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1. Books to be referred
1. Operations and Supply Chain Management
Richard Chase, Ravi Shankar, Robert Jacobs, 15th edition McGraw Hill
2. Operations Management – Theory and Practice, B.Mahadevan, 3rd edition, Pearson
3. Productions and Operations Management – K.Aswathappa and K.Shridhara Bhat ,
2009, Himalaya publishing

2. Introduction to Operations Management
• The principles of Operations Management (OM) are applicable
throughout the world, to virtually all kinds of organizations.
(Accountability, Communication, Quality control…)
• The production of goods and services requires Operations
Management in every field, be it an office, a hospital, a restaurant, a
department store, or a factory.
• The efficient production of goods and services requires effective
applications of the various concepts, tools, and techniques of OM.

3. What is Operations Management?
Operations management (OM) is defined as the design, operation, and
improvement of the systems that create and deliver the firm’s primary
products and services

4. Operations
Management
is all about
integration
of….
What is Operations Management?

5. The Importance of Operation Management
 Synergies must exist with other functional areas of the organization
Eg.: Quality issue with springs supplied by M/s SSS
 Operations account for 60-80% of the direct expenses that burden a firms
profit.( Material Cost)
 Senior executives would be from Finance, Marketing, HR
 Relay on others for information connected to operations- chances of
wrong decisions
Eg.: Turnaround of Spark Plug division of Bosch

6. Importance of Operations
• Marketing starts and ends with customers
• Operations deliver Product / Service
• Finance arranges and disburses funds
• HR deals with people

7. Importance of Operations
• It can be observed that Marketing gets the business and Operations
create value. These two are the revenue generating functions.
• The objectives of both functions are in conflict with each other. One
wants more variety and less quantity and the other wants more
quantity and less variety.

8. historical development,
Historical Development of OM
 JIT and TQC ( Late 80’s)
 Manufacturing Strategy Paradigm :
To focus on one of the performance measures viz cost, quality, delivery.
Eg. : Sony on quality, TVS on service
 Service Quality and Productivity
Eg. Mc Donald focused on quality and delivery of high volume
 Total Quality Management and Quality Certification ( ISO / Malcom
Baldrige..)

9. historical development,
Historical Development of OM (cont’d)
 Business Process Reengineering (90’s)
Eg. : FORD
 Supply Chain Management ( Whole value stream)
 e- Commerce ( Use of internet for better coordination)

10. historical development,
Focus shift of Operations Management

11. transformation processes,
What is a Transformation Process?
A transformation process is defined as a use of resources
to transform inputs into some desired outputs

12. transformation processes,
Transformations
 Physical--manufacturing
 Locational—transportation Eg. Taxi Service
 Exchange—retailing Eg. : Change of Ownership of
goods
 Storage—warehousing
 Informational—telecommunications

13. differences between services and goods
What is a Service and What is a Good?
“If you drop it on your foot, it won’t hurt you.” (Good or service?)
“Services never include goods and goods never include services.”
(True or false?)

14. differences between services and goods
• ‘Goods’ is a physical product that you can see, touch, or possibly
consume. Examples: oranges, flowers, televisions, soap, airplanes, fish,
furniture, coal, lumber, personal computers, paper, and industrial
machines.
• ‘Service’ is any primary or complementary activity that does not directly
produce a physical product.

15. differences between services and goods
Similarities Between Goods and Services
1. Goods and services provide value and satisfaction to
customers who purchase and use them.
2. They both can be standardized or customized to individual
wants and needs.
3. A process creates and delivers each good or service, and
therefore, OM is a critical skill.

16. differences between services and goods
Differences Between Goods and Services
1. Goods are tangible while services are intangible.
2. Customers participate in many service processes, activities, and transactions.
3. The demand for services is more difficult to predict than the demand for
goods.
4. Services cannot be stored as physical inventory.
5. Service management skills are paramount to a successful service encounter.
6. Service facilities typically need to be in close proximity to the customer.
7. Patents do not protect services.

17. differences between services and goods
Factor Manufacturing Service
Productivity Relatively easy to measure Difficult in some cases
Quality Relatively simple to specify & evaluate Difficult in some cases
Customers Less contact More contact
Inventory Finish products can be inventoried Outputs cannot be inventoried
Material Handling expenses Proportionately more Proportionately less
Investment More, capital intensive Less, labor intensive
Tangibility Tangible products Intangible services
Repairs & Maintenance More Less
Lead time Long lead times Short lead times
Differences between Manufacturing & Service Operations.

18. Examples of Organizations
Organizations successful through Operations Strategies to
become Market Leaders
Starbucks
McDonalds
Maruti Suzuki
Amazon
Aravind Eye Hospital
Narayana Hrudayalaya

19. a system perspective
Operations
A key functional area in an Organisation
Operations
Finance
Marketing H R M

20. a system perspective
I T
Operations Support Layer
Marketing
Design
Costing
Quality
Planning
Material
Maintenance
Tooling
I E
Ultimate
Customer
Dealers
Retailers
Customer Layer
Suppliers
Sub-contractors
Other service providers
Supplier Layer
Innovation
Strategy
Research &
Development
Layer of
Innovation
Service Delivery system
Machining
Fabrication
Assembly
Testing
Core Operations Layer
Operations Function
Linkages with other functions

21. a system perspective
Operations Management
A systems Perspective
INPUT
OUTPUT
Labour
Capital
Material
Goods
Services
Forecasting
Operations
Planning &
Control
Process &
Product
Design
Material &
Capacity
Planning
Feedback
Purchasing &
Inventory
Control
Maintenance
Management
Process
Improvement
Quality
Management
PROCESSING

22. You have decided to start a restaurant in your college.
How do you plan & what are the factors you consider to start the restaurant
Note : Make a group of 5 people and discuss.

23. Functions of Operations Management
 Product Selection and Design
 Facilities Location
 Facilities Layout and Materials Handling
 Production Planning
 Inventory Control
 Industrial Engineering
 Production System Designing
 Method Study and Work Measurement
 Capacity Planning
 PPC
 Quality control

24. OM in manufacturing
Manufacturing Operations
Produce Physical tangible items which can be stored as Inventory before
delivery to the Customer

25. OM in Services
Service Operations
Produce intangible items that cannot be produced ahead of time

26. Production Systems
• Production is the creation of goods and services. OM is the set of
activities that creates value in the form of goods and services by
transforming inputs into outputs.
• Activities creating goods and services take place in all organizations. In
manufacturing firms, the production activities that create goods are
usually obvious. In them, we can see the creation of a tangible product,
such as a television or a motorcycle.
• However, in an organization that does not create tangible goods or
products, the production function may be less obvious. We often call
these activities as services.

27. What Is Operations and Supply Chain Management?
Operations and supply chain management (OSCM) is defined as the
design, operation, and improvement of the systems that create and
deliver the firm’s primary products and services. Like Marketing and
Finance, OSCM is a functional field of business with clear line
management responsibilities. OSCM is concerned with the management
of the entire system that produces a product or delivers a service.

28. Operations and SCM
• Operations refers to manufacturing and service processes used to
transform the resources employed by a firm into Products and Services
as desired by customers.
• Supply chain refers to processes that move information and material
to and from the manufacturing and service process of the firm. These
include the logistics processes that physically move product and the
warehousing and storage processes that position products for quick
delivery to the customer.

29. Three Important Parameters for
Competitiveness
 Quality
 Productivity
 Cost

30. Nature of Production & Operations
Production is the process by which, raw materials and other inputs are
converted into finished products.
Operations is the process by which, various inputs and resources are
converted into more useful products & services.

31. Production management term is used for a system where tangible goods are
produced.
Operations management term is used where various inputs are transferred
into tangible goods and intangible services.
Operations management covers service organizations like Banks, Airlines,
Educational Institutions, Hospitals, Hotels etc.
Distinction between Production & Operations Management

32. Systems Approach to OM

33. Raw Material –
Groceries,
Vegetables
Capital
Labour
Information
Time
Money
Ordering
process
Food
preparation
Food ready for
consumption

34. Role and activities of Operations Management in
Organizations ( Eg. For ITO Model)

35. Role and activities of Operations Management in
Organizations ( Eg. For ITO Model)
Restaurant
Bank
Education Institution
Automotive Industry
Petrol Bunk
Write down Input, Process and Output for the following

36. Relationship between Operations and other
functions in the Organization

37. Operations Management - Challenges
 Competitive Pressures due to economic reforms
 Falling Prices
The on road price of a Hyundai Santro has not changed much between 2000 and 2014
 Shrinking Delivery Quote
Textile Manufacturers are expected to cut their lead time from order placement to final delivery
down to 2 months
 Build-to-Order Requirements
Need systems that allows customers to self-configure, customize and visualize their own version of
products & services

38.  Growing customer expectations
 Examples: Tariff plans and options provided by mobile operators, options in passenger
car
 Customers tend to demand more and refine their expectations.
Eg.: S/w developed for our organisation
 Manufacturing & Service organizations must learn to respond to these expectations
Eg. : Delivery of Bajaj Scooter
 Need to develop capabilities to bring newer products and services faster and yet
profitably
Eg. : Mobiles, Cars etc.

39. Operations Management - Challenges
 Today’s businesses are constantly challenged by the rapid technological
advancements
Example 1: ATMs & Internet Banking. Customers need not visit a bank branch. Drafts and cheques
replaced with electronic payment gateways & fund transfer mechanisms.
Example 2: Buying a train ticket. By visiting a Web site like http://www.irctc.co.in/, a customer can
accomplish all tasks pertaining to ticket booking and cancellation at leisure.
Example 3: Procurement of goods & services. A manufacturing organization can procure goods &
services by organizing a reverse auction on the Internet. In 3 to 4 hours, the best price for a component
and the supplier willing to provide the component at a desired quality can be located.
Example 4: New Product Development. A team of design personnel from across different geographical
locations can participate in new product development using technological tools.

40. Operations Management - Challenges
 Environmental Issues
When Government of India announced a scheme for special economic
zones (SEZs), it generated controversies and social concerns.
 Growing industrialization raises concerns regarding the depletion of
natural resources and the waste generated from production systems
and end-of-life products.

41. Operations Management - Challenges
 Growing urbanization creates societal problems arising out of scarcity of
available resources and generation of solid wastes.
 Consumption of energy and water in countries like India is on the rise.
Such a situation requires better practices and newer methods of
addressing these requirements using better operational practices.
 Increasingly, firms are under pressure to take responsibility of restoring,
sustaining, and expanding the planet’s ecosystem instead of merely
exploiting it.
OM practices must address environmental concerns in order to ensure a sustainable
world

42. Globalization

43. Sharp,
Japan
Thailand
Sony,
Japan
Philips,
Netherlands
Taiwan

44. Globalization
Global manufacturing of Spark Plug

46. 1. Computer Aided Manufacturing and Design ( CAD/ CAM)
- All designing and manufacturing the products would be
done with the help of computers
2. Shrinking product cycle :
With fast expansion of technology, product life cycles have
become short. Companies are forced to introduce rapid
development of new product (Eg.:Use of CAD, has reduced time
for Proto type)
3. Mass Customisation : Earlier Mass production is changing towards
Mass custamisation.
Eg.: Manufacture of Rolls Royce Car

47. 4. Employee Involvement : Employees were another input to the
production ,is getting changed to more decision making individuals
5. Operations turning into Lean :
6. Automation – Human skills transferred to Machine tools
7. Traditional Quality control methods are getting changed to
Right Quality First Time
8. Product Standardization
9. Use of Robotics
10. Preventive Maintenance

48. Operation Strategy :
Choosing different set of activities as a operational strategy to be competitive
Eg. : Air Deccan – To be low cost carrier

49. Operations Strategy
Example
Strategy Process
Customer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes
and Infrastructure
More Product
Increase Org. Size
Increase Production Capacity
Build New Factory

50. Operations Strategy`
Example : Air Deccan
Strategy Process
Customer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes
and Infrastructure
Low Cost
Cover more areas,
especially tier 2 cities
Use of smaller planes &
Remove food services
Build smaller
planes

51. Cost or Price
Make the Product or Deliver the Service Cheap
Eg. : Deccan Air Lines.
Quality
Make a Great Product or Deliver a Great Service
Eg. : Singapore Airlines for Quality service / SONY for quality
electronic products
Delivery Speed
Make the Product or Deliver the Service Quickly
Eg. : Dell Computers

52. Delivery Reliability
Deliver It When Promised
Eg. : Blue Dart Courier, Amazon, Flipkart
Coping with Changes in Demand
Change Its Volume- High Demand better economies of scale
Eg. : Toyota group ( Flexible to produce high volume or low volume)
Flexibility and New Product Introduction Speed
Change It Eg. :changeover from Qualis to Innova
Other Product-Specific Criteria
Support It ( After sale support, technical support to supplier through
Simultaneous engineering)

53. What is Strategic Operations Management ?
Strategic Operations Management is all about
The Translation of the Overall Corporate Strategy and
Business Strategy into functional strategies for Operations.
The Translation of the Operations Strategy into finite
Operations initiatives
The implementation, control and feedback from these
Operations initiatives.
Business strategy focuses on competing in the market place and corporate strategy on business growth and profits

54. Strategic Operations Management – Introduction
All functional areas of Management have to align themselves with the Business
Strategy and Corporate Strategy. The strategies adopted by all the functional areas
cannot work in isolation.
Operations Management is no exception. How to leverage the strategies adopted
in Operations Management Function to gain a competitive advantage for the
organization is what we can term as Strategic Operations Management.

55. Why is Strategic Operations Management Important ?
 Along with Marketing, Operations is the other revenue generating
function in an organization.
 Operations Strategy holds the key to competitive advantage for
many organizations.
 This fact holds good for the Service Sector also.
 It is about devising and implementing processes that will enable
the Organization to compete and, ideally, to create competitive
advantage.

56. Why is Strategic Operations Management Important ?
 It is concerned with developing capabilities within the Operations
that are superior to other competitors and which other
competitors either cannot copy, or will find it extremely difficult to
copy.
Eg. : Apple's products are unique not on their feature merits,
but because of the way they are conceived, designed, built,
sourced, manufactured, shipped, marketed, sold, opened, held,
and used. This is integration taken to the extreme and it would
be difficult for any company to replicate.
Cococola, Vidyarthibhavan Dose,Toyota Production System

57. Operations Strategy
The role of operations strategy is to provide a plan for the operations function
so that it can make the best use of its resources. Operations strategy specifies
the policies and plans for using the organization’s resources to support its long-
term competitive strategy Figure shows this relationship. ( Eg. Green channel,
Income tax )
Customs duty
for SW

58. Management decision in Operation Management
1. Strategic ( Long Term)
2. Tactical (Intermediate)
3. Operational ( Short Term)

59. 1. Strategic ( Long Term) :
Deciding to go for increase in capacity by investing for new machineries
Eg. : A manufacturing company gets the information that the customer
demand will be doubled within next 3 years and the company cannot
meet the requirement with existing capacity

60. 2. Tactical (Intermediate)
* The increased demand can be met by procuring the items
from vendors
* Staggered lunch hours
* Over time
3. Operational ( Short Term)
* Scheduling daily requirement with vendors
* Allocating manpower for day’s work

61. Exercise :
You have been nominated as the head for one of the MBA
colleges, which has started recently.
You have been assigned a work to improve the admission, which
is currently 500 seats to 1000 seats
What are the strategic, Tactical and operational decisions you
take to improve the situation ?

62. Strategic Fit :
Strategic fit expresses the degree to which an organization is
matching its resources and capabilities with the opportunities in the
external environment.

63. Strategic Fit :
Consistency between priorities of competitive strategy and supply chain
capabilities specified by the supply chain strategy
Competitive strategy : Low cost
Supply chain strategy : * Less Varieties
* Planning production with less changeovers
* Consolidation of transportation

64. Strategic Fit :
All activities of a firm’s operation relate to each Other to Minimize the
total cost
Eg.: Bosch Power Tools division
Competitive strategy : * Low cost
Supply chain strategy : * Reduction in Changeover time
* parts from local source
* Common Pool collection
* Suggestion Scheme
* Give incentive and get more
production.

65. Example : Southwest Airlines ( Low cost Leader)
Aim : To deliver low cost , convenient service on it’s routes
How :
• Limited Passenger services ( such as meals)
• High aircraft utilization
• Highly productive ground staff
( Eg. :15 mins turnaround time at gate – Ensures high flying hours – more
revenue- low cost)

66. A SUSTAINABLE OPERATIONS AND SUPPLY CHAIN STRATEGY
Social Responsibility: This pertains to fair and beneficial business
practices toward labor, the community, and the region in which a firm
conducts its business.

67.  Economic Prosperity :
The firm is obligated to compensate shareholders who provide capital
through stock purchases and other financial instruments via a competitive
return on investments.
 Environmental Stewardship :
This refers to the firm’s impact on the environment. The company should
protect the environment as much as possible—or at least cause no harm.
Managers should move to reduce a company’s ecological footprint by
carefully managing its consumption of natural resources and by reducing
waste.

68. Differences between Strategic and Tactical Decisions
 Strategy involves planning a company's next move, and tactics involve
physically carrying out the plan.
 The difference can be remembered with the phrase, "strategic is doing
the right things --tactical is doing things right."
 Strategy describes the destination and how you are going to get there,
and tactics describe the specific actions you are going to take along the
way.
 Strategy defines your long-term goals and how you’re planning to
achieve them.
 Strategy is more concrete and long-term and
tactics can change based on how successful your strategy is.