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Introduction to operations
1. The Strategic Importance of
Operations
DMA Kukasooriya
ISL-Certified Six Sigma Black Belt
(Director-PMD,NIBM)
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
2. Operations Management
Organization
Finance Operations Marketing
Operations is a function or system that transforms
inputs in to outputs of greater value. Operations
Management design and operation of productive
systems
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
3. 28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
How do we Understand Operations?
1. Identify Issues of operations
2. Define gaps
3. Creating Solutions - Product development
4. Designing a process
5. Managing the process
6. Operation Research for development
7. Improvement of processes
8. Innovation of new products and processes
4. Value-Added
The difference between the cost of inputs
and the value or price of outputs.
Inputs
Material
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Control
Feedback
FeedbackFeedback
Value added
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
7. Steel production
Automobile fabrication
House building
Road construction
Dressmaking
Farming
Auto Repair
Appliance repair
Maid Service
Manual car wash
Teaching
Lawn mowing
Low service content
High goods content
High service content
Low goods content
Increasing
goods content
Increasing
service content
Goods-service continuum
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
8. Stage of Production Value
Added
Value of
Product
Farmer produces and harvests wheat $0.15 $0.15
Wheat transported to mill $0.08 $0.23
Mill produces flour $0.15 $0.38
Flour transported to baker $0.08 $0.46
Baker produces bread $0.54 $1.00
Bread transported to grocery store $0.08 $1.08
Grocery store displays and sells bread $0.21 $1.29
Total Value-Added $1.29
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
9. Types of Operations
Operations Examples
Goods Producing Farming, mining, construction,
manufacturing, power generation
Storage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,
hotels, airlines
Exchange Retailing, wholesaling, banking,
renting, leasing, library, loans
Entertainment Films, radio and television,
concerts, recording
Communication Newspapers, radio and television
newscasts, telephone, satellites
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
10. Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
vegetablesMetal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
11. Hospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patientsHospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
13. Decision Making
System Design
– capacity
– location
– arrangement of departments
– product and service planning
– acquisition and placement of
equipment
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
15. Major Characteristics of Production Systems
Degree of standardization
Type of operation
– project
– job shop
– repetitive production
– continuous processing
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
17. Manufacturing vs Service
Characteristic
Output
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
Manufacturing
Tangible
Low
High
Low
High
Easy
High
Service
Intangible
High
Low
High
Low
Difficult
Low
quality problems
High
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
18. Responsibilities of Operations Management
Products & services
Planning
– Capacity
– Location
–
– Make or buy
– Layout
– Projects
– Scheduling
Controlling
– Inventory
– Quality
Organizing
– Degree of centralization
– Subcontracting
Staffing
– Hiring/laying off
– Use of Overtime
Directing
– Incentive plans
– Issuance of work orders
– Job assignments
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
19. Models
A model is an abstraction of reality.
– Physical
– Schematic
– Mathematical
What are the pros and cons of models?
Tradeoffs
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
20. Systems Approach
“The whole is greater than
the sum of the parts.”
Suboptimization
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
22. Pareto Phenomenon
• A vital few things are important for reaching
an objective or solving a problem.
• 80/20 Rule - 80% of problems are caused by
20% of the activities.
How do we identify the vital few?
28/6/2015 DMA Kulasooriya,NIBM (UCD -BSc)
23. The Internet
E-Business
Supply Chain Management
Lean manufacturing
Six Sigma Quality
Recent Trends
24. 121
154
193
234
29451
57
64
78
98
2006 2007 2008 2009 2010
IT/BPO Export Revenue
IT Revenue $m BPO Revenue $m
173
213
258
312
392
5th Largest Export revenue earner for Sri Lanka
Workforce
35,000
direct
employment
