Operations Management

1. Session 1
Introduction to Operations
Management
Dr Rajesh Sikka
Dated: 3rd December 2022

2. Operations Management
What is Operations?
• Function/ Unit of a business organization responsible for
producing goods or services
How can operations management be defined
• Management of systems or processes that create goods
and/or provide services

3.  Products/ Goods are physical items that include raw materials,
parts, subassemblies, and final products.
•Automobile
•Computer
•Oven
•Shampoo
 Services are activities that provide some combination of time,
location, form, value through human interface
•Airlines
•Education / Teaching
•Salon
•Legal Services
Products/ Good or Service

4. SUPPLY CHAIN
Nodes/ Elements of Supply Chain:
Suppliers – Tier 1,2
Manufacturers/
Production units
(Internal
Departments)
Channel Partners-
Distributors,
Retailers Customers
Dr Rajesh SIkka

5. Manufacturing vs. Service
1. Degree of 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
8. Amount of inventory
9. Evaluation of work

6. Why Operations Management?
Every aspect of business is impacted by operations
Many service jobs are closely related to operations
• Financial services
• Marketing services
• Accounting services
• Information services
Operations and supply chains give better understanding:
• World and Global environment
• Global dependencies of companies and nations
• Reasons why companies succeed or fail
• The importance of working with others

7. Responsibilities of Operations Management
•Planning
• Capacity, utilization
• Location
• Choosing products or services
• Make or buy
• Layout
• Projects
• Scheduling
• Market share
• Plan for risk reduction, alternative or back up plans
• Forecasting

8. Role of the Operations Manager
Operations Function - All activities directly related to
manufacturing products/ goods or providing services.
Main function of the operations manager is to manage by
decision making:
• System & Process Design Decisions
• System & Process Operation Decisions

9. Production systems classification
Craft Production : Highly skilled workers use simple, flexible
tools for production of small quantity of customized goods.
Lean production : Use minimum resources to produce large
volume of high-quality goods with variety.
 Dell
Mass production: Low skilled workers use specialized
machines and equipment to produce large volumes of
standardized goods.
• Ford, Maruti Suzuki

10. Production systems - Agile - Lean manufacturing
Flexibility to quickly and economically shift from one
product to another
Minimum disruption
Quick response to changes in customer demand.
Effective inventory control system
Keys to being an agile manufacturer are :
• Reduction in inventories,
• Reduction in turnaround times,
• Availability of automated flexible machinery,
• Rapid collection and processing of information

11. Environmental Concerns
•Sustainability
• Using resources in ways that do not harm ecological systems
that support human existence
• Sustainability measures often go beyond traditional environmental and
economic measures to include measures that incorporate social criteria in
decision making
• All areas of business will be affected
• Product and service design
• Consumer education programs
• Disaster preparation and response
• Supply chain waste management
• Outsourcing decisions

12. Operations Management Decision Making
• Most operations decisions involve many alternatives that can have quite
different impacts on costs or profits
• Typical operations decisions include:
• What
• When
• Where
• How
• Who

13. General Approach to Decision Making
• Modeling - key tool used by all decision makers
• Model - an abstraction of reality.
• Common features of models:
• Simplifications of real-life phenomena
• Unimportant details of the real-life systems removed
• Focus on most important aspects of real-life system

14. Quantitative Approaches
•Decision making approach - to obtain
mathematically optimal solution
• Linear programming
• Queuing techniques
• Inventory models
• Project models
• Forecasting techniques
• Statistical models

15. Influence of Japanese Manufacturers
•Refined and developed management practices to
enable increase in productivity
• Focus on Quality
• Just-in-Time production

16. Session 2
Operations Management
& Strategy
Dr Rajesh Sikka
Dated: 10th December 2022

17. Current Business Environment
Requirements
Better quality
Higher productivity
Lower costs
Ability to respond quickly to customer needs
Increasingly important requirements

18. Operations Management
•Focuses on three related areas- important to
business organizations:
Competitiveness
Strategy
Productivity

19. Competitiveness
•Competitiveness:
Effectiveness of organization in meeting wants and
needs of customers relative to others offering
similar goods or services
Organizations compete through combination of
different functions including Operations
What do customers want?
How can these customer needs best be satisfied?

20. Impact of Marketing
•Identifying consumer wants and/or needs
•Pricing
•Quality
•Advertising and promotion

21. Businesses Compete Based on Operations
• Product and service design
• Cost
• Location
• Quality
• Quick response
• Inventory management
• Supply chain management
• Service
• Skills and competencies of human resources

22. Why Some Organizations Fail
• Neglecting operations strategy
• Failing to leverage strengths and opportunities and/or failing
to recognize competitive threats
• High emphasis on short-term financial performance at the
expense of R&D
• High emphasis on product and service design and not
enough on process design and improvement
• Ignoring investments in capital and human resources
• Failing to establish good internal communications and
cooperation
• Failing to consider customer wants and needs

23. Hierarchical Planning in Organizations
Vision
Mission
Goals
Organizational Strategies
Tactics
Functional Strategies

24. Goals
The mission statement serves as the basis for
organizational goals
Goals
Provide detail and the scope of the mission
Goals can be viewed as organizational destinations
Goals serve as the basis for organizational strategies

25. Intended Strategy vs Realized Strategy
Intended Strategy
By Design
Emergent Strategy
Decisions
Response to internal and external situations
Realized Strategy
Outcome of actions by/ decisions in Operations
Operations Strategy links Directed and Emergent
Strategies  leading to Realized Strategy

26. Session 3 & 4
Design issues for Process
Dr Rajesh Sikka

27. Process Strategy
• Vertical integration
o extent to which firm will produce inputs and control outputs of each stage
of production process
• Capital intensity
o mix of capital (i.e., equipment, automation) and labor resources used in
production process
• Process flexibility
o ease with which resources can be adjusted in response to changes in
demand, technology, products or services, and resource availability
• Customer involvement
o role of customer in production process

28. Process Planning
• Process
o Group of related tasks with specific inputs & outputs
• Process design
o tasks to be done & how they are coordinated among functions,
people, & organizations
• Process strategy
o an organization’s overall approach for physically producing goods
and services
• Process planning
o converts designs into workable instructions for manufacture or
delivery

29. Process Selection
• Projects
o one-of-a-kind production of a product to customer order
• Batch production
o process many different jobs at the same time in groups or batches
• Mass production
o produce large volumes of a standard product for a mass market
• Continuous production
o used for very-high volume commodity products

30. Types of Processes
PROJECT BATCH MASS CONT.
Type of product Unique Made-to- order
(customized)
Made-to- stock
(standardized )
Commodity
Type of customer One-at-a-time Few individual
customers
Mass market Mass market
Product demand Standalone Varying Stable Very stable

31. Process Selection With Break-Even Analysis
• Study cost trade-offs based on demand volume
• Cost
o Fixed costs
constant regardless of the number of units produced
o Variable costs
• vary with the volume of units produced
• Revenue
o price at which an item is sold

32. Process Selection With Break-Even Analysis
• Total revenue
o price times volume sold
• Profit
o difference between total revenue and total cost
• Break-even Point:
Total Revenue = Total Cost

33. Four Process Strategies
1. Process Focus
2. Repetitive Focus
3. Product Focus
4. Mass Customization Focus

34. Process Focus
Process Focus
• Production facility (for goods or services) focused on processes
• Mainly oriented towards low-volume high-variety production
• Product moves in small lots,
• Operations grouped as per type of process, focused around skills required,
equipment and layout
• Production equipment is organized around specific processes
• Mostly general purpose machines are used
• Highly skilled personnel carry out the activities

35. Repetitive Focus
Repetitive Focus
• Major characteristics :
• Production equipment and facilities organized as assembly lines for mass
production.
• Most sub-assemblies and modules having components manufactured in earlier
assembly lines
• Much more efficient than process-focused facilities
• Less flexibility than process- focused
• Process orientation towards product
• Low cost and advantages of mass production

36. Product Focus
Product Focus
• Major characteristics
• Production equipment and facilities are organized by product
• High volume but can manage low variety of products
• Long and continuous production cycles lead to efficiency in processes
• Can have high fixed cost (machinery and equipment), but lower
variable costs
• Normally lesser skilled labor required in a Product focused process

37. Mass Customization Focus
Mass Customization
• Applicable both for Product and Services
• Has characteristics of flexibility and personalization of custom-built products,
and also having low costs of mass production
• Provide unique value to customers in an efficient way
• Customization of goods and services for individual customers in high volumes
and at a relatively low cost feasible due to technology and flexibility in
processes.
• Mass customization helps in saving unnecessary additional costs and avoiding
complexity to operations.
• However it can also increase unnecessary costs and complexity unless
customers perceives value in customization delivered

38. Redesigning of Processes
• Remove waste, simplify, and consolidate similar activities
• Link processes to create value
• Let the swiftest and most capable enterprise execute the process
• Flex process for any time, any place, any way
• Capture information digitally at the source and propagate it through process
• Provide visibility through fresher and richer information about process status
• Fit process with sensors and feedback loops that can prompt action
• Add analytic capabilities to the process
• Connect, collect, and create knowledge around process through all who touch it
• Personalize process with preferences and habits of participants

39. Session 5 & 6
Product and Service Design
Dr Rajesh Sikka

40. Strategic Product and Service Design
• Business of an organization is providing products and
services it offers
• Organization has to be structured around products and
services
• Product and service design – or redesign – should be aligned
to organization’s strategy

41. What Does Product & Service Design Do?
1. Convert customer wants and needs into product and service
requirements
2. Refine existing products and services
3. Develop new products and services
4. Formulate quality goals
5. Construct and test prototypes
6. Translate product and service specifications into process
specifications
Involve Inter-functional Collaboration

42. Key Questions for Organisation
1. Is there a demand for Product & Service
• Market size
• Demand profile
2. Can the Organisation meet that requirement
• Manufacturability - capability of an organization to
produce an item at an acceptable cost or profit
• Serviceability - capability of an organization to provide
a service at an acceptable cost or profit

43. Reasons to Design or Re-Design
• Driving forces for product and service design or
redesign are market opportunities or threats:
• Economic
• Social and Demographic
• Political, Liability, or Legal
• Competitive
• Cost or Availability
• Technological

44. Design Process
• Effective design can provide a competitive edge
o matches product or service characteristics with customer
requirements
o ensures that customer requirements are met in the simplest
and least costly manner
o reduces time required to design a new product or service
o minimizes revisions necessary to make a design workable

45. Sustainability
• Sustainability
• Using resources in ways that do not harm
ecological systems that support human existence
• Key aspects of designing for sustainability
• Life-Cycle assessment
• 3-Rs
• Reduction of materials
• Re-using parts
• Recycling

46. Reduce: Costs and Materials
• Value analysis
• Examination of the function of parts and materials in an
effort to reduce the cost and/or improve the
performance of a product
• Common questions used in value analysis
• Is the item necessary; does it have value
• Are there alternative sources for the item
• Can specifications be less stringent to save time or money
• Can packaging be improved or made less costly

47. Re-Use: Remanufacturing
• Remanufacturing
• Refurbishing used products by replacing worn-
out or defective components
• Reasons to remanufacture:
• Remanufactured products can be sold at lower price
• Design for disassembly (DFD)
• Designing a product to that used products can be
easily taken apart

48. Recycle
• Recycling
• Recovering materials for future use
• Applies to manufactured parts
• Why recycle?
• Cost savings
• Environmental concerns
• Design for recycling (DFR)
• Product design that takes into account for recovering
recyclable parts

49. Product Life Cycle Assessment
• Product Life Cycle Assessment
• Life-Cycle Assessment
• Assessment of the environmental impact of a
product or service

50. Standardization
•Standardization
• Extent to which there is an absence of
variety in a product, service, or process
• Same products are made in large numbers

51. Designing for Mass Customization
• Mass customization
• A strategy of producing basically standardized
goods or services, but incorporating some
degree of customization in the final product or
service

52. Delayed Differentiation
• Delayed Differentiation
• Process of producing, but not completing final
stage till customer requirement is known
• Postponement

53. Modular Design
• Modular Design
• Standardization in which component parts are
grouped into modules
• Easy to replace or change

54. Rapid Prototyping and Concurrent Design
• Testing and revising a preliminary design model
• Build a prototype
• form design
• functional design
• production design
• Test prototype
• Improve design

55. Form and Functional Design
• Form Design
• how the product will look?
• Functional Design
• how the product will perform?
• reliability
• maintenance

56. Robust Design
• Robust design
• Design that produces products or services
to function over a range of conditions
• Robust product or service – less likelihood of
failure

57. Degree of Newness
• Product or service design changes:
o Modification of an existing product or service
o Clone of a competitor’s product or service
o New product or service

58. Quality Function Deployment
Quality Function Deployment (QFD)
An approach that integrates the “voice of
the customer” into both product and service
development
 Objective – to meet customer requirements at
all stages
 Listening /understanding/ meeting customer
needs

59. Concurrent Engineering
• Concurrent engineering
• Engineering design and manufacturing teams working
together early in the design phase
• Cross-functional team involvement
• Objective - product designs to meets customer needs as
well as manufacturing capabilities

60. Computer-Aided Design (CAD)
• CAD
• Product design using computer programs and
graphics
• Advantages:
• Increase productivity of designers many times

61. Production Requirements in Design
• Designers should consider production capabilities:
• Equipment
• Skills and capabilities of resources
• Material
• Schedules
• Technologies
• Special requirements

62. Manufacturability
• Manufacturability
• Ease of fabrication and/or assembly
• It has important implications for
• Cost
• Productivity
• Quality

63. Component Commonality
• Products having high degree of
• Useable in multiple products
• Benefits:
• Time savings
• Standardized training
• Economies of scale
• Lesser inventory

64. Service Design Process
• Service concept
• Objective of service
• Target customers
• Service Levels
• Service specifications
• Performance requirements
• Delivery requiremenst

65. Service Design
• Important issues in service design
• Extent of variation in service
• Extent customer contact

66. Session 7 & 8
Location and Layout Decisions
Dr Rajesh Sikka

67. Objectives of Facility Layout
• Minimize movement and material-handling costs
• Utilize space and labor efficiently
• Eliminate bottlenecks
• Reduce manufacturing cycle time and customer service time
• Facilitate entry, exit, and placement of material, products, and people
• Incorporate safety and security measures
• Encourage proper maintenance activities
• Provide a visual control of activities and flexibility to adapt to changing conditions
• Increase capacity

68. Basic Layouts
• Process layouts
o group similar activities together according to process or function
they perform
• Product layouts
o arrange activities in line according to sequence of operations for a
particular product or service
• Fixed-position layouts
o are used for projects in which product cannot be moved

69. Fixed-Position Layouts
• Typical of projects
• Fragile, bulky, heavy items
• Equipment, workers & materials brought to site
• Low equipment utilization
• Highly skilled labor
• Typically low fixed cost
• Often high variable costs

70. Designing Process Layouts
• Objective :
• Minimize material handling costs and Labour
• Block Diagramming
o minimize nonadjacent loads
o use when quantitative data is available
• Relationship Diagramming
o based on location preference between areas
o use when quantitative data is not available

71. Block Diagramming
• Unit load
o quantity in which material
is normally moved
• Nonadjacent load
o distance farther than the
next block
• Steps
o create load summary chart
o calculate composite (two
way) movements
o develop trial layouts
minimizing number of
nonadjacent loads

72. Designing Service Layouts
• Must be both attractive and functional
• Free flow layouts
o encourage easy viewing, increase impulse purchasing, flexible and
appealing in appearance
• Grid layouts
o encourage customer familiarity, are low cost, easy to clean and
secure, and good for repeat customers
• Loop and Spine layouts
o both increase customer sightigs and exposure to products, while
encouraging customer to circulate through the entire store

73. Designing Product Layouts
• Objective
o Balance the assembly line
• Line balancing
o attempt to equalize the amount of work at each workstation
• Precedence requirements
o physical restrictions on the order in which operations are performed
• Cycle time
o maximum amount of time a product is allowed to spend at each
workstation

74. Cycle Time Working
production time available
desired units of output
d
C 
Cd Desired Cycle Time

75. Flow Time and Cycle Time
• Cycle time = max time spent at any work station
• Flow time = time to complete work at all workstations

76. Procedure for Line Balancing
i. Draw and label a precedence diagram
ii. Calculate desired cycle time required for line
iii. Calculate theoretical minimum number of workstations
iv. Group elements into workstations, recognizing cycle time and
precedence constraints
v. Calculate efficiency of line
vi. Determine if theoretical minimum number of workstations or an
acceptable efficiency level has been reached. If not, go back to
step for grouping elements.

77. Computerized Line Balancing
• Assigning tasks to workstations
o Longest operation time
o Shortest operation time
o Most number of following tasks
o Least number of following tasks

78. Hybrid Layouts
• Cellular layouts
o group dissimilar machines into work centers (called cells) that process
families of parts with similar shapes or processing requirements
• Production flow analysis (PFA)
o reorders part routing matrices to identify families of parts with similar
processing requirements
• Flexible manufacturing system
o automated machining and material handling systems which can produce
an enormous variety of items
• Mixed-model assembly line
o processes more than one product model in one line

79. Cellular Layouts
• Identify families of parts with similar flow paths
• Group machines into cells based on part families
• Arrange cells so material movement is minimized
• Locate large shared machines at point of use

80. Cellular Layouts
• Advantages
o Reduced material handling
and transit time
o Reduced setup time
o Reduced work-in- process
inventory
o Better use of human
resources
o Easier to control
o Easier to automate
• Disadvantages
o Poorly balanced cells
o Increase in training and
scheduling of workers
o Increase in capital
investment

81. Flexible Manufacturing Systems (FMS)
• Consists of
o programmable machine tools
o automated tool changing
o automated material handling system
o controlled by computer network
• Combines flexibility with efficiency
• Layouts differ based on
o variety of parts the system can process
o size of parts processed
o average processing time required for part completion

82. Mixed-Model Assembly Lines
• Produce multiple models in any order on one assembly line
• Factors in mixed model lines
o Line balancing
o U-shaped lines
o Flexible workforce
o Sequencing of different models for production