Week001 - Module
Week001 - Module
1
Introduction to Production and Operations Management
Objectives:
1. Recognize how goods and services are produced
2. Understand what operations mangers do.
3. Know why operations management is the costly part of an organization.
What is POM?
For over two centuries, operations and production management has been
acknowledged as an important aspect in a country’s economic growth. The
traditional view of manufacturing management began in eighteenth century
when Adam Smith recognized the economic benefits of Specialization Theory
better known as division of labor. He recommended breaking of jobs down
into subtasks and recognizes workers to specialized tasks in which they
would become highly skilled and efficient. He believes division of labor leads
to increased productivity. In the early twentieth century, F.W. Taylor
implemented Smith's theories and developed scientific management. From
then until 1930, many techniques were developed prevailing the traditional
view.
Course Module
Today, specialization or division of labor can be seen implemented in
different companies and businesses.
Concept of Production
Production System
Course Module
1. JOB SHOP PRODUCTION is characterized by manufacturing of one or
few quantity of products designed and produced as per the specification
of customers within prefixed time and cost. It produces piece of goods in
small batches. The distinguishing feature of this is low volume and high
variety of products.
A job shop comprises of general-purpose machines arranged into
different departments. Each job demands unique technological
requirements, demands processing on machines in a certain sequence.
Characteristics of Job-shop Production:
• High variety of products and low volume.
• Use of general-purpose machines and facilities.
• Highly skilled operators who can take up each job as a challenge
because of uniqueness.
• Large inventory of materials, tools, parts. Detailed planning is
essential for sequencing the requirements of each product, capacities
for each work center and order priorities.
Advantages of Job-shop Production:
• A variety of products can be produced because of the general-purpose
machines and facilities.
• Operators will become more skilled and competent, as each job gives
them learning opportunities.
• Full potential of operators can be utilized.
• Opportunity exists for creative methods and innovative ideas.
Limitations Job-shop Production:
• The Cost is higher due to frequent set up changes.
• Higher level of inventory at all levels and hence higher inventory cost.
• Production planning is complicated.
• There is a larger space requirement.
Course Module
Characteristics of Continuous production:
• Dedicated plant and equipment with zero flexibility.
• Material handling is fully automated.
• Process follows a predetermined sequence of operations.
• Component materials cannot be readily identified with final product.
• Planning and scheduling is a routine action.
Advantages of continuous production:
• Standardization of product and process sequence.
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Manpower is not required for material handling as it is completely
automatic.
• Person with limited skills can be used on the production line.
• Unit cost is lower due to high volume of production.
Limitations of continuous production:
• Flexibility to accommodate and process number of products does not
exist.
• Very high investment for setting flow lines.
• Product differentiation is limited.
Production Management
Operations System
An operation is defined in terms of the mission it serves for the organization,
technology it employs and the human and managerial processes it involves.
An operations system converts inputs in order to provide outputs that are in
demand to customers. It converts physical resources into outputs, the
function of which is to satisfy customer wants, for example, provide some
utility for the customer. In some of the organization, the product is a physical
good like food in a hotel while in others it is a service like treatments given in
hospitals. Bus and taxi services, tailors, hospital and builders are the
examples of an operating system.
Everett E. Adam & Ronald J. Ebert define operating system as, “An
operating system (function) of an organization is the part of an organization
that produces the organization’s physical goods and services.
”Ray Wild defines operating system as, “An operating system is a
configuration of resources combined for the provision of goods or services.”
Concept of Operations:
Operations in an organization can be categorized into Manufacturing and
Service Operations.
Manufacturing operations is a conversion process that includes
manufacturing produces tangible output or a product, whereas, a conversion
process that includes service produces an intangible output such as a deed, a
performance, an effort.
Distinction between Manufacturing Operations and Service Operations:
Characteristics
Course Module
Customization vs. Standardization
Production Environment
Operations Management
Similar Issues
Service and manufacturing organizations face many similar issues that affect
the end result of the operation. For example, both face issues of cost control.
Manufacturing operations must find suppliers of raw materials at the lowest
cost -- and highest quality -- possible. Likewise, service operations' indirect
cost of providing services must be kept low so that the organization can
provide competitive prices to customers and still turn a profit. Other issues
both types of operations face include forecasting demand for products and
services and staying competitive in the marketplace.
PRODUCTIONS AND OPERATIONS MANAGEMENT
9
Introduction to Production and Operations Management
PLANNING
The operations manager defines the objectives for the operations subsystem
of the organization, and the policies, and procedures for achieving the
objectives. This stage includes clarifying the role and focus of operations in
the organization’s overall strategy. It also involves product planning, facility
designing and using the conversion process.
ORGANIZING
Course Module
CONTROLLING
To ensure that the plans for the operations subsystems are accomplished, the
operations manager must exercise control by measuring actual outputs and
comparing them to planned operations management. Controlling costs,
quality, and schedules are the important functions here.
BEHAVIOUR
Operation managers are concerned with how their efforts to plan, organize,
and control affect human behavior. They also want to know how the behavior
of subordinates can affect management’s planning, organizing, and
controlling actions. Their interest lies in decision- making behavior.
MODELS
CUSTOMER SERVICE
RESOURCE UTILIZATION
Course Module
There are four developments, which have spurred the trend toward
globalization. These are:
1. Improved transportation and communication technologies;
2. Opened financial systems;
3. Increased demand for imports;
4. Reduced import quotas and other trade barriers.
When a firm set up facilities abroad it involves some added complexities in
its operation. Global markets impose new standards on quality and time.
Managers should not think about domestic markets first and then global
markets later, rather it could be think globally and act locally. Also, they must
have a good understanding of their competitors. Some other important
challenges of managing multinational operations include other languages and
customs, different management style, unfamiliar laws and regulations, and
different costs.
PRODUCT DESIGN
Product design deals with conversion of ideas into reality. Every business
organization has to design, develop and introduce new products as a survival
and growth strategy. Developing the new products and launching them in the
market is the biggest challenge faced by the organizations.
The entire process of need identification to physical manufactures of product
involves three functions: marketing, product development, and
manufacturing. Product development translates the needs of customers
given by marketing into technical specifications and designing the various
features into the product to these specifications. Manufacturing has the
responsibility of selecting the processes by which the product can be
manufactured. Product design and development provides link between
marketing, customer needs and expectations and the activities required to
manufacture the product.
Course Module
PROCESS DESIGN
Process design is a macroscopic decision-making of an overall process route
for converting the raw material into finished goods. These decisions
encompass the selection of a process, choice of technology, process flow
analysis and layout of the facilities. Hence, the important decisions in process
design are to analyze the workflow for converting raw material into finished
product and to select the workstation for each included in the workflow.
QUALITY CONTROL
PRODUCTIONS AND OPERATIONS MANAGEMENT
15
Introduction to Production and Operations Management
MATERIALS MANAGEMENT
Materials management is that aspect of management function, which is
primarily concerned with the acquisition, control and use of materials
needed, and flow of goods and services connected with the production
process having some predetermined objectives in view.
The main objectives of materials management are:
To minimize material cost. To purchase, receive, transport and store
materials efficiently and to reduce the related cost. To cut down costs
through simplification, standardization, value analysis, import substitution,
etc. To trace new sources of supply and to develop cordial relations with
them in order to ensure continuous supply at reasonable rates. To reduce
investment tied in the inventories for use in other productive purposes and
to develop high inventory turnover ratios.
MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very important part of
the total productive effort. Therefore, their idleness or downtime becomes
are very expensive. Hence, it is very important that the plant machinery
should be properly maintained.
Course Module
The main objectives of maintenance management are:
To achieve minimum breakdown and to keep the plant in good working
condition at the lowest possible cost. To keep the machines and other
facilities in such a condition that permits them to be used at their optimal
capacity without interruption. To ensure the availability of the machines,
buildings and services required by other sections of the factory for the
performance of their functions at optimal return on investment.
• Exercises
• Skill Development
• Case let
Glossary
Productivity: the effectiveness of productive effort, especially in industry, as
measured in terms of the rate of output per unit of input.
Schematic: A representation of the elements of a system using abstract,
graphic symbols rather than realistic pictures.
Utilization: The action of making practical and effective use of something.
PRODUCTIONS AND OPERATIONS MANAGEMENT
17
Introduction to Production and Operations Management
References
Online Supplementary Reading Materials:
1. Five Differences Between Service and Manufacturing Organizations;
http://smallbusiness.chron.com/five-differences-between-service-
manufacturing-organizations-19073.html; April 10, 2017
2. Operations Management;
http://www.slideshare.net/alvarotalvarez/operations-management-
chapter-1?next_slideshow=2; April 10, 2017
3. Operations Management;
http://tn.upi.edu/pdf/Operations_Management.pdf; April 10, 2017
4. Operations Manager Job Description;
https://www.totaljobs.com/careers-advice/job-profile/executive-
jobs/operations-manager-job-description; April 10, 2017
5. History of Production and Operations Management;
http://www.slideshare.net/prashantranka/history-of-production-
and-operations-management; April 10, 2017
6. What is the Definition of Production Management?;
https://www.reference.com/business-finance/definition-production-
management-c1c9be69aeaccc3f; April 10, 2017
7. What are Some Examples of Production-Orientated
Companies?;https://www.reference.com/business-finance/examples-
production-orientated-companies-ede1b5685d301f30; April 10, 2017
8. What is Production Management in Business?;
http://thebizmanagementguide.com/what-is-production-
management-in-business/ ; April 10, 2017
Online Instructional Video:
1. INTODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT
new; https://www.youtube.com/watch?v=idkIrZsHJ74; September
11, 2017
Books and Journals:
1. Jay Heizer & Barry Render (2011); Operations Management (10th
Edition); New Jersey; Prentice Hall PTR
Course Module