Principles of strategic operation Management

1. By
Engr. K . C Aduma
(mnse pmp)
1

2. MODULE 1
• What is operations management.
• Who s an operations manager.
• Operations management strategies.
• Where to look for productivity potentials – (production
process designs, facility layout , production schedules
monitoring and control procedures.
• Operations value stream: operations steps creating values.

3. Operations Management
3
Definition:
The business function responsible for
planning, coordinating, and controlling
the resources needed to produce products
and services for a company

4. OPERATIONS MANAGEMENT
4
Systematic direction, control, and evaluation of the
entire range of processes that transform inputs into
finished goods or services.
Environmental factors-culture, political, and market
influences
Inputs-HR, capital, materials, land,energy,
information, customer
Transformations-convert inputs into outputs

5. Operations Management:
5
management function
An organization’s corefunction
In every organization whether Service or
Manufacturing, profit or Not for profit

6. Typical organizational chart.
6

7. Who is an Operations manager
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Outputs-goods or services, and waste
Customer Contact-customers actively participate in
transformation processes, self-service
Performance Feedback-repair records, customer
comments

8. 8
Refers to the management of the production system that
transforms inputs into finished goods and services.
Production system: the way a firm acquires inputs then
converts and disposes outputs.
Operations managers: responsible for the transformation
process from inputs to outputs.
Operations management seeks to increase the quality,
efficiency, and responsiveness of the firm.
Seeks to provide a competitive advantage.

9. What are the Role of an
Operations Manager
9
Operations Manager Transforms
inputs to outputs
Inputs are resources such as
People, Material, and money
Outputs are goods and services

10. Operations Manager
Transformation Process
10

11. Operations manager transformation roles:
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To add value
Increase product value at each stage
Value added is the net increase between output product value and
input material value
Provide anefficient transformation
Efficiency – means performing activities well for least possible cost

12. Goods & Services
12
Services
Intangible product
Product cannot be
inventoried
High customer contact
Short response time
Labor intensive
Manufacturing
Tangible product
Product can be
inventoried
Low customer contact
Longer response time
Capital intensive

13.  Operations Management strategy?
Operations strategy is a guiding
principle used to plan, analyze, and
execute a company's operations.
Businesses use operations strategies
to identify and implement cost-effective
processes for creating and distributing
products and services
13

14.  Decision Areas of Operations Management Strategy.
Design of Goods and Services. ...
Quality Management. ...
Process and Capacity Design. ...
Location Strategy. ...
Layout Design and Strategy. ...
Human Resources and Job Design. ...
Supply Chain Management. ...
Inventory Management.
14
21.3

15. Component of Operation strategy

16. Core Positioning Strategies
Process focus
Space shuttle
Legal practice
Product focus
Auto assembly
plant
Mail processing
Intermediate
Garment
industry
Branch banks
Standard products,
high volume
Custom productsM,ixture of custom and standard
low volume products, moderate volume
Product volume
Continuous
process
(stable)
Resource
flows
Mass
production
Large
batch
Sporadic
(unstable)
Adapted from Figure 21.2
24

17. Productivity
INTRODUCTION
• Productivity is the output of any production process, per
unit of input.
• To increase productivity means to produce more with
less.
• In factories and corporates, productivity is a measure of
the ability to create goods and services from the given
amount of human resource, capital, land, knowledge,
time or any combination of these above.

18. PRODUCTIVITY MODELS

24. Process Design
Every firm that produces a good or a service will
do so by the use of a process. This process will
use the firm’s resources in order to transform the
primary inputs into some type of output. In
designing the actual process, particularly the
number and sequence of steps, several important
factors need to be considered.

25. Learning Objective
•Differentiate between the different types of processes.
•Understand common layouts and their challenges.
•Calculate take time based on product demand.
 Process Types:
• Project – A one-time event, such as construction of an
apartment building, implementation of a new ERP system, or
writing a book, would all be considered a project type of
process

26. • Job Shop-Many businesses have a job shop type of process. This
is most commonly used when the product being produced is
unique for each customer
• Batch- An organization may have multiple batches at different
stages coming through the process. This type of processing is
also intermittent. (start, stop, start)

27. • Repetitive-This type of business produces products that are more
standardized in nature. Usually the output is high with use of
flexible automation. E.g. assembly lines such as assembling
automobiles or electronics.
• Continuous- An example of this type of process is an oil
refinery.The equipment in this type of process is highly complex
and designed solely for that product.

28.  FACILITY LAYOUT
Layout refers to the way in which organizations position their
equipment, departments, or WorkCentre- we have four basic
types of facility layout.
• Fixed position layout- ship building and construction activity
• Process layout- process layout is a layout in which
departments, equipment, or WorkCentre are arranged
according to their function
• Product line layout-these are used in businesses that use
assembly lines or production lines. If the product has high
volume an assembly line might be the best option.
• Cellular layout-Cellular layouts are considered a “hybrid” type
of layout because it includes characteristics of both a Process
layout and a product (line) layout

29. Production Schedule, Monitoring and
Control procedures.
• Product production scheduling- is the process of assigning
different raw materials, resources or processes to different
products.
• Production Scheduling Steps
A good product schedule can be created following these steps:
1. Production planning.
2. Smart Routing.
3. Actual Scheduling.
4. Execution & Development..
5. Continuous Improvement and Rescheduling.
.

30. MONITORING
Production monitoring gives you knowledge of the entire
manufacturing cycle, points out any defects at all stages and
helps prevent shipping delays.
• KPIs to Make Your Manufacturing Processes Lean
• Processing time. Time spent transforming raw materials into
finished goods.
• Inspection time. ...
• Move time. ...
• Queue time.

31. Control Procedures
• Production control aims at achieving production targets,
optimum use of available resources, increased profits through
productivity, better and more economic goods and services
Levels of Production Control
There are three levels of production control namely programming, ordering and
dispatching.
1.Programming plans the output of products for the factory .
2.Ordering plans the output of components from the suppliers and processing
departments.
3.Dispatching considers each processing department in turn and plans the output
from the machine, tools and other work centers so as to complete the orders by due
date.

32. Operations Value Stream
Operational value streams (OVS) are the sequence of activities
needed to deliver a product or service to a customer.
• Fulfillment value streams represent the steps necessary to
process a customer request, deliver a digitally-enabled
product or service, and receive remuneration.
• Manufacturing value streams convert raw materials into the
products customers purchase.
• product value streams offer and support software products.
Examples include ERP systems, SaaS,.
• Supporting value streams include end-to-end workflows for
various supporting activities. Examples include the lifecycle
for employee hiring and retention.

33. Value Stream Mapping

34. MODULE 2
• Elimination of waste ( Material. Space. time. Movement)
• inventory
• Operations Management Checklist
• Operations to combine .Operations to eliminate. Operations
to simplify.
• Project planning and Control techniques.
• Critical Path Methods: Project evaluation and review
techniques (PERT). Job scheduling.
• Material Requisition Planning (MRP). Forecasting. Capacity
Requirement Planning (CRP).
• Overall Equipment Effectiveness (OEE). Capacity utilization.
JIT production system.
• Purchase management.
• Warehousing. Inventory management

35. Elimination of Waste
What is waste?
Waste or MUDA refers to anything and everything that does not
add value from the perspective of your customer.
Classify the Types of Waste
break down waste into categories:
• Inventory Waste:
• Overproduction Waste:
• Waste of Time and Manpower:
• In-House Machine Waste
and Production Process Waste:
• Defect Waste:

36. Inventory Management
Inventory management is a systematic approach to sourcing,
storing, and selling inventory—In business terms, inventory
management means the right stock, at the right levels, in the right
place, at the right time, and at the right cost as well as price.
Lead Time
Elapsed time between placing and receiving an order
EOQ-economic order cost
optimum order quantity yielding the lowest total inventory cost
Just-in-time
finished goods to sell
sub assemblies to be assembled
purchases of raw materials to be transformed

37. Inventory cost

38. Operations Management Checklist
•Constantly ask yourself, ‘What can we improve, simplify,
scale, or unite?’
•Regular people reviews
•Regular business reviews
•Regular financial reviews
•Regular process reviews
•Regular product/service reviews
•Regular updates to Operating Plans
•Regular checkins and followups with internal and external
teams and people

39. Operations Management Checklist
•Identification of competitive advantages
•Identification of internal and external threats to how well
and how fast the business can execute
•Identification of wastes
•Identify and create measurements to know if business is
Improving, Simplifying, Scaling, Uniting, and Executing
•Regular tracking of progress on work related to the
smaller short-term targets
•Regular communication up and down so people adapt
based on any new information

40.  Operations to Combine ,Eliminate and Simplify:
Production order routing operations can be combined into
one, resource, task. The following restrictions apply to
combining production operations:
•Combined Resource Tasks can only be created from a
Planned or a Firm Planned production order. Once the
production orders are Released combined operations can
be deleted from or added to the Combined Resource Task
provided that no postings have been made yet.
•Operations can only be combined per Production Order
Status, it is not allowed to combine an operation from a
Planned order with an operation from a Firm Planned order.

41. •Only 1 operation per production order can be combined,
in other words a production order cannot be included in
more than one combined resource task.
•It is only allowed to post to a combined resource task
when all production orders included in that task have
been released.

42. Project Planning and Control Technique
 Project Planning :
Discipline addressing how to complete a project in a certain
timeframe, usually with defined stages and designated resources
Stages of Project Planning
•scope
•objectives
•goals
•schedule

43. Components of project Planning
Scope. The scope determines what a project team will and will
not do. It takes the team's vision, what stakeholders want and
the customer's requirements and then determines what's
possible. As part of defining the project scope, the project
manager must set performance goals.
Budget. Project managers look at what manpower and other
resources will be required to meet the project goals to estimate
the project's cost.
Timeline. This reveals the length of time expected to complete
each phase of the project and includes a schedule of milestones
that will be met.

44. 5 phases of project
Initiation defines project goals and objectives. It also is when
feasibility is considered, along with how to measure project
objectives.
Planning sets out the project scope. It establishes what tasks
need to get done and who will do them.
Execution is when the deliverables are created. During
execution, the plan is set into motion and augmented, if
necessary.
Monitoring and management This phase ensures that the
project is going according to plan.
Closing and review is the final Contracts are closed out and the
final deliverables are given to the client. Successes and failures
are evaluated.

45. Project Control Techniques
Project controls are processes for gathering and analyzing
project data to keep costs and schedules on track
 Activities under the umbrella of project controls may include:
• Aligning projects with portfolio/organization goals and
objectives
• Developing a work-breakdown structure (WBS)
• Collaborating on initial project schedules
• Developing a risk management plan
• Project budgeting and forecasting
• Monitoring project costs
• Feedback and reporting
• Optimizing project strategies to enable better outcomes in the
future

46. 8 PROJECT MANAGEMENT TECHNIQUES PROJECT
MANAGERS SHOULD KNOW
• Work breakdown structure (WBS)
• Critical Path Method (CPM)
• Scrum.
• SAFe.
• Kanban.
• Gantt.
• PERT.
• Waterfall.

47. CRITICAL PATH METHOD
Critical path is the longest sequence of tasks that must be
completed to complete a project with emphasis on,
• Accurately estimate the total project duration
• Identify task dependencies, resource constraints and project
risks
• Prioritize tasks and create realistic project schedules

48. How to find a critical path
1.Collect Project Activities
Use a work breakdown structure to collect all the project
activities
2. Identify Task Dependencies
Figure out which tasks are dependent on other tasks before they
can begin.
3. Create a Critical Path Diagram
A critical path analysis chart, or network diagram, depicts the
order of activities.
4. Estimate Timeline
To use the critical path method, you’ll need to estimate the
duration of each task.

49. 5. Use the Critical Path Algorithm
The critical path algorithm has two parts; a forward pass and a
backwards pass.
6. Identify the Float or Slack of Each Activity
Use this formula to determine the float or slack of each task.
Float = LS – ES
7. Identify the Critical Path
The activities with 0 float make up the critical path.
8. Revise During Execution

50. PERT
PERT is a method of analyzing the tasks involved in completing a given
project, especially the time needed to complete each task, and to identify the
minimum time needed to complete the total project. PERT calculates a
weighted average as the PERT estimate by using the formula : Pert Estimate =
(Optimistic + (4 X Most Likely) + Pessimistic)/6

51. Material Requirement Planning
Material requirements planning (MRP) is a computer-based
inventory management system designed to improve productivity
for businesses.
MRP software uses information from the bill of materials
(BOM), master production schedule, and inventory data, and
uses these to calculate the required materials for any given
project
Three objectives:
1.Ensure raw materials and finished goods availability.
2.Maintain adequate JIT stock inventory.
3.Plan manufacturing activities, delivery schedules and
purchasing activities.

52. CAPACITY REQUIREMENT PLANNING
The capacity planning process entails the determination of
resources and production capacity. It is an ongoing, cyclical
process that starts with a forecast and an actual review.
This process aims to ensure an organization can provide services
at all times while controlling costs and risks.

54. Overall Equipment Effectiveness
OEE (Overall Equipment Effectiveness) is the gold standard
for measuring manufacturing productivity. Simply put – it
identifies the percentage of manufacturing time that is truly
productive.

55. OEE MODEL- SIX BIG LOSSES

56. JIT- JUST IN TIME
just-in-time, or JIT, is an inventory management method in
which goods are received from suppliers only as they are
needed. The main objective of this method is to reduce inventory
holding costs and increase inventory turnover.

57. Warehousing
Warehouse management:- refers to the oversight of operations
in a warehouse. This includes receiving, tracking, and storing
inventory, as well as training staff, managing shipping,
workload planning, and monitoring the movement of goods
6 DIFFERENT TYPES OF WAREHOUSES
• DISTRIBUTION CENTER. Many people confuse a
warehouse with a distribution center and use the terms
interchangeably. ...
• PICK, PACK, & SHIP WAREHOUSE. ...
• SMART WAREHOUSE. ...
• COLD STORAGE. ...
• ON-DEMAND STORAGE. ...
• BONDED WAREHOUSE.

58. MODULE 3
1. Understanding of and adherence to SOP principles and
procedures
2. Quality management: quality control tools and systems.
Cost of quality analysis.
3. 5-S System of workplace organization.

59. SOP- Principles and Procedures
An SOP is a procedure specific to your operation that describes
the activities necessary to complete tasks in accordance with
industry regulations, provincial laws or even just your own
standards for running your business
Two Types of Standard Operating Procedures:
Technical and Management.
Categories of SOP:
• step-by-step,
• hierarchical steps,
• flowcharts.

61. Total Quality Management
K.Adisesha 61
The continuous process of ensuring every aspect of
production builds in product quality
Traditional Quality-product inspection during or at
the end of the transformation process

62. Total Versus Traditional Quality
Adapted from Table21.3
Total Quality Management Traditional Quality Control
n
n
n
Quality is a strategic issue
Plan forquality
Quality iseverybody’s
responsibility
n
n
n
Quality is a tactical issue
Screen for quality
Quality is the responsibility of the
quality control department
n Strive for zerodefects n Some mistakes areinevitable
n Quality means conformance to
requirements that meet or exceed
customers’ expectations
n Quality means inspection
n Scrap and reworking are only a
small part of the costs of
nonconformance
n Scrap and reworking are the major
costs of poorquality
K.Adisesha 62

63. 5-S system of work-Area organization
A methodology for organizing, cleaning, developing, and sustaining
a productive work environment
Japanese Translated English Definition
Seiri organize sort Eliminate whatever is not
needed by separating
needed tools, parts, and
instructions from unneeded
materials.
Seiton orderliness set in order Organize whatever remains
by neatly arranging and
identifying parts and tools
for ease of use.
Seiso cleanliness shine Clean the work area by
conducting a cleanup
campaign.
Seiketsu standardize standardize Schedule regular cleaning
and maintenance by
conducting seiri, seiton,
and seiso daily.
Shitsuke discipline sustain Make 5S a way of life by
forming the habit of always
following the first four S’s.

64. LEAN 5S PROGRAM BENEFITS
Benefits to be derived from implementing a lean 5S
program include:
•Improved safety
•Higher equipment availability
•Lower defect rates
•Reduced costs
•Increased production agility and flexibility
•Improved employee morale
•Better asset utilization
•Enhanced enterprise image to customers, suppliers,
employees, and manageme

65. MODULE 4
Facility Management- Facility Maintenance.
Business Process Management tool- Business Management and
Energetic Leadership
BPM life Cycle-Energetic Leadership

66. Facility Management
Facilities management can be defined as the tools and services
that support the functionality, safety, and sustainability of
buildings, grounds, infrastructure, and real estate.
Facility Maintenance- the process of increasing the utility of a
building by regularly servicing capital assets, commercial
appliances, and areas inside or around a building.

67. Business Process Management
The discipline in which people use various methods to discover,
model, analyze, measure, improve, optimize, and automate
business processes.

70. The End
70
References :
1. Production and Operations Management – Everest E Adam &Ebert – PHI –
publication , forth edition.
2.Operations Management (Theory and Problems ) – Joseph G Monks – McGraw
Hill Intl.
3. Production and Operations Management – S N Chary – TMH Publications
4. Production and Operations Management – Pannerselvam, PHI
5. Lee J. Krajewski and Larry P. Ritzman, “Operations Management: Process and
value Chains”, 7th Edition, PHI,2007
6. Hunawalla and Patil – production and Operations Management, Himalaya
Thank you