Production and Operations Management

Prepared By,Mr. Nishant AgrawalProduction and Operations ManagementMETAS Adventist College (NEHU)

Session OutlineProduct Vs ServiceConcept of Production and OMFunctions /Scope of POMOperation StrategyTransformation ProcessProduct Design & Product ProcessHistory of POMIssues in POM

the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user. Thus production is a value addition process. At each stage of processing, there will be value addition. Edwood Buffa defines production as a process by which goods and services are created.Concept of Production

Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.4

Why study Operations Management ?This Operations Management course will introduce you to basic business ideas and their implementations.Operations and Supply Chain Management will enable you to solve complex business problems related to the journey of products and services from the manufacturer or provider to the end customer.it is such a costly part of an organization. A large percentage of the revenue of most firms is spent in the Operations Management function.

ContinueOM is one of the three major functions of any organization, and its integrally related to all the other business functions.We study OM because we want to know how goods and services are produce.We study OM to understand what operations managers do.

Operations as a

Transformation Process

INPUT

Material

Machines

Labor

Management

Capital

TRANSFORMATIONPROCESS

OUTPUT

Goods

Services

Feedback

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Quality of inputs monitoredQuality of outputs monitoredRandom Disturbance

Transformation ProcessFor getting desired output , quality of inputs has to be monitored.The quality of actual output obtained also has continually compared with the desired output. Feedback mechanisms are required to monitor the performance of the transformation process. Random disturbance are unexpected and sometimes not planned for. They are mostly due to external environment.

Transformation Process of Service Industry (MBA Institute)

Transformation Process of Manufacturing Company

Transformation Process of Restaurant

Historical Summary of Operational ManagementDateContributionContributor1776Specialization of labour in manufacturingAdam Smith1799Interchangeable parts, cost accountingEli Whitney and others1832Division of labour by skill; assignment of jobs by skill; basics of time studyCharles Babbage1900Scientific management time study and work study developed; dividing planning and doing of workFrederick W. Taylor1900Motion of study of jobsFrank B. Gilbreth1901Scheduling techniques for employees, machines jobs in manufacturingHenry L. Gantt1915Economic lot sizes for inventory controlF. W. Harris

DateContributionContributor1927Human relations; the Hawthorne studiesElton Mayo1931Statistical inference applied to product quality: quality control charts W. A. Shewart1935Statistical sampling applied to quality control: inspection sampling plansH. F. Dodge andH. G. Roming1940Operations research applications in World War IIP. M. Blacker andOthers.1946Digital ComputerJohn Mauchlly andJ. P. Eckert1947Linear ProgrammingG. B. Dantzig, William1950Mathematical programming, on-linear and stochastic processesA. Charnes, W. W. Cooper & others1951Commercial digital computer: large-scale computations available.Sperry Univac

DateContributionContributor1960Organizational behaviour: continued study of people at workL. Cummings, L. Porter1970Integrating operations into overall strategy and policy, Computer applications to manufacturing, Scheduling and control, Material requirement planning (MRP)W. Skinner J. Orlicky and G. Wright1980Quality and productivity applications from Japan: robotics, CAD-CAMW. E. Deming andJ. Juran

What is Operations Strategy?

According toSlack and Lewis, operations strategy is :Operations strategyis the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall strategy.Operations strategy is the tool that helps to define the methods of producing goods or a service offered to the customer.Itis typically driven by the overallbusiness strategyof the organization, and isdesignedto maximize theeffectivenessof production and supportelementswhile minimizingcosts.

Criteria of Performance for the OM SystemThree objectives or criteria of performance of the production and operations management system are1. Customer satisfaction2. Effectiveness3. EfficiencyCustomer satisfaction refers to the extent to which customers are happy with the products and services provided by a business. Customer satisfaction levels can be measured using survey techniques and questionnaires.

ContinueEffectiveness is any kind ofpracticewhich allows abusinessor otherorganizationto maximize the use of their inputs bydevelopingproductsat a faster pace thancompetitorsor reducingdefects.Efficiency is Performing in the best possible manner with the least waste of time and effort.Companies usually seek to increase and improve the efficiency of their operations and sales processes. When working with limited resources, they would prefer to maximize the use of each of these resources.

Functions of POMProduction/operation management is a component of organization which concerned with the creation of utility in raw materials through conversion process.As a part of management, it has following functions: Planning:Organizing:Controlling:Behavior:Models:

PLANNINGActivities that establishes a way of action and guide future decision-making is called planning.It defines the policies, and procedures for achieving the objectives. It involves product planning, facility designing and conversion process.

PlanningOrganizingControllingBehaviorModel

ORGANIZING

Activities that establishes a structure of tasks and authority is called organizing. It includes:Job designWork MeasurementProject ManagementPlanningOrganizingControllingBehaviorModel

CONTROLLING

Activities that guarantee the actual performance in accordance with planned performance is called Controlling.Controlling costs, quality, and schedules are the important functions for POM.Material ControlPlanningOrganizingControllingBehaviorModel

BEHAVIOUR

Human aspect on the job is called behavior. POM also want to know how the behavior of subordinates can affect managements planning, organizing, and controlling actions.The behavior is affected by the leadership, motivation, communication, inter-intra personnel relationship and their attitudes.PlanningOrganizingControllingBehaviorModel

MODELS

The techniques which are used for problem solving is called Models.The models are: Aggregate planning models for examining how best to use existing capacity in short-term.Break even analysis to identify break even volumes.Linear programming and computer simulation for capacity utilization.Decision tree analysis for long-term capacity problem of facility expansion.PlanningOrganizingControllingBehaviorModel

Functions / Scope of POM POM concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency. Following are the activities which are listed under production and operations management functions:1. Location of facilities2. Plant layouts and material handling3. Product design4. Process design5. Production and planning control6. Quality control7. Materials management

Classification of Decision areas

The production and operations management function can be broadly divided in to the following five areas:

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Continue....Quality: The operations function is typically responsible for the quality of goods and services produced. Quality is an important operations responsibility which requires total organizational support.Process: Decisions in this category determine the physical process or facility used to produce the product or service. The decisions include the type of equipment and technology, process flows, layout of the facility, and all other aspects of the physical plant or service facility.

Continue.Capacity: Capacity decisions are aimed at providing the right amount of capacity at the right place at the right time. Long-range capacity is determined by the size of the physical facilities which are built.Inventory : Inventory decisions in operations determine what to order, how much to order, and when to order.Work force : Managing people is the most important decision area in operations because nothing is done without the people who make the product or service. Work-force decisions include selection, hiring, firing, training, supervision, and compensation.

What is a Production System?Production System are those activities of an organization whereresources flowing within a defined system in a controlled manner to add valuein accordance to the policies communicated by the management.

Production SystemProduction is an organized activity, so every production system has an objective.The system transforms various inputs to useful outputs. There exists a feedback which is essential to control and improve system performance.

Types of Production System

Intermittent Process It stop at regular intervals of time because product requires processing on variety of machines. The volume of each product is low. Generally produces make-to-order.There are no standard routings. Products may follow different paths.

Batch ProcessAs a form of manufacturing in which the job passes through the functional departments in batches and each lot may have a different routing.Equipment used is the same in all the cases with the same processing steps but cleaning and adjustments of the equipment may be required after each production run. Here, products having same or similar processes may be grouped into a product family.

Following are the advantages of job shop production:1. Because of general purpose machines and facilities variety of products can be produced.2. Operators will become more skilled and competent, as each job gives them learning opportunities.3. Full potential of operators can be utilised.4. Opportunity exists for creative methods and innovative ideas.

Following are the limitations of job shop production:1. Higher cost due to frequent set up changes.2. Higher level of inventory at all levels and hence higher inventory cost.3. Production planning is complicated.4. Larger space requirements.

Following are the advantages of batch production:1. Better utilisation of plant and machinery.2. Promotes functional specialisation.3. Cost per unit is lower as compared to job order production.4. Lower investment in plant and machinery.5. Flexibility to accommodate and process number of products.6. Job satisfaction exists for operators.

Following are the limitations of batch production:1. Material handling is complex because of irregular and longer flows.2. Production planning and control is complex.3.Work in process inventory is higher compared to continuous production.4. Higher set up costs due to frequent changes in set up.Following are the advantages of mass production:1. Higher rate of production with reduced cycle time.2. Higher capacity utilisation due to line balancing.3. Low process inventory.Following are the limitations of mass production:1. Breakdown of one machine will stop an entire production line.2. Line layout needs major change with the changes in the product design.3. The cycle time is determined by the slowest operation.

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Job Shop

It can handle larger variety of products with low volume that the batch process. Process may be so difficult from each other. Highly skilled operators who can take up each job as a challenge because of uniqueness.Large inventory of materials, tools, parts.Job shop results in low volume of output at given time and thus costlier products compared to continuous process.

Continuous ProcessAs name suggest it is continues in nature. Some products flow continuously through a linear process. These types of operations are called continuous processSet up time : Long (Once it started they continue for a long duration)Product produced by such process are highly standardized with almost no variety and measure on continues basis. Ex. Urea chemical plant, steel , plastic, sugar, textile etc.

Product differentiation is limited. Involves high initial investments.Persons with limited skills can be used for production process. Unit cost is low due to high volume of production . Highest capacity utilization due to line balancing35

Semi-continuous Process

These are assembly process, which are repetitive in nature. Produce High volume of output with little variety. Required highly specialized machine, semi skilled workers and result in low cost per unit. Ex. Automobile , electronics etc.

Mass ProductionThis production system is justified by very large volume of production.Less skilled operators are required. Manufacturing cost per unit is low and High investment in production facilities. Ex. Chinese Toys , pen drive etc

Mass production is used under the following circumstances:1. Standardisation of product and process sequence.2. Dedicated special purpose machines having higher production capacities and output rates.3. Large volume of products.4. Shorter cycle time of production.5. Lower in process inventory.6. Perfectly balanced production lines.7. Flow of materials, components and parts is continuous and without any back tracking.8. Production planning and control is easy.9. Material handling can be completely automatic.

Continuous production is used under the following circumstances:1. Dedicated plant and equipment with zero flexibility.2. Material handling is fully automated.3. Process follows a predetermined sequence of operations.4. Component materials cannot be readily identified with final product.5. Planning and scheduling is a routine action.

Following are the advantages of continuous production:1. Standardisation of product and process sequence.2. Higher rate of production with reduced cycle time.3. Higher capacity utilisation due to line balancing.4. Manpower is not required for material handling as it is completely automatic.5. Person with limited skills can be used on the production line.6. Unit cost is lower due to high volume of production.Following are the limitations of continuous production:1. Flexibility to accommodate and process number of products does not exist.2. Very high investment for setting flow lines.3. Product differentiation is limited.

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Projects

Projects are processes that handle very complex and unique sets of activities or tasks. Usually the item to be produced stays in a fixed place and all the resources come to it.Ex. R&D projects, construction of plants , implementation of specialized software in organization , ship construction, bridge construction

Summary

Questions1) Operations management is a transformation process. Support this statement with examples if you agree with it.ORWhat is Transformation Process: Explain the transformation ProcessORDefine operations management. Describe input-transformation output relationship in an automobile factory, a restaurant, hospital, and a College2) What do you understand by the term operations Management?ORDefine production & operations management and explain functions/Activities of operations managementORWhat are the major issues in OM that faced in India?

3) Explain the types of manufacturing process in brief.ORExplain batch production and mass production along with its advantages and disadvantages.ORDiscuss the types of processes. What are the merits and demerits of each? Give an example of each.ORSuggest suitable method of production for below categories and whyAutomobile & Computers

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