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5/2/2015SHARDA1 PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH

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Presentation on theme: "5/2/2015SHARDA1 PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH"— Presentation transcript:

1 5/2/2015SHARDA1 PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH

2 LearningHours Contact 40 Guided Study 25 Assessment 10 Total 75 5/2/2015SHARDA2

3 OBJECTIVE OF THE PAPER: The objective of this paper is to help the students to become effective managers in the competitive global environment. After studying it the students placed in various organizations whether manufacturing or service are supposed to take care of the very basic unit of the work that is process. They need to accept the challenge of both managing and understanding the interrelatedness of the enterprise wide activities. Summing up the aim of this course is to prepare the truly global operation manager equipped with all type of weapons to take care of the limited resources of an enterprise and transform them to the revenue and profit. PREREQUISITE: The basic knowledge of elementary math and statistics at least up to class XII level 5/2/2015SHARDA3

4 Teaching/Learning Approach The students will learn through a combination of face – to - face contact and guided study. Personal contact sessions will include Presentations, Case Study analysis and Quizzes. Guided study will include text readings and the use of a wide range internet based resources. 5/2/2015SHARDA4

5 TopicsCoverLect ures UNIT 1 1.Introduction Meaning and function of Production Management, Production system Production Organization Chart, Decision Making in Production Operation, Production Departments with various other departments and their importance. 2. Strategies Responsibility of Production Manger. Interdependencies of Operation strategies and decision making produce to stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies. 8 UNIT 2 3. Long term planning/strategy Facility location and facility layout. Factors affecting the location of facility, different types of layouts, product focused, process Focused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a facility. 4. Intermediate term planning/ strategy Capacities Planning, aggregate planning, hire and fire strategy etc. Identification and segregation of the operations based on the strategy selected 8 UNIT3 5. Shop floor control Resource planning, sequencing and scheduling, concept of JIT, manufacturing and assembly line balancing, preparation of Gantt Chart. 6. Project Management CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project. 8 UNIT4 7. Inventory Management Inventory definition, types and models, managing the inventory, classification of inventories, MPS, MRP, ERP. 8. Work Study & Productivity Productivity improving techniques, Cost reduction approach, Work and Method study, Work Order, Production Control and its importance 8 UNIT 5 9. Quality Concepts Production Quality Concepts and Internal Customer Approach, Introduction to the tools of quality management. 10. Safety Management Evolution of safety concepts, Electrical & Chemical hazards, ionizing and non ionizing Radiation, Personal protection, Material handling and shop floor design concepts, Environmental safety, fire prevention, introduction to OHSAS standards. 8 5/2/2015SHARDA5

6 SUGGESTED READINGS 1) Adam Jr Everetl E. R J – Production and Operations Management (Prentice-Hall, 2000, 5th Edition) 2) Chary - Production and Operations Management (Tata McGraw-Hill, 1997, 9th Edition) 3) Hill T- Operations Management (Palgrave, 2000) 4) Johnston R et al – Cases in Operations Management (Pitman, 1993) 5) McGregor D – Operations Management (McGraw-Hill, 1960) 6) Morton - Production and Operations Management (Vikas) 7) Haleem A- Production and Operations Management (Galgotia books, 2004) 8) Bedi Kanishka - Production & Operations Management (Oxford University Press, 2 nd Edition) 5/2/2015SHARDA6

7 Assignment 1 – Last for submission 30 th Jan Discuss the differences in scheduling systems for mass and batch production. 2.Take any manufacturing (Textile or Automobile) or Service (Banking or Hospital) organization and draw a schematic diagram of its overall process of input, Conversion & output. 3.The government is considering for expanding the local fire fighting system. Discuss the factors which you think crucial for such decision. 5/2/2015SHARDA7

8 BUSINESS Every business wants to be remarkable – to innovate, to build customer relationships, to grow and profit. In a perfect world, you could devote all your time to achieving those goals. But in the real world, challenges loom – margin pressures, regulatory compliance and risk, massive amounts of diverse information, and an increasingly mobile, fragmented workforce 5/2/2015SHARDA8

9 BUSINESS So how do you bring your real-world business a little closer to your perfect-world vision? You need solutions that enable efficient, collaborative, action-oriented decision making – and your people need the right information to do their jobs. 5/2/2015SHARDA9

10 PRODUCTION AND OPERATIONS MANAGEMENT 1.Introduction Meaning and function of Production Management, Production system Production Organization Chart, Decision Making in Production Operation, Production Departments with various other departments and their importance. 2. Strategies Responsibility of Production Manger. Interdependencies of Operation strategies and decision making produce to stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies. 5/2/2015SHARDA10

11 Disclaimers This is a course offered in the Sharda University MBA Program, and I will make adjustments to the topics to be covered in the course of study. Your feedback in this process is valuable, and will motivate me in continuous course improvement. Please do not hesitate to let me know, throughout the course, how I can improve the course and the your learning experiences in PRODUCTION AND OPERATIONS MANAGEMENT! 5/2/2015SHARDA11

12 PRODUCTION AND OPERATIONS MANAGEMENT: CONCEPTS AND APPLICATIONS OBJECTIVE: The objective of this COURSE is to help the students to become effective managers in the competitive global environment. After studying it the students placed in various organizations whether manufacturing or service are supposed to take care of the very basic unit of the work that is process. They need to accept the challenge of both managing and understanding the inter-relatedness of the enterprise with wide activities. 5/2/2015SHARDA12

13 5/2/2015SHARDA13 Many firms have demonstrated that operations management can be an effective competitive weapon. In conjunction with well-conceived marketing and financial plans, these firms have made major penetrations into markets worldwide. This course is designed to address the key operations issues in service and manufacturing organizations that have strategic as well as tactical implications. The specific objectives include:

14 5/2/2015SHARDA14 1. To understand the role of operations management in the overall business strategy of a firm. 2. To understand the interdependence of the operating system with other key functional areas of a firm. 3. To help managers in all functional areas better control their operational processes. 4. To identify and evaluate the key factors and the interdependence of these factors in the design of effective business and operating systems. 5. To identify and evaluate a range of tools appropriate to analyze and improve the business processes and operating systems of the firm. 6. To understand the application of operations management policies and techniques to service and manufacturing firms.

15 PRODUCTION AND OPERATIONS MANAGEMENT: CONCEPTS AND APPLICATIONS Summing up the aim of this course is to prepare the truly global operation manager equipped with all type of weapons to take care of the limited resources of an enterprise and transform them to the revenue and profit. 5/2/2015SHARDA15

16 You should Study Supply Chain if you…. want to make your business run faster need to resolve a supply chain bottleneck want to streamline your procurement need to know what new products your competitors may be taking advantage of want to solve a logistics challenge need to find the best supply chain management advice and services want to network and further your career need to upgrade your materials handling equipment want to compare new distribution service providers with your current supplier 5/2/2015SHARDA16

17 5/2/2015SHARDA17

18 5/2/2015SHARDA18 1. Free your heart from hate. 5. Expect less. 4. Give more. 3. Live simple. 2. Free your mind from worry. Remember these simple guidelines for happiness.

19 Thought for the Day… “Where ignorance is our master, there is no possibility of real peace”  Shri Dalai Lama 5/2/2015SHARDA19

20 5/2/2015SHARDA20 Supply Chain Begins With A typical supply chain begins with ecological and biological regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of ever- decreasing size and ever more remote geographical locations, and finally reaching the consumer.

21 Supply Chain Management Increasingly, supply chain management is being viewed not as a business function, but as a business approach. Supply chain management focuses on the management of the relationships between firms in the supply chain. Because these relationships can be complex, all business functions need to be involved. 5/2/2015SHARDA21

22 What’s the Problem? Some indications that supply chains have problems include: - Growing inventories of components and materials - Growing costs for expediting or accelerated delivery of components or materials shortages - Growing costs for return or restocking of unneeded components or materials - Growing costs of scrapping obsolete inventory 5/2/2015SHARDA22

23 Supply Chain Drivers Intellectual property (brand presence) Forecasts (accuracy) Procurement (who, where, when?) Inventory (JIT ?) Logistics (how, when?) Capacity Quality/safety Schedule Cost 5/2/201523SHARDA

24 Key Impact Areas Marketing: –Missed opportunities –Delayed product launches –Reduced agility Sales: –“Padded” delivery times Procurement: –Inaccurate forecasting Inventory: Over-stocking Operations: –Inaccurate forecasting –Over-production Management Decisions: –Wrong/ineffective decisions –Non-optimal production scheduling –Unnecessary interventions 5/2/201524SHARDA

25 5/2/2015SHARDA25 Questions?

26 INTRODUCTION Production / operations management is the process, which combines and transforms various resources used in the production / operations subsystem of the organization into value added product / services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products / services) having the requisite quality level. 5/2/2015SHARDA26

27 5/2/2015SHARDA27 What is Operations Management? Defined 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

28 Operations Management The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management 5/2/2015SHARDA28

29 Operations Management 5/2/2015SHARDA29

30 CONCEPT OF PRODUCTION Production function is that part of an organization, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level. Production is defined as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user.” Thus production is a value addition process. At each stage of processing, there will be value addition. Edwood Buffa defines production as ‘a process by which goods and services are created’. 5/2/2015SHARDA30

31 PRODUCTION SYSTEM The production system of an organization is that part, which produces products of an organization. It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management. 5/2/2015SHARDA31

32 PRODUCTION SYSTEM The production system has the following characteristics: 1. Production is an organized activity, so every production system has an objective. 2. The system transforms the various inputs to useful outputs. 3. It does not operate in isolation from the other organization system. 4. There exists a feedback about the activities, which is essential to control and improve system performance. 5/2/2015SHARDA32

33 Classification of Production System Production systems can be classified as: Job Shop, Batch, Mass and Continuous Production systems. 5/2/2015SHARDA33

34 JOB SHOP PRODUCTION Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence. 5/2/2015SHARDA34

35 JOB SHOP PRODUCTION Characteristics: The Job-shop production system is followed when there is: 1. High variety of products and low volume. 2. Use of general purpose machines and facilities. 3. Highly skilled operators who can take up each job as a challenge because of uniqueness. 4. Large inventory of materials, tools, parts. 5. Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities. 5/2/2015SHARDA35

36 JOB SHOP PRODUCTION Advantages Following are the advantages of job shop production: 1. Because of general purpose machines and facilities variety of products can be produced. 2. Operators will become more skilled and competent, as each job gives them learning opportunities. 3. Full potential of operators can be utilized. 4. Opportunity exists for creative methods and innovative ideas. 5/2/2015SHARDA36

37 JOB SHOP PRODUCTION Limitations Following are the limitations of job shop production: 1. Higher cost due to frequent set up changes. 2. Higher level of inventory at all levels and hence higher inventory cost. 3. Production planning is complicated. 4. Larger space requirements. 5/2/2015SHARDA37

38 BATCH PRODUCTION Batch production is defined by American Production and Inventory Control Society (APICS) “as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” It is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. 5/2/2015SHARDA38

39 BATCH PRODUCTION Batch production system is used under the following circumstances: 1. When there is shorter production runs. 2. When plant and machinery are flexible. 3. When plant and machinery set up is used for the production of item in a batch and change of set up is required for processing the next batch. 4. When manufacturing lead time and cost are lower as compared to job order production. 5/2/2015SHARDA39

40 BATCH PRODUCTION Advantages Following are the advantages of batch production: 1. Better utilization of plant and machinery. 2. Promotes functional specialization. 3. Cost per unit is lower as compared to job order production. 4. Lower investment in plant and machinery. 5. Flexibility to accommodate and process number of products. 6. Job satisfaction exists for operators. 5/2/2015SHARDA40

41 BATCH PRODUCTION Limitations Following are the limitations of batch production: 1. Material handling is complex because of irregular and longer flows. 2. Production planning and control is complex. 3. Work in process inventory is higher compared to continuous production. 4. Higher set up costs due to frequent changes in set up. 5/2/2015SHARDA41

42 MASS PRODUCTION Manufacture of discrete parts or assemblies using a continuous process are called mass production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardization exists and all outputs follow the same path. 5/2/2015SHARDA42

43 MASS PRODUCTION Characteristics Mass production is used under the following circumstances: 1. Standardization of product and process sequence. 2. Dedicated special purpose machines having higher production capacities and output rates. 3. Large volume of products. 4. Shorter cycle time of production. 5. Lower in process inventory. 6. Perfectly balanced production lines. 7. Flow of materials, components and parts is continuous and without any back tracking. 8. Production planning and control is easy. 9. Material handling can be completely automatic. 5/2/2015SHARDA43

44 MASS PRODUCTION Advantages Following are the advantages of mass production: 1. Higher rate of production with reduced cycle time. 2. Higher capacity utilization due to line balancing. 3. Less skilled operators are required. 4. Low process inventory. 5. Manufacturing cost per unit is low. 5/2/2015SHARDA44

45 MASS PRODUCTION Limitations Following are the limitations of mass production: 1. Breakdown of one machine will stop an entire production line. 2. Line layout needs major change with the changes in the product design. 3. High investment in production facilities. 4. The cycle time is determined by the slowest operation. 5/2/2015SHARDA45

46 CONTINUOUS PRODUCTION Production facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc. 5/2/2015SHARDA46

47 CONTINUOUS PRODUCTION Characteristics: Continuous production is used under the following circumstances: 1. Dedicated plant and equipment with zero flexibility. 2. Material handling is fully automated. 3. Process follows a predetermined sequence of operations. 4. Component materials cannot be readily identified with final product. 5. Planning and scheduling is a routine action. 5/2/2015SHARDA47

48 CONTINUOUS PRODUCTION Advantages Following are the advantages of continuous production: 1. Standardisation of product and process sequence. 2. Higher rate of production with reduced cycle time. 3. Higher capacity utilisation due to line balancing. 4. Manpower is not required for material handling as it is completely automatic. 5. Person with limited skills can be used on the production line. 6. Unit cost is lower due to high volume of production. 5/2/2015SHARDA48

49 CONTINUOUS PRODUCTION Limitations Following are the limitations of continuous production: 1. Flexibility to accommodate and process number of products does not exist. 2. Very high investment for setting flow lines. 3. Product differentiation is limited 5/2/2015SHARDA49

50 5/2/2015SHARDA50 Questions?

51 PRODUCTION MANAGEMENT Production management is a process of planning, organizing, directing and controlling the activities of the production function. It combines and transforms various resources used in the production subsystem of the organization into value added product in a controlled manner as per the policies of the organization. 5/2/2015SHARDA51

52 PRODUCTION MANAGEMENT E.S. Buffa defines production management as, “Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.” 5/2/2015SHARDA52

53 Objectives of Production Management The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’. 1. RIGHT QUALITY The quality of product is established based upon the customers needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. 2. RIGHT QUANTITY The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products. 5/2/2015SHARDA53

54 Objectives of Production Management The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’. 3. RIGHT TIME Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective. 4. RIGHT MANUFACTURING COST Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost. 5/2/2015SHARDA54

55 OPERATING SYSTEM Operating system converts inputs in order to provide outputs which are required by a customer. It converts physical resources into outputs, the function of which is to satisfy customer wants i.e., to provide some utility for the customer. In some of the organization the product is a physical good (hotels) while in others it is a service (hospitals). Bus and taxi services, tailors, hospital and builders are the examples of an operating system. 5/2/2015SHARDA55

56 OPERATING SYSTEM Everett E. Adam & Ronald J. Ebert define operating system as, “An operating system (function) of an organization is the part of an organization that produces the organization’s physical goods and services.” Ray Wild defines operating system as, “An operating system is a configuration of resources combined for the provision of goods or services.” 5/2/2015SHARDA56

57 Concept of Operations An operation is defined in terms of the mission it serves for the organization, technology it employs and the human and managerial processes it involves. Operations in an organization can be categorized into manufacturing operations and service operations. Manufacturing operations is a conversion process that includes manufacturing yields a tangible output: a product, whereas, a conversion process that includes service yields an intangible output: a deed, a performance, an effort. 5/2/2015SHARDA57

58 Distinction between Manufacturing Operations and Service Operations Following characteristics can be considered for distinguishing manufacturing operations with service operations: 1. Tangible / Intangible nature of output 2. Consumption of output 3. Nature of work (job) 4. Degree of customer contact 5. Customer participation in conversion 6. Measurement of performance. 5/2/2015SHARDA58

59 Distinction between Manufacturing Operations and Service Operations Manufacturing is characterized by tangible outputs (products), outputs that customers consume overtime, jobs that use less labour and more equipment, little customer contact, no customer participation in the conversion process (in production), and sophisticated methods for measuring production activities and resource consumption as product are made. 5/2/2015SHARDA59

60 Distinction between Manufacturing Operations and Service Operations Service is characterized by intangible outputs, outputs that customers consumes immediately, jobs that use more labour and less equipment, direct consumer contact, frequent customer participation in the conversion process, and elementary methods for measuring conversion activities and resource consumption. Some services are equipment based namely rail- road services, telephone services and some are people based namely tax consultant services, hair styling. 5/2/2015SHARDA60

61 A Framework for Managing Operations Managing operations can be enclosed in a frame of general management function. Operation managers are concerned with planning, organizing, and controlling the activities which affect human behavior through models. 5/2/2015SHARDA61

62 A Framework for Managing Operations PLANNING Activities that establishes a course of action and guide future decision-making is planning. The operations manager defines the objectives for the operations subsystem of the organization, and the policies, and procedures for achieving the objectives. This stage includes clarifying the role and focus of operations in the organization’s overall strategy. It also involves product planning, facility designing and using the conversion process. 5/2/2015SHARDA62

63 A Framework for Managing Operations ORGANIZING Activities that establishes a structure of tasks and authority. Operation managers establish a structure of roles and the flow of information within the operations subsystem. They determine the activities required to achieve the goals and assign authority and responsibility for carrying them out. 5/2/2015SHARDA63

64 A Framework for Managing Operations CONTROLLING Activities that assure the actual performance in accordance with planned performance. To ensure that the plans for the operations subsystems are accomplished, the operations manager must exercise control by measuring actual outputs and comparing them to planned operations management. Controlling costs, quality, and schedules are the important functions here. 5/2/2015SHARDA64

65 A Framework for Managing Operations BEHAVIOUR Operation managers are concerned with how their efforts to plan, organize, and control affect human behavior. They also want to know how the behavior of subordinates can affect management’s planning, organizing, and controlling actions. Their interest lies in decision-making behavior. 5/2/2015SHARDA65

66 A Framework for Managing Operations MODELS As operation managers plan, organize, and control the conversion process, they encounter many problems and must make many decisions. They can simplify their difficulties using models like aggregate planning models for examining how best to use existing capacity in short-term, break even analysis to identify break even volumes, linear programming and computer simulation for capacity utilization, decision tree analysis for long-term capacity problem of facility expansion, simple median model for determining best locations of facilities etc. 5/2/2015SHARDA66

67 Objectives of Operations Management Objectives of operations management can be categorized into customer service and resource utilizations. CUSTOMER SERVICE The first objective of operating systems is the customer service to the satisfaction of customer wants. Therefore, customer service is a key objective of operations management. The operating system must provide something to a specification which can satisfy the customer in terms of cost and timing. Thus, primary objective can be satisfied by providing the ‘right thing at a right price at the right time’. These aspects of customer service-specification, cost and timing. They are the principal sources of customer satisfaction and must, therefore, be the principal dimension of the customer service objective for operations managers. 5/2/2015SHARDA67

68 Objectives of Operations Management Manufacture Goods of a given, requested or Cost, i.e., purchase price or cost of obtaining goods acceptable specification Timing, Supply Goods of a given, requested or Cost, i.e., purchase price or cost of obtaining acceptable specification goods. Timing, i.e., delivery delay from order or request to receipt of goods. 5/2/2015SHARDA68

69 Objectives of Operations Management Service Treatment of a given, requested or Cost, i.e., cost of movements acceptable specification Timing, i.e., 1. Duration or time required for treatment. 2. Wait or delay from requesting treatment to its commencement. Transport Management of a given, requested Cost, i.e., cost of movements. Timing, i.e., or acceptable specification 1. Duration or time to move. 2. Wait or delay from requesting to its commencement. 5/2/2015SHARDA69

70 MANAGING GLOBAL OPERATIONS The term ‘globalization’ describes businesses’ deployment of facilities and operations around the world. Globalization can be defined as a process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, political and socio-cultural relations. It can also be defined as worldwide drive toward globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. 5/2/2015SHARDA70

71 MANAGING GLOBAL OPERATIONS There are four developments, which have spurred the trend toward globalization. These are: 1. Improved transportation and communication technologies; 2. Opened financial systems; 3. Increased demand for imports; and 4. Reduced import quotas and other trade barriers. 5/2/2015SHARDA71

72 5/2/2015SHARDA72 Questions?

73 SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for ‘conversion by using physical resources.’ 5/2/2015SHARDA73

74 SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT Following are the activities which are listed under production and operations management functions: 1. Location of facilities 2. Plant layouts and material handling 3. Product design 4. Process design 5. Production and planning control 6. Quality control 7. Materials management 8. Maintenance management. 5/2/2015SHARDA74

75 Meaning and function of Production Management Management is the art and science of getting things done through others, generally by organizing and directing their activities on the job. A manager is therefore someone who defines, plans, guides, assists, and assesses the work of others, usually people for whom the manager is responsible in an organization. 5/2/2015SHARDA75

76 Meaning and function of Production Management A manager’s role is to run his or her function properly. It may be as large as the entire company, as is the case for the CEO (chief executive officer). It may be as small as the mail room. Whatever the area of responsibility, management represents the sum of a set of tasks. Being a manager comes down to doing these tasks well and consistently. 5/2/2015SHARDA76

77 5/2/2015SHARDA77 Production Organization Chart Decision Making in Production Operation, Production Departments with various other departments and their importance.

78 Production system Production Organization Chart SHAREHOLDERS BOARD OF DIRECTOS GENERAL MANAGER - SECRETARY Sales / Legal / Finance/ Manufac- Engi- / Research Personnel 5/2/2015SHARDA78

79 Production system Production Organization Chart ORGANISATION CHART FOR P.P.C. DEPARTMENT P.P.C. Production Planning Production Control Inventory Control Order Booking Stores management Production budget / Dispatching Expediting Material Records Quality Control Methods Machines Handling Receiving Tools and Jigs Operation Layout Time estimating Scheduling Standardization Simplification 5/2/2015SHARDA79

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81 Production system Production Organization Chart Production system Production Organization : Each worker’s skill, strength, and learning ability were determined. Stopwatch studies were conducted to precisely set standard output per worker on each task. Material specifications, work methods, and routing sequences were used to organize the shop. Supervisors were carefully selected and trained. Incentive pay The organizational chart has been designed to be an interactive guide to jobs available within a typical pork production system (i.e. Production, Environment, Purchasing & Facilities). 5/2/2015SHARDA81

82 Organization Chart Qualified Manufacturing Teams Jobs President Production Scheduling Engineering Planning Shipping Receiving Tooling Manufacturing CNC Programming Document Control Inspection Raw Material Purchasing Finished Goods Inventory Accounting Quality Assurance Finance Human Resources Qualified Manufacturing Teams Customer Account Managers Part Manufacturing Form: Q16 Rev - 10/14/00 Organization Chart.xls 5/2/2015SHARDA82

83 Production Departments with various other departments and their importance 5/2/2015SHARDA83

84 PRODUCTION AND OPERATIONS MANAGEMENT 2. Strategies Responsibility of Production Manger. Interdependencies of Operation strategies and decision making, produce to stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies. 5/2/2015SHARDA84

85 PRODUCTION AND OPERATIONS MANAGEMENT - Strategies Learning Objectives Understanding the role of operations strategy as a source of competitive strength in a global marketplace Linking marketing strategy to operations strategy through the use of competitive priorities Distinguish between the make-to-stock, standardized-services, assembly-to-order, make- to-order, and customized-services strategies and how they relate to competitive priorities 5/2/2015SHARDA85

86 PRODUCTION AND OPERATIONS MANAGEMENT - Strategies Strategic planning Strategic planning is the process of thinking through the current mission of the organization and the current environmental conditions facing it, then setting forth a guide for tomorrow’s decisions and results. Operations strategy Operations strategy is concerned with setting broad policies and plans for using the resources of the firm to best support the firm’s long-term competitive strategy. 5/2/2015SHARDA86

87 POM - Strategies Operations Management Decisions Consider first the Strategic (long-term) decisions Well the relevant points over here are: - How will we make the product? - Where do we locate the facility or facilities? - How much capacity do we need? - When should we add more capacity? - The other types of decisions would be- -Tactical (intermediate-term) decisions: - Well, the relevant points over here are- - How many workers do we need? - When do we need them? Should we work overtime or put on a second shift? When should we have material delivered? Should we have material delivered? Should we have a finished goods inventory? 5/2/2015SHARDA87

88 POM - Strategies Operational Planning & Control (short-term) decisions: Well, the relevant points over here are- What jobs do we work on today or this week? Who do we assign to what tasks? What jobs have priority? An operations strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organization. Since the goals of the larger organization change over time, the operations strategy must be designed to anticipate future needs. 5/2/2015SHARDA88

89 POM - Strategies An operations strategy involves decisions that relate to: the design of a process; and, the infrastructure needed to support the process. Process design includes: 1) the selection of appropriate technology; 2) sizing the process over time; 3) the role of inventory in the process; and, 4) locating the process. Infrastructure decisions involve: 1) the logic associated with the planning and control systems; 2) quality assurance and control approaches; 3) work payment structures; and, 4) the organization of the operations function. 5/2/2015SHARDA89

90 POM - Strategies Now then, what is a strategy? Well, simply stated:- Strategy is a common vision that unites an organization, provides consistency in decisions, and keeps the organization moving in the right direction. Strategy formulation consists of four basic steps: Defining a primary task. The primary task is usually expressed in a firm’s mission statement. The mission may be accompanied by a vision statement that describes what the organization sees itself becoming. 5/2/2015SHARDA90

91 POM - Strategies Assessing core competencies. Core competency is what a firm does better than anyone else, its distinctive competence. Based on experience, knowledge, and know-how, core competencies represent sustainable competitive advantages. For this reason, products and technologies are seldom core competencies. 5/2/2015SHARDA91

92 POM - Strategies The advantage they provide is short-lived, and other companies can readily purchase, emulate or improve on them. Core competencies are more likely to be processes, a company’s ability to do certain things better than a competitor. Thus, while a particular product is not a core competence, the process of developing new products is. Core competencies are not static. They should be nurtured, enhanced, and developed over time. Close contact with the customer is essential to ensuring that a competence does not become obsolete. 5/2/2015SHARDA92

93 POM - Strategies Positioning the firm. No firm can be all things to all people. Strategic positioning involves making choices choosing one or two important things on which to concentrate and doing them extremely well. A firm’s positioning strategy defines how it will compete in the marketplace-what unique value it will deliver to the customer. An effective positioning strategy considers the strengths and weaknesses of the organization, the needs of the marketplace, and the position of competitors. 5/2/2015SHARDA93

94 POM - Strategies Senior management, with input and participation from different levels of the organization, develops a corporate strategic plan. 5/2/2015SHARDA94

95 5/2/2015SHARDA95 Questions?

96 Responsibility of Production Manger 5/2/2015SHARDA96

97 Production Manager Production managers coordinate all the people and equipment involved in the manufacturing process. Production managers oversee all stages of the production process 5/2/2015SHARDA97

98 Managers must monitor the “Essential Six” business principles: Value for customers organization, competitive advantage, control, profitability, and ethical practices. A business—and its managers— must create a specific kind of value for customers. Management is responsible for keeping the company organized. Managers decide what basis the company will compete on. Managers are responsible for control. They must know the company’s goals and assign tasks that will move everyone toward those goals. The most basic goal of management is to make money for the business owners. Managers must hold themselves to the highest ethical standards. 5/2/2015SHARDA98

99 Responsibility of Production Manger Production Manger in all business areas and organizational activities are the acts of getting people together to accomplish desired goals and objectives. Production Manger comprises planning, organizing, staffing, leading or directing, and controlling production aspects an organization or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, technological resources, and natural resources. - Because organizations can be viewed as systemsplanningorganizingstaffingleadingcontrollingorganizationResourcinghuman resourcestechnologicalnatural resourcessystems 5/2/2015SHARDA99

100 Responsibility of Production Manger Production Manger can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a pre-requisite to attempting to manage others in Production Unit 5/2/2015SHARDA100

101 Responsibility of Production Manger Production Manger: Require an extensive knowledge of Production Systems, roles and skills. decisions are generally of a long-term nature decisions are made using analytic, directive, conceptual and /or behavioral / participative processes are responsible for strategic / operational decisions. have to chalk out the plan and see that plan may be effective in the future. are executive in nature in Middle management 5/2/2015SHARDA101

102 5/2/2015SHARDA102 Questions?

103 5/2/2015SHARDA103 Interdependencies of Operation strategies and Decision making

104 Decision Making in Production Operation The common element of the business definitions is that the quality of a product or service refers to the perception of the degree to which the product or service meets the customer's expectations. Quality has no specific meaning unless related to a specific function and / or object. Quality is a perceptual, conditional and somewhat subjective attribute. 5/2/2015SHARDA104

105 Decision Making in Production Operation 5/2/2015SHARDA105 A generic decision-making framework for assigning resources of a manufacturing system to production tasks. Resources are broadly defined production units, such as machines, human operators, or material handling vehicles; and tasks are activities performed by resources. In the specific context, resources correspond to individual machines; tasks correspond to operations to be performed on parts..

106 Decision Making in Production Operation 5/2/2015SHARDA106 The framework assumes a hierarchical structure of the system and calls for the execution of four consecutive steps to make a decision for the assignment of a resource to a task These steps are: 1) establishment of decision-making criteria, 2) formation of alternative assignments, 3) estimation of the consequences of the assignments, and 4) selection of the best alternative assignment.

107 Decision Making in Production Operation 5/2/2015SHARDA107 This framework has been applied to manufacturing unit as an operational policy that decides what task will be executed on which resource of production. Simulation runs provide some initial results of the application of this policy. the policy provides flexibility in terms of system performance and computational criteria.

108 5/2/2015SHARDA108 Partner Local customization – what the people want ? Local production, Low cost producer? Has a gap in product line complimented by global brand ? May do all production May lead Joint Venture into neighboring countries Supplier capability, not cost, often key Suppliers have production process expertise

109 5/2/2015SHARDA109 Questions?

110 5/2/2015SHARDA110 Process Analysis Process Flowcharting Types of Processes Process Performance Metrics Strategies - OBJECTIVES

111 5/2/2015SHARDA111 Process: Is any part of an organization that takes inputs and transforms them into outputs Cycle Time: Is the average successive time between completions of successive units Utilization: Is the ratio of the time that a resource is actually activated relative to the time that it is available for use

112 5/2/2015SHARDA112 Process flowcharting is the use of a diagram to present the major elements of a process The basic elements can include tasks or operations, flows of materials or customers, decision points, and storage areas or queues It is an ideal methodology by which to begin analyzing a process

113 Flowchart Symbols Tasks or operations Examples: Giving an admission ticket to a customer, installing a engine in a car, etc. Decision Points Examples: How much change should be given to a customer, which wrench should be used, etc. Purpose and Examples 5/2/2015SHARDA113

114 Examples: Sheds, lines of people waiting for a service, etc. Examples: Customers moving to a seat, mechanic getting a tool, etc. Storage areas or queues Flows of materials or customers Purpose and Examples Flowchart Symbols 5/2/2015SHARDA114

115 5/2/2015SHARDA115 Yes No Goof off Go to school today? Walk to class Drive to school

116 5/2/2015SHARDA116 Single-stage Process Stage 1 Stage 2Stage 3 Multi-stage Process

117 5/2/2015SHARDA117 A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage Stage 1Stage 2 Buffer Multi-stage Process with Buffer

118 5/2/2015SHARDA118 Blocking –Occurs when the activities in a stage must stop because there is no place to deposit the item just completed –If there is no room for an employee to place a unit of work down, the employee will hold on to it not able to continue working on the next unit Starving –Occurs when the activities in a stage must stop because there is no work –If an employee is waiting at a work station and no work is coming to the employee to process, the employee will remain idle until the next unit of work comes

119 5/2/2015SHARDA119 Bottleneck –Occurs when the limited capacity of a process causes work to pile up or become unevenly distributed in the flow of a process –If an employee works too slow in a multi- stage process, work will begin to pile up in front of that employee. In this is case the employee represents the limited capacity causing the bottleneck. Pacing –Refers to the fixed timing of the movement of items through the process

120 5/2/2015SHARDA120 Produce to stock and produce to order strategies

121 5/2/2015SHARDA121 Make-to-order –Only activated in response to an actual order –Both work-in-process and finished goods inventory kept to a minimum Make-to-stock –Process activated to meet expected or forecast demand –Customer orders are served from target stocking level

122 5/2/2015SHARDA122 Operation time = Setup time + Run time Throughput time = Average time for a unit to move through the system Velocity = Throughput time Value-added time

123 5/2/2015SHARDA123 Cycle time = Average time between completion of units Throughput rate = 1. Cycle time Efficiency = Actual output Standard Output

124 5/2/2015SHARDA124 Productivity = Output Input Utilization = Time Activated Time Available

125 5/2/2015SHARDA125 Suppose you had to produce 600 units in 80 hours to meet the demand requirements of a product. What is the cycle time to meet this demand requirement? Answer: There are 4,800 minutes (60 minutes/ hour x 80 hours) in 80 hours. So the average time between completions would have to be: Cycle time = 4,800/600 units = 8 minutes.

126 5/2/2015SHARDA126 Perform activities in parallel Change the sequence of activities Reduce interruptions

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130 Concept of Using Mixed Strategies Many marketplaces are now highly volatile and demand is difficult to predict. The acceleration of technological and fashion changes has additionally resulted in extremely short product life cycles. In this new environment non-availability means that in the event of non-supply the particular sales opportunity is lost forever. Consequently the focus in supply chain management must shift from the idea of cost as the order winner to responsiveness as the market winner. The implication is that the emphasis in supply chain management in the future must be on agility. 5/2/2015SHARDA130

131 Concept of Using Mixed Strategies Agility implies the ability of the supply chain to react quickly to changes in market demand – be they changes in volume, variety or mix. The characteristics of the agile supply chain have been described elsewhere, but it is useful to contrast agility with the philosophy of lean operations. Lean thinking is most often associated with the car assembly industry and Japan in particular. Agility & leanness are not opposing philosophies, rather they work best in certain contexts. 5/2/2015SHARDA131

132 Concept of Using Mixed Strategies Manufacturing companies usually have a mix of discrete and flow type manufacturing processes. An alternative to implementing multiple modules like flow and discrete for manufacturing, which may make the implementation complex, the process-mix can be handled to a large extent using Discrete Manufacturing module alone, resulting in lowering of implementation and support cost. The shop floor operations of any manufacturing entity are normally a mixed bag of discrete, flow, and processing at the outside vendor (subcontracting) etc. Implementing multiple modules of Oracle (Flow Manufacturing, Discrete Manufacturing) to handle the operations will make the implementation very complex and costly. Also the data and setup requirements for modules like flow manufacturing are quite demanding. This paper provides an alternative option to model the mixed mode manufacturing setup (combination of OSP, in-house discrete, in-house cell manufacturing) using conventional WIP and BOM modules, and simplify the setup by not having to use Flow or Network routings. This will reduce the implementation and maintenance cost but will give fairly accurate results. 5/2/2015SHARDA132

133 5/2/2015SHARDA133 Mix mode manufacturing – Concept and Relevance: The key to success in manufacturing today is it’s agility—the ability to precisely anticipate and swiftly respond to fluctuating market demands. As the supply chain becomes more demand- oriented, manufacturers are under pressure to bring products to market in the shortest span of time, at the right price, and adhering to the customer’s specifications. Moreover, during hard economic times, organizations scramble to find business, any business to help ride out of storm is welcome. To achieve this, more and more companies are pursuing mixed- mode manufacturing and employing different production strategies for different product lines. One will therefore mostly find that the shop operations are a combination of different manufacturing techniques like discrete manufacturing, repetitive manufacturing, outside processing, single piece flow manufacturing, etc.

134 Concept of Using Mixed Strategies DISTINGUISHING ATTRIBUTES / LEAN SUPPLY / AGILE SUPPLY Typical Products / Commodities / Fashion Goods Marketplace Demand / Predictable / Volatile Product Variety / Low / High Product Life Cycle / Long / Short Customer Drivers / Cost / Availability Profit Margin / Low / High Dominant Costs /Physical Costs / Marketability Stock out Penalties / Long Term / Contractual Immediate and Volatile Purchasing Policy / Buy Goods / Assign Capacity Information Enrichment / Highly Desirable / Obligatory Forecasting mechanism / Algorithmic /Consultative 5/2/2015SHARDA134

135 Single Piece Flow: In this kind of manufacturing process, pieces flow in single piece for each operation rather than lots. Once the first operation is complete on that piece, it has to be moved on for the second operation and the next piece is moved on for first operation. 5/2/2015SHARDA135

136 Advantages of having mixed strategies. Synchronous Manufacturing is in direct opposition with traditional manufacturing approaches characterized by use of economic order quantities, high capacity utilization, and high inventory. In changing from a traditional environment to one of synchronous production, cultural issues will emerge quickly, as well as resistance to change. A managing change program is needed to accompany the effort. Piecemeal approaches generally do not work or achieve significant results. Quite often we will hear top executives claiming to be using Synchronous Manufacturing strategies and when we visit the site, we will discover a pilot cell off in a corner, or a lean manufacturing environment instead. Wide scale use produces wide scale results, and very little true results will be achieved if Synchronous Manufacturing is treated as a "fad of the month." However, just like anything else, Synchronous Manufacturing is no panacea, nor should it be embraced as a religion. It is an operational strategy that, if implemented properly, will provide a new dimension to competing: quickly introducing new customerized high quality products and delivering them with unprecedented lead times, swift decisions, and manufacturing products with high velocity. 5/2/2015SHARDA136

137 Advantages of having mixed strategies. The benefits generally are higher flexibility, lower costs, higher quality, lower inventory, and shorter lead times. The characteristics of synchronous processes are: Make to order Synchronized production Just-In-Time materials/pull scheduling in early stages Synchronized scheduling in later stages Short cycle times Highly flexible and responsive processes Highly flexible machines and equipment Quick changeover Continuous flow work cells Collocated machines, equipment, tools and people Compressed space Multi-skilled employees Empowered employees High first-pass yields with major reductions in defects 5/2/2015SHARDA137

138 Pit Falls A lot of ERP packages have separate modules for discrete, flow, repetitive, etc. In order to map the shop floor operations ideally, one many need to implement a plethora of modules. This makes the implementation costly due to high licensing, consulting and maintenance cost, and training cost. Also, the implementation timelines will go up and benefits of accrual of the implementation gets delayed. The master data requirements and the accuracy of data that these multiple modules demand are also very high and it is quite difficult in lot of cases to really generate that data with the existing processes and systems. One has to really do due diligence on whether we really need that level of accuracy in terms of replicating the exact shop floor scene in Oracle. Can we sacrifice some accuracy in terms of replicating the shop floor model exactly in our ERP system, but reap the benefits like a simpler and cost effective implementation with a non complex system to handle during its life cycle. 5/2/2015SHARDA138

139 5/2/2015SHARDA139 CASE STUDY : Dr.Chowdary has been in the field of hospital administration for last 18 years. Recently he has been posted as chief of a district Head Quarters Hospital. After assuming the position, Dr.Chowdary came to know that everything is not good at the hospital and came across certain critical problems. Some of them are. (a) Storage of medical and non-medical items (b) Poor patient feeding-patients have complained about the quality of food. Production and Operations Management (c) Non availability of Ambulance, when needed. (d) Break down of X-ray facility since long time. Dr.Chowdary decided to take assistance of a management hand to solve the above problems and many more small problems that bother him in every day business. Dr.Chowdary gave an advertisement. Called candidates for interview and could not satisfy from the answers given by the candidates. One fine morning a neatly dressed young man came to Dr.Chowdary and told him that he is useful to Dr.Chowdary in solving the problems in the Hospital. He told Dr.Chowdary that he is working as a production manager in local medium sized factory. Dr.Chowdary laughed at him and said, “ You see young man in spite of my 18 years of experience in the hospital, I am not in a position to understand their administrative problems. Q. You being a production manager of a manufacturing concern, how do you help me? Think that you are the young man who has approached Dr.Chowdary and explain how do you answer Dr.Chowdary.

140 5/2/2015SHARDA140 Questions?

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