Production &Operations Management

1. Production &Operations Management Unit - I

2. Production (Vs) Operation • “The transformation process of inputs into the form of output, thereby adding value to some entity”. • Output may be a product or service. If it is a product centric that is known as production, If it is a service centric then that is known as operation.

4. Production/operations management • It is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. • It is also the management of resources, the distribution of goods and services to customers.

5. Definition • “The field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, inventory management, accounting, and other functions as they affect the organization" -- APICS The Association for Operations Management

6. OPERATIONS MANAGEMENT • UNIT – I INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT Production Systems – Nature, Importance and organizational function. Characteristics of Modern Production and Operations function. Organization of Production function. Recent Trends in Production and Operations Management. Role of Operations in Strategic Management. Production and Operations strategy – Elements and Competitive Priorities. Nature of International Operations Management.

7. UNIT – II FORECASTING, CAPACITY AND AGGREGATE PLANNING Demand Forecasting – Need, Types, Objectives and Steps. Overview of Qualitative and Quantitative methods. Capacity Planning – Long range, Types, Rough cut plan, Capacity Requirements Planning (CRP), Developing capacity alternatives. Aggregate Planning – Approaches, costs, relationship to Master Production schedule. Overview of MRP, MRP II and ERP

8. UNIT – III DESIGN OF PRODUCT, SERVICE AND WORK SYSTEMS Product Design – Influencing factors, Approaches, Legal, Ethical and Environmental issues. Process – Planning, Selection, Strategy, Major Decisions. Service Operations – Types, Strategies, Scheduling (Multiple resources and cyclical scheduling). Work Study – Objectives, Procedure. Method Study and Motion Study. Work Measurement and Productivity – Measuring Productivity and Methods to improve productivity

9. UNIT – IV MATERIALS MANAGEMENT Materials Management – Objectives, Planning, Budgeting and Control. Overview of Materials Management Information Systems (MMIS). Purchasing – Objectives, Functions, Policies, Vendor rating and Value Analysis. Stores Management – Nature, Layout, Classification and Coding. Inventory – Objectives, Costs and control techniques. Overview of JIT.

10. UNIT – V PROJECT AND FACILITY PLANNING Project Management – Scheduling Techniques, PERT, CPM, Crashing CPM networks – Simple Problems. Facility Location – Theories, Steps in Selection, Location Models – Simple Problems. Facility Layout – Principles, Types, Planning tools and techniques.

11. Business environment (Vs) Operations management • Operations management closely interrelated with all other functional areas of the business environment. • The following figure shows the various functions of operations management in other functional areas.

13. Evolution of Operations Management (or) History of OM • The Industrial Revolution • Division of Labor • Scientific Management • Mass Production • Lean Production

14. The Industrial Revolution • Operations management – did not begin until the Industrial Revolution in the 1700s • Prior to that time only craft production • Mechanically powered machines replaced the laborer as the primary factor of production and brought workers to a central location called Factory. • The revolution first took hold in textile mills, grain mills, metalworking, and machine-making facilities

16. Division of Labor • Adam Smith’s Wealth of Nations (1776) proposed the division of labour. • Production process was broken down into a series of small tasks, each performed by a different worker. • Allowed him or her to become very proficient at those tasks

18. Scientific Management • In the early 1900s F.W. Taylor approached the management of work as a science. • Based on observation, measurement, and analysis, he identified the best method for performing each job • The methods were standardized for all workers, and economic incentives were established to encourage workers to follow the standards

20. Mass Production • American manufacturers became adept at mass production over the next 50 years and easily dominated manufacturing worldwide. • Elton Mayo and Hawthorne studies, introduced the idea of workers motivation and Productivity • Theories of motivation were developed by Hertzberg, Maslow, McGregor, and others • Computers and automation led still another upsurge in technological advancements

22. Lean Production/ JIT production: • Japanese manufacturers changed the rules of production from mass production to lean production • Lean production prizes flexibility (rather than efficiency) and quality (rather than quantity)

27. Jidoka / Autonomation • Jidoka, means, not allowing defective parts to go from one work station to the next. • It specifically refers to machines or the production line itself being able to stop automatically in abnormal conditions • This Autonomation allows machines to run autonomously, as they will stop when a problem occurs. • Ultimately, it is about transferring human (or better) intelligence to machines.

28. Production system • ‘A production system is the collection of people, equipment, and procedures organized to accomplish the manufacturing operations of a company (or other organization).’

29. Types of production systems There are three common types of basic production systems: • Batch production system or Job shop production, • Continuous production system or flow shop production , • Project system or one shot system.

30. Batch production system • General-purpose equipment and methods are used to produce small quantities of output with specifications that vary greatly from one batch to the next. • A given quantity of a product is moved as a batch through one or more steps, and the total volume emerges simultaneously at the end of the production cycle. • (e.g) heavy-duty construction equipment, specialty chemicals, and processed food products,etc

33. Continuous production system • Items to be processed flow through a series of steps, or operations, that are common to most other products being processed. • Since large volumes of throughput are expected, specially designed equipment and methods are often used so that lower production costs can be achieved. • (e.g.) assembling automobiles, consumer products such as televisions, washing machines, and personal computers etc

35. Project system • The project, or “one-shot” system - For a single, one-of-a-kind product • Resources are brought together only once. Because of the singular nature of project systems, special methods of management have been developed to contain the costs of production within reasonable levels. • (e.g.) Construction of building, bridge etc

38. Decision Making in OM • Strategic Decisions • Operating Decisions • Control Decisions

39. Strategic Decisions • These decisions are 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

40. 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

41. 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

42. CIM • Computer Integrated Manufacturing, known as CIM. • In the 1980s, Computer Integrated Manufacturing was developed and promoted by machine tool manufacturers and the CASA/SME (Computer and Automated Systems Association /Society for Manufacturing Engineers). • CIM used to describe the complete automation of a manufacturing plant, with all processes functioning under computer control and digital information tying them together.

44. Today's Factors Affecting OM • Global Competition • Quality, Customer Service, and Cost Challenges • Rapid Expansion of Advanced Technologies • Continued Growth of the Service Sector • Scarcity of Operations Resources • Social-Responsibility Issues

45. Reality of Global Competition • Changing nature of world business • International companies • Strategic alliances and production sharing • Fluctuation of international financial conditions

46. Changing Nature of World Business • The US gross domestic product (GDP) is, at $10 trillion, the largest in the world. • Companies all over the globe are aggressively exporting their products/services to the US • Many US companies are targeting foreign markets to shore up profits. • The global economy that interconnects the economies of all nations has been termed the global village. • One of the most important new markets is China.

47. International Companies • International companies are those whose scope of operations spans the globe as they buy, produce, and sell. • International firms search out opportunities for profits relatively unencumbered by national boundaries. • Operations managers must coordinate geographically dispersed operations.

48. Strategic Alliances • Strategic alliances are joint ventures among international companies to exploit global business opportunities. • Alliances are often motivated by • Product or production technology • Market access • Production capability • Pooling of capital

49. Strategic Alliances • Japanese companies have long practiced keiretsu, the linking of companies into industrial groups. • A financial keiretsu links companies together with cross-holding of shares, sales and purchases within the group, and consultation. • A production keiretsu is a web of interlocking relationships between a big manufacturer (Toyota) and its suppliers.

50. Production Sharing • Production sharing means that a product might be designed and financed in one country, its materials produced in other countries, assembled in another country, and sold in yet other countries. • The country that is the highest-quality, lowest-cost producer for a particular activity would perform that portion of the production of the product.