Introduction to operation management, Importance, Scope, Transformation Process
- 2. Learning Outcomes In this unit we will discuss about: • What is operation Management? • Critical Responsibility of a Manager, • Transformation Process, • Operation as service, • Historical Development of Operation Management, 2
- 3. Learning Outcomes…. In this unit we will discuss about: • JIT & TQC, • Quality and Productivity, • TQM and Quality Certification, • Business Process Re-Engineering, • Supply Chain Management. 3
- 4. 4 The three basic functions of Management
- 5. Operations Management • What is operations? – The part of a business organization that is responsible for producing goods or services • How can we define operations management? – The management of systems or processes that create goods and/or provide services
- 6. Goods are physical items that include raw materials, parts, subassemblies, and final products. •Automobile •Computer •Oven •Shampoo Services are activities that provide some combination of time, location, form or psychological value. •Air travel •Education •Haircut •Legal counsel Good or Service?
- 7. 7 Operations Management is: • A management function • An organization’s core function • In every organization whether Service or Manufacturing, profit or Not for profit
- 8. Why Study OM? • Every aspect of business affects or is affected by operations • Many service jobs are closely related to operations – Financial services – Marketing services – Accounting services – Information services 1-8
- 9. OM and Career Opportunities • Operations manager • Supply chain manager • Production analyst • Schedule coordinator • Production manager • Industrial engineer • Purchasing manager • Inventory manager • Quality manager 1-9
- 10. Scope of Operations Management • Operations Management includes: – Forecasting – Capacity planning – Scheduling – Managing inventories
- 11. Scope of Operations Management • Operations Management includes: – Assuring quality – Motivating employees – Deciding where to locate facilities – Supply chain management – . . .
- 12. Importance of operation management 12 Reduce Cost Increase Revenue Reduce Investment Innovation Building
- 13. Operations • Goods Producing • Storage/Transportation • Exchange • Entertainment • Communication Examples • Farming, mining, construction • Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines • Retailing, wholesaling, banking, renting, leasing, library, loans • Films, radio and television, concerts, recording • Newspapers, radio and television, newscasts, telephone, satellites 13
- 14. Critical Responsibility of a Manager • Strategic Decision Making • Implement & Use ERP • Automate Process • Enhance the R&D effort. • Reduce lag in implementation of projects 14
- 15. Critical Responsibility of a Manager…. • Protect the Environment • Act as a member in New Product Design & Development • Strategic Relationship with Suppliers • Technology Management • Internal Quality Audit 15
- 16. 16 What is Role of OM? • OM Transforms inputs to outputs – Inputs are resources such as • People, Material, and Money – Outputs are goods and services
- 17. All parts of the organizations are operations • Operations as a function : Part of the organization which produces the products and services for the organization's external customers. • Operations as an activity : Any processing of input resources in order to produce products and services, for either internal or external customers. 17
- 19. Characteristics of operation processes Inputs Inputs – Transformation - Outputs But these activities do differ in: • V = The Volume of their output • V = The Variety of their output • V = The Variation in demand • V = The degree of Visibility which customers have of the product/service 19
- 20. The Volume Dimension High Volume Operations • The transformation is highly • Repeatability leads to Specialization • Specialization leads to customization • Customization is capital intensive • High volume leads to lower unit cost Low Volume Operations • There is low repetition in the repeatable transformation process • Employees perform more than one task • More tasks require less systemization • Low volume leads to high unit costs 20
- 21. The VARIETY dimension Low Variety Operations: • The transformation process is well- defined • Well-defined processes requires standardized processes • Standardized transformation processes are very routinely by nature • Low variety in the transformation processes leads to a lower unit cost High Variety Operations: • The transformation process can be highly flexible • The transformation can be highly complex • The transformation process meets the customer’s specific needs • High variety operations lead to high unit costs 21
- 22. The VARIATION dimension Low Variation Operations: • The transformation process is stable • The demand and output are predictable • There is a relatively high utilization of inputs • Low variation leads to low unit costs • Organization must be able to change capacity. High Variation Operations: • Operations needs to consider the changing demand patterns • Operations must be highly flexible. • High unit cost • Anticipation of customer behavior is required 22
- 23. The VARIATION dimension Low Visibility Operations: • Time lag between production and consumption. • The output from the transformation is highly standardized. • Employees in the process do not require a high level of contact (personal) skills. • Low unit cost services. High Visibility Operations: • There is a short waiting tolerance. • A high degree of customer contact skills is required. • There is a high degree of variety present. • The per-unit cost is very high. 23
- 24. The implications of the four V’s Implications for the cost of creating the product or service: • High volume, low variety, low variation and low visibility help to keep transformation costs down. • Low volume, high variety, high variation and high visibility carry a cost penalty for the transformation process and organization as a whole. 24