Operations Management

Samyr J. B.
 input
• Planning : forecasting, identification of
alternatives, preparations of corporate plan
• Man power : recruitment training
• Materials
• Machinery
• Money
• Technology
• Time
 Transformation Model
• Inputs
• Processor
• Output
• According to Slack et al (2001:10), the inputs
to an operation can be conveniently classified
as either:
• • Transformed resources –
• Transforming Resources
 Transformed Resources
• Transformed resources – the resources that
are treated, transformed or converted in some
way. These are usually a mixture of materials,
information and customers, with one of these
being usually more dominant in an operation.
• the transformation of information (for example,
consultancy firms or accountants) or the
transformation of customers (for example,
hairdressing or hospitals).
 Transforming Resources
• Transforming resources-the resources that act upon the transformed
resources. There are two types, which form the “building blocks” of
all operations. It can be classified into
1. tangible resources and 2. intangible resources.

The exact nature of each one of these will differ between operations.
• o Tangible resources (Facilities) – the buildings, equipment, plant,
capital and process technology of the operation.
• o Intangible resources (Staff) – those who operate, maintain, plan and
manage the operation (i.e. all the people in the operation, at any level
with the competency, knowledge and skills.
Communication and information systems are also classified as
intangible resources).
 Resource based View
• A resource, or a set of resources, can be used to create
competitive advantage.

• 2.1:The Resource-Based View: Relationships between

Assets, Capabilities and Competencies (Miller,
1998:119).
• Tangible Assets
+ x Capabilities = Competencies
=Competitive Advantage
• Intangible Assets
 Cont…
• Competencies refer to the fundamental
knowledge owned by the organisation or body
(knowledge, know-how, experience,
innovation, and unique information).
• Capabilities reflect an organisation’s ability to
use its competencies.
 Processor
• This is the enterprise itself. Factors influencing
processor:
1. Product Mix: primary concern of the processor
is the product mix.
Product mix is a combination of products
manufactured
Decisions on product mix is influenced by the
market potential, infrastructure availability and
competetion.
 Plant
• The conversion of the resources into product takes place.
Factors include plant location, building maintenance safety
etc.
• Labour cost: here two factors are important :
1. Number of workers
2. Cost of labour
Production Cost: depends on cost of production and overhead
cost. Cost of production depends on the product,
technology, delivery terms etc.
Overhead depends on many factors like fixed cost, supervision
etc.
 Material cost
• Major factor in production. It is estimated
nearly 60% of the cost of production is due to
the material cost.
 process
• According to Melnyk et al (1996:186),
• a process is the collection of activities that transforms the
inputs into an output: that means
• 1. A process is a collection of activities.
• 2. A process transforms the inputs (resources and
information) into outputs (goods, services, or information).
• 3. A process creates an output,
• 4.. Managers evaluate a process based on the level of value
that it generates.
• 5. Processes are linked to other processes.
 Processes
• Strategic Management Process - This type of process identifies, formulates, and implements
an organisation strategic vision of value and its overall objectives and goals. To generate this
output, it must manipulate inputs of information about the organisation’s unique
capabilities, needs and the potential costs and benefits.
• Innovation Process - This type of process generates new product and process designs.
Operations Managers often group these activities into narrower, supporting processes:
• Product design processes – The processes involved in designing and building new products.
• Process design process – The processes involved in designing and delivering new processes.
• Resource Management Process – This type of process combines the outputs of the strategic
management process (objectives) and the customer service process to determine the firm’s
resource needs.
• Supply Chain Management Process – This type of process recognises that every Operations
Management system depends on inputs from suppliers through the supply chain.
• Logistics Management Process – All but the smallest Operations Management systems
must solve problems that arise from physical or spatial separation.
 output
• The outputs from the transformation process
are goods and services, which are generally
seen as being different, in several ways.
• The principal outputs of a doctor's surgery are
cured patients; . In maruti udyog out put r cars.
Many transformation processes produce both
goods and services. For example, a restaurant
provides a service, but also produces goods
such as food and drinks.
 Cont..
• According to Melnyk et al (1996:200), any
operations management process can generate
up to three basic types of outputs:
• Goods – Physical products
• Services – Intangible products
• Information – Data generated by a process.