Bangalore 1 MBA Semester 2 Operations Management Ms

Bangalore 1 MBA, Semester 2 Operations Management Ms. Aarti Mehta Sharma

Bangalore Module 1 Importance Scope 2

Fed. Ex • Why are they successful? – Fast – On-time deliveries – Relatively low cost – Technology in shipment tracking Bangalore 3

Bangalore Operations Management Is the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services 4

Bangalore diff from…. • Operations research / Management Sciences / Industrial Engineering • OM uses the above tools to take decisions 5

Bangalore • A manager is … 6 • … someone who plans, acquires and manages resources needed to meet specific objectives. • • • PLANS ACQUIRES MANAGES

Organisation Chart Bangalore 7

Bangalore 8

OM’s Transformation Process Bangalore 9

Operations Management Bangalore Management of the conversion process which transforms inputs such as raw material and labour into outputs in the form of finished goods and services. 10 Inputs (materials, employees and/or customers) Transformation Process Outputs (Products and services)

Bangalore Transformation process at a Food Processor 11 Inputs Raw Vegetables Metal Sheets Water Energy Labour Building Equipment Process Cleaning Making cans Cutting Cooking Packing Labelling Output Canned vegetables

Bangalore Transformation process at a Hospital Inputs Process Output Doctors Nurses Building Medical supplies Equipment Labs Examination Surgery Monitoring Medication Therapy Healthy patients 12

Transformational Value – as a Bangalore competitive advantage • To add value 13 – Increase product value at each stage – Value added is the net increase between output product value and input material value • Provide an efficient transformation – Efficiency – perform activities well at lowest possible cost

Types of Operations Goods Producing Examples Bangalore 14 Farming, mining, construction, manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites

Differences between Manufacturers Bangalore and Service Organizations • Services: • • • Intangible product Product cannot be inventoried High customer contact Short response time Labor intensive 15

Differences between Manufacturers Bangalore and Service Organizations • Manufacturers: • • • Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive 16

Bangalore Similarities-Service/Manufacturers • All use technology • Both have quality, productivity, & response issues • All must forecast demand • Each will have capacity, layout, and location issues • All have customers, suppliers, scheduling and staffing issues 17

Bangalore Goods vs. Services Differences Goods (Produce a car) Services (Teach a class) Output Tangible Intangible Customer contact Low High Uniformity of input High Low Labor content Low High Quantity of Output High Low Measurement of productivity Easy Difficult Quality assurance Easy Difficult 18

USA (Apr 2009) Bangalore 19

Why OM ? Bangalore • For long-run success companies must place much important on their operations 20 – The 1950 -1960 era was the U. S. golden era where primary opportunities were marketing – The 1970 -1980 U. S. companies experienced a large decline in productivity growth – international firms began to challenge in many markets – The 1970 -1980 era saw U. S. firms lagging behind in methods and processes – The resurgence of American business in the 1990’s capitalized on improved operations

Scientific management - 1900 s Bangalore time line Year Concept 1910 Principles of scientific management Industrial Psychology Moving Assembly Line Economic Lot Size Tool Time study work study Origination Taylor (US) 21 Motion study Frank and Lillian Gilbreth(US) Activity Henry Ford and Scheduling Henry Gantt (US) Chart EOQ applied Harris (US) to Inv control

Bangalore 22

Bangalore Competitive Priorities • Competitive advantage denotes a firm’s ability to achieve market and financial superiority over its competitors. • Competitive priorities represent the strategic emphasis that a firm places on certain performance measures and operational capabilities within a value chain. 23

Based on … • Cost • Quality • Time • Flexibility • Innovation Bangalore 24

Bangalore Competitive Priorities • Every organization is concerned with building and sustaining a competitive advantage in its markets (see BMW). 25 • A strong competitive advantage is driven by customer needs and aligns the organization's resources with its business opportunities. • A strong competitive advantage is difficult to copy, often because of a firm’s culture, habits, or sunk costs.

Bangalore Time Line for Operations Strategies 26

1930 s Concept Tool Bangalore Origination 27 Quality Control Sampling Inspection Shewhart, Dodge and stat tables for and Romig(US) quality control Hawthorne Activity sampling for Mayo and Tippett studies work analysis (England )

1940 s, 50 s and 60 s Concept Tool Bangalore Origination 28 Multidiscipli Linear nary team Programming approaches OR Tools OR groups (England) and Dantzig (US) Simulation, US AND Europe Waiting line theory, decision theory, PERT, CPM

1970 s Concept Widespread use of computers in business Service Quality and Productivity Tool Shop Scheduling, inventory control, forecasting, MRP Bangalore Origination Company mfrers - IBM Mass Production in Mc Donalds the service sector 29

1980 s Concept Strategy Paradigm Tool Mfg as a competitive weapon JIT, TQC Kanban, and factory pokayokes automation CAD/CAM Synchronou Bottleneck s mfg analysis, theory of constraints Bangalore Origination Harvard Bus School faculty (US) 30 Tai-Chi onho of Toyota (Japan), Deming and Juran Goldratt (Israel)

1990 s Concept Tool Bangalore Origination 31 TQM, BPR Concurrent Michael Hammer Engg, improvem and US consulting ent paradigm firms Electronic Enterprise Internat, World Wide Web SCM SAP, client / SAP(Germany), server software ORACLE(US) US Government, Netscape, Microsoft

2000 s E Commerce – Internet, Amazon, e. Bay, Yahoo ! Bangalore 32 Outsourcing and FLATTENING of the world

Bangalore Index Of Industrial Production • abstract number, • the status of production in the industrial sector for a given period of time as compared to a reference period of time. • single representative figure to measure the general level of industrial activity in the economy. • Short-term indicator of industrial growth till the actual results from Annual Survey of Industries (ASI) become available. 33

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Bangalore www. mospi. nic. in • Government for policy planning purposes • Industrial Associations, Research Institutes and Academicians. • Mining, Manufacturing and Electricity 37

What do Operations Managers do? • Define Competitive advantage • Choose one of these : Dominos, ICICI Prudential, TVS Bike, VLCC, ITC, Wonder La, Amity, B - and list the main § activities the operations § § manager must manage. • What is each company’s § § competitive advantage ? Bangalore 38 role demands planning decisions coordination systems

Bangalore • Read “The Goal” - Eliyahu M. Goldratt “Jack Welch and the GE Way” - Robert Slater 39