Introduction to Operations

Management (Session 1)

Prof. (Dr.) Kaustav Kundu,

Assistant Professor (QT and OM area),
Office No. 306
 Course Outline
Objective:
 To provide students with the concepts and tools necessary to effectively manage an
operation in a resource constrained environment.
 To provide a basic learning of the tools and techniques used for designing and managing
the business irrespective of the fact whether they specialize or not in operations.

Text Book: Operations & Supply Chain Management, 8th Ed. (International Student Version) by
Roberta S. Russell and Bernard W. Taylor III ©2014 John Wiley and Sons, Inc. (ISBN-13-
9788126556823)

Reference Book:

 Operations Management, 11th Ed.by Jay Heizer, Barry Render © 2016 Pearson India
Education Services Pvt. Ltd (ISBN 978-93-325-4898-5)

Pedagogy: Case /Article based; Class Teaching; Analytical; Evaluation Component and
weightage:

Quiz : 10
Assignment : 10
Project : 10
Class Participation : 10
Mid Term : 20
End Term : 40
________
Total 100 Marks
--------------
 Learning Objectives

Define and explain OM

Explain the operations function
Describe the differences between service and
manufacturing operations
Discuss about major historical developments
in OM
Operations Management is:
The management function responsible for
planning, coordinating, and controlling the
resources needed to produce goods and services for
a company

A core function in every organization whether

Service or Manufacturing
OM’s Transformation Process

INPUT
Material
OUTPUT
Machines TRANSFORMATI
ON PROCESS
Goods
Labor
Services
Management
Capital

Feedback

Requirements
OM’s Transformation Process (contd.)

 The transformation process can be

- Physical, as in manufacturing operations
- Locational, as in transportation and warehouse operations;
- Exchange, as in retail operations;
- Physiological, as in healthcare;
- Psychological, as in entertainment; or
- Informational, as in communication.
OM’s Transformation Role

 To add value

 Increase product value at each stage

 Value added is the net increase between output product value and
input material value

 Perform activities well for least possible cost and thereby increase
efficiency
 Operations Function
Finance/Accounting

Marketing
Suppliers

Operations

Human
Resources
 Operations Function
Finance/Accounting

Production and inventory Budgets

data Cost analysis
Capital budgeting requests Capital investments
Capacity expansion and Stockholder requirements
technology plans

Marketing
Suppliers

Operations

Human
Resources
 Operations Function
Finance/Accounting

Orders for materials

Production and delivery
schedules
Quality requirements
Design/performance specs

Marketing
Suppliers

Operations
Material availability
Quality data
Delivery schedules
Designs

Human
Resources
 Operations Function
Finance/Accounting

Product/service availability
Lead-time estimates
Status of order
Delivery schedules

Marketing
Suppliers

Operations
Sales forecasts
Customer orders
Customer feedback
Promotions

Human
Resources
 Operations Function
Finance/Accounting

Marketing
Suppliers

Operations

Hiring/firing
Personal needs
Training
Skill sets
Legal requirements
Performance evaluations
Union contract
Job design
negotiations
Work measurement

Human
Resources
Manufacturers vs Service Organizations

Manufacturers: Services:
 Tangible product  Intangible product
 Product is inventoried in  Product cannot be
most cases inventoried
 Low customer contact  High customer contact
 Longer response time  Short response time
 Capital intensive  Labor intensive
Similarities for Service/Manufacturers

Both use technology

Both have issues in quality, productivity, &

response

Both must forecast demand

Both can have capacity, layout, and location issues

Both have customers, suppliers, scheduling and

staffing issues
OM Decisions

 All organizations make decisions and follow a similar path

 Strategic Decisions

– set the direction for the entire company

- they are broad in scope and long-term in nature

- Less frequent

 Tactical decisions

- focus on specific day-to-day issues like resource needs, schedules, & quantities to
produce

- are frequent
Historical Development of OM
 Industrial revolution

- Steam engine – 1769

- Division of labor - 1776

- Interchangeable parts - 1790

 Scientific management

- Principles of scientific management – 1911

- Time and motion studies – 1911

- Activity scheduling chart – 1912

- Moving assembly line - 1913

 Human relations movement

- Hawthorne studies – 1930

- Motivation theories – 1940s to 1960s

Historical Development of OM (Contd.)
 Management science / Operations Research

- Linear Programming – 1947

- Digital computer - 1951

- Simulation, waiting line theory, decision theory, PERT/CPM – 1950s

- MRP – 1960s

- EDI, CIM – 1970s

 Quality Revolution

- JIT (just-in-time) – 1970s

- TQM (total quality management), Strategy and operations – 1980s

- Reengineering – 1990s

- Six Sigma – 1990s

Historical Development of OM (Contd.)
 Internet Revolution

- Internet, ERP, Supply Chain Management – 1990s

- E-commerce – 2000s

 Globalization

- World Trade Organization, European Union – 1990s

- Global supply chains, Outsourcing, Services Science – 2000s

 Sustainability

- Global warming

- Carbon footprint

- Green products

- Corporate social responsibility (CSR)

- UN Global Compact
Today’s OM Environment

 Customers demand more customization, better quality, greater speed, and lower costs

 Companies implementing lean system concepts to make the operations more efficient

 Companies are trying to improve management of information using ERP and CRM systems

 In most sectors, cross-functional decision making is increasing

OM in Practice

 OM has different roles within an organization

 Manages the transformation process efficiently

 OM has many faces and names such as;

V. P. operations, Director of supply chains, Manufacturing manager, Plant manger, Quality

specialists, supply chain analyst, production scheduler and logistics planner

 All business functions (Marketing, HR, etc.) need information from OM in order to
perform their tasks
Globalization
 Aspects
- Selling in foreign markets
- producing in foreign lands
- purchasing from foreign suppliers
- partnering with foreign firms
 Advantages
- Take advantage of favorable costs
- Gain access to international markets
- More responsive to changes in demand
- Build reliable sources of supply
- Keep update of the latest trends and technologies
 Disadvantages
- Physical distance
- Business decision by suppliers
- Laws and legal systems in other countries
Key Takeaways
 OM is the management function that is responsible for managing and coordinating the
resources needed to produce a company’s products and services.

 The role of OM is to transform inputs into company’s products or services efficiently

 OM is responsible for a wide range of decisions, ranging from strategic to tactical.

 Organizations can be divided into manufacturing and service organizations, which have
some similar aspects and differ in other aspects

 Many historical milestones have shaped OM. Some of these are the Industrial Revolution,
scientific management, the human relations movement, quality management, management
science, and the computer age

 OM is highly important function in today’s dynamic business environment. Among the

trends with significant impact are just-in-time, flexibility, supply chain management, global
marketplace, and environmental issues