Production and Operations Management --> an overview

1. UNIT-I
L-1
PRODUCTION & OPERATIONS
Management

2. PRODUCTION SYSTEM
L-12

3. L-3

4. Automated Plant
L-14

5. Water Bottling Machine
L-5

6. Assembly Line
L-16

7. Boeings in the making
L-17

8. COLLEGE AS A SERVICE ORGANIZATION
Input Planning &
controlling
Supportive
Subsystems
Output
Students
Professor
Buildings
Class Times
Course
Development
School
Regulations
Bookstore
Library
Computer Lab
Educated
Students
Research
Outcomes
Service to
PublicL-18

9. Examples of Production & Operations System
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
L-19

10. Objective of the production
management
L-110
Ultimate objective
 Manufacturing cost
 Product Quality
 Manufacturing schedule
Intermediate objective
 Machinery and equipment
 Material
 Manpower
 Manufacturing services

11. Characteristics of Goods
Lecture-2
L-211
 Tangible product
 Consistent product
definition
 Production usually
separate from
consumption
 Can be inventoried
 Low customer interaction

12. Characteristics of Services
 Intangible product
 Produced & consumed at
same time
 Often unique
 High customer interaction
 Inconsistent product definition
 Often knowledge-based
 Frequently dispersed
L- 212

13. Goods Contain Services / Services Contain
Goods
0 25 50 75 100255075100
Automobile
Computer
Installed Carpeting
Fast-food Meal
Restaurant Meal
Auto Repair
Hospital Care
Advertising Agency
Investment Management
Consulting Service
Counseling
Percent of Product that is a Good Percent of Product that is a Service
L-213

14. Key Differences between manufacturing and Service operations
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
L- 214

15. Key Differences between manufacturing and Service operations
L-215
8. Amount of inventory
9. Evaluation of work
10. Ability to patent design

16. Goods vs. Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
L-216

17. New Challenges in OM
• Local or
national focus
• Batch
shipments
• Low bid
purchasing
• Lengthy product
development
cycles
• Standardized
products
 Global focus
 Just-in-time
 Supply chain
partnering
 Rapid product
development
 Strategic alliances
 Mass customization
 Empowered
employees
 Teams
From
To
L-217

18. Challenges faced by Operations
Manager
L-18
 Global Competition
 Quality, Customer Service, and Cost
Challenges
 Computers and Advanced
Production Technology
 Growth of Service Sector
 Scarcity of Production Resources
 Issues of Social Responsibility
 Availability of skilled Employee

19. History of Operations
Lecture-3
L- 319
 Cottage System TIME<1700
1700 - 1800
1850s
1890s
1910s
1930s
1940s
1970s
1980s
1990s
 Industrial Revolution
 Civil War
 Scientific Management
 Hawthorne Studies
 Mass Customization
 Service Revolution
 Global Competition
 Operations Research
 Moving Assembly Line
12

20. MASS PRODUCTION/ MOVING
ASSEMBLY LINE
MODEL “T” – Machine that Changed the World
 1914: Ford produced 308,162 cars, more than
all 299 other auto manufacturers combined
 1927: Automobile Produced every 24 seconds
 Higher volumes → Lower cost → Lower Prices
→Increased Sales → Higher Volumes
L-320

21. FORD MODEL “T”
L-321
First Produced:
October 1908
By 1927,
15,000,000
Produced
Any Color so long
as it’s Black…

22. POM Assembly Lines
L-322

23. Modern Assembly Line
L-323
World’s Second Largest
Manufacturer of Automobiles
About 240,000 Employees
Produces a Vehicle about
every Six Seconds
Consistently Profitable
GM: $1.1 Billion Quarter
Loss

24. Scope of POM
L-424
LONG TERM DECISIONS
 Product selection and design
 Process selection and planning
 Location facility
 Capacity planning
 Material Handling facility

25. Scope of POM
L-425
SHORT TERM DECISIONS
 Production planning
 Production control
 Inventory control
 Quality control
 Method study
 Maintenance and replacement
 Cost reduction

26. NATURE OF POM
L- 426
 Production as a System
 Production as an Organization Function
 Decision Making in POM

27. Nature of POM
L- 427

28. ……contd.
L- 428
INTERNAL ENVIRONMENT: Internal factors affecting
production:-
 Engineering- Product quality
 R& D – Product development
 Quality- Quality control & assurance

29. ….CONTD.
L-429
EXTERNAL ENVIRONMENT: External factors affecting
production:-
 Government
 Competition
 Technology
 Economic conditions
 Legal environment
 Social environment
System operates in an environment, so system has to take
feedback from its environment & adjust its parameters
accordingly.

30. Nature of POM
L-430
Production as an Organization Function:
 Companies cannot compete using marketing,
finance, accounting, and engineering alone.
 We focus on POM as we think of global
competitiveness, because that is where the vast
majority of a firm’s workers, capital assets, and
expenses required.
 To succeed, a firm must have a
strong coordination teaming with the other
organization functions.

31. Nature of POM
L-431
Decision Making in POM
Strategic Decisions:- Decisions of strategic
importance and have long-term significance for the
organization.
Examples include deciding:
the design for a new product’s
production process
 where to locate a new factory whether to
launch a new-product development plan

32. ….contd.
L-432
Operating Decisions
These decisions are necessary if the ongoing
production of goods and services is to satisfy
market demands and provide profits.
Examples include deciding:
 how much finished-goods inventory to carry
 the amount of overtime to use next week
 the details for purchasing raw material next
month

33. ……contd.
L- 433
Control Decisions
These decisions concern the day-to-day activities of
workers, quality of products and services, production
and overhead costs, and machine maintenance.
Examples include deciding:
labor cost standards for a new product
frequency of preventive maintenance
new quality control acceptance criteria

34. Production as an organization
function
L-434
 Production makes goods & services; it plays a vital
role in achieving a firm’s strategic plans or goals.
 Production involves greatest employees & is
responsible for large portion of the firm’s assets.
 Production has an impact on quality of the goods.
 Companies cannot compete using marketing,
finance, accounting, and engineering alone.

35. Production as an organization
function
L-35
 We focus on POM as we think of global
competitiveness, because that is where the vast
majority of a firm’s workers, capital assets, and
expenses reside.
 To succeed, a firm must have a strong operations
function teaming with the other organization
functions.

36. Five P’s of production/LECTURE-5
L-536
1. PRODUCT
2. PROCESS
3. PLANT
4. PLANNING & CONTROL
(PROGRAMMES)
5. PEOPLE

37. PRODUCT
L-537
Product: anything tangible that is capable of satisfying a
felt need.
New Product: - truly innovative and significantly different
from other existing products
 Role of product in POM: concerns areas such as
 PERFORMANCE
 AESTHETICS
 QUALITY
 RELIABILITY
 QUANTITY
 PRODUCTION COSTS
 DELIVERY DATES

38. PROCESS
L-538
 A production process is a series of manufacturing
operations performed at work stations to achieve
the design specifications of the planning output
Five Types of production processes:
 Project production
 Job-shop production
 Batch production
 Assembly line/Mass production
 Continuous production

39. PLANT
L-539
 PLANT: bulk of fixed assets. In determining which
plant to use, management must consider areas such
as :
 future demand
 design & layout of factory, equipment, offices
 productivity & reliability of equipment
 need for ( and costs of ) maintenance
 health & safety
 environmental issues ( creation of waste product )

40. PLANT
L-540
Plant layout: is a floor plan of physical facilities which
are used in Production.
Objectives of plant layout:
 Minimize investment in equipment
 Minimize overall production time
 Utilize existing space effectively
 Provide for employee convenience, safety &
comfort
 Maintain flexibility of arrangement & operation

41. PLANT
L-541
Classification of layout:
 Process layout
 Product layout
 Group layout
 Fixed position layout

42. PLANNING & CONTROL
L-42
PLANNING & CONTROL: planning process within an
organization is dynamic & continuous.
 Production planning & control has three phases:
Planning phase
Action phase
Control phase
Planning phase: Pre-Production planning: Consists
of product development & design, forecasting,
capacity planning.

43. PLANNING & CONTROL
L-43
 Active Planning: This consists of forecasting,
aggregate planning; master scheduling,
material resource planning
Action phase: Consists of dispatching which is
transition from planning phase to action phase
wherein worker is ordered to start
manufacturing the product.
Control phase: consists of progress reporting &
corrective action

44. TRANSFORMATIONS
L- 544
 Physical--manufacturing
 Locational--transportation
 Exchange--retailing
 Storage--warehousing
 Physiological--health care
 Informational--telecommunications

45. TYPES OF TRANSFORMATIONS
Government (state, local, etc..)
Wholesale/retail (clothing, food,
stationery,etc..)
Financial services (banking, insurance,etc..)
Healthcare (doctors, dentists,hospitals,Etc..)
Personal services(laundry,dry Cleaning,etc.)
Business services ( data processing, e-
business, etc..)
Education (schools, colleges, etc..)
L-545

46. Characteristics of a transformation
system
L-646
 Transformation is enabled by 5 P’s of
production & operations management.
 Managing transformation system involves
continual monitoring of the system and
environment.
 Conversion or transformation process
which transforms some of the inputs into
outputs which are useful for the
consumers.
 The outputs should have more value to
consumer than the cost of producing
them.

47. Example of the transformation for Food
Processor
Inputs Processing Outputs
Raw VegetablesCleaning Canned
vegetablesMetal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
L-647

48. Example of the transformation for Hospital
Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patientsHospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
L-648

49. • A vital function is necessary for
generating money to pay employees,
lenders, and stockholders.
• Effective production and operations
management can:
–lower a firm’s costs of production.
–boost the quality of its goods and
services.
L-649

50. WHY STUDY POM?
L-650
– allow it to respond dependably to
customer demands.
– enable it to renew itself by providing
new products.

51. Importance of POM
L-751
Improves Productivity:
Effective control of conversion process of
inputs into output (e.g. fewer defect outputs,
less wastage of material inputs, effective
allocation of staff, will lead to more output per
unit of time)
Improves our ability to meet customer
needs
Ensures provision of high quality products and
services at reasonable prices.
Meeting customer needs is crucial to the long
term survival of the company

52. Importance of POM
L-752
 Enables us to provide service to our
target customers better than the
competitors
 Central to the building of a brand
name/reputation of the company/firm, as
a competitive weapon: * High-quality
product/service provider * Low
cost/good value producer/service
provider (e.g., Sony & Panasonic) * Fast
delivery or response/lead time (e.g.,
Dominos Pizza for just 30 minutes

53. Responsibilities of an Operations
Manager
L-753
Operational Planning : What, when and how
to produce
Organizing Operations: sequencing
operational activities (caned coke, 1 litre
bottles, 2.5 litres). * Operations scheduling
– when to produce different product lines
(Monday, Tuesday, etc) * Operations
control – ensures quality output - safe
output – healthwise - quick output
Operations Management begins with the
need to fulfill identified customer needs! -

54. RECENT TRENDS IN POM
L-54
 Global market place
 Production and Operational strategy
 TQM
 Flexibility
 Time Reduction
 Technology
 Worker involvement
 Re Engineering
 Environmental issues
 Supply Chain management

55. SOME CURRENT TRENDS
L-55
 Implementing/sustaining Quality Management
initiatives
 Consolidating operations resulting from mergers
 Speeding up the time to get new products to
market
 Developing flexible production systems to enable
mass customization of products and services
 Developing and integrating new technologies
 Managing global supplier, production and
distribution networks
 Outsourcing