Fundamentals of managing business operation
- 1. Fundamentals of Managing Business Operations
- 2. Introduction • Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level.
- 3. • The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. • If the same concept is extended to services management, then the corresponding set of management activities is called as operations management.
- 4. Evolvement of production & operations • Adam Smith in 18th century – recommended • breaking of jobs down into subtasks and • recognises workers to specialized tasks in which they would become highly skilled and efficient
- 5. • Production Management becomes the acceptable term from 1930s to 1950s. – As F.W. Taylor’s works become more widely known, managers developed techniques that focused on economic efficiency in manufacturing – Workers were studied in great detail to eliminate wasteful efforts & achieve greater efficiency. • With the 1970s, As service sector became more prominent, the change from production’ to ‘operations’ emphasized the broadening of our field to service organizations.
- 7. Concept of production • Production is defined as ‘the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user’.
- 8. Some other key terms
- 9. Value-added • When blending inputs into a product or service, the increased value of outputs compared to the sum of value of inputs. • For all operations general goal is to create some value addition so that outputs are worth more to the consumers.
- 10. Random Fluctuations • Unplanned or uncontrollable environmental influences that cause planned and actual output to differ. • External Sources – fire, floods or lightning • Internal Sources – imperfections in material or equipment, simple human error
- 11. Feedback • Information in the control process that allows management to decide whether organizational activities needs adjustment
- 12. Technology • The level of scientific sophistication in plant, equipment and skills in the conversion process. • Soft-drink – highly mechanized, capital intensive • Scientific research lab – Highly trained, professional scientists and scientific equipments.
- 13. Productivity • A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs. • Productivity is computed by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period.
- 14. Manufacturing vs Service • Rather think of every process on the manufacturing-service continuum. • Let’s take an example of food chain industry. • So try to find that whether it’s a more like a manufacturing process or service process.
- 15. Manufacturing process or service process? Manufacturer Service Provider Nature of output Physical and Durable Intangible, perishable Nature of inventories Can be inventoried Can’t be inventoried Customer Contact (with production process) Low High Response Time Long Short Consumption of output Slower Fast Capital intensity Higher Lower Quality measurement Objective and easier Subjective and difficult
- 16. Competitive priorities • Creating competitive advantage requires a determination of the factors that may put a firm in a better position in relation to its competitors in the marketplace.
- 17. 1. Cost • cost leadership in which the features of this strategy are: – low cost relative to competitors, – related and standardised products, – and economies of scale. – A cost leadership strategy requires • intense supervision of labour, tight cost control, frequent and detailed control reports and structured firm and responsibility
- 18. 2. Quality • Provides products that meet or exceed customer needs and expectations • Top Consistent Quality – Performance – Features – Reliability – Conformance – Durability – Serviceability – Perceived Quality
- 19. 3. Time • Quick Delivery • On-time Delivery • New Product/development speed
- 20. 4. Flexibility • Customization • Variety • Volume Flexibility
- 21. Order Winners • Order winners are the competitive advantages that cause a firm's customers to select that company's products or services. • It is the main reason why customers purchase a company's product.
- 22. Order Qualifiers • An order qualifier is a characteristic of a product or service that is required in order for the product/service to even be considered by a customer. • Meets the minimum threshold level.
- 23. Core competencies • Research and Development • Large scale of the business • Human Skills • System and processes • Immense capital