SEPTEMBER 1, 2021

Operations
ManagementCon
cepts
Sustainability and Supply Chain Management
 01
DEFINE DIFFERENT OPERATIONS
MANAGEMENT CONCEPTS

Learning 02
Objectives DISCUSS HISTORICAL DEVELOPMENT AND THE
IMPORTANCE TO BUSINESS AND
ORGANIZATIONS,

At the end of this chapter, learners shoud be able to:

03
DETERMINE THE EFFECTIVENESS TO THE
ORGANIZATION.
 04
EXPLAIN THE CONCEPT OF PRODUCTION,
SYSTEM AND MANAGEMENT

Learning 05
Objectives DESCRIBE THE DIFFERENT OPERATIONS
MANAGEMENT OBJECTIVES AND STRATEGIC
ROLES IN OPERATIONS.’

At the end of this chapter, learners shoud be able to:

06
EXPLAIN THE DIFFERENT INFORMATION AND
NON MANUFACTURING SYSTEMS
Learning 07
DETERMINE THE CONCEPT OF PRODUCTIVITY

Objectives 08
At the end of this chapter, learners shoud be able to: DEFINE THE SCOPE OF OPERATIONS
MANAGEMENT
Introduction
Operations Management

Operation is that part of as organization, which is The set of interrelated management activities, which
concerned with the transformation of a range of inputs are involved in manufacturing certain products, is
into the required output (services) having the requisite called as production management. If the same
quality level. Management is the process, which concept is extended to services management, then the
combines and transforms various resources used in the corresponding set of management activities is called
operations subsystem of the organization into value added as operations management.
services in a controlled manner as per the policies of the
organization.
HISTORICAL
DEVELOPMENT
The traditional view of manufacturing
management began in eighteenth century when
Adam Smith recognized the economic benefits of
specialization of labor. He recommended breaking
of jobs down into subtasks and recognizes workers
to specialized tasks in which they would become
highly skilled and efficient. In the early twentieth
century, F.W. Taylor implemented Smith’s theories
and developed scientific management. From then
till 1930, many techniques were developed
prevailing the traditional view.
Historical Summary of Operations Management
CONCEPT OF
PRODUCTION
Production function is ‘the part of an
organization, which is concerned with
the transformation of a range of inputs
into the required outputs (products)
having the requisite quality level’.
Production is defined as ‘the step-by-
step conversion of one form of
material into another form through
chemical or mechanical process to
create or enhance the utility of the
product to the user’
PRODUCTION
SYSTEM
The production system is ‘that part of
an organization, 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’.
Classification of
Production System
Production systems can be
classified as Job-shop, Batch,
Mass and Continuous production
systems.
Job-shop production are
characterized by manufacturing
one or few quantity of products
designed and produced as per the
specification of customers within
prefixed time and cost.
 High variety of products and low volume.

Use of general purpose machines and

facilities.

Highly skilled operators

Large inventory of materials, tools, parts

01 Detailed planning for sequencing the

requirements of each product.
JOB-SHOP
PRODUCTION
Job-Shop Because of general purpose

Production 01 machines and facilities variety of

products can be produced.
ADVANTAGES
Operators will become more skilled and
02 competent, as each job gives them
learning opportunities.

Full potential of operators can be

03
utilized.

Opportunity exists for Creative

04
methods and innovative ideas
Batch Production is characterized
by the manufacture of limited
number of products produced at
regular intervals and stocked
awaiting sales.
 Shorter production runs.

Plant and machinery are flexible.

Plant and machinery set up is used for

the production of item in a batch.

02
Manufacturing lead-time and cost are
lower .

BATCH
PRODUCTION
 Better utilization of plant and machinery.
Batch 01

Production 02 Promotes functional specialization.

ADVANTAGES
Cost per unit is lower as compared to
03
job order production.

Lower investment in plant and machinery.

04

05
Flexibility to accommodate and process
number of products.

Job satisfaction exists for operators.

06
 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.
 Standardization of product and
process sequence.

Machines having higher production

capacities and output rates.

Large volume of products.

Shorter cycle time of production.

03 Lower in process inventory

MASS
PRODUCTION
 Perfectly balanced production lines.

Flow of materials, components and

parts is continuous.

Production planning and control is

easy.

Material handling can be

03 completely automatic

MASS
PRODUCTION
Mass Higher rate of production with
Production 01
reduced cycle time.

ADVANTAGES
Higher capacity utilization due to
02
line balancing.

Less skilled operators are required.

03

04 Low process inventory.

Manufacturing cost per unit is low.

05
Continuous 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.
 Dedicated plant and equipment with zero
flexibility.

Material handling is fully automated.

Process follows a predetermined sequence

of operations.

Component materials cannot be readily

identified with final product.

04 Planning and scheduling is a routine

action.

CONTINUOUS
PRODUCTION
Continuous Standardization of product and process
Production 01
sequence.
ADVANTAGES

Higher rate of production with reduced

02
cycle time.

Higher capacity utilization due to line

03
balancing.

Manpower is not required for material handling

04
as it is completely automatic.
PRODUCTION
MANAGEMENT
Production management is ‘a process
of planning, organizing, directing and
controlling the activities of the
production function. It combines and
transforms various resources used in
the production subsystem of the
organization into value added product
in a controlled manner as per the
policies of the organization’.
 ‘Production management deals
with decision-making related to
production processes so that the
resulting goods or services are
produced according to
specifications, in the amount and
by the schedule demanded and out
of minimum cost’.
- E.S.Buffa
 Objectives of
Production
Management

Right Right Quantity Right Right Manufacturing Cost

Quality Time
THE
OPERATIONS
SYSTEM
 Operations system converts inputs in order to provide outputs,
which are required by a customer.

A departmental store's has an input like land

upon which the building is located,
labor as a stock clerk, capital in the form of
building, equipment and merchandise,
management skills in the form of the stores
manager. Output will be serviced customer
with desired merchandise. Random
It converts physical resources into outputs, fluctuations will be from external or internal
the function of which is to satisfy customer sources, monitored through a feedback
wants. system.

(a) Manufacturing Operations

(b) Service Operations
 A FRAMEWORK OF
MANAGING OPERATIONS

Organizing
Planning Determine the activities Controlling
The activity that establishes a required to achieve the goals The activities that assure the
course of action and guide and assign authority and actual performance in
01 02 03
future decision-making. responsibility for carrying them accordance with planned
out. performance.
THE OPERATIONS
MANAGEMENT
 The definition of the operations Management contains
Operations Management following keywords:

• Resources
Resources are the human, material and capital inputs to the
Joseph G .Monks defines Operations production process. Human resources are the key assets of an
organization.
Management as the process whereby
resources, flowing within a defined • Systems
system, are combined and transformed Systems are the arrangement of components designed to
achieve objectives according to the plan. The business systems
by a controlled manner to add value in are subsystem of large social systems.
accordance with policies
• Transformation and Value Adding Activities
communicated by management. The objective of combining resources under controlled
conditions is to transform them into goods and services having
a higher value than the original inputs. The transformation
process applied will be in the form of technology to the inputs.
OPERATIONS
MANAGEMENT
OBJECTIVES
CUSTOMER SERVICE RESOURCE UTILIZATION
The first objective of operating systems is to Another major objective of operating
utilize resources for the satisfaction systems is to utilize resources for the
of customer wants. Therefore, customer satisfaction of customer wants effectively.
service is a key objective of operations Customer service must be provided with
management. It must provide something to a the achievement of effective operations
specification, which can satisfy the customer through efficient use of resources.
in terms of cost and timing. Thus, providing Inefficient use of resources or inadequate
the ‘right thing at a right price at the right customer service leads to commercial
time’ can satisfy primary objective. failure of an operating system.
STRATEGIC
ROLE OF
OPERATIONS
 (a) A STRATEGIC PERSPECTIVE
Overall organizational strategy must be developed:
• Quality (product performance).
• Cost efficiency (low product price).
• Dependability (reliable, timely delivery of orders to
customers).
• Flexibility (responding rapidly with new products or
changes in volume).

(b) OPERATIONS OBJECTIVES

• Product/service characteristics.
• Process characteristics.
• Product/service quality.
• Efficiency
1.Effective employee relations and cost control of labor.
2. Cost control of material.
3.Cost control in facility utilization.
• Customer service (schedule)
STRATEGIC ROLE OF OPERATIONS 1.Producing quantities to meet expected demand.
2. Meeting the required delivery date for goods or services.
• Adaptability for future survival.
 (c) OPERATIONS ALTERNATIVES AND
TRADEOFFS
The operations sub-goals can be attained through the
decisions that are made in the various operations areas.
Once a decision is made, it leads to many choices.

• Where should facilities be located?

• How large should they be?
• What degree of automation should be used?
• How skilled must labor be to operate the automated
equipment?
• Will the product be produced on site?
• How do these decisions impact quality, efficiency,
schedule (customer service), and adaptability?
• Are we prepared for changes in product or service,
or do these decisions lock in our operations?

STRATEGIC ROLE OF OPERATIONS

THE
STRATEGIC
PLANNING
Strategic Planning
for Production and In the production or operations function,
strategic planning is the broad, overall
Operation planning that precedes the more detailed
operational planning.

Production and operations strategic

plans are the basis for (1) operational
planning of facilities (design) and (2)
operational planning for the use of these
facilities
Strategic Planning—Forced
Choice Model
In-group sessions or individually,
analysts assess environmental
considerations together with the
organization’s current
production/operations position, thus
forcing management to develop
strategic options for operations
Strategic The key point is that operations
strategies must be consistent with the
Planning overall strategies of the firm.

Approaches for
Production/Oper
ations Operations typically utilize the overall
corporate approach to strategic
planning, with special modifications and
a focus upon operations issues and
opportunities.
 A Strategic Planning
Operations Mode
One feature of this approach that is
crucial to competitiveness is market-
based view of strategic planning. It
suggests that any strategic business unit
of a company operates in the context of
its corporate resources, the general and
competitive industry environment, and
the specific corporate goals of the
company.
The Trend: Information and Non Manufacturing Systems

Manufacturing is characterized by tangible outputs

(products). Consumption of outputs at overtime

Following characteristics can be considered for distinguishing

Manufacturing Operations with Service Operations:
 Tangible/Intangible nature of output
 Production and consumption
 Nature of work (job)
 Degree of customer contact
 Customer participation in conversion
 Measurement of performance
 Quality of output
 Inventory accumulated
 PRODUCTIVITY FACTORS AFFECTING
The ratio of output to input. PRODUCTIVITY
Productivity can be improved by:

 Capital/labor ratio
01  Scarcity of some resources
CONTROLLING INPUTS
 Work-force changes
02  Innovations and technology
IMPROVING PROCESS SO THAT THE
 Regulatory effects
SAME INPUT YIELDS HIGHER OUTPUT  Bargaining power
 Managerial factors
03
 Quality of work life
BY IMPROVEMENT OF TECHNOLOGY.
 Scope of
Operations
Management

 Location of facilities  Process Design  Materials

 Plant layouts and  Production and Management
Material Handling Planning Control  Maintenance
 Product Design  Quality Control Management
 LET'S SUM UP!

• Operation is that part of as organization, which is concerned with the transformation of a

range of inputs into the required output (services) having the requisite quality level.
• Management is the process, which combines and transforms various resources used in the
operations subsystem of the organization into value added services in a controlled manner as
per the policies of the organization.
• Production function is ‘the part of an organization, which is concerned with the
transformation of a range of inputs into the required outputs (products) having the requisite
quality level’.
• Production is defined as ‘the step-by-step conversion of one form of material into another
form through chemical or mechanical process to create or enhance the utility of the product to
the user’
 LET'S SUM UP!

• The production system is ‘that part of an organization, 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.
• Production management is ‘a process of planning, organizing, directing and controlling the
activities of the production function. It combines and transforms various resources used in the
production subsystem of the organization into value added product in a controlled manner as per
the policies of the organization’.
• Joseph G. Monks defines Operations Management as the process whereby resources, flowing
within a defined system, are combined and transformed by a controlled manner to add value in
accordance with policies communicated by management
 LET'S SUM UP!

• The production system is ‘that part of an organization, 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.
• Production management is ‘a process of planning, organizing, directing and controlling the
activities of the production function. It combines and transforms various resources used in the
production subsystem of the organization into value added product in a controlled manner as
per the policies of the organization’.
• Joseph G. Monks defines Operations Management as the process whereby resources, flowing
within a defined system, are combined and transformed by a controlled manner to add value
in accordance with policies communicated by management
 Thank you!
"Autograph your work with excellence." -Jessica Guidobono