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Introduction To
Operations & ProductionManagement
Lecturer: Muhammad Naveed
Email: [email protected]
OPM-BBA-BAHRIA
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Introduction
Operations managementOperations Management is a systematic approach to
address all issues pertaining to the transformation
process that converts some inputs into useful output .
Operations managers
The staff of the organization who have particular
responsibility for managing some or all of the resources
which comprise the operationsfunction.
In short operations management refers to the direction and
control of the processes that transform inputs into finished
goods and services.
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Operations in the Organization
Core functions the marketing (including sales) functionresponsible for
communicating the market needs in order to generate
customer requests.
the product/service development functionwhich is
responsible for creating new and modified products and
services in order to generate future customer requests.
the operations functionwhich is responsible for
fulfilling customer requests throughout the production
and delivery of products and services.
Supplier Relationship
Procurement Process
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Support Functions
the accounting and finance function
which provides the information to help
economic decision making and managesthe financial resources of the organization;
the human resources functionwhichrecruits and develops the organizations
staff as well as looking after their welfare.
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Operations FunctionLinkages with other functions
IT
Operations Support Layer
Marketing
Design
Costing
Quality
Planning
Material
Maintenance
Tooling
I E
Ultimate
Customer
Dealers
Retailers
Customer Layer
SuppliersSub-contractors
Other service providers
Supplier LayerInnovationStrategy
Research &
Development
Layer of
Innovation
Service Delivery system
MachiningFabrication
AssemblyTesting
Core Operations Layer
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Operations Management
Working Together
To Deliver Products and Services
Which fulfill Customers Expectations
Production Management
Creation of goods and services
Tangible Product
Hidden or Intangible Products
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The activities of core functions
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Operations As Input-Transformation-Output model
SuppliersInputs
Materials,
Customers,
Information
Transformation Process
Customers
Outputs
Goods,
Services
Records & Control
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Operations ManagementA systems Perspective
INPUT
OUTPUT
Labour
Capital
Material
Goods
Services
Forecasting
Operations
Planning &
Control
Process &
ProductDesign
Material &
Capacity
Planning
Feedback
Purchasing &
InventoryControl
Maintenance
Management
Process
Improvement
Quality
Management
PROCESSING
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Operations Management
Functions
Product Design & Development Forecasting
Process Design Production Planning and ControlQuality Management Supply Chain Management
Location and Layout of facilities Maintenance Management
Capacity Planning Continuous improvement of operations
Design of Operations Operational Control of Operations
Design issues in Operations Management lay down overall constraintsunder which the operations system functions.
Operational Control issues focuses on optimising the use of available
resources in the short-term while delivering goods and services as per plan.
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Examples of Operating Systems
Organization Inputs Transformation Process Outputs
Iron mine Iron ore Drilling, blasting,
separating, crushing,
concentrating
Iron oxide
concentrate, waste
rock
Steel mill Iron oxide pellets,
lime, coal, scrapsteel
Smelting, pouring,
oxygenating, rolling,forming
Steel ingots, slabs,
sheets
Parts
manufacturer
Sheet steel Pressing, punching,
machining, painting,
polishing
Parts ready to
assemble
Automotive
assembly
plant
Parts Welding, bolting,
riveting,
painting, testing
Finished
automobile
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Some Operation Management Activities
at IKEA
IKEA STORE
Home Furniture
Design elegant
products which
can be flat-packed
efficiently
Ensure that the jobs of
all staff encourage their
contribution to business
success
Design a storelayout which
gives smooth
and effective flow
Continually examine and
improve operations
practice
Monitor and enhance
quality of service
to customers
Arrange for fastreplenishment of
productsMaintain cleanliness
and safety
Site stores of an
appropriate size in the
most effective
location
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Some inter-functional relationships
between the operations function andother core and support functions
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Capacity Management
Providing a Service depends on having
Capacity.
Capacity of Resources such as People,
FacilitiesSpace, Equipment
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Most/All Businesses are a mix of
Product and Services
McDonalds
Rover Pakistan International Airline
Pakistan Telecom
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A Comparison Of Various Goods And
Services
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ServiceManufacturing
Pure Product Pure Service
Ayurvedic Healing Treatment
Legal/Tax Consulting
Cyber CafTelephone Booths
Emergency Maintenance Services
Facilities Maintenance
High quality restaurant meal
Fast food in a eat out joint
Customised durable goods
Fast moving commodities
Vending Machines
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Types of OperationsFour Vs
Volume
The level or rate of output from a process
Variety
The range of different products and services
produced by a process, a key characteristic thatdetermines process behavior.
Variation
The degree to which the rate or level of output varies
from a process over time the degree of the visibility which customers
have of the production of the product or serviceor degree of customer contact
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The Visibility Dimension
How much of the operations activities itscustomers experience, or how much the
operation is exposed to its customers.
E.g. bricks and mortar shop operation a high-
visibility operation
Customers experience most of its value-addingactivities.
Relatively short waiting tolerance.
Judge the operation by their perceptions
Relatively high-cost operations
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The implications of the four Vs of operations
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The implications of the four Vs of operations
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Manufacturing & Service
Similarities & DifferencesManufacturing Organisations Service Organisations
Physical durable product Intangible, perishable product
Output can be inventoried Output cant be inventoried
Low customer contact High customer contact
Long response time Short response timeRegional, national, Intl. markets Local markets
Large facilities Small facilities
Capital intensive Labour intensive
Quality easily measured Quality not easily measured
Differences
Similarities
Is concerned about quality, productivity & timely response to its customersMust make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice of resources
Has to make an estimate of demand
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Operations Management
Challenges & PrioritiesChallenges
Quality Management issues need greater attention
Long lead time for order fulfillment Low labour productivity offsets cost advantages
Priorities
Acquire Capabilities to tolerate product proliferation Relate operations system to Customer/Market
Develop systems and procedures that promote learning
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Productivity Changes
It is value of outputs (good and services)
produced by the values of input resources
(wages, cost of equipment, and the like)used:
Single-Factor Productivity =
Multi-Factor Productivity =
Output
Input
Output
Labour + Energy + Material + Capital + Misc.
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Exercise
A health-check clinic has five employees and
processes 200 patients per week. Each employee
works 35 hours per week. The clinics weekly totalwage bill is 3900 and its total overhead expenses
are 2000 per week.
What is the clinics single-factor labour productivityand its multi-factor productivity?
= patients/labour hour
= patients/