Why we study Operations Management?

An operation may be defined as the process of changing inputs into outputs

thereby adding value to some entity. Right quality, right quantity, right time
and right price are the four basic requirements of the customers and as such
they determine the extent of customer satisfaction. And if these can be
provided at a minimum cost, then the value of goods produced or services
rendered increases.

Operations management is concerned with managing the resources that

directly produce the organization service and products. The resources are
generally consist of people, material, technology and information but may go
wider than this. These resources are brought together by a series of
processes so that they are utilized to deliver the primary service or product
of the organization. Thus operation management is concerned with
managing inputs (resources) through transformation processes to deliver
outputs (service or products). The objectives of production management are
to produce goods and services of the right quality, in the right
quantities, according to the time schedule and a minimum cost.
Key Elements of Operations Management

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
companys operation ineffective and non-competitive. Products/services,
therefore, must be chosen after detailed evaluation of the product/services
alternatives in conformity with the organizations objectives. 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.
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). Locational decisions involve evaluation of locational
alternatives against multiplicity of relevant factors considering their relative
importance to the organization and selecting those, which are operationally
advantageous to the organization.

Facilities (Plant) layout and materials handling : Plant layout is

concerned with relative location of one department (Work center) 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.

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.

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 Quality
assurance and control: Quality is an important aspect of production system
and 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.

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: Method study and Work measurement.

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

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.

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

A business involves three joint processes: planning, organizing, and

controlling. These three phases are depicted in the diagram below:

Elements of Production and Operations Management:

Furthermore, these items can be grouped and listed differently by different

authors. There are concepts like planning and organizing, and the involved
conversion process. Inputs include land, labor, technology, etc., and outputs
include products and services. Then, there is the conversion typrocess
involved that converts inputs to outputs.

Additionally, there is another process called planning. Planning involves

seeing ahead and making optimal usage of available resources. With proper
planning, the controlling and organizing aspects of production and operations
management become more efficient to manage.

Objectives of Production and Operations Management:

The main objectives may be one of more of the following:
a. Efficiency:
Increase output for a given input.
b. Productivity:
Increase production using given resources.
c. Economy:
Production is more economical (done at reduced cost).

d. Quality:

Good quality products at reduced cost.

E. Reduced processing time:

Increased production within a given amount of time

How Do We Manage?

The study of operations management is a beginning.

The study of Operations Management will give you information on why some
things work and some things do not work. It will also provide you with
modalities to implement in your own style.

In essence the student of Operations Management learns the evolution of

management.

Globalization
Globalization is a current reality whereby products and services are made,
traded, sold, and marketed on a global basis.

Think locally. Act globally. This adage is used so often that it seems trite. It
is more relevant every day. Why?

You are local but the global market impacts you every day.
How is a product moved from country to country? The answer to this must
consider various rules and regulations from country to country, cultural
norms, and the raw materials and people skills in each country.

What are environmental concerns in various countries? How do we transport

goods; shipping, train, truck, air?

Will you buy raw materials from another country? Will you sell your
product(s) across borders?

An understanding of the World Trade Organization is a key to understanding

Globalization.

Supply Chain Management

Locations Logistics
How do you deliver goods, information, and services to customers whether
they are business users or individual users? The revolution of quality of this
service and the metrics provide an excellent road map to maximizing your
business and minimizing your costs.

What does the business person consider when deciding how to send or
receive their products or raw materials? There are models and historical
information to guide the business person.

Project Management
This is an excellent career pursuit all by itself.

However, in Operations Management you receive an over view of the detail,

organization, and metrics of Project Management. You will use this in many
projects over the scope of your life. The business manager interfaces often
with a Project Manager and must have an idea of the scope of work a project
manager undertakes in order to manage both the operation they are
managing and the Project Manager with his/her project.
A project may be anything from a multi-million dollar bridge or a marketing
event such as building a sandcastle in a building! Often Project Management
is thought of by neophytes as some type of construction project. If you have
ever gone through an office software re-organization you will appreciate the
need for good project management! This holds for nearly all undertakings!

SWOT means statement of work. What is the SWOT for a class? What is the
SWOT for your next household move?

Forecasting
The ability to forecast the behavior of the market, your customer, or the
supply chain is very valuable. There are mathematical methodologies and
anecdotal methods to forecasting supply chain behavior.

What is the seasonality need and use of a product? Supply and demand
issues are dealt with in forecasting. How do you track these demands? There
are several mathematical methods. An understanding of these methods is
covered in operations management.

A commercial retail manager can forecast sales for Christmas once the June
orders are placed and shipping is anticipated. The documented shipping
information and predictions will provide information. Even though buyers for
stores will not tell you their confidential buys, as made to their vendors, you
(if you have studied the discipline of operations management) will know to
take a look at the fore-casted international shipping activity. Only those at
the top in their field know this.