Process of Operation management

1. Operation management
PROCESS OF OPERATIONS
MANAGEMENT
DR.M.NEVEDIDA.
ASSISTANT PROFESSOR
SRM- IST. RAMAPURAM.

2. Content
 Introduction
 Process flow chart and process mapping
 Process flowchart symbols
 Uses of process flowcharts
 Performance measurement
 Types of performance measures
 Designing the performance measurement system
 Types of processes
 Product matrix and process selection
 Process choices
 Product-process matrix
 Factors Affecting Plant Location
 Plant Layout

3. Learning outcome:
 Enable the student to understand Process management is a means of
defining, visualizing, measuring, monitoring, and optimizing
processes.
 It enables how all members of a company to know and
understand the processes within their company
 To implement them according to the goal to meet customer
requirements profitably

4. Process of operation management-
introduction.
 Operations management (OM) is
the administration of business practices to
create the highest level of efficiency possible
within an organization. It is concerned with
converting materials and labor into goods and
services as efficiently as possible to maximize the
profit of an organization.

5. PROCESS FLOW CHART AND PROCESS
MAPPING
Meaning
 Process mapping and flow charts are
words used interchangeably and refer to
creating a diagram that illustrates a
business process. The only difference
between these words is that process
mapping refers to the actual process of
creating a diagram; the diagram itself is
called a flow chart.
example

6. Process flow chart
Process Flowchart symbols
Uses of process flowcharts
 Understanding a productive process
 -Identifying process bottlenecks and excessive
waiting periods within the process
 -Identify redundant or unnecessary process tasks
 -Identify potential improvements in labour
productivity
 -Identifyinefficientinventorymanagement and
unnecessaryinventory costs

7. Example of a process flow chart

8. PERFORMANCE MEASUREMENT
 Performance measurement is the process of collecting, analyzing
and/or reporting information regarding the performance of an
individual, group, organization, system or component. Definitions
of performance measurement tend to be predicated upon an
assumption about why the performance is being measured.
 In technical terms, a performance measure is a quantifiable
expression of the amount, cost, or result of activities that
indicate how much, how well, and at what level, products or
services are provided to customers during a given time period.

9. TYPES OF PERFORMANCE
MEASURES
 Workload or output measures. These measures indicate the amount of work
performed or number of services received. Workload or output measures indicate
what was done but not how well it was done. Example are:
• Number of potholes repaired;
• Number of garbage carts collected; and
• Number of invoices processed.

10. TYPES OF PERFORMANCE
MEASURES
 Efficiency measures. These measures show the relationship between the work
performed and the resources required to perform the work. Efficiency measures
are often expressed as unit costs. Examples are:
• Cost per pothole repaired;
• Cost per garbage cart collected; and
• Tons of garbage collected per crew (or worker).

11. TYPES OF PERFORMANCE
MEASURES
 Effectiveness or outcome measures. These measures reflect the quality of
work performed. They tie together work, resources and results. Examples are:
• Water meters read per day with less than 1 percent error;
• Number of invoices processed without error within two days of receipt; and
• Number of cold patch pothole repairs that last for three months.

12. TYPES OF PERFORMANCE
MEASURES
 Productivity measures. These measures add efficiency and effectiveness.
Productivity ties together work, cost, resources, and results. Examples are:
• Unit cost per effective meter repair (effective meter repair means that the meter
was not returned for further repair within six months);
• Unit cost of effective cold patch pothole repair (effective cold patch pothole repair
means that the patch held up for at least three months); and
• Cost of successful hires within 60 days of vacancy (successful hire means that
the hire satisfactorily passed the probation period).

13. Answer for these questions are one kind
of measurement of performance in
nonmonetary way:
 How do we lookto our shareholders? (financial
perspective)
 What must we excel at? (internal business perspective)
 How do our customers see us? (customer perspective)
 How can we continue to improve and create value?
(innovation and learning perspective)
 What are our competitors doing? (the competitor
perspective)

14. DESIGNING THE PERFORMANCE MEASUREMENT SYSTEM
1. Be simple and easy to use.
2. Have a clearpurpose.
3. Provide fast feedback.
4. Cover all the appropriate elements (internal, external, financial and nonfinancial).
5. Relate to performance improvement, not just monitoring.
6. Reinforce the firm's strategy.
7. Relate to both long-term and short-term objectives of the organization.
8. Match the firm's organization culture.
9. Not conflict with one another.
10. Be integrated both horizontally and vertically in the corporate structure.
11. Be consistent with the firm's existing recognition and reward system.
12. Focus on what is important to customers.
13. Focus on what the competition is doing.
14. Lead to identification and elimination of waste.
15. Help accelerate organizational learning.

15. Cont.,
16. Help build a consensus for change when customer expectations shift or
strategies and priorities call for the organization to behave differently.
17. Evaluate groups not individuals for performance to schedule.
18. Establish specific numeric standards for most goals.
19. Be available for constant review

16. Wisner and Fawcett provide a nine-step process for developing a performance
measurement system:
1. Clearly define the firm's mission statement.
2. Identify the firm's strategic objectives using the mission statement as a guide (profitability, market share, quality, cost,
flexibility, dependability, and innovation).
3. Develop an understanding of each functional area's role in achieving the various strategic objectives.
4. For each functional area, develop global performance measures capable of defining the firm's overall competitive position to
top management.
5. Communicate strategic objectives and performance goals to lower levels in the organization. Establish more specific
performance criteria at each level.
6. Assure consistency with strategic objectives among the performance criteria used at each level.
7. Assure the compatibility of performance measures used in all functional areas.
8. Use the performance measurement system to identify competition, locate problem areas, assist the firm in updating strategic
objectives and making tactical decisions to achieve these objectives, and supply feedback after the decisions are implemented.
9. Periodically reevaluate the appropriateness of the established performance measurement system in view of the current competitive
environment.

17. Types of process
•Unit or Job type of production.
•Batch type of Production.
•Mass Production or Flow
production.
•Continuous production or
Process production

18. Product- Process Matrix
 The product process matrix merges
the product lifecycle, which encompasses all
aspects of the product development
process—from ideation to a product’s growth
or decline— with the process lifecycle, the
progression towards a more cost-effective
and productive standardized structure.

19. Importance of product process matrix
 Product leaders can use the matrix to educate teams, stakeholders,
and departments within the organization on the product-process
lifecycle of a project.
 Using the matrix as a framework enables product leaders and
managers to identify and estimate a company’s distinctive
competence. (i.e., the assets and characteristics that give an
organization a comparative advantage over competitors.) To better
inform decisions on processes, opportunities, and investments.
Distinctive competencies include cost/price, quality, flexibility, and

20. Product – Process Matrix - choice

21. FACTORS AFFECTING PLANT
LOCATION
Plant Location
 A Plant Location is a place, where
men, money, material, machinery,
etc are brought together for
manufacturing products.
 Hardly any location can be ideal and perfect.
Decisions regarding selecting a location need
a balance of several factors affecting plant
location. Now we will discuss each factor
separately.

22. 1. Nearness to Raw Material
Availability of the raw material near the plant will reduce the cost of transporting raw material from the vendor’s end to the plant.
Especially those plants, which consume raw material in bulk, or need heavy raw material but loses a good amount of material in
processing must be located close to the source of raw material.
2. Transport facilities
One point must be kept in mind that cost of transportation should be small in proportion to the total cost.
Depending upon the size of the raw material and finished goods, a suitable method of transport like roads, rail, water, or air is selected,
and site location is decided accordingly.
3. Nearness to market
It reduces the cost of transportation as well as the chance of finished product getting damaged and spoiled in the way. If the
industry is nearer to the market then it can catch a big market share by offering quick services.
4. Availability of the labour
Another important factor that influences plant location decisions is the availability of labour. The combination of an adequate number
of labour with suitable skills and reasonable labour wages can highly benefit the firm.
However, labor-intensive firms should select the plant location which is nearer to the source of manpower

23. 5. Availability of fuel and power
Because of the wide spread use of electric power, in most cases, fuel has not remained a deciding factor for plant location.
Even then steel industries are located near the source of fuel to reduce fuel transportation costs.
6. Availability of water
Water is used for processing, drinking and sanitary purpose. Depending upon the nature of the plant water should be
available in adequate quantity and proper quality.
7. Climate condition
With the development of heating, ventilating, and air conditioning climate of the region does not present much
problem for many industries.
But, for industries such as agriculture, leather, and textile, etc climate is an influencing factor. For such industries
extreme humid or dry conditions are not suitable for plant location.
8. Financial factor
In order to attract the investment and large scale industries various states offer loans, subsidies, benefits, and sales tax
exemptions to the new units.
So, choosing the state is a important factor in order to a new industries.

24. 9. land
Area, shape of the site, cost, drainage, and other facilities, the probability of floods, chance of
earthquakes, etc influence the selection of plant location.
10. Presence of related industries
An industry can outsource some of the parts from the related industries near the plant location. It reduces
the headache of making every part within the plant.
11. Availability of facilities
Availability of basic facilities such as schools, hospitals, housing and recreation clubs, security etc can
motivate the workers to stick to the jobs.
The success of industries depends very much on the attitude of its workers, so while selecting the plant
location organization must be given preference to other facilities also.
12. Disposal of waste
Disposal of waste is becoming a major problem for industries like chemical, leather, sugar, etc. So, plant
location should have proper provision for this.

26. General Locational Factors
CONTROLLABLE FACTORS
Proximity to markets.
Supply of materials
Transportation facilities
Infrastructure availability
Labour and wages
Factors influencing plant location
External economies
Capital
UNCONTROLLABLE FACTORS
Government policy
Climate conditions
Supporting industries and services
Community and labor attitudes
Community Infrastructure

27. PLANT LAYOUT
Product or Line Layout
Process or Functional Layout
Fixed Position Layout
Combination Type of Layout