Concept of Operations Management

Anupam Kumar 1

Concept of Operations

Management

Presented By:

Anupam Kumar

Reader

SMS Varanasi

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Operations Management

• The Classical Image

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Operations Management

It is:

• A management function

• An organization’s core function

• In every organization whether

– Service or Manufacturing,

– Profit or Not for profit

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Operations Management

It is…

…the business function responsible for

planning, coordinating, and controlling the

resources needed to produce products and/or

services for a company.

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What Does Operations Management Do?

• Transforms inputs to

outputs

– Outputs can be

• goods and / or

• services

– Inputs are resources such

as

• People,

• Material,

• Machines,

• Energy,

• Information,

• Technology, and

• Money

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Why The Transformation and How?

• To add value

– Increase product value at each stage

– Value added is the net increase between output product

value and input material value

• To Provide an Efficient Transformation

– Efficiency – means performing activities well at least

possible cost

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Concept of Operations Management

Anupam Kumar 2

Types of Operations

• An operation may be broadly divided into two

categories.

– Manufacturing Operations

– Service Operations.

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Types of Operations

• Manufacturing Operations

– If a company has an ability to manufacture tangible

products, we call it a manufacturing company.

– Manufacturing operations deal with goods/tangible

products.

– Example industries:

• Agriculture,

• Forestry and fishing,

• Mining, Construction, etc.

– Inputs (raw materials, etc.) and outputs (products) are

tangible and visible objects.

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Types of Operations

• Non Manufacturing Operations

– Manufacturing transformation processes are some

kind of chemical or physical processes

– (ex: welding, assembling).

• The other companies who are not manufacturers

are referred to as service companies.

• Example industries:

– Transportation, Finance, real estate, insurance, hotels,

etc.

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Types of Operations

• Service Operations– Even in service operations, there are inputs and outputs. – The output is a satisfied customer.– Processes in service operations include

• giving advice (consultant firms), • transporting, • packaging, • storing, • serving (food), etc.

• Examples of service organizations include– Educational institutions, – repair shops, – Barbers, etc.

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Types of Service Operations

• Product Based Service Operations

– Some service operations deal with tangible outputs even

though they do not manufacture a product. e.g.

• Distributors,

• Mail service,

• Library, etc.

• Pure Service Operations

– Other service operations deal with intangible products.

– These are pure service operations. E.g.

• Financial advice,

• Counseling, etc.

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Types of Service Operations

• Proximity to Customer

– In most service operations, customer needs to be present as an active participant. e.g.

• Health care,

• Hair cut,

• Travel, etc.

• Remote Operations

– In some service operations, customer is not present as a participant. E.g.

• Architectural design,

• Repairing automobiles,

• Insurance, etc.

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Concept of Operations Management

Anupam Kumar 3

Operational Transformations

Operation

SystemInputs Transformation Outputs

Car Factory Raw MaterialsFabrication &

Assembly of CarsCars

Oil Refinery Crude OilChemical & Other

Processing

Gas, Petrol,

Kerosene, Diesel, Etc

AirlinesAirplane, pilots,

flight attendants,

customers

Air Transportation Change of place

Hospital Patients Health Cured patients13

Operations as a Function

• Operations function is one of 3 primary functions within a business:

– Finance,

– Marketing, and

– Operations.

• Operations function must also be well integrated with other parts of business.

Organization

Operations

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Operations

• Work of 3 primary

functions – Finance,

Marketing and

Operations, overlaps

each other and

• All three must work

together to reach the

full potential of the

system.

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Operations Function

• In many companies,

operations function retains

the greatest percentage of

employees.

• And, it is responsible for the

largest part of the budget.

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Operations Function

Therefore, operations function plays a

significant role in success of businesses.

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To Production V/s Operations

Management…

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