CHAPTER 1

OPERATIONS MANAGEMENT AND VALUE

CHAINS
• Explain what operations management is.
• Contrast manufacturing and services organizations.
• Describe managers role in improving productivity.
• Discuss strategic role of operations management,

• Define value chain and value chain management

• Describe the goal of value chain management
• Discuss the requirements for successfu l va lu e ch a in
management
Ø The design, operation, and control of the trasformation process
that convert such resources as labor and raw materials into
goods and services that are sold to customers.

Ø It ecompasses both services and manufacturing.

Ø effectively and efficiently managing productivity
Ø It plays a strategic role in an organization’s competitive success
Manufacturing and Services

Ø use operations management in the transformation process of

turning raw materials into physical goods

Ø Use operations management in creating non-physical outputs in

the form of services (the activities of employees interacting with
customers).
Ø The overall output of goods or services produced divided by the
inputs needed to generate that output.
Ø A composite of people and operations variables.

Ø Economic growth and development.

Ø Higher wages and profit without inflation.
Ø Increase competitive capability due to lower cost.
Ø The performance characteristics, features and attributes, and
any others aspects of goods and services for which costumer
are willing to give up resources

Ø The entire series of organizational work activities that add value

at each step beginning with the processing of raw material and
ending with finished product in the hands of end users
Ø A new business model incorporating:
v Coordination and collaboration
v Investment in Information technology
v Changes in organizational processes
v Committed Leadership
v Flexible jobs and adaptable, capable employees
v A supportive organizational culture and attitudes
Ø Organizational Barriers:
v Refusal or reluctance to share information
v Reluctance to shaken up status quo
v Securitiy issues

Ø Cultural attitudes
v Lack of trust and too much trust
v Fear of loss of decision-making power

Ø Required capabilities
v Lacking or failing to develop the requisite value chain
management skills
Ø People
v Lacking commitment to do whatever it takes
v Refusing to be flexible in meeting the demands of a
changing situation
v Not being motivated to perform a high level
v Lack of trained managers to lead the value chain
initiatives
Ø Increase automation and integration of production facilities with
business system to control cost.
v Predictive maintenance, remote diagnostics and utility cost
savings

Ø The ability of a product or services to reliably do what it

supposed to do and to saatisfy expectations.
Ø Planning for quality
Ø Organizing and Leading for quality
Ø Controlling for equality

Ø The adesign to order concept that provides consumers with

product when, where and how they want it.
Ø Makes heavy use of technology in developing flexible
manufacturing techniques an engaging in continual dialogue with
costumers.
CHAPTER 2
OPERATIONS STRATEGY
Ø The term “strategy” is not easy to define. The word itself
originates from the greek methapor strategos meaning to lead
an army. Strategy in business define in similar way which
requires leading or directing a business.

Ø It concerns the pattern of strategic decision and actions that set

the role, objectives and activities of the operation.
Ø Operations are not the same as “operational”
Ø Operations are the resource that create product and services.
Ø The most basic role of operations is to implement strategy
Ø You cannot, after all, touch a strategy; you cannot even see it; all
you can see is how the operation behaves in practice

Ø Support strategy goes beyond simply implementing strategy.

Ø It means developing the capabilities which allow the organization
to improve and refine it strategic goals.
Ø It must develop processes flexible enough to make novel
components organize it staff to udnerstand the new technologies,
develop relatonships with its supplier which help them to
respodn quickly when supplying new parts and so on.
Ø The third and most difficult, role of operation is to drive strategy
by giving it a unique and long term advantage.
Ø The operations drives the company’s strategy.
Ø This is the very poorest level of contribution by the operations
function. I is holding the company back from competing
effectively. It is inward looking and, at best, reactive with very
little positive to contribute towards competitive success.

Ø The first step of breaking out stage 1 is for the operations

function to begin comparing itself with similar companies in the
outside market
Ø This stage are among the best in the market. Yet, stage 3
operations still aspire to be clearly and unambiguously the very
best in the market. They achieve this by gaining a clear view of
the company competitive and supporting it by developing
appropriate operations resources.

Ø Where the company views the operation function as providing

the foundation for its competitive sucess. Operations look for the
long term.
The Difference between Top-down and Bottom-
Up view of Operations Strategy

Ø View strategic decision at a number of levels:

1. Corporate strategy sets the objective for the different
businesses which make up a group of businesses.
2. Business strategy set the objectives for each individual
business and how it position itself in it marketplace
3. Functional strategies set the objectives for each function
contribution to its strategy
The Difference between Top-down and Bottom-
Up view of Operations Strategy

Ø View of operations strategy seesn overall strategy:

1. Emerging from day-today operational experience
2. Sometimes companies move in a particular strategic
direction because the ongoing experience of providing
product and services to customers at an operational level
convinces them that it is the right thing to do.
CHAPTER 3
TECHNOLOGY AND OPERATION
MANAGEMENT
CHAPTER 4
GOODS AND SERVICE DESIGN
 CHAPTER 5
PROCESS SELECTION, DESIGN AND ANALYSIS
Ø Process Selection refers to the way an organization chooses to
produce its good or services.
Ø It takes into account
v selection of technology,
v capacity planning,
v layout of facilities, and
v design of work systems.

Ø In a project, the inputs are brought to the project location as they

are needed; there is no flow in the process.
v Example: building construction
Ø Companies choosing a job process often bid for work. Typically,
they make products to order and don't produce them ahead of
time. The specific needs of the next customer are unknown, and
the timing of repeat orders from the same customer is
unpredictable. Each new order is handled as a single unit--as a
job.

Ø Products are produced in batches, for example, to fill specific

customer orders. A batch process executes different production
runs for different products. The disadvantage is the setup time
required to change from one product to the other, but the
advantage is that some flexibility in product mix can be achieved
Ø An assembly line processes work in fixed sequence. However,
the assembly line connects the activities and paces them, for
example, with a conveyor belt. A good example of an assembly
line is an automobile plant.
Ø Forecast is a statement about the future value.
Ø Better those predictions more informed the decisions are.

Translate customer wants and needs into products.

Ø Formulate cost targets.
Ø Formulate quality goals.

Ø Process selection also involves introducing the advancements in

the equipments.
Ø Process of determining the production capacity needed by an
organization to meet changing demands.

Ø Process by which the placement of departments and workgroup

within a facility are determined.

Ø Work design defines a product’s characteristics of:

• appearance,
• materials,
• dimensions,
• tolerances, and
• performance standards.
Ø Product design – the process of defining all of the companies
product characteristics
Ø Product design is concerned with form and functions of a
product. It refers to the arrangement of elements or parts that
collectively form a product.
Various aspects in product design
• Design for function:
• Design for making:
• Design for selling:
Ø Process analysis is the documentation and detailed
understanding of how work is performed and how it can be
redesigned
Ø The third and most difficult, role of operation is to drive strategy
by giving it a unique and long term advantage.
Ø The operations drives the company’s strategy.
Ø Managers must pay attention to 4 core processes
• supplier relationship
• NPD
• Order fulfillment
• Customer Relationship

Ø It establishes the boundaries of the process to be analyzed.

Ø The resources that management assign to improve or
reengineer the process should match the scope of the process
Ø Analyst should document the process.
Ø Documentation consists of:-
• process input
• supplier
• output
• customers

Ø It is important to have good measures to evaluate a process.

Ø Metrics are the performance measures for the process and steps
within it.
Ø Metrics should uncover the gaps or disconnects.
Ø Redesign=new process + documentation of
current process

Ø Implementation is more than just developing a plan and carrying

it out.
• Suggestion system
• Design team
• Metrics
• Flowcharts
• Service Blueprint
THANK YOU