ppt

1. Developing an Operations Strategy
The operations strategy focuses on specific capabilities of the
operation that give the company a competitive edge.
These capabilities are called competitive priorities.
By excelling in one of these capabilities, a company can
become a winner in its market.
These competitive priorities :cost,quality,time or speed and
flexibility
1. Cost
 Competing based on cost means offering a product at a low
price relative to the prices of competing products.
 The need for this type of competition emerges from the
business strategy.
 The role of the operations strategy is to develop a plan for
the use of resources to support this type of competition.

2. Cost…
 Note that a low-cost strategy can result in a higher profit
margin, even at a competitive price.
 Also, low cost does not imply low quality. Let’s look at some
specific characteristics of the operations function we might
find in a company competing on cost.
 To develop this competitive priority, the operations function
must focus primarily on cutting costs in the system, such as
costs of labor, materials, and facilities.
 Companies that compete based on cost study their operations
system carefully to eliminate all waste.
 They might offer extra training to employees to maximize
their productivity and minimize scrap (piece).
 Also, they might invest in automation in order to increase
productivity.

3. Cost…
• Generally, companies that compete based on cost offer a narrow
range of products and product features, allow for little
customization, and have an operations process that is designed to
be as efficient as possible.
2. Quality
 Many companies claim that quality is their top priority, and many
customers say that they look for quality in the products they buy.
 Yet quality has a subjective meaning; it depends on who is defining
it. For example, to one person quality could mean that the product
lasts a long time, such as with a Volvo, a car known for its longevity.
 To another person quality might mean high performance,
such as a BMW.
 When companies focus on quality as a competitive priority,
they are focusing on the dimensions of quality that are
considered important by their customers.
 Quality as a competitive priority has two dimensions.

4. Quality…
 The first is high-performance design. This means that the
operations function will be designed to focus on aspects of
quality such as superior features, close tolerances, high
durability, and excellent customer service.
 The second dimension is goods and services consistency,
which measures how often the goods or services meet the
exact design specifications.
 A strong example of product consistency is McDonald’s,
where we know we can get the same product every time at
any location.
 Companies that compete on quality must deliver not only
high-performance design but goods and services consistency
as well.

5. Time or speed
 is one of the most important competitive priorities today.
Companies in all industries are competing to deliver high-
quality products in as short a time as possible.
 Making time a competitive priority means competing based
on all time-related issues, such as rapid delivery and on-time
delivery.
 Rapid delivery refers to how quickly an order is received; on-
time delivery refers to the number of times deliveries are
made on time.
 When time is a competitive priority, the job of the operations
function is to critically analyze the system and combine or
eliminate processes in order to save time.

6. Time or Speed…
 Often companies use technology to speed up processes, rely
on a flexible workforce to meet peak demand periods, and
eliminate unnecessary steps in the production process.
 Practical illustration: FedEx is an example of a company that
competes based on time.
4. Flexibility
 As a company’s environment changes rapidly, including
customer needs and expectations, the ability to readily
accommodate these changes can be a winning strategy. This is
flexibility. There are two dimensions of flexibility.
 One is the ability to offer a wide variety of goods or services
and customize them to the unique needs of clients.
 This is called product flexibility.

7. Flexibility
 A flexible system can quickly add new products that may be
important to customers or easily drop a product that is not doing
well.
 Another aspect of flexibility is the ability to rapidly increase or
decrease the amount produced in order to accommodate changes
in the demand.
 This is called volume flexibility.
1.7. Types of Manufacturing Systems
 In manufacturing a system is composed of a number of
components. These components are combined together for the
accomplishment of some predetermined goal.
 Any production organization can be termed as a production system
to produce goods and services. There are three main components
of these system namely input, transformation process and out put.

8. Types of Manufacturing Systems
 Thus, a combination of all activities and operations to produce
some goods and services is known as manufacturing system.
 . Depending on a number of factors such as policies of the
organization, types of the production, size of production, type
of transformation process and production method,
manufacturing system can be classified into two broad
categories: Intermittent system and Continuous system.
1.7.1. Intermittent System
 In this system, the goods are manufactured specially to fulfill
orders made by customers rather than for stock. Here the
flow of material is intermittent.
 Intermittent production system is there where the production
facilities are flexible enough to handle a wide variety of
products and size.

9. Intermittent System…
 These can be used to manufacture those products where the
basic nature of inputs change with the change in the design of
the product and the production process requires continuous
adjustments.
 Examples of intermittent system are machine shops, hospitals,
general office, etc.
Chief characteristics of intermittent system:
• Most products are produced in small quantities
• Machines and equipments are laid out by process.
• Work load are generally unbalanced.
• Highly skilled operators are required for efficient use of
machines and equipments.
• In-process inventory is large.
• Flexible to suit production varieties.

10. Intermittent…
 Intermittent system can be further classified into two
categories, namely (a) Job production and (b) Batch
production
a) Job Production
 Job or ‘make complete’ production is the production of single
complete unit by one operator or a group of operators e.g.
bridge building, dam construction, ship building etc.
 Here, whole project is considered as one operation and work
is completed on each product before passing on to the next.
 Each product is a class by itself and requires a distinct and
separate job for production purposes.
 The system requires versatile and highly skilled labor with
high capital investments.
 Control of operations is relatively simple.

11. Job Production
Job-order process is characterized by:
 Whole project is considered as single operation.
 Work is to be completed on each product before processing
the next item.
 Versatile and skilled labour ids needed.
 High capital investment.
 Operations control is relatively simple.
 High unit cost of production.
b) Batch production
 In this production system, the production schedule can be
carried out according to specific orders or on the bases of
demand forecasts.

12. Batch production
 The items are processed in lots or batches unlike job-type
system where one item is produced during each production
run.
 . In batch-type system new batch is undertaken for production
only when the work on all items of a batch is complete. In
fact, batch type of production can be considered as an
extension of job-type system.
 The best example of batch production system is chemical
industry where different medicines are manufactured in
batches.
 Other examples can be production of electronic instruments,
machine tools, printing press, etc.


13. Batch…
 In this system a batch is not passed to the next operation until
the work on the previous operation is complete for the whole
batch and no new batch enters the production line, till all the
operations for manufacturing any product is completed.
Features of batch production system:
• Demand can be discontinuous.
• All operational stages may not be balanced.
• Elaborate sequencing and scheduling is required.
• Planning, routing and scheduling changes with fresh orders.
• Storage is necessary at each stage of production process.
• The system can adjust to new situation and specification.

14. 1.7.2. Continuous System
• In this system the items are produced for the stocks and not for
specific orders.
• Before planning manufacturing to stock, a sales forecast is made to
estimate likely demand of the product and master schedule is
prepared and is made to adjust the sales forecast according to past
orders and level of inventory.
• Here the inputs are standardized and a standard set of processes
and sequences of processes can be adopted.
• Due to this, routing and scheduling for the whole process can be
standardized.
Features of continuous production system
• There must be continuous demand for the product.
• The product is standardized.
• Materials should be as per specification and delivered in time.
• All operational stages in the process must be balanced.

15. continuous production system…
• Maintenance must be by anticipation and not by default.
• Inspection must be in line with production.
• Continuous production system can be categorized into two
namely (a) mass and (b) process production
a) Mass Production
 Standardization is the fundamental characteristic of this
system. Items are produced in large quantities and much
emphasis is not given to consumer order.
 In fact the production is to stock and not to order. Uniform
and uninterrupted flow of material is maintained through
predetermined sequence of operations required to produce
the product.
 The system can produce only one type of product at one
time.

16. Mass Production…
• These days, mass production system is generally used to
manufacture sub-assemblies or particular parts/components
of an item.
• These parts are assembled together by the enterprise to get
the final product.
• In this system, specialization and standardization in
manufacturing single component can lead to economies in
production.
b) Process Production
• This system is analogous to mass production system with
more stress on automation in production process. The volume
of production is very high.

17. Process Production…
• This method is used for manufacturing those items whose
demand are continuous and high e.g. petroleum products,
particular brand of medicines, heavy chemical industries,
plastic industries etc.
• In this system, single raw material can be transformed into
different kinds of product at different stages of the production
process e.g. in the processing of crude oil in refinery one gets
kerosene, gasoline etc.
• As in mass production, planning and scheduling for material
and finished products is done well in advance in process
production.
• The whole system is designed to produce some specific type
of product only.

18. Chapter II. Design of the Operations System
2.1. Product/Service Design and Development
 In this section, we will learn about product design, which is
the process of deciding on the unique characteristics and
features of the company’s product.
 We will also learn about process selection, which is the
development of the process necessary to produce the
designed product. Product design and process selection
decisions are typically made together.
 Products are the goods and services produced, processes are
the facilities, and skills and technologies used to produce
them.
 The two go together – products require processes and
processes limit what products can be produced.

19. Product/Service Design and Development…
 A company can have a highly innovative design for its product,
but if it has not determined how to make the product in a cost
effective way, the product will stay a design forever.
 Since the business environment in which most organizations
must operate is dynamic, product and service design too is
dynamic.
 Product design and process selection affect product quality,
product cost, and customer satisfaction.
 If a product is to achieve customer satisfaction, it must have
the combined characteristics of good design, competitive
pricing, and the ability to fill a market need.
 Product design defines a product’s characteristics, such as its
appearance, the materials it is made of, its dimensions and
tolerances, and its performance standards.

20. Product/Service Design and Development…
 Effective design can provide a competitive edge:
 matches product or service characteristics with customer
requirements
 ensures that customer requirements are met in the simplest
and least costly manner
 reduces time required to design a new product or service
 minimizes revisions necessary to make a design workable
Requirements of a good Design
 A good product must fulfill following essential requirements:
a) Customer satisfaction. The product should satisfy the
customers by fulfilling their need and expectations. In order
to achieve this objective, following points should be kept in
view:

21. Requirements of a good Design…
– It functions properly
– It should be of proper quality so as to achieve desired
degree of accuracy and reliability
– Easy to use( operate)
– Easy to repair and service
– Able to withstand rough handling
– Good aesthetic view
– Have good space utilization
b) Adequate profit
• It should be able to manufacture at a reasonable cost so that
it can compete other products in the market
• A good design needs minimum number of parts

22. Adequate profit
• It should adapt latest technology so that manufacturing
requires minimum cost per unit of production
Factors considered while designing a product
• Materials- should be cheap, and should be able to withstand
design requirements and it should be easily workable.
• Manufacturing facility – product design should commensurate
(match) with the facilities available in the factory as regards to
equipment, labor, and layout
• Use of standardization – the parts used should be of minimum
variety and should either be easily available in the market or
can be manufactured easily with the machines available.
• Aesthetic- the product should be in good appearance and
should have attractive colors.

23. Factors considered while designing a product
• Function – it should be able to perform its desired function
with desired accuracy, reliability and strength.
• Ergonomics – it should be easy to use, operate and should
cause minimum possible fatigue and provide comfort.
• Operating conditions- the product should operate with
minimum of noise, vibration, heat and other hazard (risk) to
be operated with available skill.
• Maintenance- should easily be maintained and serviced.
• Simplification- the design should be simple to avoid
manufacturing complications.
• Economy – At the design stage, it is easy to attack cost than
latter on when the product is actually produced.

24. 2.2. The Product Design Process
• The path from an idea to a finished product is by no means
fixed. It depends up on the nature of the firm, the product,
and numerous other factors.
• Certain steps are common in the development of most
product designs.
• They are idea generation, product screening, preliminary
design and testing, and final design.
Let’s look at these steps in more detail.
1. Idea Development
 All product designs begin with an idea. The idea might come
from a product manager who spends time with customers and
has a sense of what customers want, from an engineer with a
flare for inventions, or from anyone else in the company.

25. Idea Development…
Sources of Product Ideas Include:
• The first sources of ideas are customers, the driving force in
the design of goods and services.
 Marketing is a vital link between customers and product
design. Market researchers collect customer information by
studying customer buying patterns and using tools such as
customer surveys and focus groups.
 Management may love an idea, but if market analysis shows
that customers do not like it, the idea is not viable.
 Analyzing customer preferences is an ongoing process.
Customer preferences next year may be quite different from
what they are today.
• Competitors are another source of ideas

26. Sources of Product Ideas
 Studying the practices of companies considered “best in class”
and comparing the performance of our company against
theirs is called benchmarking.
 Another way of using competitors’ ideas is called reverse
engineering which is to buy a competitor’s new product and
study its design features.
• A company’s R & D (research and development) department
whose role is to develop product and process innovation also
generates product design ideas.
• Suppliers are another source of product design ideas. To
remain competitive more companies are developing
partnering relationships with their suppliers, to jointly satisfy
the end customer.

27. 2. Product Screening

28. 2. Product Screening
• After a product idea has been developed, it is evaluated to
determine its likelihood of success. This is called product
(idea) screening.
• The company’s product screening team evaluates the product
design idea according to the needs of the major business
functions : Operations, Marketing,Finance & Break-even
analysis .
• Operations -what are the production needs of the proposed
new product and how do they match our existing resources?
Will we need new facilities and equipment? Do we have the
labor skills to make the product? Can the material for
production be readily obtained?

29. Product Screening…
• Marketing -what is the potential size of the market for the
proposed new product? How much effort will be needed to
develop a market for the product and what is the long-term
product potential?
• Finance -the production of a new product is a financial
investment like any other. What is the proposed new
product’s financial potential, cost, and return on investment?
• Break-even analysis is a technique that can be useful when
evaluating a new product. This technique computes the
quantity of goods a company needs to sell just to cover its
costs, or break even, called the “break-even” point.
• When evaluating an idea for a new product it is helpful to
compute its break-even quantity.

30. 3. Preliminary Design and Testing
• Once a product idea has passed the screening stage, it is time
to begin preliminary design and testing.
• At this stage, design engineers translate general performance
specifications into technical specifications.
• Prototypes (samples) are built and tested. Changes are made
based on test results, and the process of revising, rebuilding a
prototype, and testing continues.
• For service companies this may entail testing the offering on a
small scale and working with customers to refine the service
offering.
• Fast-food restaurants are known for this type of testing,
where a new menu item may be tested in only one particular
geographic area.

31. 4. Final Product Design
• Following extensive design testing the product moves to the
final design stage. This is where final product specifications
are drawn up.