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8/7/2019 Unit 1 Production & Operations MGMT
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Production & Operations
Management
Lecture byT.V.SIDDHARTHA
BE, MBA, PGDM, MSc (Psychology)
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Unit-1
Introduction to Production & Operations
Management
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1.1. Operations Management
Definitions:
An operations system is defined as one in which several
activities are performed to transform a set of inputs intouseful output using a transformation process
Operations Management is a systematic transformation
process that converts some inputs into output that areuseful, and could fetch revenue to the operations system
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Operations as a transformation process
INPUT
Material
Machines
Men
Management
money
TRANSFORMATION
PROCESS
OUTPUT
Goods
Services
Feedback & Requirements
Suppliers Customers
TRANSFORMATION
PROCESS
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Operations as technical core Operations
Marketing
Finance andaccounting
Human resources
Outside suppliers
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Operations Management relation to
other fields
Accounting
Information
Technology
Management
As an auditor you must
understand the fundamentals
of operations management.
IT is a tool, and theres no
better place to apply it than inoperations.
We use so many things you
learn in an operations class
scheduling, lean production,
theory of constraints, andtons of quality tools.
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Operations Management relation to other
fields (cont.)
Economics
Marketing
Finance
Its all about processes. I live
by flowcharts and Pareto
analysis.
How can you do a good jobmarketing a product if youre
unsure of its quality or delivery
status?
Most of our capital budgeting
requests are from operations,
and most of our cost savings,
too.
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POM functions
1. Production planning (Before the start of manufacturing)
2. Production control (During the manufacturing)
3. Quality control (ISO, 6 sigma, CMMI ..etc)
4. Industrial engineering (Machinary design ..etc)
5. Purchasing (Buying of raw material and machines)
6. Plant engineering
7. Manufacturing
8. Method analysis
9. Inventory control (Stock management)
10. Plant layout
11. Work measurement
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1.3. Historical development of
POMEra Events/Concepts Dates OriginatorIndustrial
Revolution
Steam engine 1769 James Watt
Division of labor 1776 Adam Smith
Interchangeable parts 1790 Eli Whitney
Scientific
Management
Principles of scientificmanagement
1911 Frederick W. Taylor
Time and motion studies 1911Frank and Lillian
Gilbreth
Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913Henry Ford
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Historical development of POM (cont.)
Era Events/Concepts Dates Originator
Human
Relations
Hawthorne studies 1930 Elton Mayo
Motivation theories
1940s Abraham Maslow
1950s Frederick Herzberg
1960s Douglas McGregor
Operations
Research
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
line theory, decision
theory, PERT/CPM
1950sOperations research
groups
MRP, EDI, EFT, CIM1960s,
1970s
Joseph Orlicky, IBM
and others
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Historical development of POM (cont.)
Era Events/Concepts Dates Originator
Quality
Revolution
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality
management)1980s
W. Edwards Deming,
Joseph Juran
Strategy andoperations
1980s Wickham Skinner,Robert Hayes
Business process
reengineering1990s
Michael Hammer,
James Champy
Six Sigma 1990s GE, Motorola
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Historical development of POM (cont.)
Era Events/Concepts Dates OriginatorInternet
Revolution
Internet, WWW, ERP,
supply chain management
1990s ARPANET, Tim
Berners-Lee SAP,
i2 Technologies,
ORACLE
E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
Globalization WTO, European Union,
and other tradeagreements, global supply
chains, outsourcing, BPO,
Services Science
1990s
2000s
Numerous countries
and companies
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1.4. POM todays and tomorrows
scenario
MARKET PLACE
CHALLENGES
Market fragmentation
Vocal customers
Customer supplier
relationship
Disruptivetechnologies
PRODUCTION
CHALLENGES
Process design and
improvements
Human resources
scarcity
Declining / Increasingraw material prices
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POM todays and tomorrows scenario
(cont.)
TECHNOLOGICALCHALLENGES
Technology changes
GEOGRAPHICAL
CHALLENGES
China
Japan
India
SOCIETALCHALLENGES
The Environment
Intellectual property
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1.5. Product design
Definition
A product is a bundle of physical services and symbolic
particulars expected to yield customer satisfaction
Typology of Products:
Goods Services
Contracts
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The Product Design Process Step 1 - Idea Development
- Someone thinks of a need and a product/service design to satisfy it
e.g. customers, marketing, engineering, competitors,
benchmarking, reverse engineering
Step 2 - Product Screening
- Every business needs a formal/structured evaluation process
e.g. fit with facility and labor skills, size of market, contribution
margin,
break-even analysis, return on sales
Step 3 Preliminary Design and Testing
- Technical specifications are developed, prototypes built, testingstarts
Step 4 Final Design
- Final design based on test results, facility, equipment, material, &
labor
skills defined, suppliers identified
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Concepts involved in Product design
1. Reverse Engineering
(process of carefully dismantling the existing product)
Ex: Camera Reel Digital Cam
Audio Cassette CD
Walkman I Pod etc2. Research & development
(India produces up to 10000 Doctorates per anum0
3. Manufacturability
4. Standardization
5. Robust design6. Concurrent Engineering
7. CAD (Computer Aided design)
8. Product Life Cycle
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2007 Wiley
Product Life Cycle
Product life cycle seriesof changing productdemand
Consider productlife cycle stages
Introduction
Growth
Maturity
Decline Facility & process
investment depends onlife cycle
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1.6. Process design
Process design consists of several steps involved in the
production process
Factors affecting Process Design decisions
Nature of product / service demand Degree of vertical integration (Forward & Backward
integration)
Product/ Service and volume flexibility
Degree of automation Level of Product/Service quality
Degree of customer contact
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Typology of the Processes
Processes by Market
Orientation
Make to Stock (MTS)
Ex: (Shirts, jeans ..etc)
Assemble to Order (ATO)
Ex: (Computers ..etc)
Make to Order (MTO)
Ex: (Private Jets ..etc)
Engineer to Order (ETO)
Ex: (Specific Industrial equipment
..etc)
Processes as Production
System
Project
Job Shop
Batch Production
Assembly Line
Continuous Flow
Cell Manufacturing
Flexible manufacturing
Systems
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Process Improvement stages
1. Determine strategic dimensions
2. Identify the inputs, outputs, and customers of the
process
3. Identify the performance measures4. Document the process
5. Process improvement
6. Process Re-Engineering
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1.7. Manufacturing Process
Technology Production process planning
Manufacturing concept planning
Factory layout planning and analysis
work flow simulation.
walk-path assembly planning
plant design optimization
Mixed model line balancing. Workloads on multiple stations.
Process simulation tools e.g. die press lines, manufacturing lines
Ergonomic simulation and assessment of production assembly tasks
Resource planning
Computer Aided Design (CAD) Computer-aided manufacturing (CAM)
Numerical control CNC
Direct Numerical Control (DNC)
Tooling/equipment/fixtures development
Tooling and Robot work-cell setup and offline programming (OLP)
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1.7. Manufacturing Process
Technology (cont.) Generation of shop floor work instructions
Time and cost estimates
ABC - Manufacturing activity-based costing
Production, costs, and pricing
Quality Computer-aided quality assurance (CAQ)
FMEA Failure mode and effects analysis SPC Statistical process control
Computer aided inspection with coordinate-measuring machine (CMM)
Tolerance stack-up analysis using PMI models.
Success Measurements
Overall Equipment Effectiveness (OEE),
Communication with other systems Enterprise resource planning (ERP)
Manufacturing Operations Management (MOM)
Product Data Management (PDM)
SCADA (Supervisory Control and Data Acquisition) real time processmonitoring and control
Human-machine interface (HMI) (orman-machine interface (MMI))
Distributed control system (DCS)
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Manufacturing Process Technology
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1.8. Value Analysis
Value analysis is an approach to improving the value
of a product or process by understanding its
constituent components and their associated costs. It
then seeks to find improvements to the components by
either reducing their cost or increasing the value of the
functions.
Value is the ratio of Function and Cost
Value = Function
Cost
Where Function is expressed as units of performance
Cost is expressed as monetary unit
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Concepts of Value analysis
Value: the ratio between a function for customersatisfaction and the cost of that function.
Function: the effect produced by a product or by one of
its elements, in order to satisfy customer needs.
Value analysis: methodology to increase the value of anobject the object to be analysed could be an existing ora new product or process, and it is usually accomplished
by a team following a work plan.
Need: something that is necessary or desired by thecustomer
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Procedure ofValue analysis
1. Identify each of the functions of a product or service listthem down
2. Rearrange the functions on the basis of theirimportance
3. Identify each of the components in the product orservice list them down
4. Relate the functions of components to the functions ofproduct or service
5. Identify the cost of each component6. Compare the weights of the functions and weights of
costs of each component
7. Identify those components where the ratio ofFunction/Cost is low
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Guidelines to students
Take help of the dictionary to understand the terminology
used in this study material
Elaborate the answers with examples discussed in the
class room Refer the following books for in-depth understanding of
the subject
POM by Upendra Kachru (Excel Books)
POM by Panneeselavam (PHI)