OPERATIONS

MANAGEMENT

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Index
■ Introduction: Operations Management
■ System Perspective
■ History & Evolution
■ Linkage with Supply Chains
■ Course Plan

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INTRODUCTION

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What is Operations?
Operations is a group of activities performed to transform a set of inputs into a
useful output (Goods or services) using a transformation process.

Value Add
Inputs:
Material Output:
Labor Process Products or
Capital Services
Technology

…….Management of System that create Goods and/or Services

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 Inputs, Process & Output
Type of Sector Inputs Process Output
Organization
Restaurant Hospitality Capital, Food Cooking Food
Ingredients, Cooking
staff, Kitchen, Mixers,
Gas burners, utensils
Management Education Capital, Infrastructure, Teaching, Knowledge,
Institute Faculty, Study Evaluation, Degree & Career
resources, Admin staff Mentoring
Automobile Manufacturing Capital, Plant, Staff, Welding, machining, Car, 2-wheeler
Equipment, Raw assembly, painting,
materials dispatch, etc.
Grocery Super FMCG Retail Capital, Space, finished Procuring, shelf Grocery
mart goods inventory, staff storing, refilling, Products sold
invoicing, etc.

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Goods are physical items that include raw materials, parts, sub-assemblies and
final products. E.g. Motherboard, Automobile, Handset, Steel, Books, etc.

Services are activities that provide some combination of time, location, form or
psychological value. E.g. housekeeping, lecture, cleaning, etc.

Intangibility
Heterogeneity
Perishability

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Fundamentals of Business
■ An ideal situation for a business organization is to achieve an economic match of
Supply & Demand
■ Having excess capacity or supply is wasteful & costly
■ Having too little means lost opportunity and possible customer dissatisfaction

Demand Supply

Sales & Marketing Operations & Supply Chains

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Why Operations? Support Functions
R&D Finance
Activity Responsiblity
Vision: What Organization wants to become in long Top Management IT Mktg.
term
Strategy, Mission & Goals: To Achieve Vision Top Management
HR
What Products or services to achieve Vision Top Management Supplier Dealer

Which Products/Services to be chosen? Marketing

Which Products/Services R&D
What Technology? Engineering
In house v/s Outsourced Top Management
Operations Sales
Way of attaining Capital Finance

Procurement & Distribution :How, What, when, What Supply Chain

price Line Functions
Human Resource: Hiring, Engagement, learning & HR
Development, Retire
Where to sell? How to sell? What to sell? Sales

How to manufacture? Best way to manufacture or Customer

deliver? What resources? How to meet customer
demand?
Operations
Operations Management Lifecycle
•Process •Forecasting
•Product •Production Planning
•Quality •Resource
•Facilities •Manufacturing
•Plant •Scheduling
•Capacity Planning •Project

Planning
Design
& Control

Value
Improve
Chain
•Maintenance •Supply Chain
•Continuous •Purchasing
Improvement •Logistics
•Inventory Planning &
Control
A SYSTEM PERSPECTIVE

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Operations as a System
A group of activities performed to transform a set of inputs into a useful output
using a transformation process. It is Managing system or processes that creates
goods and/or services

Operations System

Inputs
Raw Material Outputs
Labor Process Goods
Land Value Add Services
Capital

Measurement
& Feedback Measurement
& Feedback
Control

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Example- Manufacturing operations
Automotive Industry

Raw Material
Machining/ Production
Design
Assembly Planning

Plant
Automobile

Capital

Paint Shop Quality Testing

People

Measurement
& Feedback Measurement
& Feedback
Control

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Example- Service operations
ITES
Inputs Output
Process
Work
Facility Service Communicati Automation
Delivery on

Hardware/
Software Audit &
Training Compliance Software

Capital

MIS
People

Measurement
Measurement
& Feedback
& Feedback
Control

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Car Manufacturing
EVOLUTION OF
OPERATIONS
MANAGEMENT

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 Evolution of Operations
Late 1770 Early 20 th Century Late 20 th Century 21 st Century

The Industrial Revolution Scientific Management Start of Technology Operations Today

• Frederic Winslow Taylor

(US) identified best
• Human Relations
• Started in UK, spread work methods to do a
movement • Advances in IT
to Europe & to US in job
• Commercial digital • Global Competition
19th Century • Methods emphasized
computer-IBM • Disruption due to
• Change from human maximum output
• Japanese technology Internet
power to machine • Book “Principles of
• Automation • eBusiness/eCommerce
power. E.g. Steam Scientific
• Emphasis on Quality • Globalization
Engine Management”
• Internet • Digitisation
• Steam used in published
• Supply Chain • Connected world
machines • Ford Car-Rollout
Management • Impact of industry and
• Ample supply of Iron & • Mass production in
• Outsourcing economic activities on
Coal Automotive industry
• Application service Environment & Society
• Crafts production • Division of Labor
providers
• Factories began • Statistical procedures
• Social media like You
growing for sampling & QC
tube
• Motion Study- Gilberth
• Gantt Chart invented
LINKAGE WITH SUPPLY
CHAINS

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Operations & Supply Chain management
■ Supply chain is the list of activities involved directly or indirectly in fulfilling a
customer request
■ Operations and Supply Chain are mutually dependent

Customer
Demand

Sales &
Distributio
Operation
n/Delivery
s Planning

Operation Procurem
s ent of
Managem Raw
ent materials

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Overview
■ Supply Chain is the sequence of organizations- their facilities, functions and
activities-that are involved in producing and delivering a product or service
■ Sequence begins with basic raw material suppliers and extends up to
Customer
■ Facilities include Factories, Warehouse, processing centers, distribution
centers, retail outlets and offices
■ Functions and activities include
– Forecasting
– Purchasing
– Inventory Management
– Information management
– Quality assurance
– Scheduling
– Production
– Distribution 19
 A Typical Supply Chain
Goods and Services Flow

Procurement Distribution
Warehousi Manufactu
Inbound ng/Storag ring/Asse Outbound
Supplier Logistics Storage Logistics Distributor Retailer Customer
e mbly

Information Flow

Financial Flow

• Every organization is a part of at least one supply chain

• A Supply Chain is often referred to as “Value Chain” as value is added as
the goods or service is processed across the chain
• Every responsible stakeholder has their own operations
COURSE PLAN

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 Course Plan
Topic
• Introduction to Operations Management
• Managing Operations
• Design of Service Systems
• Quality Management
• Planning & Control of Operations
• Operations Logistics & Materials
Management
• Inventory Management-Planning & Control
• Maintenance Management
• Modern Concepts in Operations
Management
Unit Post Coverage of respective Units
I Case Study Discussion- I
Assignment I
II Case Study Discussion- II
Assignment II
Class Test/Surprise Test (Unit I & II)
III Case Study Discussion- III
Quiz & Presentation (Units I,II & III)
IV Case Study Discussion- IV
V Case Study Discussion- V
End Term Exam

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