Module-III-Marketing Management

Marketing--- is a social and managerial process by which individuals and organisations obtain what they need
and want through creating and exchanging value with others.

Marketing is also defined as the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return.

Market:-----the set of all actual and potential buyers of a product or service.

Marketing management is the art and science of choosing target markets and building profitable relationships
with them
Inbound Marketing
Inbound is when customers initiate contact with the marketer in response to various methods used to gain their
attention. These methods include email, events, content and web design.

Outbound Marketing
In this, the marketer initiates contact with the customer through methods such as TV, radio and digital display
advertising. It is often used to influence consumer awareness and preference for a brand.

Steps in Marketing Process

Following are the steps involved in the Marketing Process :-

• Situation Analysis
• Marketing Strategy
• Marketing Mix Decision
• Implementation and Control

1. Situation Analysis:--Analysis of situation in which the organisation finds itself serves as the basis for
identifying opportunities to satisfy unfulfilled customer needs. Situational and environmental analysis is done
to identify the marketing opportunities, to understand firms own capabilities, and to understand the
environment in which the firm is operating.

2. Marketing Strategy:--After identifying the marketing opportunities a strategic plan is developed to pursue
the identified opportunities.

3. Marketing Mix Decisions:--At this step detailed tactical decisions are made for the controllable parameters
of the marketing mix. It includes - product development decisions, product pricing decisions, product
distribution decisions, and product promotional decisions.

4. Implementation and Control:--Finally, the marketing plan is implemented and the results of marketing
efforts are monitored to adjust the marketing mix according to the market changes.

Importance of Marketing
➢ Marketing affects our lives.-Customer is the resolving force of marketing.
➢ Marketing satisfies our needs-ensures the free and smooth exchange of goods and services from
marketers to customers.
➢ Marketing generates revenue for business firms.
➢ Marketing is the kingpin that sets the rate of progress of the economy.
➢ Marketing enables the nation to improve the standard of goods and services and hence the business
value.
➢ Marketing generates employment.
➢ Marketing helps in developing economic resources

Nature of Marketing

Economic function – It involves mobilization of economic resources for production and distribution of ideas,
goods and services

Creative function – It involves innovation and implementation of ideas, frameworks and processes to satisfy
customers.

Integrated function – It involves communication and integration with various business activities to make
effective marketing strategies.

Managerial functional – It involves analysing market opportunities, planning marketing strategies,

implementing marketing plans and setting up a control mechanism to achieve organizational objectives.

Dynamic process – Marketing plans are reviewed from time to time with the changes in the marketing
environment.

Social process – Marketing aims at customer satisfaction and welfare of the society.

Goal oriented activity – It aims at profit making and customer satisfaction to meet business objectives

Universally applicable – It is applicable to all types of organizations from business for profit motive and to
non-profit organizations.

Customer oriented – Marketing starts with identification of customer needs and wants and ends with
satisfaction of those needs and wants

System – It is a system of subsystems namely input (4P`s) – process (motivation) – output (increased sales and
revenue)

Process – It involves a series of inter-related functions.

Marketing is a science as well as art – As a science, it makes use of frameworks and methods
for segmentation and targeting. As an art, it requires creativity to create demand for a product and
understand consumer behaviour.

Objectives of Marketing
The main objective of marketing is to fulfil customers’ demands while making profits. Besides this, the other
five objectives of marketing are –

1. Customer Satisfaction: Satisfying the needs, wants, and demands of the customers.
2. Profitability: Earning profit for the business to support sustainable growth.
3. Demand Creation: Develop demand for the offerings by communicating about it to the target
audience.
 4. Brand Development: Building a brand out of the company and/or the offering and differentiating it
from other players in the market.
5. Create Goodwill And Public Image: Building up a public image of the brand and increasing its
equity by providing offerings with a consistent brand promise.

Importance of Marketing
To the society

• Encourages better standard of living

• Helps in creation of utility – form, place, time, possession
• Aids in consumer protection by keeping customers informed
• Provides consumer choice (variety of products)
• Introduction of new products and services
To the firm

• Helps in product planning and new product development

• Helps in Increasing profit (sales & revenue)
• Acts as a link between business and society
• Enhances goodwill and brand value
• Reducing cost of sales and production

Scope of Marketing
The scope of marketing lies in the following:

• Study of consumer needs and wants

• Study of consumer behaviour
• Segmentation, Targeting and Positioning
• Product planning and development
• Product packaging and branding
• Developing pricing policies
• Promotion and distribution of goods and services
• Consumer satisfaction
• Sales management
• After sale services
• Enhancing corporate identity and goodwill

Core Marketing Concepts

Five Core customer and marketplace concepts
➢ Customer Need, Wants and Demand
➢ Market Offerings-Product, Services and Experiences.
➢ Customer Value and Satisfaction
➢ Exchanges and relationship
➢ Markets

Customer needs ,wants and demand

Human needs are the states of felt deprivation. They include the basic needs like needs for food, water,
shelter, warmth,safety,social needs of belongingness and affection,individual needs for knowledge and
self expression etc..
eg –I need a pen to write
Wants are the form of human needs that are shaped by culture and individual personality.
eg- I want a ball point pen
Demands –human wants when backed by buying power becomes demand.
Eg- please get cello gripper.
Desire-desire to write only with parker pen

Market offering
Market offering is some combination of products, services information or experiences offered to a
market to satisfy a need or want.
It can be physical products-soap, tooth paste, books, pen,etc..
Services-banking, hotel, airlines, taxi, hospital, etc..
Persons
Places
Information-no smoking
Ideas-

Customer value and satisfaction

Customer form expectation about the value and satisfaction that various market offerings will deliver
and buy accordingly.
Satisfied customers buy again and tell others about their good experience.
Customer value and customer satisfaction are the key building blocks for developing and managing
customer relationship
Customer form expectation about the value and satisfaction that various market offerings will deliver
and buy accordingly.
Satisfied customers buy again and tell others about their good experience.
Customer value and customer satisfaction are the key building blocks for developing and managing
customer relationship

Exchange and Relationship

Exchange is the act of obtaining a desired object from someone by offering something in return.
Exchange is meant to retain the customer and grow their business with the company

Evolution of Marketing Concepts

1. Production concept:- The production concept holds that customers will favour those products that
are available and highly affordable and that the organisation should therefore focus on improving
production and distribution efficiency.

In order to reduce the cost of production and to bring it down to the minimum level, these companies
indulge in large scale production. This helps them in effecting the economics of the large scale
production. Hence mass production is their strategy.

Advantage:---The advantage of this philosophy is apparent only when demand exceeds supply.
Disadvantage:--Its greatest drawback is that it is not always necessary that the customer every time
purchases the cheap and easily available goods or services.

2. Product concept:- the product concept holds the idea that customers will favour those products that
offer the most quality, performance and features and that the organisation should therefore devote its
energy to making continuous product improvement.

Those companies who believe in this philosophy are of the opinion that if the quality of goods or
services is of good standard, the customers can be easily attracted. The basis of this thinking is that the
customers get attracted towards the products of good quality.

A good quality product and high price can upset the budget of a customer. Therefore, it can be said that
only the quality of the product is not the only way to the success of marketing.

3. Selling concept:- The selling concept holds the idea that consumers will not buy enough of the firm’s
products unless it undertakes a large- scale selling and promotion effort.

The basis of this thinking is that the customers can be attracted. Keeping in view this concept these
companies concentrate their marketing efforts towards educating and attracting the customers.

In such a case their main thinking is ‘selling what you have’. This concept offers the idea that by
repeated efforts one can sell-anything to the customers.

Therefore, it can be asserted that this philosophy of selling concept offers only a short-term advantage
and is not for long-term gains.

4. Marketing concept:- the marketing concept holds the idea that achieving organisational goal depends
on knowing the needs and wants of target markets and delivering the desired satisfaction better than the
competitors do.

The basis of this thinking is that only those goods/service should be made available which the consumers
want or desire and not the things which you can do.

In other words, they do not sell what they can make but they make what they can sell.

Keeping in mind this idea, these companies direct their marketing efforts to achieve consumer
satisfaction.

In short, it can be said that marketing concept is a modern concept and by adopting it profit can be
earned on a long-term basis.

The drawback of this concept is that no attention is paid to social welfare.

5. Societal marketing concept:- the societal marketing concept holds that a company should make
good marketing decisions by considering consumers want, the company’s requirements, consumers’
long run interests and society’s long run interests.
Under this concept, it is believed that mere satisfaction of the consumers would not help and the welfare
of the whole society has to be kept in mind. For example, if a company produces a vehicle which
consumes less petrol but spreads pollution, it will result in only consumer satisfaction and not the social
welfare.
Hence going for electric cars is ans example for societal marketing concept.

Evolution of Marketing
a) The Stage of Barter
The pre-industrial revolution world was characterized by an agricultural cum handicraft economy. The
agriculturist, whether produce wheat or rice, or wool or cotton, exchange the surplus with other
agriculturists because the products produced by one agriculturist is required by other who were not
engaged in the same activity. In this way, they meet their requirement by exchanging the product of
value with each other. There was no elaborate distribution system because the need and habit of the
people and the technology did not demand such system.

b) b) The Stage of Money Economy The next stage in the evolution of marketing was money economy.
The fundamental change that took place in this period was the replacement of barter system by money
economy. Money becomes the mechanism of exchanging goods and services.

c) c) The Stage of Industrial Revolution Many fundamental changes took place at this stage. Industrial
revolution gave the birth to new business system. It introduced new products, new 14 Sales Management
manufacturing system, new transportation mode and methods of communication, and also brings
changes in the physical and economic environment of man. The concept of mass production was
introduced and variety of low cost products is manufactured in abundance. The industrial revolution also
gave birth to income revolution, giving a great deal of disposable income to large mass of people. And
because of this disposable income only, mass production and mass distribution sustained during
industrial revolution.

d) The Stage of Competition The mass production and mass distribution brought by industrial revolution
soon to the stage of competition. The ever-increasing size of the industrial firms leads to stiff
competition among the producers. Earlier, during industrial revolution the main task of the industrial
firms was to produce and distribute the products but now the main issue was to face the competition and
sustain in the business. They started differentiating their products in order that their products are
preferred over the competitor’s product.

Marketing Mix
Marketing mix is a set of controllable, tactical marketing tools that the firm blends to produce the
response it wants in the target matket. The marketing tools include product , price, place and
promotion.
Differentiate between Marketing and Selling
Sl.No. Marketing Selling
1. Emphasis is on customer needs & .Emphasis is on the product
wants
2. Marketer identifies the needs and Organization makes the product
wants of the customer and then and then figures out how to sell it
delivers a product to satisfy
customer.
3. Profit oriented through customer Profit oriented through sales
satisfaction volume
4 Long term planning Short term planning
5 Focus is on needs of consumers Focus is on needs of seller
6 Creates form time, possession and Only possession utility (transfer
place utility of ownership)
7 It is a system of integrated and inter- It is a part of the marketing
related functions. process

MARKETING MIX
Although the term “marketing mix” was first coined by Professor Neil Borden, it was popularized by
Edmund Jerome McCarthy, who first developed the 4 Ps of marketing.
The marketing mix definition refers to various factors that companies can control to influence consumers
to buy their products. It includes different focus areas as part of a comprehensive marketing plan.
"The Marketing Mix is the set of tactical marketing tools - Product, Price, Promotion, and Place - that
the firm blends to produce the response it wants in the target market."

The marketing mix tools for marketing product include 4P’s. They are Product , Price, Place and
Promotion.
The marketing mix tools for marketing services include 7P’s. They are Product , Price, Place and
Promotion, Process, People and Physical Evidence.
Concept of 4C's. The Concept of 4C's is more customer-driven replacement of 4P's. According to
Lauterborn's the 4C's are - Consumer, Cost, Communication, and Convenience. According to Shimizu's
the 4C's are -Commodity, Cost, Communication, and Channel.

•Product - Products are offerings that a marketer offers to the target audience to satisfy their needs and
wants. Product can be tangible good or intangible service.

Product mix include product features like quality, shape, size, colour, etc

• Price - Price is the amount that is charged by marketer of his offerings or the amount that is paid by
consumer for the use or consumption of the product. . Marketers are required to be aware of the
customer perceived value of the product to set the right price.

Price mix include MRP(Maximum Retail Price), discount, allowances, rebate, etc.

• Promotion - Promotion represents the different methods of communication that are used by marketer
to inform target audience about the product.
Promotion mix includes - advertising, personal selling, public relation, direct marketing and sales
promotion.

• Place - Place or distribution refers to making the product available for customers
at convenient and accessible places.

Place mix include distribution channels, transportation, warehousing facilities,etc.

Physical Evidence--Physical evidence refers to elements like uniform of employees, signboards, and
etc
People, People refers to the employees of the organization comes in contact with the customers in the
process of marketing.
Process--Process refers to the systems and processes followed within organization.

Important terms in Marketing

1.A niche market is a distinct segment of a wider market, defined by its unique needs or characteristics.

For example, within the women’s shoes market there are niches for eco-friendly shoes, orthopedic shoes,
or hiking boots. Each of these niches caters to a unique set of requirements that don’t apply to the
general market.

2.Marketing Myopia:-Marketing myopia is the failure & narrow-minded approach of marketing

management of a company; which only focuses on certain attributes of the product or service while
completely ignoring the long terms goals such as product quality, customers need, demand and
satisfaction.
3.Relationship Marketing: As the name indicates, relationship marketing centers around developing
deeper relationships with customers to ensure long-term brand loyalty.
4.Brand Marketing: Rather than promoting a specific product or service, brand marketing focuses on
the personality, purpose, and character of your brand, with the goal of creating an emotional connection
with customers.
5.Influencer Marketing: With influencer marketing, a company or brand finds a “famous” person with
a huge social media following that closely aligns with the brand’s target audience, and pays the
“influencer” to mention or promote its products to their fans.
6.Digital marketing:-Definition: Digital marketing means using an online channel, paid or unpaid, to
market your products or services.

7.Mass marketing is a type of marketing aimed at reaching large populations by using mass media
outlets. It involves the creation and distribution of promotional messages broadcasted simultaneously to
wide audiences, such as radio or television commercials, print ads, billboards or online advertisements.

8.Pay-per-click marketing.:- Pay-per-click marketing means creating, placing and managing pay-
per-click ads — typically on Google, but also on Bing, Amazon and other platforms.
Also known as: search engine marketing and PPC marketing.

9.Cause Marketing
Cause-Marketing is the type when businesses and companies support social causes to raise funds or
spread awareness and receive marketing benefits like customers and brand loyalty in return
10.Worth of Mouth Marketing
Word of mouth marketing is based on the principle of making a good impression on customers. If the
customers have good experience with the company’s product/service, they would refer it to their friends
and relatives and do the same in return. Word of mouth marketing creates a chain reaction
11.E-Marketing
E-Marketing also goes by the name of internet marketing strategy. It means that the company or
business would use the internet for marketing its product and services.
12.Product Marketing: Tangible offerings manufactured in bulk and requiring proper marketing to
make it available to the right customer at the right time. Example – mobile phones, televisions, etc..
13.Service Marketing: Intangible activities that can’t be separated by the provider. Example – hotels,
airlines, barbers, etc.
14.Event Marketing: Time based events like trade shows, artistic performances, etc.
15.Person Marketing: A person known for his skills, profession, art, experience, etc. Example –
Ronaldo, Michael Jackson, etc.
16.Place Marketing: Places, cities, states, and countries with an aim to attract potential investors and/or
tourists. Example – Hawaii.
17.Traditional marketing: Entails using offline channels like newspaper ads, billboards, and TV
commercials. It’s effective for local outreach but offers limited targeting beyond that.
18.Digital marketing: Involves online channels like websites, display ads, and social media. It often
allows for precise targeting and real-time analytics.
19.Content marketing: Focuses on creating valuable content to attract, convert, and retain customers.
These pieces can include blog posts, ebooks, and infographics.
20.Email marketing: Involves sending targeted messages directly to your audience’s inboxes. It’s great
for nurturing leads and maintaining relationships.
21.Video marketing: Focuses on using videos to connect with your audience. Product demos and
tutorials work especially well in this format.
22.Influencer marketing: Relies on collaborating with popular individuals with large followings to
promote your products or services. It’s primarily done on social media.
23.Affiliate marketing: Involves working with publishers or creators to promote your brand in
exchange for a commission. It’s often done through a formal program with terms both parties agree to.
24.Search engine optimization (SEO): Centers around making improvements that help your website
appear (i.e., “rank”) higher in search results and gain more organic (unpaid) traffic. It can be used for
any type of webpage, but it’s especially common to create SEO-focused blog posts.
25.Guerrilla Marketing. The term refers to a (usually) cheap, non-traditional advertising approach that
uses public art installations, graffiti, treasure hunts, and other imaginative presentation
techniques.Invented in 1984 by advertising executive Jay Conrad Levinson, guerrilla marketing signified
a shift from traditional media (print, television, and radio) to digital and viral marketing.
Guerrilla marketing is an advertising strategy that uses unconventional tactics to delight and attract
customers. It is an alternative to traditional marketing, such as print media, television commercials,
billboards, and direct mail. Instead, it focuses on disrupting public spaces and events with unusual,
memorable images or activities that may lead to brand association or purchase.
26. Green marketing is the practice of promoting products or services that are environmentally friendly
or have a positive impact on the planet. It involves incorporating sustainability principles into various
aspects of marketing, such as product design, packaging, messaging, and promotion. Some green
marketing strategies include:

• Creating eco-friendly products

• Using eco-friendly product packaging made from recycled materials
• Reducing greenhouse gas emissions from production processes
• Adopting sustainable business practices
• Marketing efforts communicating a product's environmental benefits
• Investing profits in renewable energy or carbon offset efforts

Module-II--OPERATIONS MANAGEMENT

• Operations management (OM) is the administration of business practices to create the

highest level of efficiency possible within an organization.
• Operations management is concerned with converting materials and labor into goods
and services as efficiently as possible.

Essential Operational Management Skills.”

• Technical expertise in areas such as production automation, data entry, budget tracking,
and design.
• Organizational ability and attention to detail, including keeping track of project files,
employee reports, budgets, schedules, and other details related to company processes.
• Motivational prowess in the form of strong leadership skills that provide the expertise to
motivate others, inspire ideas, and foster a supportive and diverse team.
• Analytical aptitude, including skill in risk analysis and mitigation when initiating new
projects. Operations managers must also analyze processes to identify challenges and
offer solutions if negative situations develop.
• Decision-making proficiency, especially under stress, when there is very little time to
assess all factors.
• Ability to maintain quality standards, including as they relate to raw materials,
machinery, manufacturing procedures, packaging, delivery processes, and the finished
product.

Nature of Operations Management

• Dynamic- Operations management is dynamic in nature. It keeps on changing as per market trends and
demands.
• Transformational Process– Operation management is the management of activities concerned with
the conversion of raw materials into finished products.
• Continuous Process– Operation management is a continuous process. It is employed by organizations
for managing its activities as long as they continue their operations.
• Administration– Operation management administers and controls all activities of the organization. It
ensures that all activities are going efficiently and there is no underutilization or mis-utilization of any
resources.
Importance of Operations Management
• Helps in achievement of objectives: Operations management has an effective role in the achievement
of pre-determined objectives of an organization. It ensures that all activities are going as per plans by
continuously monitoring all operations of organization.
• Improves Employee productivity: Operation management improves the productivity of employees. It
checks and measures the performance of all people working in the organization. Operation manager
trains and educate their employees for better performance.
• Enhance Goodwill: Operation management helps in improving the goodwill and presence of the
organization. It ensures that quality products are delivered to all customers that could provide them
better satisfaction and makes them happy.
• Optimum utilization of resources: Operation management focuses on optimum utilization of all
resources of the organization. It frames proper strategies and accordingly continues all operations of the
organization. Operation managers keep a check on all activities and ensure that all resources are utilized
on only useful means and are not wasted.
• Motivates Employees: Operation management helps in motivating the employees towards their roles.
Operation managers guide all peoples in performing their roles and provide them with better atmosphere.
Employees are remunerated and rewarded according to their performance level.

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

What is an ideal location?

An ideal location is one where the cost of the product is kept to minimum, with a
large market share, the least risk and the maximum social gain. It is the place of
maximum net advantage or which gives lowest unit cost of production and
distribution.
To choose an ideal location, it is important to do location analysis.
Locational analysis is a dynamic process where entrepreneur analyses and
compares the appropriateness or otherwise of alternative sites with the aim of
selecting the best site for a given enterprise. It consists the following:

(a) Demographic Analysis: It involves study of population in the area in terms of

total population (in no.), age composition, per capita income, educational level,
occupational structure etc.
(b) Trade Area Analysis: It is an analysis of the geographic area that provides
continued clientele to the firm. He would also see the feasibility of accessing the
trade area from alternative sites.
(c) Competitive Analysis: It helps to judge the nature, location, size and quality
of competition in a given trade area.
(d) Traffic analysis: To have a rough idea about the number of potential
customers passing by the proposed site during the working hours of the shop, the
traffic analysis aims at judging the alternative sites in terms of pedestrian and
vehicular traffic passing a site.
(e) Site economics: Alternative sites are evaluated in terms of establishment costs
and operational costs under this. Costs of establishment is basically cost incurred
for permanent physical facilities but operational costs are incurred for running
business on day to day basis, they are also called as running costs.
SELECTION CRITERIA OF LOCATION
The important considerations for selecting a suitable location are given as
follows:
a) Natural or climatic conditions.
b) Availability and nearness to the sources of raw material.
c) Transport costs-in obtaining raw material and also distribution or marketing
finished products to the ultimate users.
d) Access to market: small businesses in retail or wholesale or services should be
located within the vicinity of densely populated areas.
e) Availability of Infrastructural facilities such as developed industrial sheds or
sites, link roads, nearness to railway stations, airports or sea ports, availability
of electricity, water, public utilities, civil amenities and means of
communication are important, especially for small scale businesses.
f) Availability of skilled and non-skilled labour and technically qualified and
trained managers.
g) Banking and financial institutions are located nearby.
h) Locations with links: to develop industrial areas or business centers result in
savings and cost reductions in transport overheads, miscellaneous expenses.
i) Strategic considerations of safety and security should be given due importance.
j) Government influences: Both positive and negative incentives to motivate an
entrepreneur to choose a particular location are made available. Positive
includes cheap overhead facilities like electricity, banking transport, tax relief,
subsidies and liberalization. Negative incentives are in form of restrictions for
setting up industries in urban areas for reasons of pollution control and
decentralization of industries.
k) Residence of small business entrepreneurs want to set up nearby their
homelands

PLANT LAYOUT
According to Riggs, “the overall objective of plant layout is to design a physical arrangement
that most economically meets the required output – quantity and quality.”

According to J. L. Zundi, “Plant layout ideally involves allocation of space and arrangement
of equipment in such a manner that overall operating costs are minimized.

Importance of plant layout

An efficient plant layout is one that can be instrumental in achieving the
following objectives:
a) Proper and efficient utilization of available floor space
b) To ensure that work proceeds from one point to another point without any
delay
c) Provide enough production capacity.
d) Reduce material handling costs
e) Reduce hazards to personnel
f) Utilise labour efficiently
g) Increase employee morale
h) Reduce accidents
i) Provide for volume and product flexibility
j) Provide ease of supervision and control
k) Provide for employee safety and health
l) Allow ease of maintenance
m) Allow high machine or equipment utilization
n) Improve productivity

FACTORS INFLUENCING PLANT LAYOUT

While deciding his factory or unit or establishment or store, a small-scale businessman

should keep the following factors in mind:
a) Factory building: The nature and size of the building determines the floor space available
for layout. While designing the special requirements, e.g. air conditioning, dust control,
humidity control etc. must be kept in mind.

b) Nature of product: product layout is suitable for uniform products whereas process layout
is more appropriate for custom-made products.

c) Production process: In assembly line industries, product layout is better. In job order or
intermittent manufacturing on the other hand, process layout is desirable.

d) Type of machinery: General purpose machines are often arranged as per process layout
while special purpose machines are arranged according to product layout

e) Repairs and maintenance: machines should be so arranged that adequate space is available
between them for movement of equipment and people required for repairing the machines.

f) Human needs: Adequate arrangement should be made for cloakroom, washroom, lockers,
drinking water, toilets and other employee facilities, proper provision should be made for
disposal of effluents, if any.

g) Plant environment: Heat, light, noise, ventilation and other aspects should be duly
considered, e.g. paint shops and plating section should be located in another hall so that
dangerous fumes can be removed through proper ventilation etc. Adequate safety
arrangement should also be made.

h) Availability of Total Floor Area: The allocation of space for machines, workbenches sub
stores, aisles, etc is made on the basis of the available floor area. Use of overhead space is
made in case of shortage of space.

i) Possibility of Future Expansion: Plant layout is mad in the light of the future requirements
and installation of additional facilities.

j) Arrangement of Material Handling Equipment: The plant layout and the material handling
services are closely related and the latter has a decisive effect on the arrangement of the
production process and plant services.

Thus, the layout should be conducive to health and safety of employees. It

should ensure free and efficient flow of men and materials. Future expansion and
diversification may also be considered while planning factory layout.

Types of Plant layout

In case of manufacturing unit, plant layout may be of five types:
(a) Product or line layout
(b) Process or functional layout
(c) Fixed position or location layout
(d) Combined or group layout
(e) Project layout

(a). Product or line layout:

Under this, machines and equipments are arranged in one line depending upon the
sequence of operations required for the product. The materials move form one
workstation to another sequentially without any backtracking or deviation. Under
this, machines are grouped in one sequence. Therefore materials are fed into the
first machine and finished goods travel automatically from machine to machine,
the output of one machine becoming input of the next, e.g. in a paper mill,
bamboos are fed into the machine at one end and paper comes out at the other end

A line layout for two products is given below.

Product A:--Lathe ---Drill--- Grinder--- Assembly ---Paint shop

Product B: Planer--- Grinder--- Miller-- Lathe--- Welding

Advantages: Product layout provides the following benefits:

a) Low cost of material handling, due to straight and short route and absence of
backtracking
b) Smooth and uninterrupted operations
c) Continuous flow of work

Disadvantages: Product layout suffers from following drawbacks:

a. High initial capital investment in special purpose machine
b. Heavy overhead charges
c. Breakdown of one machine will hamper the whole production process
d. Lesser flexibility as specially laid out for particular product.

Suitability: Product layout is useful under following conditions:

1) Mass production of standardized products
2) Simple and repetitive manufacturing process
3) Operation time for different process is more or less equal
4) Reasonably stable demand for the product
5) Continuous supply of materials

(b)Process layout:
In this type of layout machines of a similar type are arranged together at one place.
E.g. Machines performing drilling operations are arranged in the drilling
department, machines performing casting operations be grouped in the casting
department.

Advantages: Process layout provides the following benefits

a) Lower initial capital investment in machines and equipments. There is high
degree of machine utilization, as a machine is not blocked for a single product
b) The overhead costs are relatively low
c) Change in output design and volume can be more easily adapted to the output
of variety of products
d) Breakdown of one machine does not result in complete work stoppage
e) Supervision can be more effective and specialized
f) There is a greater flexibility of scope for expansion.

Disadvantages: Product layout suffers from following drawbacks

a. Material handling costs are high due to backtracking
b. More skilled labour is required resulting in higher cost.
c. Time gap or lag in production is higher
d. Work in progress inventory is high needing greater storage space
e. More frequent inspection is needed which results in costly supervision
Suitability: Process layout is adopted when
1. Products are not standardized
2. Quantity produced is small
3. There are frequent changes in design and style of product
4. Job shop type of work is done
5. Machines are very expensive

(c) Fixed Position or Location Layout

In this type of layout, the major product being produced is fixed at one location.
Equipment labour and components are moved to that location. All facilities are
brought and arranged around one work center. Eg. Shipyard or Coach manufacturing plant

Advantages: Fixed position layout provides the following benefits

a) It saves time and cost involved on the movement of work from one
workstation to another.
b) The layout is flexible as change in job design and operation sequence can be
easily incorporated.
c) It is more economical when several orders in different stages of progress are
being executed simultaneously.
d) Adjustments can be made to meet shortage of materials or absence of workers
by changing the sequence of operations.

Disadvantages: Fixed position layout has the following drawbacks

a. Production period being very long, capital investment is very heavy
b. Very large space is required for storage of material and equipment near the
product.
c. As several operations are often carried out simultaneously, there is possibility
of confusion and conflicts among different workgroups.

Suitability: The fixed position layout is followed in following conditions

1. Manufacture of bulky and heavy products such as locomotives, ships, boilers,
generators, wagon building, aircraft manufacturing, etc.
2. Construction of building, flyovers, dams.
3. Hospital, the medicines, doctors and nurses are taken to the patient (product).

(d) Combination 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].
Generally, a combination of the product and process layout or other combination are found,
in practice, e.g. for industries involving the fabrication of parts and assembly, fabrication
tends to employ the process layout, while the assembly areas often employ the product layout.

(e) Project layout

In Project Layout the manufacturing operation require the movements of men, machines and
materials. Generally few inputs tend to be static while the others are moving. Eg. Building
bridges, highways etc.

CAPACITY MANAGEMENT AND SCHEDULING

What Is Capacity Management?
Capacity management refers to the strategy applied by businesses to maximize production
efficiency owing to the overall demand for a product or service in the market. Its goals
include identifying and eliminating bottlenecks in the manufacturing process and increasing
the production speed by optimizing available resources and removing time and capacity
constraints.
Importance of capacity management
It helps companies overcome challenges in meeting short- and mid-term customer demand,
managing supply chain operations, and formulating long-term organizational plans.

Strategic capacity planning in operations management requires businesses to:

Determine their goals

Understand the sales demands
Analyze the opportunities
Evaluate their resources
Eliminate bottlenecks
Review production capacity

Capacity Management Strategies

Industrial managers have devised a few strategies to achieve better results to increase the
business production capacity. Below are some of the most popular capacity management
strategies:

#1 - Lag Strategy
Using this conservative approach, a manager determines the capacity and then waits until
there is an actual steady increase in demand. Then, the manager raises the production
capabilities to a level to fulfill the current market need.

The main drawback of this option is that the business will lose the chance to sell more if the
demand goes up too quickly, as increasing production often takes time. Also, a shortage of
inventory might result in customer dissatisfaction.

#2 - Lead Strategy
Unlike the lag strategy, this strategy is very aggressive and much riskier. The business
decides to increase the capacity before there is an actual demand and anticipates that this will
suffice if it goes up. It is used in cases where a company expands or in industries where sales
demand goes up quickly. So, small firms usually avoid this kind of strategy.

However, there are a few issues with this approach. For instance, if the actual demand does
not go up, it could increase the inventory storage costs and the risk of inventory wastage.

#3 - Dynamic Strategy
This forecast-driven strategy focuses on relying on market trends to increase capacity. The
manager analyzes the sales forecast data and actual demand and then makes adjustments to
production in advance.

It is one of the safest approaches as managers have accurate forecast data that will qualify
their capacity targets. Also, it decreases the risk of shortage or wastage of inventory.

#4 - Match Strategy
This strategy mixes up lead and lag strategies. It uses small yet significant additions in the
capacity of the company by following the market demand. Whenever it is clear that demand
will rise, the company boosts its production in small amounts.

If the demand goes up quickly, the company can at least grow its sales a bit. If it does not, the
company will not suffer huge losses. However, the business will never fully enjoy a
significant spike in demand or escape unharmed from a sudden recession in the market.

Benefits
A strong capacity management strategy will bring several benefits to a business. These are
some of the main positive aspects that it will change:

1.It will enhance their ability to monitor the costs, especially during growths or recessions.
This way, the business will detect shifts in price quickly and can act accordingly.
2.Using capacity management helps plan production cycles ahead of time to maximize
production efficiency.
3.It will reduce the overall costs of doing business. As such, a company can identify parts of
its business not optimized and remove the bottlenecks.
4.Good capacity management planning will help manage inventory better and deal with
problems in the supply chain.
5.It allows better allocation of human and material resources.
6.Finally, it helps to scale a business, for example, having an in-depth understanding of how
to operate before opening a new branch.

SCHEDULING
Scheduling in Operations Management is the process of planning, coordinating, and
controlling the use of resources to complete a production process. It involves deciding when
to start and finish each task, which resources to use for each task, and the sequence in which
to carry out the tasks.

Stages of Production Scheduling

Forecasting: The first stage of production scheduling is forecasting, which involves

estimating the future demand for a service or product. This can be done using statistical
methods, market research, or other forecasting techniques.
Capacity planning: The second stage of production scheduling is capacity planning, which
involves determining how much capacity is needed to meet the forecasted demand. It
includes considering both the physical and human resources that will be required.
Scheduling: The third stage of production scheduling is creating the schedule. This includes
deciding what order tasks need to be completed in and when they should be started and
finished. It also includes assigning resources to tasks and ensuring that all constraints are
considered.
Monitoring and control: The fourth stage of production scheduling is monitoring and
control, which involves ensuring that the schedule is followed and that any deviations are
corrected. It can be done through regular status reports, earned value management, or other
monitoring techniques.
Adjustments: The fifth stage of production scheduling is adjustments, which involve making
changes to the schedule as needed in response to changes in demand or other factors. This
might include rescheduling tasks, reassigning resources, or adding new tasks to the schedule.

Types of Production Scheduling

Different types of production schedules are needed to accommodate the different types of
production systems. The three most common types of production scheduling are make-to-
stock (MTS), make-to-order (MTO), and mixed mode.

1. Make-to-Stock(MTS) Production Scheduling: MTS aims to produce items in advance so

that they can be stocked and ready for sale when customer demand arises.

2. Make-To-Order Production Scheduling: In contrast to MTS, where goods are produced in

advance of customer orders, MTO schedulers wait until they receive a customer order before
starting production. This system is often used for custom or personalised products where
each unit must be made specifically for the customer who ordered it.

3. Mixed Mode Production Scheduling:Mixed-mode production scheduling is the process of

creating a production schedule that includes both manufacturing and assembly operations. .
Mixed-mode production scheduling can be beneficial because it facilitates coordination
between manufacturing and assembly operations. This can lead to improved quality control,
shorter lead times, and reduced inventory levels. In addition, mixed-mode production
scheduling can help reduce manufacturing costs by reducing waste and improving the
utilisation of resources.

QUALITY MANAGEMENT AND SUPPLY CHAIN MANAGEMENT

A Quality Management System(QMS) is a clearly defined set of processes and

responsibilities that makes your business run how it’s supposed to.

Each organization tailors its own QMS, comprising a formal set of policies, processes and
procedures established to elevate consumer satisfaction.

A QMS guides organizations as they standardize and enhance quality controls across
manufacturing, service delivery and other key business processes.
The core benefits of a QMS include:

1.Elevated consistency and standardization of processes and outputs

2.Reduced errors and increased operational efficiency
3.Improved customer satisfaction through the delivery of quality products and services
4.Continuous evaluation and improvement of organizational operations.
5. Reduce wastage.

Types of quality management systems

A QMS may be based on either domestic or international standards. Different QMSs respond
to different needs and scenarios, and organizations can choose to implement just one, or
integrate a blend of different approaches. Among the most common are:

1. Standardized systems: These set the bar for established standards and agreed-upon codes
and practices, such as certifications against ISO standards. ISO 9001 outlines requirements
for a comprehensive QMS and provides guidance for organizations looking to implement or
improve their quality management strategy.

ISO 9001:2015 and other QMS standards

ISO 9001:2015 is the most recognized and implemented quality management system
standard in the world. ISO 9001:2015 specifies the requirements for a QMS that
organizations can use to develop their own programs.

Other standards related to quality management systems include the rest of the ISO 9000
series (including ISO 9000 and ISO 9004), the ISO 14000 series (environmental management
systems), ISO 13485 (quality management systems for medical devices), ISO 19011
(auditing management systems), and IATF 16949 (quality management systems for
automotive-related products).

2. Total quality management (TQM): TQM is a management philosophy centred on

customer satisfaction through the active participation of every employee. Its goal is to
support the continuous improvement of quality across all levels and business functions.

3. Lean management: Inefficiencies can result in unnecessary waste. Lean management

strives to maximize customer value while minimizing waste using tools like value stream
mapping, which helps fine-tune an organization’s processes for optimum efficiency. Lean
management involves continuously analyzing workflows to identify and eliminate
unnecessary steps, inefficiencies, or redundancies.
5 Key Principles of Lean Management
1.Value Identification: Identifying value is the cornerstone of Lean Management. It
involves understanding customer needs and desires profoundly. This process demands active
engagement with customers to discern what aspects of a product or service truly matter to
them.
2.Value Stream Mapping: Value stream mapping is a visualization tool that allows
organizations to dissect their processes and identify areas for improvement. It involves
mapping the entire value chain, from raw materials to the end product/service delivery,
highlighting every step and associated timelines. This comprehensive view enables teams to
identify bottlenecks, redundancies, and inefficiencies within the process flow.
3.Continuous Improvement (Kaizen): Kaizen, the Japanese term for continuous
improvement, emphasizes the incremental and ongoing enhancement of processes, products,
or services. This principle promotes a culture of constant reflection, where employees at all
levels actively participate in identifying areas for improvement.
4.Just-In-Time (JIT) Production: The JIT principle aims to reduce waste by ensuring that
materials or components arrive precisely when needed for production. By minimizing
inventory and storing only what is immediately necessary, companies can significantly cut
costs associated with storage space, obsolescence, and excessive inventory holding.
5.Respect for People: Respect for people is a foundational principle of Lean Management,
emphasizing the importance of valuing and empowering employees. It involves fostering a
work environment that encourages collaboration, trust, and open communication among team
members.

5.Six Sigma: Although perfection is almost impossible to reach, the pursuit of it is still
worthwhile. Six Sigma uses data-driven techniques in the pursuit of producing near-perfect
products and services, with a defect rate of 3.4 per one million opportunities. While that’s not
perfect, it is pretty close. The Six Sigma method uses a step-by-step approach called
DMAIC, an acronym that stands for Define, Measure, Analyze, Improve, and Control.
Define
A team of people, led by a Six Sigma expert, chooses a process to focus on and defines the
problem it wishes to solve.

Measure
The team measures the initial performance of the process, creating a benchmark, and
pinpoints a list of inputs that may be hindering performance.

Analyze
Next the team analyzes the process by isolating each input, or potential reason for any
failures, and testing it as the possible root of the problem.

Improve
The team works from there to implement changes that will improve system performance.

Control
The group adds controls to the process to ensure it does not regress and become ineffective
once again.

SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the coordination of a business’ entire production flow,
from sourcing raw materials to delivering a finished item.
It includes obtaining the necessary components, manufacturing the product, storing it,
transporting it and getting it to customers.
SCM also involves the coordination of external partners and both internal resources and
operations management.
Key elements of supply chain management
Supply chain management consists of several main components, including:

Planning
Planning involves forecasting demand, arranging production and managing inventory levels
to ensure that the right products are ready to meet customer demand. It also involves setting
an overall SCM strategy by determining metrics to measure whether the supply chain is
efficient, effective and meets company goals. And it includes adapting to new product needs.
Sourcing
Sourcing involves identifying which providers to work with, negotiating contracts and
managing supplier relationships to ensure a reliable supply of raw materials and components.
The work includes ordering, receiving, managing inventory and authorizing supplier
payments.

Manufacturing
Manufacturing involves organizing the supply chain operations required to accept raw
materials, design and produce the product, and handle quality control.

Delivery
Delivery involves the transportation and distribution of finished products to meet customer
needs. It includes managing distribution centers, warehousing, order fulfillment and logistics.

Returns
Handling returns involves creating a network or process to take back defective, excess or
end-of-lifecycle products. It includes managing reverse logistics and customer satisfaction, in
addition to final product disposal.

Common approaches to supply chain management

There are several strategic approaches to SCM. Companies can pursue different strategies
based on their needs, budgets, capabilities and long-term goals and priorities.

1.Lean supply chain management

This approach focuses on eliminating waste in all forms, including excess inventory,
unnecessary transportation and inefficient processes. The goal is to create a streamlined, cost-
effective supply chain.

2.Agile supply chain management

This approach emphasizes quick response to changes in customer demand and market
conditions. It often involves practices such as quick batch production, rapid replenishment
and flexible supplier contracts.

3.Six Sigma
This approach is data-driven and aims to eliminate defects and reduce variability in supply
chain processes. It uses statistical methods to identify and remove the causes of errors and
minimize variability in manufacturing and business processes.

4.Total quality management (TQM)

This approach focuses on improving quality throughout the supply chain, with the goal of
increasing customer satisfaction. It involves continuous improvement efforts and often
includes practices such as supplier quality management and process standardization.

5.Resilient supply chain management

This approach focuses on building a supply chain that can withstand disruptions and adapt to
changing conditions. It focuses on identifying potential risks in the supply chain and
developing strategies to mitigate them. These strategies might include diversifying suppliers,
creating contingency plans and investing in supply chain visibility tools.
6.Green supply chain management
This approach focuses on minimizing the environmental impact of the supply chain and
promoting social responsibility. It can involve practices such as sustainable procurement and
participation in the circular economy.

7.Digital supply chain management

This approach uses technologies such as artificial intelligence (AI), machine learning (ML),
Internet of Things (IoT) and advanced analytics to enhance various aspects of supply chain
management, including demand forecasting, inventory management and logistics.

Supply chain management technology

The integration of new technologies is transforming the way that businesses manage their
supply chains.

Artificial intelligence (AI) and machine learning (ML)

AI and ML revolutionized demand forecasting, allowing companies to predict sales with
greater accuracy and adjust their production, inventory levels and pricing strategies
accordingly. AI-powered chatbots and virtual assistants streamline interactions for improved
customer experience. ML algorithms analyze collected data across the supply chain to
identify bottlenecks, optimize routes and improve overall visibility.

Internet of Things (IoT)

IoT devices, such as sensors and radio-frequency identification (RFID) tags, collect real-time
data on inventory levels, shipment tracking and asset performance. IoT-enabled smart
warehouses are also becoming more common; they offer automated storage and retrieval
systems, robotic picking and drones for inventory management.

Industry 4.0
IoT is also integral to the rise of Industry 4.0, a term used to refer to the digital
transformation of manufacturing. Industry 4.0 incorporates new technologies such as digital-
physical systems, augmented reality, cloud computing and advanced data analysis. Robotics
and 3D printing streamline production and warehousing processes, reducing lead times and
costs. Industry 4.0 capabilities allow for faster decision making, automation and
customization at new levels.

Blockchain
Blockchain technology is enhancing supply chain transparency, traceability and security. By
creating an immutable, decentralized ledger of transactions, the blockchain can help prevent
counterfeiting, improve product safety and streamline compliance processes.

Innovative developments
Technologies such as 5G allow faster, more reliable data transmission, supporting the
deployment of more advanced IoT devices and real-time monitoring systems. And
autonomous vehicles, such as self-driving trucks and drones, will become more prevalent,
reducing transportation costs and improving delivery times. Although still in early stages,
quantum computing is shaping the future of SCM by solving complex problems and enabling
more accurate simulations and scenario planning.