MMZG533

Manufacturing Planning & Control

BITS Pilani
Pilani Campus Venkatesh PS/ Pavan Potdar
 BITS Pilani
Pilani Campus

MM ZG533, Manufacturing Planning &

Control - Introduction
Lecture No. 1
Session 1
Pre-Read:
The Goal (Chapters 1 to 5)
T1 – Chapters 1 and 2

Pre-work – Use a commercial passenger airline company to illustrate a

service organization’s operations system. The system consists of
the airplanes, the airport facilities, maintenance facilities and
involved multiple locations spread geographically. Explain the key
activities under various heads that would come under the scope of
operations management.

BITS Pilani, Pilani Campus

Introduction to Operations
Management
• Operations Management
• Why study Operations Management
• Transformation Processes defined
• Operations as a service
• Importance of Operations Management
• Historical Development of Operations Management
• Current Issues in Operations Management

BITS Pilani, Pilani Campus

What is Operations
Management?
Operations management (OM) is defined as the design,
operation, and improvement of the systems that create
and deliver the firm’s primary products and services

BITS Pilani, Pilani Campus

What is Operations
Management?
Systematic
Approach
to Org
Processes

Operations Career
Business
Education Manageme Opportuniti
es
nt

Cross-
functional
Application
s

BITS Pilani, Pilani Campus

What is Operations
Management?
Production is the creation of goods and services

Operations Management is the set of activities that creates

value in the form of goods and services by transforming
inputs to outputs.

BITS Pilani, Pilani Campus

What is a Transformation
Process?
Transformation
Example
A transformation type
process is defined as
Physical Manufacturing
a user of resources to
transform inputs into Locational Transportation

some desired outputs Exchange Retailing

Storage Warehousing

Informational Communication

BITS Pilani, Pilani Campus

Core Services
Core Services Performance Objectives
Core services are
basic things that
customers want from
products they
Quality
purchase

Operations
Flexibility Speed
Mgmt

Price

BITS Pilani, Pilani Campus

Value-added Services

Value-added services Problem-

Solving
differentiate the
organization from
competitors and build
relationships that bind Informatio Operations
Management
Sales
n Support
customers to the firm
in a positive way.

Field
Support

BITS Pilani, Pilani Campus

Organizing to Produce
goods and services
Essential functions

Marketing Generates Demand

Supply chain (incl

Creates the product
production)

Tracks how well the

Finance/ Accounting organization is doing,
pays bills, collects money

BITS Pilani, Pilani Campus

Role of Operations Management
in the Organisation

Finance Operations Marketing

Plant Manager Operations Manager Operations Director

Manufacturing,
Prodn control,
Quality Assurance,
Engineering,
Purchasing,
Maintenance

BITS Pilani, Pilani Campus

Org charts example

BITS Pilani, Pilani Campus

Why study Operations
Management?

Need to know
One of 3 major
how goods and
functions in an
services are
organization
produced

Understand what Operations is

operations typically where
managers do large costs sit

BITS Pilani, Pilani Campus

Importance of Operations
Management
• Need for Synergy
• With other functions
• Teamwork

Typically Operations account for almost 60 - 80% of the

direct expenses of an organisation and therefore has a
direct impact on the bottomline (profits).

BITS Pilani, Pilani Campus

What do operations managers
do? – 10 Strategic decisions

Process and
Design of goods
Managing quality Capacity design
and services
and management

Human
Location strategy Layout strategy resources and
job design

Supply chain Inventory

Scheduling
management management

Maintenance

BITS Pilani, Pilani Campus

Design of Goods and
Services

What goods or
services should
we offer?

How should we
design these
products and
services?

BITS Pilani, Pilani Campus

Managing Quality

How do we
define
quality

Who is
responsible
for quality?

BITS Pilani, Pilani Campus

Process and capacity
design

What process? What capacity?

What equipment
and technology
for the underlying
processes?

BITS Pilani, Pilani Campus

Location strategy

Where should
we put any
facilities?

On what criteria
should we base
the location
decision?

BITS Pilani, Pilani Campus

Layout strategy

How should we
arrange the
facility?

How large must

the facility be to
meet our plan?

BITS Pilani, Pilani Campus

Human resources and job
design

How do we
provide a
reasonable work
environment?

How much can

we expect our
employees to
produce?

BITS Pilani, Pilani Campus

Supply chain management

Should we make Who, what, when,

or buy? Goods or what terms and
services…. conditions?

Who are our

suppliers and who
can we integrate
well with?

BITS Pilani, Pilani Campus

Inventory Management

Balance cash/ Net

What, how much
Working Capital
and when to hold
and service/
inventory
efficiency needs

When to order or
produce

BITS Pilani, Pilani Campus

Scheduling

Medium-term planning
to maximize throughput
and minimize costs
while meeting service
requirements

Intermediate and short-

term scheduling
• Managing peaks and troughs
• Efficiency vs Effectiveness
• Job sequencing to improve
efficiency

BITS Pilani, Pilani Campus

Maintenance

Who is responsible for

maintenance?

When do we do
maintenance?
• Balancing resources,
production demand, facility
capacity, personnel, etc.

BITS Pilani, Pilani Campus

Where are the OM jobs?

Facilities/
Technology/ Strategic
Space
Methods issues
utilization

People/
Response Customer
Team
time service
development

Cost Inventory
Quality
reduction reduction

Productivity
Sustainability
improvement

BITS Pilani, Pilani Campus

Historical development of
Operations Management
• JIT – Just in Time
• TQC – Total Quality Control
• Service Quality and Productivity
• Total Quality Management and Quality Certification
• Business Process Re-engineering
• Supply Chain Management
• Electronic Commerce

BITS Pilani, Pilani Campus

Significant events in
Operations Management

BITS Pilani, Pilani Campus

Current Issues in
Operations Management
• Coordinating relationships
between mutually supportive but
separate organizations Supply Chain
• Optimizing global suppliers, Globalization
Partnering
production, and distribution
networks
Rapid
• Increased co-production of goods Product
and services Sustainability
development
• Managing customers’ (and demise)
experiences during service
encounters
Mass Lean
• Raising the awareness of customization Operations
operations as a significant
competitive weapon

BITS Pilani, Pilani Campus

Example 1

Pre-work – Use a commercial passenger airline company to illustrate a

service organization’s operations system. The system consists of
the airplanes, the airport facilities, maintenance facilities and
involved multiple locations spread geographically. Explain the key
activities under various heads that would come under the scope of
operations management.

BITS Pilani, Pilani Campus

Example 1 - Commercial
Passenger airline Operations
Pre-work – Use a commercial passenger airline company to illustrate a
service organization’s operations system. The system consists of
the airplanes, the airport facilities, maintenance facilities and
involved multiple locations spread geographically. Explain the key
activities under various heads that would come under the scope of
operations management.

BITS Pilani, Pilani Campus

Commercial Passenger
airline Operations system
Forecasting such things as weather and landing conditions, seat demand for flights, and the growth in
air travel, pricing impact on demand, etc.
Capacity planning, essential for the airline to maintain cash flow and make a reasonable profit. (Too
few or too many planes, or even the right number of planes but in the wrong places, will hurt profits.)
Facilities and layout, important in achieving effective use of workers and equipment
Scheduling of planes for flights and for routine maintenance; scheduling of pilots and flight attendants;
scheduling of ground crews, counter staff, baggage handlers
Managing inventories of such items as foods and beverages, first aid equipment, in-flight magazines/
pillows/ blankets/ life vests/ travel kits
Assuring quality - essential in flying and maintenance operations - with emphasis on safety; quality of
customer experience in ticketing/ check-in/ queue management/ baggage handling/ telephone and
electronic reservations, where emphasis is on efficiency and courtesy.
Motivating and training employees in all phases of operations,
Locating facilities according to management/ strategy decisions on which locations to provide service
for location of major and minor hubs, etc.

BITS Pilani, Pilani Campus

Example 2 – Pharma company
making a strategic change in
direction
You are called upon to create the Operations Strategy
Design of goods Managing
for a large European pharmaceutical company that and services quality

wants to move into higher value products sold to

Process and
Capacity design Location
customers world-wide from its current position of a mid- and strategy
management
market player in bulk pharmaceutical chemicals for the
Human
West European market. What are the key changes the Layout strategy resources and
job design
company needs to make to its current operations
strategy – clarify the current strategy and what it needs Supply chain
management
Inventory
management

to move to. Focus on product selection/ design, quality/

process requirements, layout, human resources, supply Scheduling Maintenance

chain, inventory, production scheduling and

maintenance focus.
BITS Pilani, Pilani Campus
Example 2 – Pharma company
making a strategic change in
direction
Current operations strategy likely to be focused on achieving:
• Low-cost
• High-volume
Design of goods Managing
and services quality
• Standardized production of bulk pharmaceutical chemicals
• Relatively simple and stable product portfolio Process and

• Regional customer base

Capacity design Location
and strategy
• Lean and efficient supply chain. management

Human
However, this strategy may not be suitable for the desired Layout strategy resources and
job design
position of a global leader in higher value products, which
may require:
• More innovation Supply chain
management
Inventory
management
• Greater differentiation
• Higher quality
• Greater agility in operations. Scheduling Maintenance

• Based on the above, what needs to change and how?

Across each of the critical decision-making areas?
BITS Pilani, Pilani Campus
Example 2 – Pharma company
making a strategic change in
direction
Product selection/design

Quality/process requirements
Diversify product portfolio Enhance quality management system

Offer more value-added products and processes to ensure consistent

(different customer segments and and reliable delivery of high-quality

markets) products to customers.

Need to invest more in research & Advanced quality control and

development assurance methods

Adopting new technologies and Adopting more rigorous quality

modalities standards and certifications.

Collaboration with external partners. Optimize production processes to

improve efficiency, flexibility, and
Design with quality, safety, efficacy,
productivity
compliance and sustainability in mind.
Mixed model assembly lines with
automation, robotics, artificial
intelligence, and analytics

BITS Pilani, Pilani Campus

Example 2 – Pharma company
making a strategic change in
direction
Human resources
Layout
Redesign your facility layout to
accommodate the increased
complexity and diversity of product
portfolio and processes.
Creating more modular and flexible
production units that can handle
different types of products and
technologies, as well as integrating
more digital and smart systems that
can enable real-time monitoring,
communication, and optimization of
operations.
Consider expanding or relocating
some facilities to access new markets
or resources, or outsourcing some
activities to external providers.
Upgrade human capital and
capabilities to support innovation and
growth
Hire more skilled and qualified
workers who can operate the new
technologies
Developing more training and
development programs to enhance
employee competencies and
performance.
Foster a more collaborative and agile
culture - encourage creativity,
learning, problem-solving, and
adaptation among your employees.
BITS Pilani, Pilani Campus
Example 2 – Pharma company
making a strategic change in
direction

Inventory
Supply chain

Transform from a lean and efficient Adjust inventory policies to balance

one to a more resilient and agile one between cost, service and risk
to cope with the increased uncertainty Create safety stock or buffer inventory
and volatility in the global market. to protect against demand fluctuation
Diversifying sources of raw materials, and supply disruptions
components, and services Choose the right inventory
Establish more strategic partnerships management technique (EOQ/ ROP/
and alliances with suppliers. Adopt JIT)
more advanced supply chain
management practices such as
demand forecasting, inventory
optimization, risk mitigation,
contingency planning, and digital
integration.

BITS Pilani, Pilani Campus

Example 2 – Pharma company
making a strategic change in
direction
Production scheduling

Maintenance focus
Optimize utilization of resources and Shift maintenance focus from
the fulfillment of your customer reactive/ preventive maintenance to
orders. predictive or prescriptive maintenance

More dynamic and responsive Leverage data analytics and artificial

scheduling approaches that can adapt intelligence to anticipate or prevent
to changing demand or capacity failures before they occur.
conditions

BITS Pilani, Pilani Campus

The Goal – Chapter 1
Chapter 1

This chapter introduces the main character Mr. Alex Rogo, an industrial
engineer and an MBA graduate who manages a plant of the UniCo
Manufacturing Corporation. He arrives at the office one morning to discover
that his parking slot has been taken by the division Vice President Mr. Bill
Peach. The conversation becomes heated when they discuss order #41427
that is seven-weeks overdue. Bill is very angry and warns Alex that he must
turn around the factory within 3 months or it will be shut down. Further, the
overdue order must be shipped that very same day or else...... Sounds like
the problems in your company?

BITS Pilani, Pilani Campus

The Goal – Chapter 2
Chapter 2

Alex reflects back back on his travels, finding himself back at the place where
he started from. "I’m 38 years old and a crummy plant manager."

The scene shifts to Alex’s home life. His wife Julie is from the city and is
struggling to adjust to small town life. They get into an argument when Julie
wants to go out for lunch. He promises her to be back early that night and
then heads towards the plant...

Alex reaches office only to discover a worse-case scenario wherein a

machine has completely stalled. He pushes all the employees to work extra
hours and somehow, order #41427 finally gets shipped late that night. But this
achievement comes at the cost of declining efficiencies and further delays for
other orders. Later that night, while at dinner with a colleague, he reflects
upon the mismatch between the company's MIS system reports and actual
profits...

BITS Pilani, Pilani Campus

Thank you

BITS Pilani, Pilani Campus