCOME

Consider Following Transformations SYSTEM INPUTS TRANSFORMATION OUTCOME HOSPITAL PATIENT TREATMENT GOOD HEALTH RESTAURANT HUNGRY PERSON SUPPLY OF FOOD SATISFACTION MGMT. INSTITUTE STUDENTS TEACHING QUALIFIED MGR. APPU GHAR CHILDREN RIDES HAPPY EXPERIENCE NEWS PAPER NEWS PRINTING & CIRCULATION INFORMATION DISSIMINATION

1 -5 Operations and Supply Management Supply Chain Processes Sourcing Processes Manufacturing Processes Logistics Processes Service Processes Distribution Processes

Distinctive nature of Service Operations : �Tangibility: Services are performances and actions rather than objects, therefore having poor tangibility �Heterogeneity: High variability in the operation system performance �Simultaneous Production & Consumption: Degree of customer contact is very high �Perishability: Services cannot be inventoried as in the case of manufactured products.

Differences & Similarities in Business Operations of Manufacturing Organizations & Service Organizations : Manufacturing Organizations --- Service Organizations A. Differences Products: Physical & durable Output can be inventoried Product : Intangible & perishable Output can’t be inventoried Low customer contact High customer contact Long response time Short response time Quality easily measurable Quality not easily measurable Large facilities Capital intensive Small facilities Labour intensive Regional, national, Intl. markets Local markets

Manufacturing Organizations --- Service Organizations Similarities -Both concerned about quality, productivity and timely response to customers -In both cases choices have to be exercised about capacity, location, layout -Suppliers play very important role in business operations -Planning, Organizing, Scheduling and Controlling activities are equally applicable in operations of Manufacturing and Service Organization

2 -9 Operations’ Competitive Dimensions • Cost or Price – Make the Product or Deliver the Service Cheap • Quality – Make a Great Product or Deliver a Great Service • Delivery Speed – Make the Product or Deliver the Service Quickly • Delivery Reliability – Deliver It When Promised • Coping with Changes in Demand – Change Its Volume • Flexibility and New Product Introduction Speed – Change It • Other Product-Specific Criteria – Support It

20 -10 3 -Parameters for Measuring Performance of Operations • 1. Throughput – The rate at which Inputs are Converted to deliverable Outputs • 2. Inventory – Total holding of Inputs, In-process Outputs and Finished Outputs due for delivery to End customer • 3. Operating expenses – All the expenses that the system incurs on turning inputs into outputs

20 -11 KEY CONCERNS FOR MANAGERS OF OPERATIONS – Has throughput increased? – Has inventory decreased? – Have operational expenses decreased?

Areas for Reduction of Operational Costs • Labor costs • Material costs • Inventory costs • Transportation or distribution costs • Quality costs • Other costs

CONTEMPORARY ISSUES IN OPERATIONS MANAGEMENT • • • EFFECTIVE SUPPLY CHAIN COORDINATION GLOBAL AND DOMESTIC ENTERPRISE RESOURCE PLANNING CATERING TO INCREASING CUSTOMER EXPECTATIONS EFFECTIVE MANAGEMENT OF CUSTOMER TOUCH POINTS ACTIVE INVOLVEMENT OF MANAGERS AND WORKERS AT ALL LEVELS IN MANAGEMENT OF QUALITY.

2 -14 ORDER QUALIFIERS & ORDER WINNERS • Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers • Order winners are the criteria that differentiates the products and services of one firm from another