Presentation on theme: " The term Production is used mainly for organizations that are involved in manufacturing of goods, such as automobiles, electronics, garments or foot."— Presentation transcript:
The term Production is used mainly for organizations that are involved in manufacturing of goods, such as automobiles, electronics, garments or foot wear etc. Also called manufacturing process. The term Operations is used for organizations that provide service to others e.g. FedEx delivers 5.5 million packages each day with sales of $26 billion each year. Also called service process.
Operation Management deals with processes. What is a Process? Any activity or group of activities that takes one or more inputs, transforms them and provides one or more outputs for its customers.
Fundamental activities that organizations use to produce goods and to provide services and achieve goals. E.g. FedEx must receive packages from customers, sort them by destiny, move them to the required destination by air or ground transportation, keep track of their progress and bill the customer for the service.
External environment Information on performance Internal and external customers Figure 1.1 Processes and operations Inputs Workers Managers Equipment Facilities Materials Land Energy Outputs Goods Services
Process is much broader then the boundaries of departments within an organization. A single process may involve work flow that spread across many departments. E.g. at Serena hotels various departments and activities coordinate to serve their guests such as, reservation, Reception, baggage collection, room services, food & beverages, House keeping, laundry, restaurants and billing & accounts department etc. Effectiveness of any organizations is actually due to the effectiveness of its processes.
Planning and controlling for processes of any service or manufacturing firm is very complicated, as a single process may consist of many different activities or actions performed by various department or person. A single process may be broken down into sub processes which can be broken down into further. The concept of a process within a process is called NESTED PROCESS.
Manufacturing process Service process Physical, durable output Output can be inventoried Low customer contact Long response time Capital intensive Quality easily measured Intangible, perishable output Output cannot be inventoried High customer contact Short response time Labor intensive Quality not easily measured Figure 1.2
Material & Service Inputs Sales Revenue Product & Service Outputs Finance Acquires financial resources and capital for inputs Marketing Generates sales of outputs Operations Translates materials and service into outputs Support Functions Accounting Information Systems Human Resources Engineering Figure 1.3
The systematic design, direction, and control of processes that transform inputs into useful services & products for internal, as well as external customers.
Activities that relate to the creation of goods and services through the transformation of inputs into outputs. The field of OM is multidimensional constantly changing.
Planning for operations Product & Service Design Quality Inventory Cost Facility Location Facility Layout Materials Production Planning Forecasting Material Planning Scheduling Supply Chain Management Technology Planning for Manpower
Processes can be linked together to form a value chain – interrelated processes within a firms and across different departments that produce a service or product to the satisfaction of the customers.
Support Processes External suppliers External customers Inbound Logistics operations Outbound logistics Marketing, Sales and Services Figure 1.4 Core Processes
Core processes are sets of activities that deliver value to external customers 1.Inbound Logistics 2.Operations 3.Outbound Logistics 4.Marketing/Sales & Services Support processes provide vital resources and support to the core processes
TABLE 1.1 | EXAMPLES OF SUPPORT PROCESSES Capital acquisitionThe provision of financial resources for the organization to do its work and to execute its strategy BudgetingThe process of deciding how funds will be allocated over a period of time Recruitment and hiringThe acquisition of people to do the work of the organization Evaluation and compensationThe assessment and payment of people for the work and value they provide to the company Human resource support and developmentThe preparation of people for their current jobs and future skills and knowledge needs Regulatory complianceThe processes that ensure that the company is meeting all laws and legal obligations Information systemsThe movement and processing of data and information to expedite business operations and decisions Corporate and functional managementThe systems and activities that provide strategic direction and ensure effective execution of the work of the business
Nokia Value Chain
Internal &external Supplier Internal & External Customer Internal Supplier › The employees or processes that supply important information or materials to a firm’s processes. External Supplier › The businesses or individuals who provide the resources, services, products and materials for the firm’s needs. Internal customer › One or more employees that rely on inputs from other employees in order to perform their work External customer › A customer who is either an end user or a business user, buying the firm’s products and services.
The modern OM has gone through a long evolution process over more than a century and has taken the shape of how we know it today. Here are some important milestones and developments in the field of OM over the years.
Early 1900s – 1940s: The era of industrial revolution and inventions. Focus was on identifying ways to produce on a large scale at minimum cost. Focus on Quality control and mass inspection was an important development in 1930s. Most important concepts of this era are: Scientific Management by Fredrick Taylor Time and Motion study Activity scheduling chart (GANTT Chart) Quality Control by using inspection statistical product control Hawthorne studies of worker motivation
Late 1950s – early 1960s: The specific concept of operations management was introduced. Scholars identified the commonalities of all production systems and emphasized the important of viewing production operations as a system. Most important concepts of this era are: PERT Chart Decision Theory Critical path method (CPM) Mathematical Programming models
1970s: Introduction of computer technology in business operations. Proves to be a new revolution in OM. Most important concepts of this era are: Forecasting Scheduling techniques Inventory Control Project Management Service Quality & productivity
1980s: This era marks the development of manufacturing strategy paradigm by the researcher of Harvard Business School. Use of sophisticated computer technology for manufacturing and operations. Just in Time philosophy Factory Automation Robots (CIM) CAD/CAM
1990s: Major development of this era is TQM. Development of industry standards for quality ISO 9000 certification standards created by International Organization for Standardization. TQM Process Re-engineering Supply Chain Management Electronic enterprise (Internet) SAP/Oracle software 2000s: Enterprise Resource Planning (ERP) E-commerce