SM 724

Operations Management
 Important Aspects and Trends in Business Operations
• Product Packages

• Management of Supply Chain

• The Internet and E-business

• Globalization and Outsourcing

• Lean Production

• Ethics
 Lean Production/ Lean Manufacturing
It is a systematic method in manufacturing that tries to get rid
of Mura (Unevenness of workload), Muri (Overburden) and
Muda (Waste) in the production system without sacrificing
productivity.

Sometimes called
the Toyota
Production
System (TPS)
because Toyota
Motor Company’s
Eiji Toyoda and
Taiichui Ohno are
given credit for
this approach.
 Lean, Just-In-Time (JIT), Flexibility and Agility
Lean and JIT are often used interchangeably
JIT = A highly coordinated processing system in which goods move
through the system, and services are performed, just as they are
needed.
Lean Operations = A highly coordinated system that uses minimal
resources (eliminating waste) and produces high-quality goods or
services with focus on customers
i.e. Lean can be applied to the whole organization whereas…. Earlier
JIT referred to only the production system
Flexibility vs Agility
Flexibility in manufacturing ➔ Systems are able to handle known or
expected differences in the demand (Eg. Handle seasonal demand)
Agile System= The system that has an ability to respond quickly to
change in demands and opportunities
Agility ➔ Responsiveness to even unforeseen changes in demand
 Ethics
Definition: Moral principles that govern a person's behaviour or the
conducting of an activity.
Managers’ decision affects stakeholders- shareholders,
management, employees, customers, community, & environment.
If mistakes occur, responsibility of managers to correct those
mistakes and address any negative consequences.
Ethical issues may pertain to:
• Financial statements: Reporting accurate financial conditions.
Counter Eg. • In 2009 Satyam Chairman Ramalinga Raju confessed
that the company's accounts had been falsified.
• The company misrepresented its accounts both to its
board, stock exchanges, regulators, investors and all
other stakeholders.
• Even basic facts such as revenues, operating profits,
interest liabilities and cash balances were grossly
inflated to show the company in good health.
Source: https://www.hindustantimes.com/business/satyam-scam-all-you-need-to-know-about-india-s-biggest-
accounting-fraud/story-YTfHTZy9K6NvsW8PxIEEYL.html
 Ethics
Ethical issues may pertain to (contd.):
• Worker safety: Providing adequate training, maintaining
equipment in good condition, maintaining safe working
environment.

VS
 Ethical Issues (Contd.)
• Product safety: Providing products that minimize the risk of
injury to users or damage to property or the
environment. Counter Eg.

My HP printer

• Quality: Honoring warranties, avoiding hidden defects.

Counter Eg.

My Hawkins pressure cooker

 Ethical Issues (Contd.)
• Environment: Not doing things that harms the environment.
Counter Eg.
Some Chemical plants

• Community: Being a good neighbor

Eg. Corporate Social Responsibility (CSR) activities (Source: https://www.india-
briefing.com/news/companies-amendment-act-2019-india-mandatory-csr-new-provisions-19082.html/)
The Act mandates that companies with a profit of more than INR 5 crore (US
$700,675), turnover of INR 100 crore (US $14 million), and net worth of more
than INR 500 crore (US $70 million) have to spend at least two percent of their
three years’ annual average net profit towards CSR activities.
Else transfer their unspent CSR funds to one of the funds prescribed under
Schedule VII of the Act (such as the Prime Minister Relief Fund)
 Ethical Issues (Contd.)
• Hiring/firing workers: Avoiding false pretenses (e.g. promising
a long-term job when that is not what is intended). Counter Eg.
Indian Airlines forced to reinstate airhostess
sacked for being overweight as an after-effect
of airline doctor prescribed medicines
• Closing facilities and Worker’s rights: Taking into account the
impact on a community, and honoring commitments that have been
made. Respecting workers’ rights, dealing with workers’ problems
quickly and fairly
• General Motors in July 2015 planned to shut down the plant in Halol Gujarat.
• In 2016, agreements of contract workers were not renewed and permanent
workers were offered VRS with 100 days of salary for each year of service per
worker. Of the 625 permanent workers at the site, many refused to accept the
VRS, saying it was not beneficial. They were also against shifting to Talegaon.
• However, in April 2017, GM was is in the midst of a labour transfer process that
would see workers being shifted to GM’s Talegaon plant in Maharashtra.
• Chinese auto major SAIC Motor Corporation acquired the Halol plant for UK’s
Morris Garages (MG) brand. Of the 14 top officials hired by MG Motors around
ten had held senior positions at GM India in the past.