Operational ManagementBookhapter 1. Introduction to OM (1).pptx

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Course Name: Operations Management
Course code:
Classroom: BUP-MGT- 2020-A-OM- 2drqdxr
BUP-MGT- 2020-B-OM- nauw4k2
Course Teacher: Dr. Md. Miraj Hossen
Associate Professor, JnU
Contact: 01911643826, 01817505403
E-mail: miraj.hust@gmail.com
Reference Books:
1. Operations Management: Krajewski, Ritzman,
Malhotra
2. Production and Operations Management: William J.
Stevenson
3. Operations and Supply Management: Jacobs, Chase,
and Aquilano

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About the Course
Introduction:
 Operations Management (OM) is concerned with the management of
resources and activities that produce and deliver goods and services
for customers.
 Efficient and effective operations can provide an organization with
major competitive advantages since the ability to respond to customer
and market requirements quickly, at a low cost, and with high quality,
is vital to attaining profitability and growth through increased market
share.
 The course focuses on the basic concepts, and techniques for efficient
and effective operations. Special emphasis is placed on process
improvement and supply chain management.
 Topics include operations strategy, product and service design, process
design and analysis, capacity planning, materials and inventory
management, quality management, and project management.

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Course Objectives:
Upon completing this course, students will be able to:
 understand the strategic role of operations management in
creating and enhancing a firm’s competitive advantages;
 understand key concepts and issues of OM in both
manufacturing and service organizations;
 understand the interdependence of the operations function
with the other key functional areas of a firm;
 apply analytical skills and problem-solving tools to the
analysis of the operations problems.

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Welcome to a Session
on
Chapter 01:
Introduction to
Operations Management

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Chapter Contents
Define Operations Management
Subject matters of Operations Management
Different types of operations
Scope/ areas of operations management
Different roles of operations management
Transformation/ Operations process (Model)
Manufacturing & service organizations’ process: Differences
Tasks and responsibilities of an operations manager
Quality dimensions in service and manufacturing firms
Value-added concept in operations management

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Defining Operations Management
According to Krajewski, Ritzman, and Malhotra:
Operations Management is the direction and control of the
process that transform inputs into products and services.
The systematic design, direction, and control of processes
that transform inputs into services and products for
internals, as well as external, customers.
Processes can be linked together to form a supply chain –
interrelated processes within a firms and across different
firms that produce a service or product to the satisfaction
of the customers

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Operations Management
Organization
Finance Operations Marketing
According to W. J. Stevenson, Operations Management is
the management of systems or processes that create goods
and/or provide services
Introduction to Operations Management

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OM’s Transformation Process
10

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Typical Organization Chart
11

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Different 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

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Areas/ Subject matters of OM
Operations Management includes:
Product and process design
Layout and location planning
Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees
Supply chain strategy
And more . . .

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Different Roles of Operations Management
1. OM transforms inputs into outputs
• Inputs are resources such as
• People, Material, and Money…..
• Outputs are goods and services
2. To add value:
• Increase product value at each stage
• Value added is the net increase between output product
value and input material value
3. Provide an efficient transformation:
• Efficiency – means performing activities well for least
possible cost. 14

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Value-Added by OM Process
The difference between the cost of inputs and the value
or price of outputs.
Inputs
Land
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Control
Feedback
Feedback
Feedback
Value added

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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

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A Process View of OM
External environment
Information on
performance
Internal and external
customers
Processes and
operations
1
2
3
4
5
Inputs
• Workers
• Managers
• Equipment
• Facilities
• Materials
• Land
• Energy
Outputs
• Goods
• Services
Figure: Process View of OM
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

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OM Process of Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
vegetables
Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment

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OM Process of Hospital
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patients
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy

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Scopes of Operations and Production Management
Copyright © 2010 Pearson Education,
Inc. Publishing as Prentice Hall.

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Scope of operations management……
1. Product design: product design and development provides
link between marketing, customer needs and expectations and
the activities required to manufacture the product.
2. Process design: an overall process route for converting the
raw materials in finished goods.
3. Production planning and control: the process of planning
the production in advance, setting the exact route of each
item, fixing the starting and finishing dates for each item, to
give production orders and follow up the progress of products
according to orders.
4. Planning: Planning is deciding in advance what to do, how to
do it, when to do it and who is to do it.

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Scope of Operations Management……
5. Routing (direction-finding): selection of path which each
part of the product will follow, which being transformed
from raw materials to finished products.
6. Scheduling: the fixation of time and date for each
operation.
7. Dispatching: release of orders and instruction for the
starting of production for any item in acceptance with the
route sheet and schedule charts.
8. Quality control: a system that is used to maintain a
desired level of quality in a product or service.
9. Materials management:
10. Maintenance management

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Manufacturing or Service Organizations:
• Physical, durable output
• Output can be inventoried
• Low customer contact
• Long response time
• Capital intensive
• Quality easily measured
• Intangible, perishable output
• Output cannot be inventoried
• High customer contact
• Short response time
• Labor intensive
• Quality not easily measured
More like a
manufacturing process
More like a
service process
Figure 1.3
Continuum of characteristics of manufacturing and service organizations

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Manufacturing Vs. Service Firms: Key Differences
• Customer contact
• Uniformity of input
• Labor content
• Uniformity of output
• Measurement of productivity
• Quality assurance
These differences are beginning to fade
in many cases

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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

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Major Tasks and Responsibilities of Operations
Managers
Major Tasks:
 Quality Production
 Timely Production
 Cost-effective Production
Major Responsibilities:
 Planning
 Organizing
 Staffing
 Directing
 Controlling

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Major 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

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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?

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Recent Trends:
The Internet
E-Business
Supply Chain Management
Recent Trends and Continuing Trends
• Quality and process improvement
• Technology
• Globalization
• Operations strategy
• Environmental issues
Continuing Trends

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Important Quality Dimensions in Manufacturing
Industry:
•Performance
•Features
•Reliability
•Conformance
•Durability
•Serviceability
•Aesthetics
•Perceived Quality

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• Dimension 1: Performance
• Does the product or service do what it is supposed to do, within
its defined tolerances?
• Performance is often a source of contention between customers
and suppliers, particularly when deliverables are not adequately
defined within specifications.
• The performance of a product often influences profitability or
reputation of the end-user. As such, many contracts or
specifications include damages related to inadequate
performance.
• Dimension 2: Features
• Does the product or services possess all of the features specified,
or required for its intended purpose?
• While this dimension may seem obvious, performance
specifications rarely define the features required in a product.
Thus, it’s important that suppliers designing product or services
from performance specifications are familiar with its intended
uses, and maintain close relationships with the end-users.

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Dimension 3: Reliability
Will the product consistently perform within specifications?
Reliability may be closely related to performance. For
instance, a product specification may define parameters for
up-time, or acceptable failure rates.
Reliability is a major contributor to brand or company image,
and is considered a fundamental dimension of quality by
most end-users.
Dimension 4: Conformance
 Does the product or service conform to the specification?
 If it’s developed based on a performance specification,
does it perform as specified? If it’s developed based on a
design specification, does it possess all of the features
defined?

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Dimension 5: Durability
 How long will the product perform or last, and under what
conditions?
 Durability is closely related to warranty. Requirements for
product durability are often included within procurement
contracts and specifications.
 For instance, fighter aircraft procured to operate from aircraft
carriers include design criteria intended to improve their
durability in the demanding naval environment.
Dimension 6: Serviceability
 Is the product relatively easy to maintain and repair?
 As end users become more focused on Total Cost of
Ownership than simple procurement costs, serviceability (as
well as reliability) is becoming an increasingly important
dimension of quality and criteria for product selection.

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Dimension 7: Aesthetics
 The way a product looks is important to end-users. The
aesthetic properties of a product contribute to a company’s or
brand’s identity. Faults or defects in a product that diminish its
aesthetic properties, even those that do not reduce or alter
other dimensions of quality, are often cause for rejection.
Dimension 8: Perception
 Perception is reality. The product or service may possess
adequate or even superior dimensions of quality, but still fall
victim to negative customer or public perceptions.
 As an example, a high quality product may get the reputation
for being low quality based on poor service by installation or
field technicians. If the product is not installed or maintained
properly, and fails as a result, the failure is often associated
with the product’s quality rather than the quality of the service
it receives.

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Important Quality Dimensions in Servicing
 Time: How long must a customer wait?
 Timeliness: Will a package be delivered by 10:30 the
next morning?
 Completeness: Are all items in the order included?
 Courtesy: Do front-line employees greet each
customer cheerfully?
 Consistency: Are services delivered in the same
fashion for every customer?
 Accessibility and convenience: Is the service easy to
obtain?
 Accuracy: Is the service performed right the first time?
 Responsiveness: Can service personnel react quickly
and resolve unexpected problems?

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Exciter, Satisfier, Dissatisfier regarding Products/
Services:
• An exciter is something that a company does that leaves their
customer not just satisfied, but a raving fan! The customer is left
with an extremely positive impression and feels the need to share
their great experience with their friends and family.
• They are providing this positive feedback without being prompted
by the company to do so. In a world where word of mouth referrals
drive business more than media advertising, this is huge!
• These are "front of the box" features that typically set your product
apart from the competition. They're typically hard to discover or
require unique assets.
• Exciters are also features that get your development team
excited to work on ‘something cool’ and keep team moral high.

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Exciter, Satisfier, Dissatisfier…….
• A satisfier is something that a company does that leaves their
customer satisfied and happy, but not necessarily with any certain
"wow" factor. An example of this would be arriving to a clean hotel
room with good customer service, but nothing beyond that. The
customer leaves with positive thoughts in their mind and if asked,
would give the hotel a good review.
• Dissatisfiers are features customer just expect to be there, or defects
where the product is designed to perform a task that it doesn't (a bug).
• A dissatisfier turn a client or candidate away and send them out into
the marketplace with a negative impression of the company.
• An example would be a hotel giving someone a room that had barely
been cleaned and providing below average customer service. The
person going through that experience would be certain to leave with a
negative thought in their mind and to share that thought with their
friends and family.

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