MODULE 1

Operations Management

➢ The concept of 'Operations Management' arose in 1970. As its name implied, the concept
denoted a change in the field of manufacturing and service in the economy.
➢ According to APICS, The Association for Operations Management, “Operations management
is the field of study that focuses on the effective planning, scheduling, use, and control of a
manufacturing or service organisation through the study of concepts from design
engineering, industrial engineering, management information systems, quality management,
production management, inventory management, accounting, and other functions as they
affect the organisation".
➢ In simple words, the main aim of Operations Management is to augment the number of
processes which add value to a given procedure. This value adding events should be
designed, keeping in mind the market conditions.

Characteristics of Modern Operations Management

1) Transformational Process: The transformation of raw material is the main task of Operations
management.

2) Offers Value Addition: Every succeeding level adds some value to the preceding one. As an
instance, construction process leads to value addition to inputs such as sand.

3) System Itself: It entails a comprehensive logical process which requires following a definitive
sequence of activities.

4) Exists for Certain Objectives: The first step is to set an objective and for meeting that specific
objective, the whole procedure needs to be tracked.

5) Carried Out in Part of Organisation: It shows that production is not the sole function executed by
the organisation. It performs other functions such as research and development, finance, etc.

6) Interrelationship among the System: A system cannot work in seclusion and its success depends
on its interaction with other systems. Various systems co-exist.

7) Stratum Formulation: A production system exists through various levels of hierarchy in an

organisation. Each level of the organisation benefits from it.

8) Specialisation of Function: Various functions may be executed separately and the individuals may
attain specialisation in them as they perform them repeatedly.

OBJECTIVES OF OPERATIONS MANAGEMENT :

1) Ultimate Objectives: The main function of the manufacturing activities is to produce goods and
services with following qualities:

i) Right Quality: The appropriate quality standard for a product is determined keeping in view the
requirements of the customer. It may or may not be the best quality as the production management
needs to keep costs and other technical features in mind as well.

ii) Right Quantity: The production should be done in right quantity to ensure that there is no
significant under or over production. In case of over production, the capital is unnecessarily tied up
in inventories while in case of under production, the supply will not be enough to meet the demand.
iii) Right Time: Another factor to determine the efficacy of production division is related to its ability
to deliver the goods and services on timely basis. For this purpose, it is important to make optimal
utilisation of resources.

iv) Pre-Established Cost: The determination of manufacturing costs is done before the actual
manufacturing is done. The firm should endeavour to stick to the predetermined costs and not have
much variation.

Intermediate Objectives:

i) Machinery and Equipment: The main objectives in this regard are a) Procurement of machinery
and apparatus and b) Utilisation of machinery and equipment. There should be proper availability of
machines. The efficiency of machines can be maintained or enhanced through proper maintenance,
occupancy and repair.

ii) Materials: This objective should be presented with regard to units, monetary units or space units.
Costs should be enumerated on per unit basis. It should be endeavoured to increase the inventory
turnover rate for all kinds of inventory.

iii) Manpower: Human resources are a vital input. For this purpose, proper attention must be paid to
the process of selecting, placing, training, compensating and utilising manpower. The efficiency of
these processes can be measured using safety measurements, employee turnover rate, absenteeism
and industrial relations.

iv) Manufacturing Services: various inputs including materials, machines , Utilisation of resources and
manpower is determined by the provision of adequate and proper services. The appropriate aims
should be fixed for maximum efficiency.

ROLE OF OPERATIONS MANAGER :

1. Develop, implement, and review processes and procedures

➢ All work operations are processes. Operations managers deal with processes across a
wide variety of functional workflows, from manufacturing to sales and everything in
between.
➢ For example, an operations manager in a business producing physical goods will take
the initiative, execute, enforce, and assess rules and procedures for equipment use,
standard work, inventory management, and shipping.
➢ Operations managers constantly monitor different processes within the organization
and develop ways to make them more effective. If a company faces difficulty getting
new employees onboard, an operations manager might drive the study and
improvement of the onboarding process to make training and deploying new employees
more timely and more effective.

2. Assist with budgeting and planning

➢ Operations managers oversee financial management, planning, operational systems and

controls, and the organization of fiscal documentation. In this role, they would manage
capital, budgeting, financial reporting, cost-cutting, and other elements that impact an
organization’s cash flow.
 ➢ They also collaborate closely with the inventory team to conduct an analysis and ensure
that the company’s inventory is used effectively to minimize inventory carrying costs
that eat into the company’s profits.

3. Identify quality control issues and offer ways to improve

➢ Manufacturing, performance, quality, and customer service standards are implemented

and regularly refined by operations managers. They’re also expected to perform audits
and handle quality control issues.
➢ An operations manager has accountability for on-site safety incidents. They are often
the first internal point of contact for customers with concerns about product or service
quality. They communicate client concerns to the operations team and design solutions
to resolve complaints and maximize customer satisfaction. In addition, operations
managers offer operational data and insights for establishing and evaluating
improvement strategies and tactics.

4. Formulate strategic objectives for different departments

➢ Other primary responsibilities of an operations manager include overseeing and

improving the human resources (HR), IT, and finance departments’ performance and
efficiency. They accomplish this by ensuring smooth workflows within each department
and establishing easy and lucid communication channels between them.
➢ Often departmental operations managers work together to eliminate “silo”
suboptimization to create a coordinated value stream across the greater organization.

5. Help ensure the company remains legally compliant

➢ Operations managers are directly responsible for establishing a safe, healthy, and
inclusive work environment. They also manage contracts and pricing and serve as the
principal point of contact for utilities and local government departments, including fire,
police, health, and safety.
➢ All legal compliance mandates and notices are directly sent to a company’s operations
manager, who is expected to ensure that the company abides by them.

6. Recruit, train, and supervise staff

➢ Operations managers may also be entrusted with significant human resource

management responsibilities like recruiting, training, and disciplining employees.
➢ They may also be asked to help with employee appraisals by communicating job
expectations and monitoring and reviewing job contributions.

7. Examine data and help forecast any long-term planning

➢ Operations managers regularly analyze data that can help them assess inconsistencies
and take subsequent remedial action. They also assist in predicting the company’s
requirements, preparing a yearly budget, and planning future spending.
Difference between Goods & Services :

BASIS FOR
GOODS SERVICES
COMPARISON
Meaning Goods are the material items that can be seen, Services are amenities, facilities,
touched or felt and are ready for sale to the benefits or help provided by other
customers. people.
Nature Tangible Intangible
Transfer of Yes No
ownership
Evaluation Very simple and easy Complicated
Return Goods can be returned. Services cannot be returned back
once they are provided.
Separable Yes, goods can be separated from the seller. No, services cannot be separated from
the service provider.
Variability Identical Diversified
Storage Goods can be stored for use in future or Services cannot be stored.
multiple use.
Production and There is a time lag between production and Production and Consumption of
Consumption consumption of goods. services occurs simultaneously.

Concept of Resources – 4M’S

➢ In a manufacturing industry, other than raw materials there are number of things needed to
manufacture a product. For example machinery, instruments, equipment’s, tools,
documents, etc., some are stationary, big in size and some are movable, small in size, some
are trivial but extremely useful.
➢ Production Resources and Tools are movable/non stationary operating resource, that are
required to perform an activity and can be used repeatedly during the manufacturing
process.

Here are some insights on how you can manage your resources in the best way possible:

➢ Manpower:
• Man in management is referred to as a human resource. It is the recruitment,
selection, training, promotion and grievances handling of personnel. Payment of
compensation gratuity, termination of services are the few issues that have to be
dealt effectively to retain the talent within an organization.
• Other than training and motivating your manpower, it is recommended to strike a
balance between seasoned individuals with a history of excellence in their field
along with younger talent that is passionate and eager to learn.
➢ Money: Money is a valuable resource and therefore, you should have a proper money
management system in terms of budgeting, forecasting, and financial reporting to keep track
of the financial health of the organization,
➢ Material: When it comes to material management you need to be realistic and determine
the necessities for your startup and also have a proper system to manage the materials, and
lastly,
 ➢ Method:
• Every thing has a right way to do and this right way is known as a Method in
management. In short it means, an art of doing. A set of procedures and instructions is
known as a method. The visible methods of a company include: Plans, Policies,
Procedures, and Data.
• Adopt processes and methods that can put all the above resources together into an
efficient workflow. These processes should be measurable and trackable .
➢ Machine :
• Machine are the basic tools to produce goods or to generate services. Selection of an
appropriate machine not only enhances efficiency but also saves times and increases
revenue.
• Tailoring the requirement of the organization, Selections of a right technical machine and
equipment, availability of spare parts, evaluation of after sales services, substitutes and
technology and the organization budget are the crucial criteria while purchasing a machine.

PRODUCTIVITY :

➢ Productivity tells us how well a particular entity uses its factors of production. Productivity
can be defined as follows:
➢ Productivity = Output / Input
➢ The ratio of outputs to inputs should be made as large as possible to get the best
productivity.

TYPES OF PRODUCTIVITY OR PRODUCTIVITY MEASURES

1. Partial Productivity
2. Total Factor Productivity
3. Total Productivity
1. Partial Productivity :
➢ Various factors of production are used for generating output. These factors include
land, labour, capital, material, machines, etc. All these inputs are required to
generate output. The amount of each input changes in different circumstances.
Calculating efficiency using total output gives us the partial productivity of a factor
of production.
➢ The ratio of output and a particular factor of production show its partial
productivity.
➢ Management should determine the effectiveness of each factor of production. If it is
found that a particular input is not being properly utilized then efforts should be
made to determine the reason of such inefficiency. The next step is to find solutions
to remedy this situation.
2. Total Factor Productivity :
➢ Some factors of production are available in-house while others need to be bought
from outside. For example, a firm may have its own land but needs to buy
machinery and human resources from outside. In such cases, the net output is
determined by calculating the difference between total output and the value of the
resources bought from outside.
➢ The two most important factors of production are labour and capital. The total
factor productivity is shown as the ratio of net output to the sum total of capital and
labour .
➢ Total Factor Productivity = Net Output / (Labour + Capital) Inputs
 3. Total Productivity :
Total productivity is defined as follows:
Total Productivity = Total Tangible Output / Total Tangible Input
*Tangible means measurable
❖ Total tangible output = Value of finished goods + Value of partially finished units +
Dividends from securities + Interest + Other income.
❖ Total tangible input = Value of human, material, capital ,energy and other inputs
used.

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MODULE 2

Meaning and Definition of Forecasting

➢ Planning is the primary work of management. The base of planning is forecasting.

Forecasting is required in planning in respect of every department of the organization may
be it sales and marketing, or production planning or manpower planning.
➢ A forecast refers to the evaluation of forthcoming actions attained by organized and
predetermined way of combining and casting forward the past data.
➢ According to Fayol, "Forecasting is the essence of management. Its techniques are used in
every type of organization may it be government or private, production or service and social
or religious"

Qualitative Forecasting Methods

This method is characterised by the opinion of different forces that drives the demand i.e. buyers,
experts, retailers, etc.

1) Consumer Survey Methods:

➢ Survey method is the most commonly used direct method in short run for the
projection of the demand.
➢ Under this, different surveys are organised in routine to gather the information
about the likes and the dislikes of the buyers and the probable future purchases.
➢ The survey is done by visiting all the houses either physically or virtually
(emails/messages/tele calls) during the forecast and all the household opinions are
taken into consideration.

2) Sales Force Opinion Method:

➢ It is also termed an Collective Opinion Method. Under this, rather than approaching the
consumers for their opinions, the verdict of those affecting the sales are given the
priority i.e., the shopkeepers and the salesmen.
➢ The salespersons who are engaged with the company are to make spate projections of
their sales to the respective regions. These individual forecasts are put forth for further
study and final data for the organisation as a whole is prepared.
3) Delphi Technique:
➢ It comprises of the certain rounds of the structural surveys and those who participate in
the survey are the experts of their own field. This survey is conducted in different rounds
 and the results of the initial rounds are given as feedback in the later round for the
purpose of follow-ups.
➢ It can be observed that the expert's responses in the second round are influenced by the
opinion of the others. It is basically a group communication system which is structured
for survey, so that the incomplete information or knowledge is utilised to derive the
most appropriate outcomes.
4) Past Analogy:
➢ The forecast for the sale of new business depends upon the analogy of past sales of the
existing product. The new product can be a substitute of existing product,
complementary products or product related to consumer belonging to same income
groups as being targeted by the existing product.
➢ For example, the expensive sunglasses manufacturing company should study the
customer's demand pattern of expensive watches for launching a new watch in the
market.

QUANTITATIVE FORECASTING TECHNIQUES :

1. Econometric Model
➢ The econometric model forecasting involves estimating several simultaneous equations,
which are, generally, behavioural equations, mathematical identities and market-
clearing equations.
➢ The econometric model technique is also known as simultaneous equations method and
complete system approach to forecasting. This technique uses sophisticated,
mathematical and statistical tools.
2. Time Series Methods
➢ These methods (graphical and least square) are dependent upon analysis of the past
data. Just like the other methods, this method also assumes that the past data can be
effectively used to predict the future demand of the product.
➢ Usage of different methods like simple moving average and weighted moving average is
adopted on the same assumption that the future events are based on the past figures.
3. Linear Regression Analysis Method
➢ This is one of the most commonly used methods in forecasting of demand. Here,
relation between quantity demanded being dependent variable and other independent
variables like price, income, price of substitutes, etc. is established and a regression
equation is formulated as Y = A + BX.
➢ Such relation between the dependent and the independent variables is often a linear
one but sometimes it may also be curvy-linear. After formulating the regression
equation, the value of variable Y can be calculated by using the value of dependent
variable X and the two constants i.e. A and B

Plant Layout / Facility Layout

Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture
etc. within the factory building in such a manner so as to have quickest flow of material at the
lowest cost and with the least amount of handling in processing the product from the receipt of
material to the shipment of the finished product.

Objectives

• Proper and efficient utilization of available floor space

 • To ensure that work proceeds from one point to another point without any delay

• Provide enough production capacity.

• Reduce material handling costs

• Reduce hazards to personnel

• Utilize labor efficiently

• Increase employee morale

• Reduce accidents

• Provide for volume and product flexibility

• Provide ease of supervision and control

Classification / Types of Plant Layout

In case of manufacturing unit, plant layout may be of four types:

• Product or line layout
• Process or functional layout
• Fixed position or location layout
• Hybrid layout

(a) Product Layout (or Line Layout):

In this type of layout, all the machines are arranged in the sequence, as required to produce
a specific product. It is called line layout because machines are arrange in a straight line. The
raw materials are fed at one end and taken out as finished product to the other end.
Special purpose machines are used which perform the required jobs (i.e. functions) quickly
and reliably.
Product layout is depicted below:

Advantages:
1. Reduced material handling cost due to mechanized handling systems and straight flow
2. Perfect line balancing which eliminates bottlenecks and idle capacity.
3. Short manufacturing cycle due to uninterrupted flow of materials
4. Simplified production planning and control; and simple and effective inspection of work.
Disadvantages:
1. Lack of flexibility of operations, as layout cannot be adapted to the manufacture of any
other type of product.
2. Large capital investment, because of special purpose machines.
3. Dependence of whole activity on each part; any breakdown of one machine in the
sequence may result in stoppage of production.

Suitability of product layout:

Product layout is suitable in the following cases:
1. Where one or few standardized products are manufactured.
 2. Where a large volume of production of each item has to travel the production process,
over a considerable period of time.
3. Where a possibility of a good balance of labour and equipment exists.
4. Where minimum of inspection is required, during sequence of operations.

B) Process Layout (or Functional Layout):

In this type of layout, all machines performing similar type of operations are grouped at one
location i.e. all lathes, milling machines etc. are grouped in the shop and they will be
clustered in like groups.

A typical process layout is depicted below:

Advantages:
1. Greater flexibility with regard to work distribution to machinery and personnel. Adapted
to frequent changes in sequence of operations.
2. Lower investment due to general purpose machines; which usually are less costly than
special purpose machines.
3. Higher utilisation of production facilities; which can be adapted to a variety of products.
4. Variety of jobs makes the work challenging and interesting.
5. Breakdown of one machine does not result in complete stoppage of work.
Disadvantages:
1. Backtracking and long movements occur in handling of materials. As such, material
handling costs are higher.
2. Mechanisation of material handling is not possible.
3. Production planning and control is difficult
4. More space requirement; as work-in-progress inventory is high-requiring greater storage
space.
5. As the work has to pass through different departments; it is quite difficult to trace the
responsibility for the finished product.

Suitability of process layout:

Process layout is suitable in the following cases, where:
1. Non-standardised products are manufactured; as the emphasis is on special orders.

(c) Hybrid Layout / Combined Layout :

• In practice, plants are rarely laid out either in product or process layout form. Generally a
combination of the two basic layouts is employed; to derive the advantages of both systems
of layout.
• For example, refrigerator manufacturing uses a combination layout.
• Process layout is used to produce various operations like stamping, welding, heat treatment
being carried out in different work centres as per requirement. The final assembly of the
product is done in a product type layout.
• Certain manufacturing units may require all three processes namely intermittent process
(job shops), the continuous process (mass production shops) and the representative
process combined process [i.e. miscellaneous shops].
• In most of industries, only a product layout or process layout or fixed location layout does
not exist. Thus, in manufacturing concerns where several products are produced in
repeated numbers with no likelihood of continuous production, combined layout is
followed.
• Examples : Soap manufacturing , cement manufacturing

(d) Fixed Position Layout:

It is also called stationary layout. In this type of layout men, materials and machines are
brought to a product that remains in one place owing to its size.
Ship-building, air-craft manufacturing, wagon building, heavy construction of dams, bridges,
buildings etc. are typical examples of such layout.

Advantages:

(i) It is possible to assign one or more skilled workers to a project from start to finish in order
to ensure continuity of work.

(ii) It involves least movement of materials.

(iii) There is maximum flexibility for all sorts of changes in product and process.

(iv) A number of quite different projects can be taken with the same layout.
 Disadvantages:

(i) It usually involves a low content of work-in-progress.

(ii) There appears to be low utilization of labour and equipment.

(iii) It involves high equipment handling costs.

Application:

Layout by fixed position of product is limited to large items made singly or in very small lots.

FACILITY LOCATION / PLANT LOCATION :

Plant Location / Facility Location :

✓ Plant location refers to the choice of region and the selection of a particular site for setting
up a business or factory.

✓ But the choice is made only after considering cost and benefits of different alternative sites.
It is a strategic decision that cannot be changed once taken. If at all changed only at
considerable loss, the location should be selected as per its own requirements and
circumstances. Each individual plant is a case in itself.

✓ Businessman should try to make an attempt for optimum or ideal location.

Factors Influencing Location in Manufacturing Operations :

Following are the factors that may affect the location in the manufacturing operations:

i) Availability of the Raw Material : Those areas where the procurement of the raw material can be
easily done are better than the other areas. Much emphasis is given to these areas. It may bring the
following advantages:

a) Reduction in the transportation cost,

b) Continuous and efficient supply of the material, and Reduced carrying and storing costs.

ii) Availability of Labour :

In those companies or the manufacturing units that require more labour like furniture, textiles,
cement, consumer goods and electronics, working environment of the labour is quite significant The
environment comprises of worker training, wage rates, labour unions, amenities, productivity
requirement, etc.

iii) Integration with Other Parts of Organisation:

The newly established unit should be adequately connected with the rest of the establishment.
Initially, there may be some hurdle in the growth that needs to be taken care of and it is possible if
the unit is closely connected with the rest of organisation.

iv) Proximity to the Market:

The local demand and the potential growth should also be considered while selecting the ideal
location of 250 the plant. Normally, the market, where the demand is maximum is selected so that
the goods may reach the consumer in no time and the transportation cost can also be saved. For
example, the concept is adopted by the manufacturers of the bricks and the plastic pipes.

v) Quality of Life:

Presence of other facilities like schools, hospitals, society and culture, recreational activities, etc.,
also attract the project (the whole concept of quality life) in a good way.

vi) Proximity to the Suppliers and the Resources:

Many organisations are themselves suppliers of the main parts to their other manufacturing units. Or
in some instances, the same may also be procured from an outside source. In both the cases,
preference is given to the place where both the suppliers and the resources are located close to the
set-up.

vii) Safety Requirements:

Few plants may not only be themselves exposed to certain threats but the neighbourhood may also
be exposed to the same. For example, nuclear power reactors, chemical and the explosives factory,
etc. In such cases, normally a remote locality is preferred for the set-up.

viii) Availability of Useful Services:

Following are the services, the presence of which is highly crucial: Gas , water , electricity ,drainage
,disposal of wastes , communication.

Few industries may require significant amount of water as in the case of laundries, food processing,
chemical, etc., while some other may require electricity or gas in abundance while setting up a unit,
requirement of the plant should be carefully considered.

ix) Utilities, Taxes, and Real Estate Costs:

Some more significant factors including the basic utility, local administration and taxes, land costs,
relocation costs are also to be accounted for.

x) Secondary Factors:

Apart from the above factors, certain other factors like scope for expansion, total cost of
construction, access to the alternate modes of the transport, cost of shifting labour and the material
between two sites, competitive environment, response of the society and the community, etc. are
vital. If the firm is planning to expand globally, then employee education and training, infrastructure
development need to be considered.

Production System
The production system of an organization is that part, which produces products of an organization. It
is that activity whereby resources, flowing within a defined system, are combined and transformed
in a controlled manner to add value in accordance with the policies communicated by management.
A simplified production system is shown above.

The production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to control and improve
system performance.

Classification of Production System:

1. Job Shop Production

Job shop production are characterised by manufacturing of one or few quantity of products
designed and produced as per the specification of customers within prefixed time and cost. The
distinguishing feature of this is low volume and high variety of products.
Characteristics

The Job-shop production system is followed when there is:

1. High variety of products and low volume.

2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each product, capacities
for each work centre and order priorities

Advantages

Following are the advantages of job shop production:

1. Because of general purpose machines and facilities variety of products can be produced.
2. Operators will become more skilled and competent, as each job gives them learning
opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.

Limitations

1. Following are the limitations of job shop production:

2. Higher cost due to frequent set up changes.
3. Higher level of inventory at all levels and hence higher inventory cost.
4. Production planning is complicated.
5. Larger space requirements.

2. Batch Production

Batch production is defined by American Production and Inventory Control Society (APICS) “as a
form of manufacturing in which the job passes through the functional departments in lots or batches
and each lot may have a different routing.” It is characterized by the manufacture of limited number
of products produced at regular intervals and stocked awaiting sales.

Characteristics

Batch production system is used under the following circumstances:

1. When there is shorter production runs.

2. When plant and machinery are flexible.

3. When plant and machinery set up is used for the production of item in a batch and change
of set up is required for processing the next batch.

4. When manufacturing lead time and cost are lower as compared to job order production.

Advantages

Following are the advantages of batch production:

1. Better utilization of plant and machinery.

 2. Promotes functional specialization.

3. Cost per unit is lower as compared to job order production.

4. Lower investment in plant and machinery.

5. Flexibility to accommodate and process number of products.

6. Job satisfaction exists for operators.

Limitations

Following are the limitations of batch production:

1. Material handling is complex because of irregular and longer flows.

2. Production planning and control is complex. Work in process inventory is higher compared to
continuous production.Higher set up costs due to frequent changes in set up.

3. Mass Production

Manufacture of discrete parts or assemblies using a continuous process are called mass production.
This production system is justified by very large volume of production. The machines are arranged in
a line or product layout. Product and process standardization exists and all outputs follow the same
path.

Characteristics

Mass production is used under the following circumstances:

1. Standardization of product and process sequence.

2. Dedicated special purpose machines having higher production capacities and output rates.

3. Large volume of products.

4. Shorter cycle time of production.

5. Lower in process inventory.

6. Perfectly balanced production lines.

7. Flow of materials, components and parts is continuous and without any back tracking.

8. Production planning and control is easy.

9. Material handling can be completely automatic.

Advantages

Following are the advantages of mass production:

1. Higher rate of production with reduced cycle time.

2. Higher capacity utilization due to line balancing.

3. Less skilled operators are required.

4. Low process inventory.

 5. Manufacturing cost per unit is low.

Limitations

Following are the limitations of mass production:

1. Breakdown of one machine will stop an entire production line.

2. Line layout needs major change with the changes in the product design.

3. High investment in production facilities.

4. Continuous Flow Production

Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product. The items are made to flow through the sequence of operations
through material handling devices such as conveyors, transfer devices, etc.

Characteristics

Continuous production is used under the following circumstances:

1. Dedicated plant and equipment with zero flexibility.

2. Material handling is fully automated.

3. Process follows a predetermined sequence of operations.

4. Component materials cannot be readily identified with final product.

5. Planning and scheduling is a routine action.

Advantages

Following are the advantages of continuous production:

1. Standardization of product and process sequence.

2. Higher rate of production with reduced cycle time.

3. Higher capacity utilization due to line balancing.

4. Manpower is not required for material handling as it is completely automatic.

5. Person with limited skills can be used on the production line.

6. Unit cost is lower due to high volume of production.

Limitations

Following are the limitations of continuous production:

1. Flexibility to accommodate and process number of products does not exist.

2. Very high investment for setting flow lines.

3. Product differentiation is limited.

PARTICIPANTS OF SUPPLY CHAIN MANAGEMENT :

Supply chain management involves the coordination of various entities and activities to

ensure the smooth flow of goods and services from the point of origin to the point of

consumption. Participants in supply chain management can be categorized into several key

roles, including:

1. Suppliers: These are the organizations or individuals that provide the raw materials,

components, or finished products required for the production of goods or services.

Suppliers play a critical role in the supply chain by ensuring a steady and reliable source of

inputs.

2. Manufacturers or Producers: Manufacturers are responsible for transforming raw materials

and components into finished products. They are a crucial link in the supply chain, as the

quality and efficiency of their operations impact the entire supply chain.

3. Distributors or Wholesalers: Distributors purchase goods from manufacturers and supply

them to retailers or other businesses. They often play a role in inventory management,

order fulfilment, and transportation within the supply chain.

4. Retailers: Retailers sell products directly to consumers through physical stores, e-

commerce platforms, or other channels. They are often the final link in the supply chain and

have a direct interface with consumers.

5. Customers or Consumers: Customers are the ultimate end-users of products and services.

Their demand drives the entire supply chain, as companies aim to meet customer needs

efficiently and effectively.

6. Transportation and Logistics Providers: These include transportation companies (e.g.,

trucking, shipping, air cargo), warehousing and storage facilities, and third-party logistics

(3PL) providers. They are responsible for the movement, storage, and distribution of goods

throughout the supply chain.

7. Supply Chain Managers and Planners: These professionals oversee and coordinate supply

chain activities. They make strategic decisions, optimize processes, and use technology to

enhance supply chain efficiency.

8. Information Technology (IT) and Software Providers: IT plays a critical role in modern

supply chain management. Software and technology providers .

A Supply Chain consists of all the parties involved directly or indirectly in fulfilling a customer
request. The Supply Chain includes not only Manufacturers and Suppliers but also Transporters,
Warehouses, Material Handlers, Retailers & even Customers. Supply Chain is the chain of activities &
processes that ensures the movement of a product from its raw stage, through value addition, to the
final customer. The objective of a Supply Chain is to ensure that the right product reaches the right
customer in the right condition, in the right quantity at the right time and at the right price.

Supply Chain Management is the integration of business procedures from end consumer through
suppliers that offer products, services and information so that it provides value addition to
consumers. It is the network of transportation & warehousing processes that ensure the
procurement, distribution and movement of materials up to the point of sale to the customer. It is a
network of different companies that produce, handle and distribute products. An efficient supply
chain benefits customers by reducing the incidence of stock-outs and providing the assortment of
merchandise as required. This, in turn, leads to higher sales, higher inventory turnover and lower
markdowns for retailers
Supply Chain Logistics & Ware Housing :

Logistics is that component of the Supply Chain which plans, executes & controls the storage / flow
of products & associated information from the source of origin to the point of utilisation in order to
meet the requirements of the customer. SCM is a comprehensive & strategic perspective that
includes logistics, inventory management, vendor relations & even new product development.
Warehousing is a critical part of the chain of transportation of goods from the manufacturer to the
retail store. Warehousing processes ensure procurement, distribution and movement of materials up
to the point of sale to the customers.

Logistics Management System :

• Warehouse Management • Transportation & Material Handling • Delivery & Storage • Transaction
Processing • Cross Docking ( Re-Packing ) • Ticketing & Marking ( Labels & Tags )

……………………………………………………………………………………………………………………………………………………….
ADDITIONAL TOPICS ( FOR CONCEPT CLARITY . )

Historical Evolution of Operations Management :

1.Industrial Revolution:

Industrial revolution has played an important role in shaping the manner, in which the goods are
produced now. During the pre industrial revolution era, products were mostly hand-made by the
persons having necessary expertise in their shops or homes.

Each product was only one of its kind (unique) made in a meticulous manner by one person.
However, in the year 1700, a revolutionary development took place in England, which changed the
entire scenario in a holistic manner.

This development is referred to as the Industrial Development Industrial revolution had two basic
components, viz.:

i) Large-scale replacement of human power with the machine power and water power,
and ii) The establishment of the factory system. The workers were brought together into
factories on a large-scale, as a result of the growing need to organise them logically and
scientifically with the objective of improving the productivity.
ii) The significance and economic benefits arising out of the division of labour (also
referred to as the specialisation of labour) was highlighted in Adam Smith's famous book
The Wealth of Nations published in 1776. It envisaged the breaking up of the process of
production into small but specialised tasks, which were entrusted to the workers along
the production lines.
iii) The factories set-up during late 1700s had the elements of planning. monitoring and
controlling the work done by the factory workers along with the provisions of
production machinery
iv) The Industrial revolution had its origin the United Kingdom. where majority of the
technological innovations took place The industrial revolution thereafter spread to other
parts of European countries and the United States of America.
v) Prior to the industrial revolution, each part used in the production process was exclusive
or one of its kind it lacked inter-changeability, which meant that was of limited use
However, in the year 1790, the concept of interchangeable-parts was introduced by Eli
Whitney, which envisaged standardisation of parts so that each and every item in a
batch fits equally.

2) Post-Civil War Period:

• In the middle of the 19th century, a new industrial period emerged in the United States. The
post-civil war period (1865 1877) also known as the reconstruction period. provided
necessary thrust to the large-scale growth potential of production capacity of various
industries.
• Beginning of the modern type of organisations started in the form of joint stock companies
which also coincided with the end of the Civil War This was a remarkable development,
which led to the distinction between the capitalist and the employer, the managers became
salaried employees of the financiers, who happened to be the owner of the capital Towards
the end of 1990.
 • The developments like enhanced capital and production capacity, burgeoning manpower in
urban centres upcoming western markets, efficient transportation system at the national
level, etc., created an environment most suitable for the great production outburst of the
period

3) Scientific Management:

The theory of Scientific Frederick Management was put forward by the renowned American
mechanical engineer Winslow Taylor (1856-1915) (The focal point of his theory was machines and
the system of their use.

His theory was based on certain postulations. known as the Taylor's postulations, which simulates
the following:

i) Any kind of work is governed by the scientific laws, the scientific methods may be put to
use for the proper analysis of the work.
ii) Each worker performs with different ability their potential needs to be identified and
matched with their jobs.
iii) This may be followed by imparting appropriate training to them, so that their full
potential can be utilised Self interest of an employee is the strongest motivational force;
this may be used to encourage the employees for better performance, and
iv) There should be segregation of responsibilities of workers and managers.
➢ Time and Motion Study : The time and motion study may be defined as a business efficiency
technique. which analyses the combination of the Time Study work (Frederick Winslow
Taylor) and the Motion Study work Frank and Lillian Gilbreth It is a systematic and
sophisticated method, which takes into account the limits of human physical and mental
capacity, and the importance of a good physical environment

4) Human Relations Movement:

➢ The manner in which managers of an organisation-interact with their employees is termed

as Human Relations If the management is able to motivate its employees properly, the
outcome is good and of better quality Such an organisation is said to have effective human
relations.
➢ On the contrary. if the management fails to motivate its employees, and as a result their
efficiency and morale decline. the organisation is said to have ineffective human relations.
➢ The history of human relations started with the contribution of Elton Mayo, FJ
Roethlisberger, TN White-head and WJ Dickson at the Hawthorne, Illinois Then contribution
is referred to as the Hawthorne studies, which were initially started by industrial engineers
with the objective of determining the most suitable level of lighting in order to have the
optimum production from workers.
➢ The outcome of these studies was confusing with regard to the relationship between
physical environment and workers efficiency. which made the researchers realise the
significance of the human factors.
➢ This was the first time that the researchers and managers were on the same scale regarding
the fact that psychological and sociological factors affected not only human motivation and
attitude but also the production.

5) Operations Research:
Operations research is a branch of management which uses modern and sophisticated analytical
methods to i) Facilitate better decision-making and Solving complex problems.

This approach was developed in the year 1940 which has a quantitative perspective of efficient
allocation, monitoring, and controlling of various scarce resources such as material, skilled workers,
machines, money and time.

Operations research is also viewed as a branch of mathematics, as it makes use of various

techniques from other mathematical sciences, such as mathematical modelling, statistical analysis
and mathematical optimisation, etc.

The technique of Operations Research may be applied in areas such as supply chain management,
marketing and revenue management systems, manufacturing plants. financial engineering.
telecommunication networks. healthcare management, transportation networks, energy and
environment, service systems, web commerce.

6) Service Revolution:

Service sector started taking shape at the global level before the beginning of the World War II and
gathered momentum after the Was came to an end The momentum, which continued to gain speed
thereafter, is still growing a fast pace (This is true especially in the context of an Emerging Market
Economy (EME) like India.

Where the share of service sector (tertiary sector) in the GDP has shown an increasing trend year
after year, in comparison with that of the agriculture sector primary sector) or industrial sector
(secondary sector) The phenomenal growth of service sector has influenced the production
management in a major way ( has posed such a challenge before the production managers that they
are compelled to chalk-out strategies and actions so that the services areas are managed properly for
the improvement productivity, quality and competitive edge, Services sector is expected to gain
more significance in the future or coming time

7) Computer Revolution:

➢ Application of computers in business started way back in the year 1970 which grew at an
enormous speed subsequently Computers proved to be a great help in the widespread use
of various quantitative models, which were developed by the management science, Data
processing became much smoother and hassle free in the areas like forecasting scheduling
and inventory management of the organisations operations were greatly influenced by the
computer hardware and software.
➢ Organisations dependence upon the computers continued to grow unabatedly Due to the
availability of a wealth of information in abundance and easy access to more information,
operations decisions became easy to make in a prompt manner Advancement in computer
technologies and software applications has ensured fast and better decision making .
➢ Evolution and expansion in the field of communication technologies have empowered
companies to manage their operations efficiently at the global level they are also able to
work in a smooth way on the international projects by having uninterrupted communication
with their globally placed team members E-mail has enabled employees, other colleagues,
vendors, and customers to communicate with each other in a prompt and hassle free
 manner on a 24x7 basis All these developments have made the decision-making process fast
and operational activities have improved .

8) Supply Chain Management:

The next of the supply chain management lies in the application of the Total System Approach, which
entads the management of the flow of information, materials and services from the suppliers thereof
through factories and warehouses to the end users. re. customers Latest developments in this regard
like outsourcing and mass customisation are indicative of major drift in the trend which have
compelled the companies to seek easy ways to fulfil customers expectations They are concentrating
on prompt and quick action (optimising their core activities) on their part. response to the fast
changing customers preferences

9) Electronic Commerce :

The advent of the internet and the World Wide Web (WWW) during the late 1990s is considered as
the most notable development of the time with far-reaching impact E-commerce denotes the use of
intimate as the backbone of the business activity Genesis of the internet may be traced back to the
US Government network called Advanced Research Projects Agency Network (ARPANET), which was
created in 1969 by the defence department of US Government .

The manner in which people access information shop and communicate undergoes changes
accordingly with the use of web pages, forms, and interactive search engines . The internet has also
brought about drastic changes in the way operations managers coordinate production and
distribution processes and execute

10) Globalisation:

Globalisation may be defined as the process of international integration, which is associated with the
exchange of world views, products, ideas and various facets of culture.

It has resulted in phenomenal increase in the international trade The inclination towards healthy
competitiveness between the business organisations as well as the nations has become a regular
feature through better communications and trade agreements .

Scope of Production and Operations Management

Production and operations management concern with the conversion of inputs into outputs, using
physical resources, so as to provide the desired utilities to the customer while meeting the other
organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from
other functions such as personnel, marketing, finance, etc., by its primary concern for „conversion
by using physical resources.‟ Following are the activities which are listed under production and
operations management functions:

1. Location of facilities

2. Plant layouts and material handling

3. Product design

4. Process design

5. Production and planning control

 6. Quality control

7. Materials management

8. Maintenance management.

1.LOCATION OF FACILITIES

Location of facilities for operations is a long-term capacity decision which involves a long term
commitment about the geographically static factors that affect a business organization. It is an
important strategic level decision- making for an organization. It deals with the questions such as
„where our main operations should be based?‟

2.PLANT LAYOUT AND MATERIAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments,
work centres and equipment in the conversion process. The overall objective of the plant layout is to
design a physical arrangement that meets the required output quality and quantity most
economically.

According to James Moore, “Plant layout is a plan of an optimum arrangement of facilities including
personnel, operating equipment, storage space, material handling equipment’s and all other
supporting services along with the design of best structure to contain all these facilities”.

Material Handling‟ refers to the „moving of materials from the store room to the machine and from
one machine to the next during the process of manufacture‟. It is also defined as the „art and
science of moving, packing and storing of products in any form‟. It is a specialised activity for a
modern manufacturing concern, with 50 to 75% of the cost of production.

3.PRODUCT DESIGN

Product design deals with conversion of ideas into reality. Every business organization have to
design, develop and introduce new products as a survival and growth strategy. Developing the new
products and launching them in the market is the biggest challenge faced by the organizations.

4.PROCESS DESIGN

Process design is a macroscopic decision-making of an overall process route for converting the raw
material into finished goods. These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities.

5.PRODUCTION PLANNING AND CONTROL

Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to
give production orders to shops and to follow up the progress of products according to orders.

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning
bridges the gap from where we are, to where we want to go.

Routing may be defined as the selection of path which each part of the product will follow, which
being transformed from raw material to finished products.
Scheduling determines the programme for the operations. Scheduling may be defined as „the
fixation of time and date for each operation‟ as well as it determines the sequence of operations to
be followed.

6.QUALITY CONTROL

Quality Control (QC) may be defined as „a system that is used to maintain a desired level of quality
in a product or service‟. It is a systematic control of various factors that affect the quality of the
product. Quality control aims at prevention of defects at the source, relies on effective feed back
system and corrective action procedure.

Quality control can also be defined as „that industrial management technique by means of which
product of uniform acceptable quality is manufactured‟. It is the entire collection of activities which
ensures that the operation will produce the optimum quality products at minimum cost.

7.MATERIAL MANAGEMENT

Materials management is that aspect of management function which is primarily concerned with
the acquisition, control and use of materials needed and flow of goods and services connected with
the production process having some predetermined objectives in view.

8.MAINTENANCE MANAGEMENT

In modern industry, equipment and machinery are a very important part of the total productive
effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very
important that the plant machinery should be properly maintained.