Introduction

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.
The set of interrelated management activities, which are involved in manufacturing
certain products, is called as production management. If the same concept is extended
to services management, then the corresponding set of management activities is called as
operations management.
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”. Thus production is a value addition
process. At each stage of processing, there will be value addition.
Edwood Buffa defines production as “a process by which goods and services are
created”. Some examples of production are: manufacturing custom-made products like,
boilers with a specific capacity, constructing flats, some structural fabrication works for
selected customers, etc., and manufacturing standardized products like, car, bus, motor
cycle, radio, television, etc.
APICS The Association for Operations Management also defines operations management
as "the field of study that focuses on the effective planning, scheduling, use, and control
of a manufacturing or service organization 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 organization"
Need for production management
 Producing the right kind of goods and services that satisfy customers’ needs
(effectiveness objective).
  Maximizing output of goods and services with minimum resource inputs
(efficiency objective).
 Ensuring that goods and services produced conform to pre-set quality
specifications (quality objective).
 Minimizing throughput-time- the time that elapses in the conversion process- by
reducing delays, waiting time and idle time (lead time objective).
 Maximizing utilization of manpower, machines, etc. (Capacity utilization
objective).
 Minimizing cost of producing goods or rendering a service (Cost objective).
Operations Management’s Contributions to Society
Operations management plays an important, although not always obvious, role in the
societies in which we live. It is responsible for the food we eat and even the table on
which we eat it; it provides us with the clothing we wear and with transportation, whether
in the form of an automobile, train, or airplane, as well as being responsible for making
these vehicles themselves. In other words, operations management affects nearly all
aspects of our day-to-day activities.
Higher Standard of Living
A major factor in raising the standard of living in a society is the ability to increase its
productivity. (Productivity, which can be broadly defined as how efficiently inputs are
converted into outputs,) Higher productivity is the result of increased efficiency in
operations, which in turn translates into lower-cost goods and services. Thus, higher
productivity provides consumers with more discretionary income, which contributes to
their higher standard of living.
Better Quality Goods and Services
One of the many consumer benefits of increased competition is the higher-quality
products that are available today. Quality standards are continuously increasing. Many
companies today, have established six-sigma quality standards (pioneered by Motorola in
the late 1980s), which means no more than 3.4 defects per million opportunities. Such
high-quality standards were once considered not only prohibitively expensive, but also
virtually impossible to achieve even if cost wasn’t a consideration. Today we know that
such high-quality standards not only are possible, but they also result in lower costs,
because firms no longer have large amounts of waste and rework to deal with. One
example of increasing quality is the focus on safety in automobiles. Honda Motor Co.
voluntarily displays crash-test scores on the window stickers of its 2006 models. The
company sees its product safety ratings as giving it an edge in the competitive auto
industry.
Not only is operations management important in producing better quality goods and
services, it also plays a vital role in ensuring that products and services (such as the
Apple IPod or Dell computers) are designed and delivered, and if necessary customized,
to customer specifications, in a timely manner.
Concern for the Environment
Many companies today are taking up the challenge to produce environmentally friendly
products with environmentally friendly processes, all of which falls under the purview of
operations management. Many companies are also taking steps toward energy efficiency
and water conservation. Canada reiterated its commitment as a country to reducing
greenhouse gases when it ratified the Kyoto Protocol in 2002. Ford’s new River Rouge
manufacturing plant in Detroit provides another good example. No longer will raw waste
be dumped into the waterways or the air be polluted with smoke from its operations.
Vegetation will be used to clean up contaminated land, and the River Rouge will be
restored so that fish will have access to the upper part of the river.
Improved Working Conditions
Managers recognize the benefits of providing workers with better working conditions.
This includes not only the work environment, but also the design of the jobs themselves.
Workers are now encouraged to participate in improving operations by making
suggestions. After all, who would know better how to do a particular operation than the
person who does it every day? Managers have also learned that there is a very clear
relationship between satisfied workers and satisfied customers, especially in service
operations.
Organizations also are recognizing the importance of corporate responsibility in their
supply chains, especially with regard to suppliers in developing countries. This ensures
that employees in supplier companies have acceptable working conditions and human
rights.
Key elements of Operations Management
1) Product selection and design:
The right kind of products and good designs of the products are crucial for the
success of an organizing. A wrong selection of the product and/or poor design of the
products can render the company’s operation ineffective and non-competitive.
Products/services, therefore, must be chosen after detailed evaluation of the
product/services alternatives in conformity with the organization’s objectives.
Techniques like value engineering may be employed in creating alternate designs,
which are free from unnecessary features and meet the intended functions at the
lowest cost.
2) Process selection and planning:
Selection of the optimal “conversion system” is as important as choice of
products/services and their design. Process selection decisions include decisions
concerning choice of technology, Equipment, machines, material handling systems,
mechanization and automation. Process planning involves detailing of processes if
resource conversion required and their sequence.
3) Facilities (Plant) location
Plant location decisions are strategic decisions and once plant is set up at a
location, it is comparatively immobile and can be shifted later only at a considerable
cost and interruption of production. Although problem of location choice does not fall
within preview the production function and it occurs infrequently, yet it is of crucial
importance because of its major effect on the performance of every department
including production. Therefore, it is important to choose the right location, which
will minimize total “delivered customer” cost (Production and distribution cost).
Location decisions involve evaluation of location alternatives against multiplicity of
relevant factors considering their relative importance to the organization and selecting
those, which are operationally advantageous to the organization.
4) Facilities (Plant) layout and materials handling
Plant layout is concerned with relative location of one department (Work centre)
with another in order to facilitate material flow and processing of a product in the
most efficient manner through the shortest possible time. A good layout reduces
material handling cost, eliminates delays and congestion, improves co-ordination,
provide good housekeeping etc. while a poor layout results in congestion, waste,
frustration, inefficiency and loss of profit.
5) Capacity Planning
Capacity planning concerns determination and acquisition of productive resource
to ensure that their availability matches the demand. Capacity decisions have a direct
Influence on performance of production system in respect of both resource
productivity and customer service (i.e. delivery performance). Excess capacity results
in low resource productivity while inadequate capacity leads to poor customer
service. Capacity planning decisions can be short-term decisions. Long-term capacity
planning decisions concern expansion/contraction of major facilities required in the
conversion process, economics of multiple shift operation, development of vendors
for major components etc. Short term capacity planning decisions concern issues like
overtime working, sub-contracting, shift adjustments etc. Break even analysis is a
valuable tool for capacity planning.
6) Production Planning and Control (PPC)
Production planning is the system for specifying the production procedure to
obtain the desired output in a given time at optimum cost in conformance with
specified standard of quality, and control is essential to ensure that manufacturing
takes place in the manner stated in the plan.
7) Inventory control
Inventory control deals with determination of optimal inventory levels of raw
materials, components, parts, tools; finished goods, spares and supplies to ensure their
availability with minimum capital lock up. Material requirement planning (MRP) and
just-in-Time (JIT) are the latest techniques that can help the firm to reduce inventory.
8) Quality assurance and control
Quality is an important aspect of production system and it must ensure that
services and products produced by the company conform to the declared quality
standards at the minimum cost A total quality assurance system includes such aspects
as setting standards of quality, inspection of purchased and sub-contracted parts,
control of quality during manufacture and inspection of finished product including
performance testing etc.
9) Work study and job design
Work-study, also called time and motion study, is concerned with improvement of
productivity in the existing jobs and the maximization of productivity in the design of
new jobs. Two principal component of work-study are:
(i) Method study
(ii) Work measurement
Method study has been defined as the systematic recording and critical examination
of the existing and proposed ways of doing work, as a means of developing and
applying easier and more effective methods and reducing costs. Method study when
applied to production methods yields one or more of the following benefits:
• Improved work environment
• Improved facility layout
• Better utilization of facilities
• Greater safety
• Lesser materials handling
• Smooth production flow
• Lower work-in-process
• Higher earnings for the workmen
10) Maintenance and replacement
Maintenance and replacement involve selection of optimal maintenance
Preventive and/or breakdown) policy to ensure higher equipment availability at
minimum maintenance and repair cost. Preventive maintenance, which includes
preventive inspection, planned lubrication, periodic cleaning and upkeep, planned
replacement of parts, condition monitoring of the equipment and machines, etc. is
most appropriate for critical machines.
11) Cost reduction and cost control
Effective production management must ensure minimum cost of production and
in this context cost reduction and cost control acquires significant importance. There
 are large number of tools and techniques available that can help to make a heavy dent
on the production cost.
Evolution of Operations Management/History of operations management:
The evolution of operations management concept consists of six important milestones in
its history. They are listed and discussed below
 The Industrial Revolution
 Division of Labor
 Scientific Management
 Mass Production
 Drawbacks of Mass Production
 Lean Production
The Industrial Revolution
Operations management – did not begin until the Industrial Revolution in the 1700s. Prior
to that time skilled craft persons and their apprentices fashioned goods for individual
customers from studios in their own homes. Every piece was unique; hand fitted, and
made by one person a process known as craft production. Although craft production still
exists today, the availability of coal, iron ore, and steam power set into motion a series of
industrial inventions that revolutionized the way work was performed. Great
mechanically powered machines replaced the laborer as the primary factor of production
and brought workers to a central location to perform tasks under the direction of an
overseer in a place called factory. The revolution first took hold in textile mills, grain
mills, metalworking, and machine-making facilities.
Division of Labor:
Around the same time, Adam Smith’s Wealth of Nations (1776) proposed the division of
labor, in which the production process was broken down into a series of small tasks, each
performed by a different worker. The specialization of the worker on limited, repetitive
tasks allowed him or her to become very proficient at those tasks and further encouraged
the development of specialized machinery.
Scientific Management:
In the early 1900s an enterprising laborer at Midwale Steel Works named F.W. Taylor
approached the management of work as a science. Based on observation, measurement,
and analysis, he identified the best method for performing each job. Once determined, the
methods were standardized for all workers, and economic incentives were established to
encourage workers to follow the standards. Taylor’s philosophy became known as
‘scientific management’.
Mass Production:
American manufacturers became adept at mass production over the next 50 years and
easily dominated manufacturing worldwide. The human relations movement of the
1930’s led by Elton Mayo and Hawthorne studies, introduced the idea that the workers
motivation as well as the technical aspects of works, affected productivity. Theories of
motivation were developed by Hertzberg, Maslow, McGregor, and others. Quantitative
models and techniques spawned by the operations research group of World War II
continued to develop and were applied successfully to manufacturing and services.
Computers and automation led still another upsurge in technological advancements
applied to operations.
Lean Production/ Just-in-time production:
Using a concept as just-in-time, Japanese manufacturers changed the rules of production
from mass production to lean production. Lean production prizes flexibility (rather than
efficiency) and quality (rather than quantity). The total quality mantra has since spread
across the globe and is the underlying force for successful operations today. The renewed
emphasis on quality and the strategic importance of operations made U.S. companies
competitive again.
Meaning of System
System consists of set of elements or components. The elements or components are
interlinked together to achieve the common objective for which it exists.
Eg: Computer system, Business organization etc
Production / Operation System
Operation system is either manufacturing sector or service sector. The input requirements
are shown in figure. The transformation process, in which part of the value addition takes
place to get the required quantity of the product or services with the targeted quality
within the specified time period, is carried out in a most economical way. Transformation
/ Conversion process includes operations (actual production process). Operations may be
either manual or mechanical or chemical. Operations convert inputs into output.
Conversion process also includes supporting activities, which help the process of
conversion. The supporting activities include; production planning and control, purchase
of raw-materials, receipt, storage and issue of materials, inspection of parts and work-in-
progress, testing of products, quality control, warehousing of finished products, etc.

Operation Management Plan coordinates and controls all the activities in the operation
system to achieve the stated objectives. Hence, we can say that, production system is a
union or combination of its three main components viz., Inputs, Conversion Process, and
Output. In short, everything which is done to produce goods and services or to achieve
the production objective is called production system.
TYPES OF PRODUCTION SYSTEM
The production systems are classified according to the nature of the industry. Product,
transformation process, the market and the volume of production. The broad and sub-
classifications are:
 Intermittent Production
o Job shop
o Batch
 Continuous Production
o Flow Production
o Mass Production
o Process Production
INTERMITTENT PRODUCTION
In this type of production, the volume of production is less, sometimes even a single
number. The variety is high. Generally these comparisons are made against other
classifications viz. continuous production.
More general purpose machines, highly skilled laborers, lower capacity utilization of
resources, simple or portable material handling equipments, high degree of flexibility in
production, customer driven production environment, more production cycle time,
process layout are the features of intermittent production systems.
JOB SHOP PRODUCTION SYSTEM
In this type of production, the whole product is viewed as 'one-off'. Each and every
product is custom designed. The products are manufactured to meet the requirements of
the specific order. The specifications are given by the customer. Generally the quantity
produced per order is small. It is appropriated into small batches depending upon the
customer requirement.
The job shop handles many different products. The equipments available in the shop are
general purpose machines. Generally, the products are simple. Sometimes the production
is handled by a single worker or a small group of workers. The workers are expected to
possess multiple job skills. The work completion is rapid resulting in high value addition
per unit time.
Low equipment utilization is a main drawback. Also elaborate job tracking and control
system is required to meet the customer requirements. The equipment waiting time is
high. Skewed work load results in overloading or under loading of all organizational
resources including men, machine, material and capital.
The job arrival patterns cannot be predicted, as the patterns do not follow any
distribution. Flow pattern through the shop floor, varies from one job to another. This
makes planning and scheduling jobs tougher.
Though job shop has advantages like more flexibility in accommodating variety of
products, the quality standards cannot be fixed for the company ¬as the customers dictate
it. Increased set up time, work-in-progress and complex scheduling results in high unit
cost of production.
Examples: Printing press
Hair Dressing
Machine shop
Consultancy
Building construction
BATCH PRODUCTION SYSTEM
In this type of production, the production volume is made into batches and each batch
will have intermediate volume compared to job shop. Volumes do not justify the use of
dedicated set of organizational resources. Compared to job shop, organization for the
batch production will be easy. It requires use of specialized skills. Due to this, some
degree of specialization of labour is possible. Variety of task is more and hence
production planning and control, if done properly, can produce better results. Because of
more variety, flow of work in the factory will be slow. Also the value addition or work
completion is slow per unit time comparatively. Inspite of all these, the utilization of
capacity and other resources will be high compared to the job shop production system.
Example: Electronic Instruments
Industrial Boilers, Motor / Pump manufacturing
In order to distinguish job shop and batch production, consider ten identical tasks to be
carried out by a number of workers. Using the job shop type of production, the workers
are divided into ten groups, and each will be responsible for one complete task.
In the batch production system, the work content of each module will be broken down
into a number of tasks which need not be equal work content and the ten workers would
be divided into groups. The first group is responsible for the completion of the first
operation in all the modules. Then the whole module is passed from first group to second
group for the second operation. This method is followed till the completion of all the
tasks and modules.
Generally, until all the works are completed on that specific operation, the batch is not
passed on from one worker or group to another. But there is a drawback. When the group
has to do the ten jobs, and when they are attending to one job, the remaining nine jobs
have to wait. This needs prioritization which may generate idle times on some resources,
which will result in increased work-in-progress. The batch production scheduling is one
of the most difficult tasks for the manager.
There are two types of idle times on the resources: first, when the whole batch is waiting
for the resource i.e. batch in the queue, and the second is within the batch. That is, within
a batch, when the first task in carried out then the remaining tasks within that batch are
idle, waiting for their turn. This results in time between the work organization on a batch
and its eventual completion is greater than the time required to complete each task or
batch.
CONTINUOUS PRODUCTION SYSTEM
In situations where there is a large and continuous demand for a product, it is worth while
to establish dedicated facilities to manufacture the product. High investment is the feature
of the continuous production system. Investment on special purpose, automated
machines, fixed path material handling equipments, costly control mechanisms are to be
made. Due to this, the operation cycle time is less. The unit cost of the product is less
because of the larger volume of production. The layout type is a dedicated product layout.
Most of the organizations cannot straightaway be intermittent or continuous production
system, as one department in the organization may follow the continuous type when
others following intermittent production type and vice-versa.
FLOW PRODUCTION
In flow production, the entire production system is designed to produce a specific
product. The production variety may not be possible. Specialized labour is required to
handle highly sophisticated automated'\machineries. The flow of material will follow a
predetermined sequence of operations. Due to this, the flexibility is lost in production.
Larger investment than intermittent production is necessary on material handling
equipments, which are normally fixed ones, The common material handling equipments
like belt conveyors, roller conveyors, rails, chutes are installed. The layout ¬followed is
product layout. Since the facilities are dedicated and layout is product type, the
operations cycle time is far less; Cost of production is less ; lower setting up time
(Probably only once); lower work -in-process (almost nil if JIT and perfect line balancing
is adopted) compared to intermittent production systems.
Example of flow production
 Oil Refinery
 Fertilizer Production
 Chemical Plants
ASSEMBLY LINE (OR) MASS PRODUCTION
Compared to flow production, in mass production product variety is more. This does not
mean that mass production can compete with batch production on the variety. It is
definitely more than one; but only a few and not many.
Consider the example of auto major - Maruthi. In this the assembly line for Maruti 800 is
a dedicated one. It consists of highly sophisticated machineries with higher degree of
automation. The labour is highly skilled and is specialists in their area of operation; the
material handling is through dedicated system which minimizes the in-process inventory.
But using the same assembly line, the other variant like Maruti Omni is also produced.
The two are different products with many differences in the production process. The
machine set up time is comparatively more as it involves more than one product.
This helps the organization in times of trouble. If needed, the organization can prioritize
within the product mix to maximize the sales and profit. This is not possible in the case of
flow production, as there is no product mix (in strict sense).
Functions of POM
The ultimate responsibility of creating the goods or services lies with the operations
management personnel. The focus of the ‘POM’ personnel will vary from organization to
organization, but the basic task of optimally utilizing the resources through the
management process will not vary. As we are aware, planning, organizing, staffing,
directing and controlling are the basic functions of management. Planning involves
determining a future course of action. The planning process begins by deciding what is
desired and then designing the ways for accomplishing that objective. Organizing refers
to the administrative structure of the organization. It involves putting the parts of the
system together in such a way that desired results can be achieved. Staffing involves
selection and training of personnel who will operate the system. Directing refers to the
release of commands or orders, making suggestions or otherwise motivating subordinates
to perfol1n their assigned duties in a timely and efficient manner. Controlling involves
measuring the results of operations, deciding if they are acceptable and instituting
corrective action if need be.
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.
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?’ The
selection of location is a key-decision as large investment is made in building plant and
machinery. An improper location of plant may lead to waste of all the investments made
in plant and machinery equipments. Hence, location of plant should be based on the
company’s expansion plan and policy, diversification plan for the products, changing
sources of raw materials and many other factors. The purpose of the location study is to
find the optimal location that will results in the greatest advantage to the organization.
Plant layout
Plant layout refers to the physical arrangement of facilities. It is the configuration of
departments, work centers 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 More ‘Plant layout is
a plan of an optimum arrangement of facilities including personnel, operating equipment,
storage space, material handling equipments 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 specialized activity for a
modern manufacturing concern, with 50 to 75% of the cost of production. This cost can
be reduced by proper section, operation and maintenance of material handling devices.
Material handling devices increases the output, improves quality, speeds up the deliveries
and decreases the cost of production. Hence, material handling is a prime consideration in
the designing new plant and several existing plants.
Product design
Product design deals with conversion of ideas into reality. Every business organization
has 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. The entire process of need identification to physical
manufactures of product involves three functions Design and Marketing, Product,
Development, and manufacturing. Product Development translates the needs of
customers given by marketing into technical specifications and designing the various
features into the product to these specifications. Manufacturing has the responsibility of
selecting the processes by which the product can be manufactured. Product design and
development provides link between marketing, customer needs and expectations and the
activities required to manufacture the product.
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.
Hence, the important decisions in process design are to analyze the workflow for
converting raw material into finished product and to select the workstation for each
included in the workflow.
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. The principle of production planning and control lies in the statement
‘First Plan Your Work and then Work on Your Plan’. Main functions of production
planning and control include Planning, Routing, Scheduling, Dispatching and Follow-up.
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. It makes it
possible for things to occur which would not otherwise happen. 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. Routing determines the most
advantageous path to be followed for department to department and machine to machine
till raw material gets its final shape. Scheduling determines the program 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. Dispatching
is concerned with the starting the processes. It gives necessary authority so as to start a
particular work, which has been already been planned under ‘Routing’ and ‘Scheduling’.
Therefore, dispatching is ‘Release of orders and instruction for the starting of production
for any item in acceptance with the Route sheet and Schedule Charts’. The function of
Follow-up is to report daily the progress of work in each shop in a prescribed proforma
and to investigate the causes of deviations from the planned performance.
Quality Control (QC)
Quality Control 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 feedback 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.
Materials 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. The main objectives of Material Management are:
1. To minimize material cost.
2. To purchase, receive, transport and store materials efficiently and to reduce the related
cost.
3. To cut down costs through simplification, standardization, value analysis, import
substitution, etc.
4. To trace new sources of supply and to develop cordial relations with them in order to
ensure continuous supply at reasonable rates.
5. To reduce investment tied in the inventories for use in other productive purposes and to
develop high inventory turnover ratios.
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. The
main objectives of Maintenance Management are:
1. To achieve minimum breakdown and to keep the plant in good working condition at
the lowest possible cost.
2. To keep the machines and other facilities in such a condition that permits them to be
used at their optimal capacity without interruption.
3. To ensure the availability of the machines, buildings and services required by other
sections of the factory for the performance of their functions at optimal return on
investment.
Communication in operations management
To be effective in reducing security risk and ensuring correct computing, a security
program needs to include operational procedures, controls, and well-defined
responsibilities. Additional formal policies, procedures, and controls are needed to
protect exchange of data and information through any type of communication media or
technology. Operational and communication exchange procedures and controls address
Operating procedures include proper documentation of all normal and emergency
functions, management of audit logs and other security or system log information.
Procedures for change management that include the planning and testing of changes,
assessment of changes, formal approval, and fallback procedures. You will want to
segregate duties and areas of responsibility to minimize the chance of accidental or
unintended access or modification. You will also want to make sure you have separate
development, test, and production (operational) environments with rules for development,
testing to minimize risk and exposure of sensitive data.
System capacity, resource planning and acceptance include management of projections of
future capacity requirements and acceptance and test criteria for addition of new
information systems, upgrades, or new versions.
System back-up procedures and policy and its timely restoration in case of a disaster or
media failure.
Media handling include handling of removable media and secure disposal of computer
media such as tapes, disks, and documents.
Systems monitoring, log management and auditing, confirming the effectiveness of
controls in place and anomaly detection and follow-up activities.
Network security management and protection of supporting infrastructure including:
careful consideration of the security of data in transit over public or wireless networks
and management and control of connected systems and applications.
Protection against malicious and mobile code such as computer viruses, network
worms, Trojan horses, and logic bombs. System managers are responsible for
implementing controls to prevent, detect, and remove malicious code. Procedures need to
be created to make aware of and train users on the dangers of malicious code.
Third party service delivery management including: monitoring of compliance with
information security requirements and agreements.
Information exchange management such as compliance with information or data
exchange agreements, policies, and relevant legislation. Security controls and procedures
should also exist for physical media containing data in transit within an organization and
with any external entity.
Electronic commerce services including security of on-line transactions and publicly
available information.
Current priorities of OM
1) Cost
Low cost operations
2) Quality
Top quality
Consistent quality
3) Time
Delivery speed
On time delivery
Development speed
4) Flexibility
Customization
Variety
Volume flexibility
Recent Trends in operations management
1) Computer-aided Design and Manufacturing (CAD/CAM)
2) Shrinking product life cycle
3) Supply-Chain Management
4) Mass Customization
5) Employee Involvement
6) Sustainability
 7) Environmentally sensitive production (Green Manufacturing)
8) Lean Operations / Just In Time
Computer Integrated Manufacturing
Automation
Automation in various fields of industry and manufacturing was introduced successfully
by the extensive use of computer and micro electronics. The first use of computer was to
accelerate the processing of information within the unit-enterprise. Accounting data was
the first to be put for purposeful processing. Gradually, technology of computers and its
exploitation in other fields of manufacturing has advanced to the extent that the concept
of automation of the factory became feasible and economically-viable. Thus, the office of
on industry could accumulate data in large quantities and later process the data for any
number of uses that the factory thinks. Normally, the processing data-base information
takes place when the events transpired, while the intended objective of automation of
factory- activities needs to be real-time-control, not batch processing of accumulated
information.
Today, many industrial activities are automated, because the users of computers have
mastered the real time control (on-line-control).
Basically the efficiency of the production-system improves even if the individual
activities of an industry are not automated, meaning thereby that system performance
efficiency improves if the components of the system are properly integrated. If the
individual activities are automated, then their integration would bring still better results.
Therefore, the emphasis has been changing to automation and effective integration so that
higher productivity may be resulted.
The term automation describes various aspects of production technology such as
CAD/CAM, FMS, Robotics, etc. Automation seems to take – off since ‘industries
revolution, i.e., work performed by manual labour is taken over by machines in gradual
manner. So, automation is a process of continuous technological development, i.e.,
continuous changes in the structure of manufacturing technology. The introduction of
micro-electronics and computer has been influencing the concepts of automation in terms
of control – system and ultimately creates the logical and intelligent automated
equipment.
Definition of Automation
"Automation is a technology concerned with the application of mechanical, electrical and
other computer-based-systems to operate and to control the production.
Automation is also defined as the "Substitution of machine-work for human physical and
mental work".
Normally, in the present context this technology includes the following:
 Automatic machine-tools to process parts
 Automatic assembly lines
 Industrial-robots-the introduction of micro-electronics into robot has significantly
improved the flexibility and reliability into robot¬ operations and synchronization
and coordination of roots with other types of automated machine-tools, handling-
systems, CAD, etc.
 Automatic material handling and storage system.
 Automatic inspection system for controlling the quality
 Computerized process control and feed-back control
 Computer systems required to support:
o Planning
o Data-collection (data-acquisition and processing)
o Decision making system to support manufacturing
o activities
o Speedy information transfer.

Reasons for Automation

Presently, lot of manufacturing industries and business houses have been undertaking
variety of projects concerning automation and computer-based-manufacturing because of
the following reasons:
(i) Increased-productivity: Higher production rates are achieved with automation
than with the corresponding manual operations. This happens owing to accelerating the
operations with significant accuracy, thus utilizing the scarce and expensive resources in
the most effective and efficient manner (reducing the scrap). Increased productivity is
possible due to the following:
 Effective and efficient use of resources.
 Storage of information in efficient manner and quick transfer of stored
information to appropriate place.
(ii) High cost of labour: Depending on workforce has gradually been creating
problems owing to the following factors:
 Shortage of skilled labour
 Non-availability of labour
 Various labour driven problems such as labour welfare, health,
education and training, trade-unions and service-conditions.
Ultimately, labour has gradually been becoming scarce commodity owing to its
increasing cost. So, the business-houses realize that investment on automation may prove
to be economical proposition. So, higher investment in automation may usually be
justifiable to replace many manual operations by automated operations. High cost of
labour has gradually been forcing business leaders for finding a substitute for human
labour. Since the output rate of these automated systems maybe much higher, so results in
lower cost per unit of product.
Another important aspect of labour is the short-availability of right type of labour for
specified work. This also stimulates the development of automation in that direction.
Therefore, the present trend is to replace the workforce by automation to the maximum
possible extent
(iii) Product-quality: There is a clearly-indicated shift in the market ¬trend in
terms of consumer expectations with regard to quality and variety. As such, frequent
changes in product-design to meet the requirements of customer, improved product
quality at reduced-cost and occupational safety have become objectives. It is possibly
achievable through automation.
(iv)Reduced manufacturing lead-time: Automation has made it possible to
reduce the time between the customer order and product delivery. Automation also makes
possible to reduce the manufacturing cycle time. Thus the manufacturer gets competitive
advantage in promoting good customer-service.
 (v) Reduced in-process inventory: Holding large inventories as work in-process
represents a significant cost to the manufacturer owing to tie up capital in terms of space
and money. In-process inventory is of no¬ value i.e., instead of adding any value to the
product, it rather increases the work cycle time. It neither serves raw-material stock, nor
it serve finished product inventory; It is therefore, in the interest of manufacturer to
reduce the work-in progress to the minimum level.
Automation helps to accomplish this goal by reducing the time a worker spends in the
factory for accomplishing any activity.
Above discussions clearly indicate that a competitive advantage is gained by adopting
automation in different activities of a manufacturing plant. The benefits of automation
can only be demonstrated' on the project form through improved product quality, better
customer service in terms of availability of spare parts and product in the market, better
utilization of manpower and materials, reducing work-cycle time. It means that most of
the unproductive work elements at every stage of work-cycle should be reduced to a great
of extent. Obviously, the companies that do not automate and integrate their work¬
activities are likely to find themselves at competitive disadvantage, is at high cost of non-
automation.
All these factors act to make production activities automated as a feasible and attractive
alternative to manual methods of manufacture. However, everybody is advised to
workout the influence of economic forces and social forces on the system and then act
accordingly.
The Service Revolution
One of the startling developments of our time is the mushrooming of services in every
economy. In our economy too, the share of the services sector (also called tertiary sector)
in the GDP is much higher than that of industry or agriculture.
The impact of this explosion of service organizations on production management has
been enormous. It is a challenge for manufacturing managers, that they should evolve
strategies and actions to manage service areas for better productivity, quality and
competitiveness.
One should wait for the type of actions that would emerge in future for managing service
economies effectively. In the meantime, it is useful to bring out characteristics of the
systems that produce services.
In the factory of the future there will be a greater role for professionals like design
engineers, computer operators and production planners. It is these people who will have a
greater say in the production process.
With increasing customization and product variety, the service component of a product
will assume more importance. Days are not far off when a customer will be able to walk
into an automobile dealership, order a car based on his preferences for colour, style and
the like, and arrange all necessary financing using a computer terminal. The order will be
relayed to the factory, where a car meeting the customer's specific requirements will be
manufactured and readied for delivery in a short time. Obviously, corporate profitability
depends on how best the service component is integrated into the product.

Global perspective of Operations management

Operations management is continuously changing to meet the new and exciting
challenges of today’s business world. This ever-changing world is characterized by
increasing global competition and advances in technology. Emphasis is also shifting
within the operations function to link it more closely with both customers and suppliers.
Increased Global Competition
The world is rapidly transforming itself into a single global economy, which is also
referred to as a global village or global landscape. Markets once dominated by local or
national companies are now vulnerable to competition from literally all corners of the
world. For example, IBM’s computer manufacturing business was recently bought out by
Lenovo, a Chinese company. Montreal-based Bombardier Aerospace competes primarily
with Embraer, a Brazilian company. According to World Steel Dynamics, a U.S.-based
steel information provider, in 2001, a company from India called the Tata Iron and Steel
Company was the best steel company in the world. Thus, competition for Indian
companies comes not only from North American, European, and Japanese companies, but
from other, developing countries as well.
The creation of international trade through agreements such as the North American
Free Trade Agreement (NAFTA), World Trade Organization (WTO), and the proposed
Free Trade Agreement of the Americas (FTAA) greatly affect how business is done in
global market. The reduction of tariffs means that the world-class companies will have
new global markets, will be able to invest in foreign countries more easily and prosper.
Consequently, as companies expand their businesses to include foreign markets, so too
must the operations management function take a broader, more global perspective for
companies to remain competitive. To survive and prosper in such a global marketplace,
companies must excel in more than one competitive dimension, which previously was the
norm. With the rise of the global economy, companies are no longer limited as to where
they can make or buy their products and components. This means that supply chain
management (SCM) is more complex, and critical SCM decisions have to be made more
carefully.
Supply network applications of POM
A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to customers,
Supply chains exist in both service and manufacturing organizations, although the
complexity of the chain may vary greatly from industry to industry and firm to firm.
Below is an example of a very simple supply chain for a single product, where raw
material is procured from vendors, transformed into finished goods in a single step, and
then transported to distribution centers, and ultimately, customers, Realistic supply chains
have multiple end products with shared components, facilities and capacities. The flow
of materials is not always along a network, various modes of transportation may be
considered, and the bill of materials for the end items may be both deep and large.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing
organizations along the supply chain operated independently. These organizations have
their own objectives and these are often conflicting, marketing objective of high customer
service and maximum sales dollars conflict with manufacturing and distraction goals.
Many manufacturing operations are designed to maximize throughput and lower costs
with little consideration for the impact on inventory levels and distribution capabilities.
Purchasing contracts are often negotiated with very little information beyond historical
buying patterns, The result of these factors is that there is not a single, integrated plan for
the organization-there were as many plans as businesses, Clearly, there is a need for a
mechanism through which these different functions can be integrated together. Supply
chain management is a strategy through which such as integration can be achieved.
Supply chain management is typically viewed to lie between fully vertically integrated
firms, where the entire material flow is owned by a single firm and those where each
channel member operates independently. Therefore, coordination between the various
players in the chain is a key in its effective management. Supply chain management can
be compared to a well-balanced and well-practiced relay team. Such a team is more
competitive when each player knows how to be positioned for the hand-off. The
relationships are the strongest between players who directly pass the baton, but the entire
team needs to make a coordinated effort to win the race.
Supply chain management decisions
Supply chain management decisions can be classified into two broad categories-strategic
and operational. As the term implies, strategic decisions are made typically over a longer
time horizon. These are closely linked to the corporate strategy, and guide supply chain
policies from a design perspective. On the other hand, operational decisions are short
term, and focus on activities over a day-to-day basis. The effort in these types of
decisions is to effectively and efficiently manage the product flow in the "strategically"
planned supply chain. There are four major decisions areas in supply chain management:
1) Location
2) Production
3) Inventory, and
4) Transportation (distribution), and there are both strategic and operational
elements in each of these decision areas.
Supply chain modeling approaches
Clearly, each of the above two levels of decisions require a different perspective. The
strategic decisions are, for the most part, global or "all encompassing" in that they try to
integrate various aspects of the supply chain. Consequently, the models that describe
these decisions are huge, and require a considerable amount of data. Often due to the
enormity of data requirements, and the broad scope of decisions, these models
approximate solutions to the decisions they describe. The operational decisions,
meanwhile, address the day to day operation of the supply chain. Therefore the models
that describe them are often very specific in nature. Due to their narrow perspective, these
models often consider great detail and provide very good, if not optimal, solutions to the
operational decisions.
To facilitate a concise review of the literature, and at the same time attempting to
accommodate the above polarity in modeling, we divide the modeling approaches into
three areas- a. Network Design, b. "Rough Cut" methods, and c. simulation based
methods. The network design methods, for the most part, provide normative models for
the more strategic decisions. These models typically cover the four major decision areas
described earlier, and focus more on the design aspect of the supply chain: the
establishment of the network and the associated flows on them. "Rough cut" methods, on
the other hand, give guiding policies for the operational decisions. These models typically
assume a "single site" (i.e., ignore the network) and add supply chain characteristics to it,
such as explicitly considering the site's relation to the others in the network. Simulation
method is a method by which a comprehensive supply chain model can be analyzed,
considering both strategic and operational elements. However. as with all simulation
models, one can only evaluate the effectiveness of a pre-specified policy rather than
develop new ones. It is the traditional question of "What If?" versus "What's Best?"