Production & Operations

Management

Lecture by
T.V.SIDDHARTHA
BE, MBA, PGDM, MSc (Psychology)

siddhartha.tv@gmail.com
 Unit-1

Introduction to Production & Operations

Management
 1.1. Operations Management
Definitions:

• An operations system is defined as one in which several

activities are performed to transform a set of inputs into
useful output using a transformation process

• Operations Management is a systematic transformation

process that converts some inputs into output that are
useful, and could fetch revenue to the operations system
Operations as a transformation process

Suppliers Customers

INPUT

•Material TRANSFORMATION OUTPUT

•Machines PROCESS
•Men
•Managemen •Goods
•Services
t
•money

Feedback & Requirements

 Operations as technical core
• Operations
• Marketing
• Finance and
accounting
• Human resources
• Outside suppliers
Operations Management relation to
other fields
• Accounting • “As an auditor you must
understand the fundamentals
of operations management.”
• Information • “IT is a tool, and there’s no
better place to apply it than in
Technology operations.”
• “We use so many things you
learn in an operations class—
• Management scheduling, lean production,
theory of constraints, and
tons of quality tools.”
Operations Management relation to other
fields (cont.)
• Economics • “It’s all about processes. I live
by flowcharts and Pareto
analysis.”
• “How can you do a good job
• Marketing marketing a product if you’re
unsure of its quality or delivery
status?”
• “Most of our capital budgeting
• Finance requests are from operations,
and most of our cost savings,
too.”
 1.2. Objectives of POM
1. Optimal use of resources (me, machines,
materials ..etc)
2. Ensuring quality of goods are produced at
minimal cost
3. Implementation of both Qualitative and
Quantitative techniques effectively
4. Good Decision making
 POM functions
1. Production planning (Before the start of manufacturing)
2. Production control (During the manufacturing)
3. Quality control (ISO, 6 sigma, CMMI ..etc)
4. Industrial engineering (Machinary design ..etc)
5. Purchasing (Buying of raw material and machines)
6. Plant engineering
7. Manufacturing
8. Method analysis
9. Inventory control (Stock management)
10. Plant layout
11. Work measurement
1.3. Historical development of
POM
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Frank and Lillian
Scientific Time and motion studies 1911 Gilbreth
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
Historical development of POM (cont.)
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human 1940s Abraham Maslow
Relations Motivation theories 1950s Frederick Herzberg
1960s Douglas McGregor
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
Operations Operations research
line theory, decision 1950s
Research groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others
Historical development of POM (cont.)
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
1980s
management) Joseph Juran
Quality Strategy and Wickham Skinner,
1980s
Revolution operations Robert Hayes
Business process Michael Hammer,
1990s
reengineering James Champy
Six Sigma 1990s GE, Motorola
Historical development of POM (cont.)
Era Events/Concepts Dates Originator
Internet Internet, WWW, ERP, 1990s ARPANET, Tim
Revolution supply chain management Berners-Lee SAP,
i2 Technologies,
ORACLE
E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
Globalization WTO, European Union, 1990s Numerous countries
and other trade 2000s and companies
agreements, global supply
chains, outsourcing, BPO,
Services Science
 1.4. POM today’s and tomorrow’s
scenario
MARKET PLACE PRODUCTION
CHALLENGES CHALLENGES
• Market fragmentation • Process design and
• Vocal customers improvements
• Customer – supplier • Human resources
relationship scarcity
• Disruptive • Declining / Increasing
technologies raw material prices
POM today’s and tomorrow’s scenario
(cont.)
TECHNOLOGICAL SOCIETAL
CHALLENGES CHALLENGES
• Technology changes • The Environment
• Intellectual property
GEOGRAPHICAL
CHALLENGES
• China
• Japan
• India
 1.5. Product design
Definition

“A product is a bundle of physical services and symbolic

particulars expected to yield customer satisfaction”

Typology of Products:

• Goods
• Services
• Contracts
 The Product Design Process
• Step 1 - Idea Development
- Someone thinks of a need and a product/service design to satisfy it
e.g. customers, marketing, engineering, competitors,
benchmarking, reverse engineering
• Step 2 - Product Screening
- Every business needs a formal/structured evaluation process
e.g. fit with facility and labor skills, size of market, contribution margin,
break-even analysis, return on sales
• Step 3 – Preliminary Design and Testing
- Technical specifications are developed, prototypes built, testing starts
• Step 4 – Final Design
- Final design based on test results, facility, equipment, material, & labor
skills defined, suppliers identified
 Concepts involved in Product design
1. Reverse Engineering
(process of carefully dismantling the existing product)
Ex: Camera Reel – Digital Cam
Audio Cassette – CD
Walkman – I Pod …etc
2. Research & development
(India produces up to 10000 Doctorates per anum0
3. Manufacturability
4. Standardization
5. Robust design
6. Concurrent Engineering
7. CAD (Computer Aided design)
8. Product Life Cycle
 Product Life Cycle
• Product life cycle – series
of changing product
demand
• Consider product
life cycle stages
– Introduction
– Growth
– Maturity
– Decline
• Facility & process
investment depends on
life cycle

© 2007 Wiley
 1.6. Process design
• Process design consists of several steps involved in the
production process
• Factors affecting Process Design decisions
– Nature of product / service demand
– Degree of vertical integration (Forward & Backward
integration)
– Product/ Service and volume flexibility
– Degree of automation
– Level of Product/Service quality
– Degree of customer contact
 Typology of the Processes
Processes by Market
Orientation
• Make to Stock (MTS)
Ex: (Shirts, jeans ..etc)
• Assemble to Order (ATO)
Ex: (Computers ..etc)
• Make to Order (MTO)
Ex: (Private Jets ..etc)
• Engineer to Order (ETO)
Ex: (Specific Industrial
equipment ..etc)
Processes as Production
System
• Project
• Job Shop
• Batch Production
• Assembly Line
• Continuous Flow
• Cell Manufacturing
• Flexible manufacturing
Systems
 Process Improvement stages
1. Determine strategic dimensions
2. Identify the inputs, outputs, and customers of the
process
3. Identify the performance measures
4. Document the process
5. Process improvement
6. Process Re-Engineering
 1.7. Manufacturing Process
Technology
• Production process planning
– Manufacturing concept planning
– Factory layout planning and analysis
• work flow simulation.
• walk-path assembly planning
• plant design optimization
– Mixed model line balancing.
– Workloads on multiple stations.
– Process simulation tools e.g. die press lines, manufacturing lines
– Ergonomic simulation and assessment of production assembly tasks
– Resource planning
• Computer Aided Design (CAD)
• Computer-aided manufacturing (CAM)
– Numerical control CNC
– Direct Numerical Control (DNC)
– Tooling/equipment/fixtures development
– Tooling and Robot work-cell setup and offline programming (OLP)
 1.7. Manufacturing Process
Technology (cont.)
• Generation of shop floor work instructions
• Time and cost estimates
– ABC - Manufacturing activity-based costing
– Production, costs, and pricing
• Quality Computer-aided quality assurance (CAQ)
– FMEA Failure mode and effects analysis
– SPC Statistical process control
– Computer aided inspection with coordinate-measuring machine (CMM)
– Tolerance stack-up analysis using PMI models.
• Success Measurements
– Overall Equipment Effectiveness (OEE),
• Communication with other systems
– Enterprise resource planning (ERP)
– Manufacturing Operations Management (MOM)
– Product Data Management (PDM)
– SCADA (Supervisory Control and Data Acquisition) real time process monitoring and
control
– Human-machine interface (HMI) (or man-machine interface (MMI))
– Distributed control system (DCS)
Manufacturing Process Technology
 1.8. Value Analysis
• Value analysis is an approach to improving the value
of a product or process by understanding its
constituent components and their associated costs. It
then seeks to find improvements to the components by
either reducing their cost or increasing the value of the
functions.
• Value is the ratio of Function and Cost

Value = Function
Cost
Where “Function” is expressed as units of performance
“Cost” is expressed as monetary unit
 Concepts of Value analysis
• Value: the ratio between a function for customer
satisfaction and the cost of that function.

• Function: the effect produced by a product or by one of

its elements, in order to satisfy customer needs.

• Value analysis: methodology to increase the value of an

object – the object to be analysed could be an existing or
a new product or process, and it is usually accomplished
by a team following a work plan.

• Need: something that is necessary or desired by the

customer
 Procedure of Value analysis
1. Identify each of the functions of a product or service list
them down
2. Rearrange the functions on the basis of their
importance
3. Identify each of the components in the product or
service list them down
4. Relate the functions of components to the functions of
product or service
5. Identify the cost of each component
6. Compare the weights of the functions and weights of
costs of each component
7. Identify those components where the ratio of
Function/Cost is low
 Guidelines to students
• Take help of the dictionary to understand the terminology
used in this study material
• Elaborate the answers with examples discussed in the
class room
• Refer the following books for in-depth understanding of
the subject
– POM by Upendra Kachru (Excel Books)
– POM by Panneeselavam (PHI)