Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                          Cells: 0345-8114486, 0315-9222848MBA-University of Karachi          ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                                    Cells: 0345-8114486, 0315-9222848MBA-University of Karachi...
Kamran Rahat                                         Cells: 0345-8114486, 0315-9222848MBA-University of Karachi           ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
Kamran Rahat                                            Cells: 0345-8114486, 0315-9222848MBA-University of Karachi        ...
Kamran Rahat                                              Cells: 0345-8114486, 0315-9222848MBA-University of Karachi      ...
Kamran Rahat                                       Cells: 0345-8114486, 0315-9222848MBA-University of Karachi             ...
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Introduction to Operations Management

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This is An Introduction to Production/Operations Management for Beginners. Key Concepts and Scope of the subject matter is shown at a glance.

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Introduction to Operations Management

  1. 1. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED University Operations Management/ Production Management At a Glance Chapter-1 Operations as a Competitive Weapon (An Introduction to Operations/Production Management for Beginners) Kamran Rahat www.kamranrahat.webs.com
  2. 2. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityMANAGEMENT AND MANAGERIAL FUNCTIONS Management is “The organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of defined objectives”. There are four basic functions of Management. These are: -Planning: Planning relates to decisions on about the present and the future. It relates to developing objectives, strategies, policies etc. -Organizing: In this function, managers have to decide the optimum usage of all resources -Staffing: Filling positions in organizational chart, i.e recruitment/selection etc. -Leading: Leading deals with proper communication of goals and plans and motivating the employees to achieve Management them. Defined -Controlling: Keeping a check on the progress of plans and monitor actual performance.FUNCTIONAL DEPARTMENTS IN ORGANIZATIONSBasic Functional Departments in any organization may beFinance/Accounting/Internal Audit, Marketing/Sales/Business Development,Operations/Production/ Manufacturing, Human Resources/Personnel.Other Departments may be Procurement/Purchasing/Outsourcing, Engineering,Research and Development (R & D) etc., as per requirement of organization.TYPES OF ORGANIZATIONS W.R.T BUSINESSManufacturing Organizations: They deal in converting raw materials,components, or parts into finished goods that meet a customers expectations orspecifications. Manufacturing commonly employs a man-machine setup with divisionof labor in a large scale production. Example: P & G, Mitsubishi Japan etc.
  3. 3. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityAssembling Organizations: They usually deal in getting component parts frommanufacturers and combine them on assembly lines to get fininshed goods.Example: Toyota Indus Motor, Karachi, Pakistan imports components of automobilesfrom Japan and assembles them in Karachi.Service Organizations: They deal in providing services to their Clients/Customers.Example: Hospitals, Lawyer’s Office, Cellular Networks etc.Trading Organizations: They deal in goods manufactured or assembled by otherorganizations. Example: Distributors, Wholesalers, Retailers.Macro Cash and Carry etc.CORE AND SUPPORT OPERATIONS OF ORGANIZATION Core Operations of an organization means the types of operations through which an organization primarily achieves its objectives of profitability and/or growth. Support Operations are the operations which are necessary to support and sustain the core operations. Core Operation of PEPSICO is manufacturing/ processing of Foods and Beverages, whereas its Support Operations are HR, Finance, Marketing/Sales and IT. Similarly Core Operation of an Advertising Agency is Marketing, and that of a Recruitment Agency is HRM.
  4. 4. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityWHAT IS A PROCESS? A Process is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides one or more outputs for its customers. External Customer is either End User of a company’s product or an Intermediary like Distributor, Wholesaler, and Retailer. Different Sections within an organization are Internal Customers of each other as they all rely each other for different internal inputs and products.Within an organization, Intra-organizational Relationships develop (i.eProfessional Relationships between two or more sections/departments of anorganization) in order to achieve organizational objectives.Process Illustration Showing Inputs and Outputs
  5. 5. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityNested ProcessesThe Concept of processes within a process is called Nested Process. Nested Processes at a Bank BANK Operations Retail Products Wholesale Cash Management Distribution Auto Finance Trading Loan operations Compliance Cards Loan administration Trading operations Finance Mortgages Leasing Others Human resources Others Others ATM support Teller line transactions Credit applications Fund management Customer transactions Track branch sales Manage retail products Market making spot Service quality ATM hotline Originate lease portfolio Dealer support Others Others Others Others Maintain cards Process deposits Loan documentation Prepare reports Research problems Cash checks Review credit standing Attend meetings Site analysis Safe deposit boxes Obtain manager approval Input funds deals Others Others Others OthersSome Examples of Common ProcessesCustomer/Patient Processing An information processing operation at aOperation at a Hospital Commercial Bank
  6. 6. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityWHAT IS OPERATIONS/PRODUCTION MANAGEMENT (OM/PM)?The business function responsible for planning, coordinating, and controlling theresources needed to produce a company’s products and services is calledOperations or Production. The management of systems or processes that creategoods and/or provide services is called Operations or Production Management.Production not only means manufacturing goods. Services are alsoproduced.OM/PM DecisionsStrategic Decisions Tactical Decisions  Product/Service Design  Quality Control  Process Selection  Demand Forecasting  Capacity Planning  Supply Chain Management  Facility Location  Production Planning  Facility Layout  Inventory Control  Job Design  Scheduling
  7. 7. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityCross-Functional Nature of OM/PMOM/PM has an impact on all aspects and functional departments of an organization.Thus OM/PM is not an isolated phenomenon as shown in following figure.
  8. 8. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityGOODS V/S SERVICESManufacturing, Assembling and Trading Organizations deal in Goods.No Organization is 100% Goods Organization. And No Organization is 100%Service Organization. The orientation of Goods Organization is more towardsgoods and less towards services and vice-versa.The Goods-Services Continuum is shown below:
  9. 9. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityFRONT OFFICE AND BACKOFFICE OPERATIONSThe study of service operations has led to the development of some useful conceptsin addition to those that have emerged from the study of manufacturing. One suchconcept is that of the difference between the Front Office and the Back OfficeOperations. The area in which contact with customers occurs is termed the frontoffice. This primarily involves customer processing operations. The area where thereis normally no contact with customers is termed the back office. This may involveinformation and/or materials processing operations.TRENDS IN OM/PM • Exponential Growth of Service Sector • Productivity Issues and Challenges • The Internet, e-commerce, and e-business. • Management of technology. • Globalization & Global Competition • Quality, Time and Technology Considerations • Management of supply chains. • Outsourcing. • Agility. • Ethical behavior. • Workforce Diversity • Operations strategy • Working with fewer resources • Revenue management • Process analysis and improvement, and quality improvement • Increased regulation and product liability issues • Lean production
  10. 10. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityCONCEPT OF SUPPLY CHAINA Supply Chain is a system of organizations, people, technology, activities,information and resources involved in moving a product or service from supplier tocustomer. Supply chain activities transform natural resources, raw materials andcomponents into a finished product that is delivered to the end customer.For a typical Manufacturer, the Backward Side of its Supply Chain consists of RawMaterial Suppliers, Component Parts Supplier, and Other Main and Support ServicesSuppliers like Legal Services, Security Services and Medical Services. And theForward Side of Supply Chain consists of Distributor, Wholesalers, Retailers, EndUsers/Consumers etc.This Supply Chain creates Inter-organizational Relationships i.e ProfessionalRelationship between Supply Chain Members. Failure of one member of supply chainmay result in overall supply chain failure.RESOURCES: DEFINITION AND TYPES Resources are stock or supply of money, materials, staff, and other assets that can be drawn on by a person or organization in order to function effectively. Types of Resources are: Human Resources (Executives and Labour with their Skills and Capabilities) Material Resources (Tangible Consumable Items like Raw Material Inventory) Tool, Machinery, Equipment, Plant (Tangible, Non-Consumable Items) Methods and Procedures, Money and Other Assets
  11. 11. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityINTRODUCTION TO PRODUCTIVITY Productivity is the value of Outputs (goods, services, results) produced divided by the values of Inputs (resources). Mathematically it can be shown as: Productivity = Output / Input Labour Productivity Output per Person or Output per Man-Hour eg 50 Cases Processed per Processing Offices, 10 Cases Processed per Man-Hour Machine Productivity Output per Machine or Output per Machine-Hour eg 50 Units Produced per Machine, 10 Units Produced per Machine-Hour Multifactor Productivity It is an index of output provided by more than one of the resources (inputs) used in production.SCOPE OF OPERATIONS/PRODUCTION MANAGEMENTOther things included in the Scope of OM/PM are:Strategic Considerations, Managing Project Processes, Technology Management,TQM, Statistical Process Control, Facility Layout, Supply Chain, ResourceManagement, Production Planning/Scheduling
  12. 12. Kamran Rahat Cells: 0345-8114486, 0315-9222848MBA-University of Karachi Direct Tel: 92-21-38455508ME (Construction Management)-NED University URL: www.kamranrahat.webs.comBE (Civil)-NED UniversityPGC (Advanced Project Management)-NED UniversityEXERCISEQ-1: Services are also produced. Do you agree? If yes then briefly elaborate.Q-2: List down key processes and core operations in following type of organizations:Commercial Bank, Investment Bank, Fast Food Chain, Car Assembling Company,FMCG Distributor.Q-3: Briefly explain any three points of differentiation between Goods and Services.Q-4: A typical manufacturing organization deals only in providing goods to itscustomers, not services. What is your opinion? Justify your answer.Q-5: How Strong Intra-organizational Relationships can contribute to overallOrganizational Productivity and consequently profitability?Q-6: Use the transformation model (Figure 1.1) to analyze the following types oforganization. In each case, list the transformed resources, the transformingresources and the outputs produced.Clothing manufacturer, School, Dentist, Accountancy, Restaurant, BankQ-7: List down the Front Office and Back Office Operations in a Mega DepartmentalStore like Macro Cash and Carry.

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