Introduction to operation management Manufacturing, service and agriculture are the major economic activities in any country.

In India manufacturing and services together constitute nearly 75 per cent of gross domestic product (GDP). In recent years, the growth in GDP has been primarily due to the growth in these sectors. Moreover, the share of the service sector in the GDP has grown steadily from 40 per cent to over 51 per cent between 1996 and 2006. In view of their contribution to countrys GDP, management of manufacturing and service operations are important economic activities. Significant improvements in productivity and cost savings can be achieved through operations management- a discipline that focuses on activities that relate to the planning and control of operations in manufacturing and service organisations. Efficient operations management can also have a positive impact on the overall health of the economy. A manufacturing firm essentially engages in converting a variety of inputs into products that are useful for individuals and organisations. A service organisation on the other hand responds to the requirements of customers and satisfies their needs through a service delivery process. Service organisations leave an impression in the minds of their customers through their service delivery. A service organisation may not always make use of material inputs and amy not always produce products that are consumed by the customer. Despite the difference, service systems also have a conversion process that utilizes resources and delivers useful outputs from the system.

An operations system is defined as one in which several activities are performed to transform a set of inputs into useful output using a transformation process. These inputs and outputs can be tangible or intangible. Viewed in this manner manufacturing and service system can be broadly classified as operations system. Operations management is a systematic approach to addressing issues in the transformation process that converts inputs into useful outputs.

Four aspects of this definition are Operations management is a systematic approach. It involves understanding the nature of issues; establishing measures of performance; collecting relevant data; using scientific tools and techniques and solution methodologies for analysis and developing effective and efficient solutions for the problem at hand. Operations management involves addressing various issues that an organisation faces. These issues vary markedly in terms of the time frame, the nature of the problem, and the commitment of required resources. Transformation process is central to operation systems. The TP ensures that inputs are converted into useful outputs. Therefore the focus of om is to address the design, planning and operational control of the transformation process. The goal of om is to ensure that the organisation is able to keep costs to a minimum and obtain revenue in excess of costs through careful planning and control of operations. An appropriate performance evaluation system is required for this. The om also involves the development of performance evaluation system.

SERVICES AS A PART OF OPERATIONS AMNAGEMENT

Intangibility Fundamentally, services differ from manufacturing with respect to tangibility. Because services are experiences rather than objects, they cannot be touched, tasted or felt. This has important implications for defining and assessing the quality of service. In product oriented operation, the product is defined by certain attributes and less ambiguity with respect to its performance.

Heterogeneity Since experiential component is dominant in services, it is likely that no two services are exactly alike. The differences are attributed to difference in customers, service providers, and other parameters of service delivery system.

Simultaneous production consumption. More often, services occur in the presence of the customer, who may also be involved at the time the service is produced for consumption. This holds good for education, entertainment, travel, tourism, and hotel services etc. in the case of manufacturing, however, most goods are produced at some point in time and distributed later. Of late technology has helped organisations shift some of the traditional operations from a predominantly service domain to the product domain. One such example is the installation of ATMs for money withdrawal.

Perishability Services are perishable, which implies that they cannot be inventoried. The possibility of inventorying and the supply using at a later time is very common in a manufacturing system. The implication for operations is that service systems require methods that work without inventories. The characteristics of tangibility, heterogeneity, simultaneity and perishability apply to pure services which are more experiential in nature. Furthermore, businesses with dominant service characteristics will have these features dominating over the other product related features. Despite differences between product and services, from an operations management perspective, there are similarities between these two categories. A comparison of manufacturing and service organizations.

Manufacturing organisations
Differences Physical, durable product Output can be inventoried. Low customer contact Long response time. Regional, national, international markets. Large facilities Capital intensive Quality measurement is easy.

service organisations

Intangible, perishable product Output cannot be inventoried High customer contact Short response time. Local markets. Small facilities Labour intensive Quality measurement is easy.

Similarities Is concerned about quality, productivity and timely response to its customers Must make choices about capacity, location, and layout. Have suppliers to deal with. Have to plan operations, schedules and resources. Must balance capacity with demand by careful choice of resources. Has to make an estimate of demand.

Operations as a key functional area Finanace The basic functions of an organisation

Operations

Marketing

HRM