Operations Management

PGP Term 2
Session 1, Section G
Classroom Q003
20/09/2023

Prof. M.S.Shalique
Young Faculty Research Chair,
Department of Production and Operations Management, IIM Bangalore
Office: NF Block 201
Email: shalique.ms@iimb.ac.in
 Operations Management

Demand and Supply

The academic discipline of analysing and improving work

 Course Overview
Module 1
Process & Capacity
Analysis
• Operations as a source of
competitive advantage
• Factors affecting operations
performance
• How to improve operations
• Performance analysis in service
contexts
• Capacity analysis
Module 2 Module 3
Supply Chain & Operations Planning
Coordination & Strategy
• Inventory management • Master Operations Schedule
• Efficient and responsive supply • Aggregate production planning
chains • Just-in-time and lean management
• Quality control
• Sustainability in operations
• Operations strategy
How is Operations Management different for physical goods compared to services?

4
 For physical goods

Product design and Purchasing/ Manufacturing/

Fulfilment
development Sourcing Production

For services

Product design and Purchasing/ Production and

development Sourcing Fulfilment

5
Hierarchy in a Firm
• Corporate Strategy

A framework or
plan to utilize
the resources
Hierarchy in a Firm At Corporate
• Corporate Strategy level, we focus
on a set of
Business Units

The areas of focus

include:
• vision and mission,
corporate values
• resource allocation
and synergy
between BUs
Hierarchy in a Firm
• Corporate Strategy Business Unit is a
profit centre
focusing on a
• Business Unit Strategy
specific product and
market segment

E.g. Unilever has

separate food,
beverage, homecare
business units
Hierarchy in a Firm
• Corporate Strategy Translation of
BU strategy into
• Business Unit Strategy an actionable
plan
• Operations Strategy

The areas of focus

include:
• organizing systems
of resources that
create and deliver
the firm’s product
or service
Operations Focus
• First introduced by Skinner in 1974 (The Focused Factory, Harvard Business Review)

Business Unit
Operations
Strategy

Trade-Offs
 Four Dimensions of Performance: Trade-offs
Quality
Cost
▪ Efficiency
▪ Product quality (how good?)

▪ Measured by:
▪ Process quality (as good as
promised?
- cost per unit
- utilization

Variety Time
▪ Customer demand heterogeneity ▪ Responsiveness to demand
▪ Measured by: ▪ Measured by:
- number of options - customer lead time
- flow time

Cachon & Terwiesch (2021), “Matching

Supply with Demand”, Mc Graw Hill
What Can Ops Management (This Course) Do to Help?
Step 1: Help Making Operational Trade-Offs
High
Very short waiting times,
come at the expense of
Responsiveness
high operational costs

Long waiting times,

and lower costs
Ability to change/act Low
quickly in terms of Low cost High cost
volume, mix, or Operational cost
(Unit?)
location

Cachon & Terwiesch (2021), “Matching

Supply with Demand”, Mc Graw Hill
What Can Ops Management (This Course) Do to Help?
Step 2: Overcome Inefficiencies

Responsiveness

Pareto dominated: be worse on all

High
Current frontier dimensions
In the industry
Competitor A Efficiency Frontier: the set of firms
that has no firm pareto dominating
Eliminate
Competitor C
them on operational performance
inefficiencies

Low
Competitor B

Low labor High labor Labor Productivity

productivity productivity

Cachon & Terwiesch (2021), “Matching

Supply with Demand”, Mc Graw Hill
What Can Ops Management (This Course) Do to Help?
Step 3: Evaluate Proposed Redesigns/New Technologies

Responsiveness

High

Redesign
process

New frontier
Current frontier
In the industry
Low

Low labor High labor Labor Productivity

productivity productivity

Cachon & Terwiesch (2021), “Matching

Supply with Demand”, Mc Graw Hill
 Waste

Consumption of inputs and resources that are non-value adding to the customer
 Variability

Changes in demand or supply over time

Consumer preferences Inaccurate forecast

Arrival time Capacity constraints
Skill level
Information
Arvind Eye Hospital
Arvind Eye Hospital

Source: Seelos, C. (2014). Theorising and strategising

with models: generative models of social
enterprises. International Journal of Entrepreneurial
Venturing, 6(1), 6-21.
 The Product-Process Matrix
Product Life Cycle Stage
Low Volume Many Few Major High Volume (High
(Low Products Products Standardization
Standardization) (Low Volume) (High Volume) Commodity Products)

Jumbled Flow Commercial Printer

(Job Shop)

Heavy Equipment/Apparel
Disconnected Line Flow
Process (Batch)
Structure
Automobile Assembly
Connected Line Flow
(Assembly Line)

Sugar Refinery
Continuous Flow

Hayes & Wheelwright (1979), “The Dynamics

of Process-Product Lifecycles”, Harvard
Business Review