The document discusses operations management and provides context on production scenarios in India. It notes that during the past few decades, many domestic companies saw their market share decline due to an inability to compete with foreign firms in terms of cost, quality, or delivery. World-class operations performance in delivering high-quality, cost-competitive products and services is essential for survival in today's global economy. The document then discusses factors influencing competitiveness in manufacturing between India and China and provides examples of core competencies and decisions in operations management.

1. OPERATIONS MANAGEMENT

2. Why Study Operations Management?
Operations
Management
Business Education
Systematic Approach
to Org. Processes
Career Opportunities
Cross-Functional
Applications

3. Importance of Operations Management
• During the past couple of decades, many domestic
companies saw their market share decline due to their
inability to compete with foreign firms in terms of product
design, cost, or quality.
• Theories to explain this development:
– Cultural differences
– Government policies
– Merger mania
– Neglect of human resources
– Insufficient investment in technology
– An excess of lawyers and/or MBAs.
• World­class performance by operations in delivering high­
quality, cost­competitive products and services is essential to
survival in today's global economy.
• Of late Auto components, pharma, IT and ITES sectors are
showing signs of global competitiveness.

4. OPERATIONS MANAGEMENT
INTRODUCTION
PRODUCTION SCENARIO IN INDIA
• 50”s
• NEHRUVIAN SOCIALISM
• COMMANDING HEIGHTS FOR PUBLIC
SECTOR
• GOVT DECIDES “ WHAT IS GOOD”
• TEMPLES OF MODERN INDIA.
• WHATEVER IS PRODUCED IS SOLD

5. OPERATIONS MANAGEMENT
INTRODUCTION
PRODUCTION SCENARIO IN INDIA
contd..
• 60s and 70s ... INDIRA GANDHI ”s SLOGAN
“ GHARIBHI HATAO “
• PRINCES BECOME PAUPERS ,TOTAL SELF
SUFFICIENCY, BANK DEPOSITS ARE AT
THE DISPOSAL OF COMMON MAN
• 80s RAJIV GANDHI”s VISION OF “ A NEW
INDIA “ , DISMANTLING OF CONTROLS...

6. OPERATIONS MANAGEMENT
INTRODUCTION
PRODUCTION SCENARIO IN INDIA…
• 90”s LPG IN FULL FLOW, THROTTLED BY
SCAMS/SCANDLES
• NOW… TRANSITION PHASE TO OPEN
ECONOMY, CONSUMER IS THE
KING/EMPEROR, MANY CHOICES,
ECONOMIC/PRODN PSYCHE AT A LOW
EBB...

7. OPERATIONS MANAGEMENT
COMPETITIVENESS IN MFG - FACTORS
THE DRAGON VS THE ELEPHENT
• INDIA FACTOR CHINA
• 1947 ECONOMIC RACE STARTED 1947
• 1991 LIBERALISATION INITIATED 1978
• 5-6 % GDP GROWTH 9-10%
• 100 Cr + POPULATION 130 Cr
• 22% SAVINGS RATE 41%
• $100 PER CAPITA INCOME $450
• $165bn FOREIGN RESERVES $500bn
• $ 5-10 bn F D I $ 45-60 bn
• 09-11% BANK LENDING RATE 4-5%
• Rs 4/unit ELETRIC POWER Rs 2/unit
• 100units PRODUCTIVITY 300units
• 10Lakhs TOURIST ARRIVAL 60Lakhs
• V.strong TRADE UNIONS NO TU rights

8. OPERATIONS MANAGEMENT
COMPETITIVENESS IN MFG - FACTORS
THE DRAGON VS THE ELEPHENT
INDIA FACTOR CHINA
10 million No of TV sets produced 40 million
30 m tons Steel production 300 m tons
$30 bn Textiles production $ 145 bn
$ 15 bn Textiles exports $ 80 bn
1.6 million Automobiles production 5.5 million

9. OPERATIONS MANAGEMENT
World Manufacturing-Share of ASIA
Country 1980 2010
China 3,3 5.8
Korea 0.7 2.5
Taiwan 0.6 1.6
Indonesia 0.4 1.0
Thailand 0.3 0.8
Malaysia 0.2 0.5
Singapore 0.1 0.4
INDIA 1.1 1.1

10. Definition of Operations
Management
• Management of business (transformation)
processes
• How to structure the processes and manage
resources to develop the appropriate
capabilities to convert inputs to outputs
(transformation process).
– What is appropriate?

11. Inputs Outputs
Goods
Services
Labor & Capital
Feedback
for control
Transformation:Transformation:
Network of activities
Flow Units
(Material, Information,
Knowledge, etc.)
Resources
Operations
Management
Operations as a Transformation Process

12. Transformation Processes-Types
• Physical manufacturing
• Locational transport/storage
• Exchange retail
• Physiological healthcare
• Psychological entertainment
• Informational communications
TransformationInput Output

13. What is a Service and What is a Good?
• “If you drop it on your foot, it won’t hurt
you.” (Good or service?)
• “Services never include goods and goods
never include services.” (True or false?)

14. Core services are basic things that
customers want from products they
purchase.
Core Services
Definition

15. Product/Services Performance Objectives
Operations
Management
Flexibility
Quality
Speed
Price (or cost
Reduction)

16. Value­added services differentiate the
organization from competitors and build
relationships that bind customers to the firm
in a positive way.
Value-Added Services
Defined

17. Value­Added Service Categories
Operations
Management
Information
Problem Solving
Sales Support
Field Support

18. How do Firms Add Value?
• Greater productivity
– Lower costs and expenses
– Lower prices for the customer
• Higher quality
– Better performance
– Greater durability, reliability, aesthetics.
• Better timeliness
– Faster response and turnaround
– On­time delivery, meet promises
• Greater flexibility
– greater variety
– customization for customer needs / desires

19. • Operations - Strategy
• Product/Service Design
• Process Selection
• Site Selection
• Facility Layout
Capacity Planning
• Demand
Management
MRP/ERP
• Production Planning
and Scheduling
• Inventory
Management
• Quality control
OM Deals With

20. OM and Other Business
Functions - Marketing
• What operations can do relative to
meeting due dates, product
customization, new product introduction.
• In service industries, marketing and
production take place simultaneously.

21. OM and Other Business Functions
- Finance
• Understand inventory management, capacity
utilization and labor standards to develop
accurate cost data, perform audits, and
prepare financial reports.
• Cost accountants must be aware of how JIT
works.
• Need for capital investments.
• Forecast cash flows.
• Make-or-buy decision.
• Plant expansion and/or relocation.

22. OM and Other Business
Functions - Human Resources
• How jobs are designed?
• Compensation and incentive programs.
• Skills of work force.

23. OM and Other Business
Functions - IT
• Design and develop software.
• Major business applications of
computers is in production control.

24. OM and Other Business
Functions - Entrepreneurs
• Often fail because they run out of
working capital.
• Poor production, planning and inventory
management.

25. Current Issues in OM
• Effectively consolidating the operations resulting
from mergers.
• Developing flexible supply chains to enable mass
customization of products and services.
• Managing global supplier, production and
distribution networks.

26. Current Issues in OM (cont’d)
• Increased “commoditization” of
suppliers.
• Achieving the “Service Factory”.
• Achieving good service from service
firms.

27. Operations Strategy

28. Today’s competitive market
• Buyer’s market
• Buyer wants it
faster, better, and
cheaper/customised
• Competitors are
global
• Increasing short
Life-cycles

29. Car choices in 1980
• Ambassador
• Premier
• Standard-Herald

30. In 2004 what are the choices?
• Maruti
• Fiat- Palio
• Mitsubishi
• TATA- Indica
• Ambassador
• Daewoo
• BMW
• Ford
• GM
• Hyundai
• Honda
• Mercedes
• Rover
• Toyota

31. What is the impact of this global
competition?
• Operations must
achieve simultaneous
improvement of
price, quality, and
delivery speed.

32. What is a strategy?
• “Strategy is the determination of the
basic long-term goals and the
objectives of an enterprise, and the
adoption of courses of action and the
allocation of resources necessary for
carrying out these goals.”

33. Strategy
Strategic goals are common throughout an organization
What set of business should we be in ?
How should we compete in XYZ business ?
How can a specific area contribute to the competitive
advantage of a business ?
An organization therefore, requires a strategy
hierarchy

34. Operations Strategy
An operations strategy is defined by a pattern
of decisions , both structural and infra-structural,
which determine the capability of a
manufacturing/Service system and specify
how it will operate in order to
meet a set of operations objectives which are
consistent with overall business objectives.

35. Operations Role In Corporate Strategy
• Provide support for overall strategy of a
firm
• Serve as firm’s distinctive competence
• Must be consistent with overall strategy

36. Operations Strategy
Customer Needs Corporate Strategy
Operations Strategy
Alignment
Core
Competencies
Decisions
Processes, Infrastructure, and Capabilities

37. Linking the Strategic Role & Process View
Business Strategy
Operations Strategy
Desired Capabilities
Marketing Strategy Financial Strategy. . .
p, Q, t,
flexibility
compatible
?
Operations Structure:
Processes & Resources

38. Dealing with Trade-Offs
Cost
Quality
DeliveryFlexibility

39. Operations Strategy - Wal-Mart(USA)
Corporate Strategy
(Gain competitive advantage by) providing customers access to
quality goods, when and where needed, at competitive prices
Operations Strategy
– Short flow times
– Low inventory levels
Operations Structure
– Cross docking
– EDI
– Fast transportation system
– Focused locations
– Communication between
retail stores

40. Wal-Mart – Operations Strategy
• Inventory at retail stores turned over twice a week
(Industry averages once every two weeks)
• Improved targeting of products to markets
• Sourcing of Products – World-wide
• Sales per square foot increased from $140 in 1991
to $200 in 2004 (Industry average increased from
$110 to $150)

41. Core Competence
• CompetitivenessCompetitiveness derives from an ability to build, at lower cost
and more speedily than competitors, the core competenciescore competencies
that spawn unanticipated products.
– Core competencies are the collective learningcollective learning in the
organization, especially how to coordinate diverse
production skills and integrate multiple streams of
technologies.
– Core competence is about harmonizing streams ofharmonizing streams of
technologytechnology.
– Core competence is about the organization of workorganization of work and the
delivery of valuedelivery of value.
– Core competence is communicationcommunication, involvement and a
deep commitment to working across organizationalacross organizational
boundariesboundaries.
• Companies need to do a better job of leveraging technologies
and offering a wider variety of products on the same
technology platform.

42. CORE COMPETANCE….
• HOW TO IDENTIFY ?
• WHAT IT DOES BEST
• WHAT IT CAN DO.. OTHERSCAN NOT DO
• WHAT WILL PERMIT IT TO ACHIEVE THE BEST
IN THE WORLD
• STATUS(GAP) W.R.T . WHAT IT CAN NOT DO
• DEVELOP PLANS TO FULLY EXPLOIT
CAPABILITIES

43. CORE COMPETANCY…. EXAMPLES
• SONY
• HONDA
• MOTOROLA
• MCDONALD
RELIANCE
AMUL
HLL
Infosys
• MINIATURISATION
• MOTORS
• WIRELESS
COMMUNICATION
• LOCALISATION/
HYGENE

44. OM Decisions
• Strategic Decisions
• Design Decisions
• Operating Decisions

45. Strategic Decisions
• Product and Service plans
– What products and services?
• Competitive priorities
• Excel on cost or flexibility?
• Positioning strategy
• Organize around products and processes?
• Quality management
• How to get everyone involved?
• Quality control
• How to best achieve quality goals?

46. Design Decisions
• Process Design
– What transformation processes?
• Technology management
– Should we automate?
• Job design
– Should our jobs be specialized or enlarged?
• Capacity
– Is our facility too large or small?
• Location
– Where is a good store location?
• Layout
– What departments should be close?

47. Operating Decisions
• Forecasting
– How do we design the best forecasting system?
• Materials management
– Who should be our suppliers?
• Inventory
– How should we control our inventory?
• Aggregate plans
– How big should our workforce be?
• Master production scheduling
– Should we make to stock?
• Production control systems
– When should we release new orders?

48. IV.
Continuous
Flow
III.
Assembly
Line
II.
Batch
I.
Job
Shop
Low
Volume
Oneofa
Kind
Multiple
Products,
Low
Volume
Few
Major
Products,
Higher
Volume
High
Volume,
High
Standard-
ization
Commercial
Printer
FrenchRestaurant
Heavy
Equipment
CoffeeShop
Automobile
Assembly
BurgerKing
Sugar
Refinery
Flexibility(High)
UnitCost(High)
Flexibility(Low)
UnitCost(Low)
Product/Process
Matrix
Product/Process
Matrix

49. Example
• Yamaha announces plans for a new factory, making it the
worlds largest motorcycle manufacturer (1981)
• Honda responds “Yamaha wo tsubusu!”
– (“We will crush, squash, slaughter Yamaha”)
• Honda cut prices, increased advertising, flooded distribution
channels
• Both firms started with about 60 models
– Yamaha introduced 37 product line changes during next 18 months
– Honda introduced 113 new products, including new styles and new
technologies (4-valve engines, composite materials, ...)
• Yamaha decimated, despite drastic price cuts, has 12 month
inventory of unsold motor cycles
• Yamaha capitulates, Pres. Eguchi publicly apologizes
• Honda wins war with superior design, cycle times

50. Effective Key Success Measures of OM
• Quality as felt by the customer
– Warranty
• Flexibility as felt by the customer
– Customized Product that exceeds need
• Speed as felt by the customer
– On Time Delivery
• Price as felt by the Customer
– Internal Profit Margin (Price minus Costs)
supported by the market

51. Current POM Challenges
• Speeding product development time
• Developing production systems to enable mass
customization of products and services
• Managing global production networks
• Developing and integrating new process
technologies into existing production systems .

52. Current POM Challenges
• Achieving high quality quickly and maintaining
it in the face of restructuring
• Managing an increasingly diverse workforce
• Conforming to environmental constraints,
ethical standards, and government regulations.

53. GOALS FOR OM EXCELLENCE
• OPERATIONAL EXCELLENCE
• ON-TIME DELIVERY PERFORMANCE
• ZERO ERROR
• INVENTORY REDUCTION(IN-BOUND)

54. Questioning The Process
``It is always amazing how many of the
things we do will never be missed. And
nothing is less productive than to make
more efficient what should not be done at
all.”
Peter Drucker