Operations Management

Ramanujan College of Management

Approved By AICTE, affiliated to MDU, Rohtak
Palwal (NCR Delhi, Haryana)
What is Operations?
In more broader terms, Operations is not
just concerned with what goes on at the
point of production, but is also directly
concerned with supplying the materials, the
location and layout of facilities, the
programming of operations and the
motivation of employees.
Every organization has an Operations
function, whether or not it is called
‘operations’
Operations as Basic
Function in an
Organization
Operations as Basic Function
Every business is managed through
three major functions:
Marketing: Generates Demand, Sale
Operations: Produce Goods or Services
Finance: Manage Funds, Collect & Pays
All other functions fit somewhere under one
or more of above. For example, finance
could include accounting, investing, real
estate, insurance or banking.
 Operations as Basic Function
– Manufacturing
Manufacturing

Marketing Operations Finance

Production Quality Control Supply Chain Maintenance Design / IT

 Operations as Basic Function
– Service (Banking)
Banking
Services

Marketing Operations Finance

Data Cheque Transactions Loan

Security
Storage Clearing Processing Processing
 Operations as Basic Function
– Service (Airline)
Airline

Marketing Operations Finance

Passenger Luggage Flight Facility

Catering
Check ins Handling Operations Maintenance
Operations as Basic Function
Hence Operations is one of 3 basic functions
in an organization.

Its applications / sub-domains depends

upon nature of the business and may vary
from organization to organization.

Production, Design / IT, Maintenance,

Quality, Supply Chain are common sub
domains in an manufacturing setup.
 Operations as
Transformation Function
in an Organization
 Operations as Transformation
Function
Inputs Transformation Outputs

Transformed Resources: This Includes Changes

Materials: in the
The physical inputs to the process Physical characteristics of
materials or customers
Information Location of materials,
That is being processed or used information or customers
in the process Ownership of materials or
Customers: Information
The people who are transformed in Purpose or form of Goods
some way. information physiological or Service
psychological state of
customers. Undesirable Waste in
Transforming Resources:
Storage of materials, some case
Human Resources: information or customers
People involved directly or
supporting it
Facilities:
Land, buildings, machines, capital,
technology and equipment.
Operations as Transformation
Function
Hence Operations can also be defined as all the
activities concerned with the transformation of
materials, information or customers. [Galloway in
his book “Principles of Operations Management”]
Operations as Transformation
Function- What is Value Addition?
Value addition is the difference between the
cost of inputs and the value or price of
outputs.
Hence Operations as transformation process
is value addition.
The essence of operations function is to add
value during the transformation process.
Operations as Core
Function in an
Organization
Operations as Core Function

Capital Markets, Stockholders

Finance

Personnel

Workers
Suppliers

Purchasing

Operations

Marketing

Customers
 Operations as Core Function
Finance/Accounting
Production and Budgets
Inventory data Cost analysis
Capital budgeting requests Capital investments
Capacity expansion and Stockholder
Orders for materials Technology plans requirements Product/Service
Production and delivery Availability
Schedules Quality Lead-time estimates

Marketing
Suppliers

Requirements Design/ Status of order

Performance specs Delivery schedules
Operations
Material availability Sales forecasts
Quality data Customer orders
Delivery schedules Customer feedback
Designs Personnel needs Promotions
Hiring/firing
Skill sets
Training
Performance evaluations
Legal requirements
Job design/work
Union contract negotiations
measurement

Human Resources
Operations as Core Function
Hence Operations is Core of any business
unit having interface with
Marketing
Finance
Suppliers
Customers
Workers
Other Stakeholders
Other Domains
What is Operations
Management?
What is Operations
Management?
Various definitions are as below:
The management of systems or processes
that create goods and / or provide services.

The organizing and controlling of the

fundamental business activity of providing
goods and services to customers.

The systematic direction and control of the

processes that transform resources (inputs)
into finished goods or services (outputs).
What is Operations
Management?
It is the science and art of ensuring that
goods and services are created and
delivered successfully to customers.
The on-going activities of designing, reviewing
and using the operating system, to achieve
service outputs as determined by the
organization for customers.
Operations management is about how
organizations produce goods and services.
To summarize, Operation Management is ….
What is Operations
Management?
Management of:
People
Process
Systems
…for delivery of a useful product or service

and also ….
What is Operations
Management?
Recognition / realization of improvement
opportunities in the areas of:
Increasing customer value
Reducing operational cost
Increasing return on assets
Sustainability
Why Operations
Management is
Important for an
Organization?
Why Operation Management
is Important?
Operations is one of the three major
functions (marketing, finance and
operations) of an organization.

Operations affects the companies’ ability to

compete. Offers a major opportunity for an
organization to improve its productivity and
profitability.

Operations is a costly part of an

organization.
Why Operation Management
is Important?
Nearly half of the employed people over the
world have jobs in operations.

The Operations function is responsible for a

major portion of the assets of most
organizations.

The concepts, tools and techniques of

Operations Management are widely used in
managing other functions.
Why Operation Management
is Important?
In Operations, it must be ensured that the
transformation process is performed
efficiently and that the output is of greater
value than the sum of the input. Operations
management is concerned with the design
and implementation of system and process
for getting work done.
 Why Operation Management
is Important? Effects of Increasing Contribution
Marketing Finance Operation
Option Option Management
Option

Current Increase Sales Reduce Finance Reduce

Production Cost
50% Cost 50% 20%

Sales 1,00,000 1,50,000 1,00,000 1,00,000

Input Cost 80,000 1,20,000 80,000 64,000
Gross Margin 20,000 30,000 20,000 36,000
Finance Cost 6,000 6,000 3,000 6,000
Net Margin 14,000 24,000 17,000 30,000
Taxes @ 25% 3,500 6,000 4,250 7,500
Margin after Tax 10,500 18,000 12,750 22,500
Why Operation Management
is Important? Effects of Increasing Contribution
On a sale of 1,00,000, 3 options related to 3
basic functions are explored 1) Increase
Sales by 50% 2) Reduce Finance Cost by
50% 3) Reduce Operations cost by 20%.
Margin after Tax was found to be maximum
in option 3 i.e. reduce Operations cost by
20%.
Hence managing Operations function is of
utmost importance to an organization and
gives high dividends.
Why Operation Management
is Important? Effects of Increasing Capabilities
Why Operation Management
is Important? Effects of Increasing Capabilities
As evident in figure, increasing operations
capabilities through proper Operations
Management tools, it not only gives an
competitive advantage but redefines
industry standards as well.
 What skills do
Managers need for
Operations
Management?
What skills do Managers need
for Managing Operations?
Successful managers should have knowledge of:
Advanced operations technology and
technical knowledge relevant to his/her
industry.

Interpersonal skills and knowledge of other

functional areas.

The ability to communicate effectively,

motivate other people, manage projects, and
work on multidisciplinary teams.
What skills do Managers need
for Managing Operations?
Mulch-disciplinary working, for example:
Supply chains, management of all
aspects of providing goods to a
consumer from extraction of raw
materials to end-of-life disposal.
The interface with marketing –
determining what customers' value prior
to product / service development.
What skills do Managers need
for Managing Operations?
The interface with Finance - capital
equipment and inventories comprise a
sizable portion of many firms' assets in
addition to normal operating costs

Service operations – coping with inherent

service characteristics such as simultaneous
delivery/consumption, performance
measurements, etc.
What skills do Managers need
for Managing Operations?
Operations strategy – consistent and aligned
with other strategies and legal
requirements.

Process design and improvements –

managing the innovation process.
What skills do Managers need
for Managing Operations?
New Concepts and Trends in Operation Management

Should have knowledge of new trends &

Concepts:
Mass Customization
The rapid, low cost production of goods and services that fulfill constantly
changing and increasingly unique customer desires.

Supply Chain Management

SCM requires the application of a systems approach to managing the flow
of information, materials and services from raw material suppliers through
factories and warehouses to the end user (customer)

Outsourcing
Outsourcing Buying goods or services rather than producing goods or
performing services within the organization
What skills do Managers need
for Managing Operations?
New Concepts and Trends in Operation Management

Lean manufacturing
Systems that use minimal amounts of resources - less space, less inventory,
fewer workers, fewer levels of management- to produce a high volume of
high-quality goods with some variety

Agility
The ability of an organization to respond quickly to demands or
opportunities.

Electronic Commerce
The use of computer networks, primarily the internet, to buy and sell
products, services, and information.
PGDM Operations
Management
Structure, Outcome &
Benefits to Organization &
Individuals
Program Structure
The core program consists of 17 courses
related to general management & leadership
skills, out of which 5 are offered in the second
year.
The elective program consists of 6 courses,
offered during 3rd & 4th semesters.
Specialization courses are divided into 2 main
categories
Manufacturing or Production Operations
Service, Technology Operations.
Program Structure &
Learning Outcome
Taught Course Learning Outcome
Management Accounting Operations – Finance Interface
Economics for Managers
Finance Management
Computer Applications in Use of IT in Operations, Data storage
Management & processing for decision making
Management Information System
(MIS)
Organizational Behavior Human Resources Development, IR
Human Resources Management relations, Team Building

Business Communication Skills Communicate effectively

Operations Research Data Processing, research & decision
Strategic Management making, Report writing
 Program Structure &
Learning Outcome
Taught Course Learning Outcome
●
Operations Management
Business Risk Management Leadership, Team building, innovation
Innovation & Entrepreneurship & risk taking
Economic & Social Environment Environment studies & evaluation

Marketing Management Operations – Marketing Interface

Domain Specific specialization i.e. Domain specific knowledge, knowing
Production Management about new technologies in the field.
Quality Management
Maintenance Management
Service Management
IT Management
Project Management
Program Outcome & Benefits
to Organization
At program completion, Professionals /
Technocrats should be able to:
Use a systematic approach towards management &
problem solving.

Use the techniques, skills and modern tools in

management to practice effectively in industry.
Identify, formulate, solve and evaluate
management problems.
Apply skills to plan and manage people, systems
and resources.
Program Outcome & Benefits
to Organization
Undertake action research independently and
develop clear report writing skills.

Function and communicate effectively in multi-

disciplinary teams.

Ensure effective management of execution &

efficient operations within requirements of
regulatory & Governance framework.
About Ramanujan College
Established in year 2007 at Delhi Mathura
Road, district Palwal of Haryana (NCR Delhi)

Offers PG level programs in management field

i.e. MBA & PGDM.

College is approved by AICTE & affiliated to

MDU, Rohtak.