Introductory note on operation management

1. PRESENTATION
ON
INTRODUCTORY NOTE ON
OPERATIONS MANAGEMENT
BY:
PAWAN KAWAN
Roll No: 14
MBA-IV
UNIGLOBE COLLEGE

2.  Operations is one key to any organization’s success.
Along with marketing, operations, often called
production, is where an organization adds value and
makes money. In order to develop an effective
operating point of view and decision-making skills
related to operations, this note explores four
fundamental aspects of all organizations:
 The purpose and components of operations;
 The key tasks that operations managers must
manage for their respective organizations to do well;
 The types of operations systems and their
management requirements; and
 Some tools to help us diagnose and solve operations
problems.

3.  One common way to describe operations is the
input-transformation-output model shown in
Exhibit 1. According to this model, the
organization “purchases” inputs from suppliers,
changes them in some way through a
transformation process, and then “sells” the
outputs to customers.
 We normally associate operations with mines,
factories, and food processing plants, we also
see it in everyday settings such as restaurants,
hotels, airlines, universities, hospitals, banks,
and stores. Exhibit 2 gives some examples.

4.  Exhibit 3 lists six conclusions drawn from
Exhibits 1 and 2.
 First, some enterprises transform materials,
others transform customers, and others
transform information.
 Second, operations is everywhere.
 Third, inputs and outputs are a matter of
perspective.
 Fourth, operations adds value.
 Fifth, breaking an operation down into its many
steps can help in understanding and analysis.
 Sixth, operations needs information.

5.  The transformation process usually involves
equipment, people with a range of skills,
inventories of goods to help smooth out the
operation, and energy to make it all happen.
 Equipment
 Equipment is the machinery needed to make
production happen. The kind of equipment
needed depend as per the business. Four
important features of equipment are
capability, capacity, flexibility, and reliability.

6.  People
 Capability, capacity, flexibility, and reliability also
apply to people, who bring muscles, brains, and
interpersonal skills to operations. Although most
operations require some labour to operate machines,
move materials, or perform operating tasks, physical
labour is increasingly being reduced as tasks become
automated or otherwise changed.
 Energy
 Energy is a component of almost any operation and a
major operations factor. Traditionally, our economy
developed around energy sources, as many
watercourses were exploited to run mills and
factories

7.  Inventory
 Inventory is an input, a component, and a
product of most operating systems. Inventory
can be defined as anything that is purchased or
acquired for transformation or resale, or that
assists in the transformation of materials into
saleable goods.
 Although we talk about inventories of people,
plants, equipment, capacity, or light bulbs but in
this case the discussion to inventories of items
along the material flow is based on in Exhibit 1
i.e. there are three basic kinds of inventory: raw
materials, work in process, and finished goods.

8.  Operations tasks are what an organization must do to
produce products and/or services to satisfy customers and
realize its overall objectives. The main function of
operations is to transform inputs into the desired outputs,
using the necessary resources. The goal is to provide the
right product or service, in the right quantity, at the right
price, in the right place, at the right time, every time, with
an acceptable level of side effects.
 Exhibit 8 outlines five important customer needs that have
significant implications for operations.
 Function
 Quality
 Quantity
 Price
 Service

9.  Customer needs vary from one individual to
another and depend very much on the
situation. The operations manager’s job
includes determining what today’s need is
and having the flexibility to provide it.
 As a manager we have to know where to
focus our attention. Because we can’t do
everything well, we need to know what is
most important so we can at least achieve
that.

10.  The role of the operations manager is to
accomplish the necessary tasks as effectively and
as efficiently as possible. Exhibit 9 describes and
gives some examples of these two concepts.
 Effectiveness is related to quality. An operation
is effective if it makes the product as designed,
on time.
 Efficiency is related to productivity. An operation
is efficient if it functions with a minimum of cost,
effort, and waste.
 The ideal, of course, is to be both effective and
efficient. Although this goal is not always
possible, every organization should strive for it.

11.  Continuous-Flow and Line-Flow Processes
 In a continuous-flow process, inputs are
transformed into outputs continuously.
 Line-flow processes tend to produce discrete
units (that is, they can be counted one by
one, such as cars or bottles), whereas
continuous-flow processes produce products
counted in units of measure (litres of
benzene, tonnes of steel).

12.  Job Shop and Batch Processes
 In job shop and batch processes work moves
intermittently in batches. Job shop and
batching operations typically build up
significant work-in-process inventories.
 A job shop typically performs custom work in
response to customer orders. A batching
operation more likely makes a standard
product line in response to inventory levels.

13.  Project Processes
 Some products are unique or very complex. In
these situations, a somewhat different approach
to production, a project process, is most efficient
and effective.
 Often, the organization is “product-dedicated,”
with the job often being stationary and having
resources brought to it.
 Projects are unique because of their size,
complexity, and the presence of a number of
steps that must be completed in a clearly defined
order.

14.  Process Analysis
 As much as possible, operations managers must
ensure that the units of product proceed through
the process as scheduled.
 In continuous- or line-flow processes,
production is usually either on or off; when it is
on, each unit moves along at essentially the same
even or level rate.
 In job shops or batch operations, this is usually
not the case. Flow is intermittent, and the rate of
any one step can change frequently, leading to
bottlenecks that keep changing.

15.  Trade-off Analysis
 Trade-offs arises when we must choose
because we cannot have everything. Everyone
makes trade-offs every day. In some cases,
the trade-off is black or white — medicine or
business. Trade-off analysis helps managers
decide what the “best” compromise is. Like
process analysis, trade-off analysis involves a
logical sequence of steps that will not
guarantee success but might prevent
disaster.

16.  Like all fields, operations is constantly developing.
The recent past has seen revolutionary changes in
attitudes toward quality, inventory management,
and timing, which affect all departments in an
organization.

17.  Quality
 The changes in quality originate in how it
affects an organization’s competitiveness, how
it is defined, and how it is achieved.
 Current thinking on quality focuses on a
philosophy rooted in Japan known as total
quality management (TQM), which builds on
SPC in two ways. First, its real goal is to
enhance competitive performance in all areas:
costs, productivity, market share, and profits,
as well as quality. Second, TQM is all-inclusive.

18.  Just-in-Time Manufacturing
 TQM arose from a more fundamental Japanese
movement, just-in-time (JIT) or zero inventory (ZI)
manufacturing, which is largely responsible for
Japan’s striking post–World War II success. JIT has
at least two distinct meanings.
 On a micro level, the term literally is taken to mean
that something arrives just as it is needed — no
sooner and no later.
 On a macro level JIT means eliminating waste —
the TQM philosophy of continual improvement.

19.  Flexibility and Operations Control
 In the past few years, customers have started to
demand exactly what they want from manufacturers.
Typically, they want something different — perhaps
colour, size, flavour, or shape — and they want it ast
without a price penalty. This phenomenon, termed
“mass customization,” is more common in some
industries than others.
 Many mass customizers dedicate a team to design,
produce, and deliver a customer’s order.
 Flexibility requires that such teams be established
quickly and work together from the start, implying a
cooperative organizational culture.

20.  This note was designed to broaden our knowledge of
operations situations by discussing five aspects of
operating systems:
1. The input-transformation-output notion and the basic
transformation components of equipment, labour,
materials, and energy;
2. The key operations tasks of function, quality, quantity,
price, and service;
3. The basic process types (continuous-flow, line-flow,
batch, job shop, and project processes) and their
management requirements;
4. The two basic operations analysis tools of process and
trade-off analysis; and
5. Recent developments in quality, inventory management,
and timing.

21. THANK YOU