This document discusses production and operations management in a global environment. It defines production/operations management and its objectives of producing the right quality, quantity, time, and cost. It also discusses concepts like operations management, manufacturing vs service organizations, strategic vs tactical decisions, and functions that support operations management. Finally, it discusses preparing for the future by addressing globalization, outsourcing, environment, knowledge, and information.

1. Speakers
Larry M. Malapit
Ginalyn M. Mendoza
Jacqueline B. Gamana

2. Production and Operations
Management,
Materials Management, and
Inventory Management In A
Global Environment

3. Production and Operations
Management
in a Global Environment
By:
Larry M. Malapit

4.  Production/operations management is the process, which
combines and transforms various resources used in the
production/operations subsystem of the organization into
value added product/services in a controlled manner as per
the policies of the organization.
 Therefore, it is that part of an organization, which is
concerned with the transformation of a range of inputs into
the required (products/services) having the requisite quality
level. The set of interrelated management activities, which
are involved in manufacturing certain products, is called as
production management. If the same concept is extended to
services management, then the corresponding set of
management activities is called as operations management.


5. CONCEPT OF PRODUCTION
 Production function is that part of an organization,
which is concerned with the transformation of a range
of inputs into the required outputs (products) having
the requisite quality level.
 Production is defined as “the step-by-step conversion
of one form of material into another form through
chemical or mechanical process to create or enhance
the utility of the product to the user.” Thus production
is a value addition process.

6. Objectives of Production Management
 1. RIGHT QUALITY
 The quality of product is established based
upon the customers needs. The right quality is not
necessarily best quality. It is determined by the cost of
the product and the technical characteristics as suited
to the specific requirements.
 2. RIGHT QUANTITY
 The manufacturing organization should
produce the products in number. If they are produced
in excess of demand the capital will block up in the
form of inventory and if the quantity is produced in
short of demand, leads to shortage

7. Objectives of Production Management
 3. RIGHT TIME
 Timeliness of delivery is one of the important
parameter to judge the effectiveness of production
department. So, the production department has to make
the optimal utilization of input resources to achieve its
objective.
 4. RIGHT MANUFACTURING COST
 Manufacturing costs are established before the
product is actually manufactured. Hence, all attempts
should be made to produce the products at pre-established
cost, so as to reduce the variation between actual and the
standard (pre-established) cost.

8. OPERATIONS MANAGEMENT
 A Framework for Managing Operations
 Managing operations can be enclosed in a
frame of general management function.
 Operation managers are concerned with
planning, organizing, and controlling the activities
which affect human behaviour through models.


9. Operations Management
Operations
the methods, systems, and mental framework by which a
company transforms the inputs into outputs
operations management is the analysis and
implementation of this process
many varied factors impinge on a company’s operations
Effects of change
operations management is in a period of transition
the pace of change today is different from the past

10. OUTPUT
INPUTS S
Human The • Goods
Resources Transformation • Services
• Facilities
& Processes Process
•Technologies
• Materials

11. Context of operations management
-operations management means:
• responding to the needs of diverse parties within the
company
• satisfying parties in the larger arena
-in the digital age:
• we are witnessing mass customization
-ability to manufacture many variations of the same
product
• access to increasing amounts of information
• focus has become the customer’s experience of the
product
-managers must view operations through a variety of lenses
• product specifications customer satisfaction
• cost limitations

12. MANUFACTURING
ORGANIZATION
* Physical Product
* Product can be inventoried
* Low customer contact
* Intangible Product
* Capital intensive
•Product cannot be
inventoried * Long response time
* High customer contact
* Short response time
* Labor intensive SERVICE
ORGANIZATON

13. STRATEGIC TACTICAL
DECISIONS DECISIONS
*Broad in scope *Narrow in scope
*Short term in
*Long term in nature
nature *Concerning a
*All encompassing small group of
issues

14. Decisions that set the
direction for the entire
company; they are broad in
scope and long term in
nature.

15. Decisions that are
specific
and short term in
nature and
are bound by strategic
Decision.

16. Functions That Support Operations
Management
Strategic
planning
Finance Marketing
Operations
Operations
management
management
Research and
Logistics
engineering
Human
Purchasing
resources

17. Corporate Organization
Common functions support the operations management
system
strategic planning - good strategic planning seeks to
anticipate change, then plan for it
promotes effective coordination of all functions
throughout the organization
marketing - of all functions, marketing is closest to the
customer
plays important support role for operations
management
operations managers must restate what marketing has
communicated in terms that will bring an appropriate
response from the production mechanism

18. Corporate Organization (cont.)
Common functions support the operations management
system (cont.)
research and engineering - develop and refine the
product and the manufacturing processes
interact with both customers and operations
identify and implement solutions not currently in use
end result of this work affects all of the other functional
areas
human resources - must seek, attract, and keep
individuals having the skills, human qualities, and
experience required by the operational management system
effective use of employees will provide operations
managers with a valuable source of innovation and
productivity gains

19. Corporate Organization (cont.)
 Common functions support the operations
management system (cont.)
 purchasing - select inputs that support the company’s
orientation and vision
 provide information about the variety of materials and
systems available for use by the production process
 cost effective supply of the right materials potentially
represents enormous savings for the company
 logistics - coordinate the flow from supplier of
materials to delivery to the customer
 poor coordination of the flow from materials supplier to
delivery to the customer has repercussions throughout the
channel

20. Corporate Organization (cont.)
 Common functions support the operations
management system (cont.)
 finance - serves as the interface between the firm and
the financial community
 accounting derives cost implications of new technologies
 must be aware of firm’s and suppliers’ creditworthiness
 A team operation
 operations management:
 works hand in glove with the other functions
 must be alert to any harmful fragmentation or lack of
communication

21. Preparing For The Future In The
New Economy
 Globalization
 the entire world is today’s operating arena
 presents the operations management system with a new range
of possibilities
 outsourcing - success of producing elsewhere depends
on the characteristics of the “elsewhere”
 those who anticipate potential problem areas are ahead of the
game in the decision to manufacture offshore
 the globe represents a vast marketplace
 requires product design that accounts for differing tastes
 operations management systems able to make product
alterations more easily

22. Preparing For The Future In The
New Economy (cont.)
 Environment
 managers must be sensitive to the environmental impact
of operations on the future of the planet without
imperiling today’s operations
 progress has been made in handling the most blatant
environmental effects of manufacturing
 managers must be aware of the potential negative effects
of production processes

23. Preparing For The Future In The
New Economy (cont.)
 Knowledge and information
 knowledge and information have supplanted (in value) the
material inputs into products
 consumers more knowledgeable, have higher expectations
 not locked into only a few sources for their information
 employees will be drawn to (and stay with) a specific job if:
 it provides the possibility of experiencing personal satisfaction and
growth
 it offers satisfaction in the human interaction prevalent in the firm
 employees do not expect to be supervised, but rather
coached along the path of success

24. Preparing For The Future In The
New Economy (cont.)
 Technology
 technological innovation can be helpful or harmful
 technologies exist in various stages of development
 in its development, a technology tends to move to the
hands of the user
 the shift of a technology to the user is not always smooth
 technology can advance only at the rate at which it can be
used effectively
 effective operations managers have a formal technology
management in place
 also, have a means for looking ahead, preparing for the effects
of new technologies

25. The Internet
 Opportunities and pitfalls abound in the Web
 three ways have emerged as options for exploiting the Web
 “brick and mortar” business can create its own in-house web
group
 “brick and mortar” business can partner with a dot.com company
that will operate the web-end of its operations for them
 business can elect to sell its products only on the Internet
 managers have to learn how to seamlessly integrate web activities
into their operations
 poorly integrated systems can wreak havoc
 the Web may help lure customers into stores
 instead, may bring the Web into the store

26. The Internet (cont.)
 Opportunities and pitfalls abound in the Web (cont.)
 retailers are in various stages of deploying new
technologies to offer the benefits of online shopping at
the retail site
 approximately one-quarter of the 200 public Internet
companies are profitable under standard accounting
rules
 profitable companies sell information, not products
 customers ultimately cast their votes for those
companies that provide the best product experience

27. Internet (cont.)
 Company-wide resonance
 sales and marketing data collection is turned on its
head
 record information about users’ habits which becomes
crucial to successful marketing decisions
 business intelligence software
 extract information from computer systems
 present the information in a way that anyone can
grasp
 relatively inexpensive and can pay off quickly

28. Internet (cont.)
 Mountains of data
 purchasing function benefits from the Web from sheer
availability of data
 businesses seeing a realignment of the traditional
relationships among producers, wholesalers, distributors, and
retailers
 Web-based companies becoming the new intermediaries
between producers and buyers
 Internet becoming the intermediary between employers and
employees
 e.g., job searches
 logistics, scheduling, and distribution plugged into Web-
based networks

29. Internet (cont.)
 Changing information patterns
 companies are digitizing information
 companies are posting information on the Web
 there may be repercussions
 e.g., information may affect more than one department
 Intellectual property
 must provide certain information to various parties,
which gives rise to new information needs
 information may be supplied in different formats

30. Value Of Human Attributes
 Today’s managers must:
 be aware of shifts in trends, habits, and customs
 have or develop the vision to foresee the range of
possibilities
 have imagination to create solutions
 have courage to strike out in new directions
 be alert to adjustments required by new directions
 be flexible enough to make adjustments
 be steadfast in the face of misunderstandings and
mistakes
 be persistent in following the chosen path