OPERATION UNIT 1.pdf VERY USEFUL TO LEARN
- 2. Difference between Production and Operations Management BASIS FOR COMPARISON PRODUCTION MANAGEMENT OPERATIONS MANAGEMENT Meaning Production Management connotes the administration of the range of activities belonging to the creation of products. Operations Management refers to the part of management concerned with the production and delivery of goods and services. Decision Making Related to the aspects of production. Related to the regular business activities. Found in Enterprises where production is undertaken. Banks, Hospitals, Companies including production companies, Agencies etc. Objectives To produce right quality goods in right quantity at right time To utilize resources, to the extent possible so as to satisfy customer
- 3. The Product/Process Continuum Product orientation Process orientation Automobile manufacturers Restaurants Undertakers Automobile retailers Banks Airlines Consultancies Photocopier manufacturers & service providers Organizations on a Product/Process Continuum
- 4. The Transformation Process Transformation Process Feedback Mechanisms INPUTS OUTPUTS Random disturbances Quality of inputs monitored Quality of outputs monitored
- 5. The Transformation Process For a Service Organization (An MBA Institute) Transformation Process Raw minds (students) Teachers Class rooms Computer lab Library Projectors (OHP, LCD etc) Administrative staff Enlightened students with: • Good communication skills • Pleasant personalities • Leadership qualities • Good analytical ability • Team spirit • Decision making abilities • Computer skills Random disturbances • Strikes of students, teachers or staff • Undue interference of the government in the working of institutions Quality of inputs monitored Quality of outputs monitored INPUTS Feedback Mechanisms • Success at placement interviews • Grades obtained in examinations • Rising career graph of alumni in the industry • Number of applications for admission in the institute • Ratings of surveys OUTPUTS
- 6. The Transformation Process For a Hybrid Service & Manufacturing Organization (A Restaurant) Transformation Process Building Vegetables Furniture Mutton, chicken, pork, etc. Cooking oil, Spices, etc. Waiters Manager Customers satisfied with: • Good preparation of the food • Pleasant behavior and personality of the waiter • Genuine prices charged Random disturbances • High turnover of chefs, waiters, etc. • Inflation • Government’s taxation policy Quality of inputs monitored Quality of outputs monitored INPUTS Feedback Mechanisms • Rising Revenues • Repeat Customers • Appreciation of customers OUTPUTS Customers Chef
- 7. The Transformation Process For a Purely Manufacturing Organization (A Refrigerator Manufacturer) Transformation Process Building Office infrastructure (computers, furniture, etc.) Workers Packaging material Capital Managers Customers satisfied with: • Good cooling performance • Less consumption with electricity • Good after-sales service • New advanced features Random disturbances • High turnover of workers and managers • Recession • Government’s taxation policy • Strikes instigated by trade unions Quality of inputs monitored Quality of outputs monitored INPUTS Feedback Mechanisms • Rising sales volume • Lesser customer complaints • Positive response of customers in the feedback forms • Productivity OUTPUTS Machines & Equipments Components, parts, sub-assemblies, etc.
- 8. Production & Operations Management (POM) Defined Production & Operations Management is defined as the design, operation, and improvement of the transformation process, which converts the various inputs into desired outputs of products and services.
- 9. Operations Strategy Inventory Management for Independent Demand Items Facility Location Planning Facility Layout Planning Project Management Total Productive Maintenance (TPM) Facility Capacity Planning Materials Requirement Planning (MRP)/ Just-In-Time (JIT) System/ Supply Chain Mgt. (SCM) New Product Development Business Process Outsourcing and Off-shoring Steps in the production/operations process from the point of view of an entrepreneur
- 10. Aggregate Production/ Operations Planning Work Design Quality Management Operations Scheduling Service Operations Management Demand Forecasting Steps in the production/operations process from the point of view of an entrepreneur
- 11. Productivity and its Measurement • A measure of how efficiently inputs are converted into outputs is called productivity. Productivity measures how well resources are used. • It is computed as a ratio of outputs (goods and services) to inputs (labor and materials). • The more productive a company is, the better it uses its resources. • The equation is as follows: Productivity = output/input • This measure of productivity can be used to measure the productivity of one worker or many, as well as the productivity of a machine, a department, the whole firm, or even a nation. • Productivity refers to the efficiency of the production system. • .
- 12. Total productivity • Total productivity is used when measuring productivity for all inputs combined, such as labor, machines, and capital. • For example, let’s say a company produces weekly the equivalent of $10,000 in output in the form of finished goods. Let’s also say that the weekly value of all the inputs combined—including labor, materials, and other costs—is $5,000. Total productivity for the week for the company is Total Productivity = output/input = $10,000/$5,000 = 2.0 • Although total productivity is valuable to give a company a sense of how it is doing on the whole, it is often much more useful to measure the productivity of one variable at a time. • This allows us to evaluate how efficiently various resources are being used
- 13. Total Productivity Measure (TPM) • It is based on all the inputs. The model can be applied to any manufacturing organization or service company. • Total productivity =Total tangible output +Total tangible input • Total tangible output = Value of finished goods produced + Value of partial units produced + Dividends from securities + Interest+ Other income • Total tangible input = Value of (human + material + capital + energy+ other inputs) used. The word tangible here refers to measurable. • The output of the firm as well as the inputs must be expressed in a common measurement unit. The best way is to express them in rupee value.
- 14. Partial productivity or single-factor productivity • Partial productivity or single-factor productivity is when we compute productivity as the ratio of output relative to a single input. • For example, we can compute machine productivity or labor productivity. • For machine productivity we can see how many units a machine is processing over a certain period of time; • For labor productivity we can compute how many units a worker can process over a certain period of time, such as a day, hour, or month.
- 15. Partial Productivity Measures (PPM) • Depending upon the individual input partial productivity measures are expressed as: • Partial productivity =Total output/ Individual input • Labor productivity =Total output/Labour input(in terms of man hours) • Capital productivity =Total output/Capital input • Material productivity =Total output/Material input • Energy productivity =Total output/Energy input One of the major disadvantages of partial productivity measures is that there is an over emphasis on one input factor to the extent that other input are underestimated or even ignored.
- 16. Benefits derived from higher productivity are as follows: • It helps to cut down cost per unit and thereby improve the profits. • Gains from productivity can be transferred to the consumers in form of lower priced Products or better quality products. • These gains can also be shared with workers or employees by paying them at higher rate. • A more productive entrepreneur can have better chances to exploit expert opportunities. • It would generate more employment opportunity.
- 17. • Overall productivity reflects the efficiency of production system. • More output is produced with same or less input. • The same output is produced with lesser input. More output is produced with more input. • The proportional increase in output being more than the proportional increase in input.
- 18. Work study • “Work study is a generic term for those techniques, method study and work measurement which are used in the examination of human work in all its contexts. And which lead systematically to the investigation of all the factors which affect the efficiency and economy of the situation being reviewed, in order to effect improvement.”
- 19. Work study • Work study is a means of enhancing the production efficiency (productivity) of the firm by elimination of waste and unnecessary operations. • It is a technique to identify non-value adding operations by investigation of all the factors affecting the job. • It is the only accurate and systematic procedure oriented technique to establish time standards. • It is going to contribute to the profit as the savings will start immediately and continue throughout the life of the product. • Method study and work measurement is part of work study. • Part of method study is motion study, work measurement is also called by the name ‘Time study’.
- 20. Advantages of Work Study • It helps to achieve the smooth production flow with minimum interruptions. • It helps to reduce the cost of the product by eliminating waste and unnecessary operations. • Better worker-management relations. • Meets the delivery commitment. • Reduction in rejections and scrap and higher utilization of resources of the organization. • Helps to achieve better working conditions. • Better workplace layout. • Improves upon the existing process or methods and helps in standardization and simplification. • Helps to establish the standard time for an operation or job which has got application in manpower planning, production planning.
- 21. Method study • Method study enables the industrial engineer to subject each operation to systematic analysis. • The main purpose of method study is to eliminate the unnecessary operations and to achieve the best method of performing the operation. • Method study is also called methods engineering or work design. • Method engineering is used to describe collection of analysis techniques which focus on improving the effectiveness of men and machines. • According to British Standards Institution (BS 3138): “Method study is the systematic recording and critical examination or existing and proposed ways or doing work as a means or developing and applying easier and more effective methods and reducing cost.”
- 22. Objectives of Method Study Method study is essentially concerned with finding better ways of doing things. It adds value and increases the efficiency by eliminating unnecessary operations, avoidable delays and other forms of waste. The improvement in efficiency is achieved through: • Improved layout and design of workplace. • Improved and efficient work procedures. • Effective utilization of men, machines and materials. • Improved design or specification of the final product. • The objectives of method study techniques are: • Present and analyze true facts concerning the situation. • To examine those facts critically. • To develop the best answer possible under given circumstances based on critical examination of facts.
- 23. Scope of Method Study Method Study can be equally applied to both Manufacturing and service sector: • To improve work methods and procedures. • To determine the best sequence of doing work. • To smoothen material flow with minimum of back tracking and to improve layout. • To improve the working conditions and hence to improve labor efficiency. • To reduce monotony in the work. • To improve plant utilization and material utilization. • Elimination of waste and unproductive operations. • To reduce the manufacturing costs through reducing cycle time of operations.
- 24. Steps or Procedure Involved in Method Study
- 25. • SELECT the work to be studied and define its boundaries. • RECORD the relevant facts about the job by direct observation and collect such additional data as may be needed from appropriate sources. • EXAMINE the way the job is being performed and challenge its purpose, place sequence and method of performance. • DEVELOP the most practical, economic and effective method, drawing on the contributions of those concerned.
- 26. • EVALUATE different alternatives to developing a new improved method comparing the cost- effectiveness of the selected new method with the current method with the current method of performance. • DEFINE the new method, as a result, in a clear manner and present it to those concerned, i.e., management, supervisors and workers. • INSTALL the new method as a standard practice and train the persons involved in applying it. • MAINTAIN the new method and introduce control procedures to prevent a drifting back to the previous method of work.
- 27. Time study • Time study is also called work measurement. • It is essential for both planning and control of operations. • According to British Standard Institute time study has been defined as • “The application of techniques designed to establish the time for a qualified worker to carry out a specified job at a defined level of performance.”
- 28. Steps in Time Study • Stop watch time is the basic technique for determining accurate time standards. They are economical for repetitive type of work. • Steps in the time study are: • Select the work to be studied. • Obtain and record all the information available about the job, the operator and the working conditions likely to affect the time study work. • Breakdown the operation into elements. An element is a instinct part of a specified activity composed of one or more fundamental motions selected for convenience of observation and timing. • Measure the time by means of a stop watch taken by the operator to perform each element of the operation. Either continuous method or snap back method of timing could be used.
- 29. • At the same time, assess the operators effective speed of work relative to the observer’s concept of ‘normal’ speed. This is called performance rating • Adjust the observed time by rating factor to obtain normal time for each element • Normal = Observed time x (Rating/ 100 ) • Add the suitable allowances to compensate for fatigue, personal needs, contingencies etc. to give standard time for each element. • Compute allowed time for the entire job by adding elemental standard times considering frequency of occurrence of each element. • Make a detailed job description describing the method for which the standard time is established. • Test and review standards wherever necessary.
- 30. Steps in Time Study
- 31. ILLUSTRATION 1 • Assuming that the total observed time for an operation of assembling an electric switch is 1.00 min. If the rating is 120%, find normal time. If an allowance of 10% is allowed for the operation, determine the standard time.
- 33. Factors Influencing Productivity Factors influencing productivity can be classified broadly into two categories: • controllable (or internal) factors and • un-controllable (or external) factors.
- 34. Controllable internal factors • Product factor: In terms of productivity means the extent to which the product meets output requirements product is judged by its usefulness. The cost benefit factor of a product can be enhanced by increasing the benefit at the same cost or by reducing cost for the same benefit. • Plant and equipment: These play a prominent role in enhancing the productivity. The increased availability of the plant through proper maintenance and reduction of idle time increases the productivity. Productivity can be increased by paying proper attention to utilization, age, modernization, cost, investments etc. • Technology: Innovative and latest technology improves productivity to a greater extent. Automation and information technology helps to achieve improvements in material handling, storage, communication system and quality control. The various aspects of technology factors to be considered are: Size and capacity of the plant, o Timely supply and quality of inputs, o Production planning and control, o Repairs and maintenance, o Waste reduction, and o Efficient material handling system.
- 35. • Material and energy: Efforts to reduce materials and energy consumption brings about considerable improvement in productivity. o Selection of quality material and right material. o Control of wastage and scrap. o Effective stock control. o Development of sources of supply. o Optimum energy utilization and energy savings. • Human factors: Productivity is basically dependent upon human competence and skill. Ability to work effectively is governed by various factors such as education, training, experience aptitude etc., of the employees. Motivation of employees will influence productivity. • Work methods: Improving the ways in which the work is done (methods) improves productivity, work study and industrial engineering techniques and training are the areas which improve the work methods, which in term enhance the productivity. • Management style: This influence the organizational design, communication in organization, policy and procedures. A flexible and dynamic management style is a better approach to achieve higher productivity.
- 36. Uncontrollable (or) external factors • Structural adjustments: Structural adjustments include both economic and social changes. Economic changes that influence significantly are: o Shift in employment from agriculture to manufacturing industry, o Import of technology, and o Industrial competitiveness. Social changes such as women’s participation in the labor force, education, cultural values, attitudes are some of the factors that play a significant role in the improvement of productivity. • Natural resources: Manpower, land and raw materials are vital to the productivity improvement. • Government and infrastructure: Government policies and program are significant to productivity practices of government agencies, transport and communication power, fiscal policies (interest rates, taxes) influence productivity to the greater extent.
- 37. Types of Manaufacturing Processes/systems Types of Manufacturing Processes Types of Manufacturing Processes Continuous Process Mass (Assembly) Process Intermittent Process Project Batch Process Job Shop Process
- 38. Continuous Process • Continuous means something that operates constantly without any irregularities or frequent halts. • In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence.
- 39. Following are examples on the continuous production system. • The production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production. • Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand.
- 40. The Characteristics of Continuous Process • The flow of production is continuous. It is not intermittent. • The products produced by such a process are highly standardized with almost no variety. • The products are produced on predetermined quality standards. • The products are produced in anticipation of demand. • Standardized routing sheets and schedules are prepared.
- 41. Types of Continuous Process • Mass(Assembly) production • Process production
- 42. Mass production • Here, company produces different types of products on a large-scale and stock them in warehouses until they are demanded in the market. • Volume of output is high . • Varieties are less. • These processes require highly specialized machines , semi skilled workers, and result in low cost per unit. . • E.g. of mass production is the production of toothpastes, soaps, pens, automobiles, electronic items , white goods
- 43. The characteristics of mass production • There is a continuous flow of production. However, this depends on the demand in the market. • Here, there is limited work-in-progress. • Supervision is easy because only few instructions are necessary. • The material handling is done mostly by machines, i.e. conveyors and automatic transfer machines. • The flow of materials is continuous. There is little or no queuing at any stage of production.
- 44. Process production • , The set–up time for starting such processes is usually very long and once started they continue for along duration. • The products by such processes are highly standardized with almost no variety, and are measured on a continuous basis( tonnes per day, lengths per day , etc.) rather than in terms of discreet units. • A single product is produced and stocked in warehouses until it is demanded in the market. The flexibility of these plants is almost zero because only one product can be produced. • Examples of these plants include, steel, cement, paper, sugar, chemicals , plastic, textiles , detergents etc.
- 45. The characteristics of process production • There is a highly mechanized system for handling materials. Conveyors and automatic transfer machines are used to move the materials from one stage to another. • Low-skilled labour and skilled technicians are required. • There is very less work-in-progress because material flow is continuous. • The production planning and scheduling can be decided well in advance. • The full production system is designed to produce only one specific type of item.
- 46. Intermittent Manufacturing Process • Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). • In the intermittent production system, goods are produced based on customer's orders. • These goods are produced on a small scale. • The flow of production is intermittent (irregular). • In other words, the flow of production is not continuous. • In this system, large varieties of products are produced. These products are of different sizes. • The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible.
- 47. The characteristics of an Intermittent process • The flow of production is not continuous. It is intermittent. • Wide varieties of products are produced. • The volume of production is small. • General purpose machines are used. These machines can be used to produce different types of products. • The sequence of operation goes on changing as per the design of the product. • The quantity, size, shape, design, etc. of the product depends on the customer's orders.
- 48. Types of Intermittent Manufacturing Process • Job Shop • Batch
- 49. Job Shop • Here, in jobbing production flows, company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer. The product is produced within a given period and at a fixed cost. This cost is fixed at the time of signing the contract. • Examples of such jobbing production flows include, services given by repair shops, tailoring shops, manufacturer of special machine tools, etc.
- 50. Characteristics of Job Shop • The production of items takes place in small lots. Sometimes only one product is produced at one time. • The items are manufactured strictly as per customer's specifications. • Highly skilled labor is required to perform specialized jobs. • There is disproportionate manufacturing cycle time. For e.g. the time needed to design the product may be more than the manufacturing time.
- 51. Batch production • In batch production flows, the production schedule is decided according to specific orders or are based on the demand forecasts. • Here, the production of items takes place in lots or batches. • A product is divided into different jobs. • All jobs of one batch of production must be completed before starting the next batch of production. • Examples of batch production flows include, manufacturing of drugs and pharmaceuticals, medium and heavy machineries, etc.
- 52. The characteristics of batch production • The products are made and kept in stock until their demand arises in the market. • General purpose machines and handling equipments, which can do many different jobs quickly are installed. This is because large varieties of items are to be produced. • There is a possibility of large work-in-progress due to many reasons. • There is a need for detailed production planning and control.
- 53. Project • Here, in project production flows, company accepts a single, complex order or contract. The order must be completed within a given period of time and at an estimated cost. • Examples of project production flows mainly include, construction of airports, dams, roads, buildings, shipbuilding, etc.
- 54. Characteristics of Project Production • The requirement of resources is not same (it varies). Generally, the resource requirement at the beginning is low. Then in mid of production, the requirement increases. Finally, it slows down when the project is near its completion phase. • Many agencies are involved in the project. Each agency performs specialized jobs. Here, coordination between agencies is important because all jobs are interrelated. • Delays take place in completion of projects due to its complexity and massiveness. • As routing and scheduling changes with fresh orders, proper inspection is required at each stage of production.
- 55. Emerging Role of the Production & Operations Manager in India Today New Responsibilities of Operations Managers To take part in the implementation & use of ERP software in the organization To take part in strategic decision making of the organization To act as internal quality auditors in certification programmes like ISO 9000 Increased attention to technology management in view of JVs of MNCs with domestic companies To act as supply chain managers in forging long-term strategic relationships with suppliers To automate the processes according to the requirements of the organization To act as a member of the concurrent engineering team in new product design To enhance the R & D effort of the organization for becoming self-reliant in developing new technologies To implement the environmental and pollution norms established by the government from time to time To oversee timely implementation of projects (like commissioning of facilities, launching of new products/ services, etc.) in view of the increased competition To implement total productive maintenance (TPM) programme To take care of issues relating to services operations management To take decisions regarding outsourcing/ off-shoring of business processes
- 56. • Text Book: S.N.Chary(2010). Production and operations management (5th ed.). Chennai,TN: Tata McGraw Hill • Reference Books: 1.Buffa E. S. ,& Sarin R. K.(2000).Modern production / operations management( 8th ed.).New York, NY :John Wiley and Sons 2. R. Panneerselvam(2012), Production and operations management(3rd. ed.). New Delhi: PHI