WELCOME!
OPERATIONS MANAGEMENT
Everyone loves this course!
COURSE OBJECTIVES
At the end of our course, students will:
1 Understand the basic principles of
Operations Management;
2 Be introduced to the tools used by
operations professionals today;
3 Learn how to apply the principles of
OM at work.
TOPIC 1:
INTRODUCTION TO OPERATIONS MANAGEMENT
How the business firm functions
PRIMARY FUNCTIONS – THE VALUE CHAIN
PRODUCT
DEVELOPMENT
HUMAN
RESOURCES
OPERATIONS
FINANCE
IT SUPPORT
SALES,
MARKETING,
SERVICE
ADMIN. AND
OTHERS
SUPPORT OR SECONDARY FUNCTIONS
THE FIRM: CONVERTING IDEAS INTO MONEY
MAJOR DIFFERENCES BETWEEN
GOODS AND SERVICES
TANGIBILITY
‘STORABILITY’
‘TRANSPORTABILITY’
Services through a cable?
VARIATION IN OUTPUT
Ideally, Standard Deviation should be zero.
CO-CREATION & INTERACTION
BETWEEN PROVIDER & CLIENT
IS TECHNOLOGY CHANGING
SOME OF THIS?
In general, we say that…
Goods are produced and consumed;
Services are delivered and experienced.
THE MOST IMPORTANT TERM IN OPERATIONS IS…
UNDERSTANDING SUPPLY CHAINS
THE CONCEPT
OF FLOW
OPERATIONS MANAGEMENT & SUPPLY CHAIN MANAGEMENT
A Typical Supply Chain
Raw Materials
Source
Consumer
A GENERIC SUPPLY CHAIN
IN SERVICES, WE TRACK THE WORK-FLOW
Primary Flow
Supporting/Enabling Flow
Resultant Flow
- Materials/Work
- Information
- Cash
TOPIC 2:
UNDERSTANDING PROCESSES
PIONEER OF SCIENTIFIC WORK
SO, WHAT IS A PROCESS?
DEFINITION OF A PROCESS
A process is a set of inter-related or
inter-acting activities performed in a logical
sequence that convert (or transform)
specified inputs into desired outputs.
PROCESS
INPUTS
(RESOURCES)
Set of
activities
OUTPUTS
(RESULTS)
CONVERSION ACTIVITIES
Tea leaves
Milk
Sugar
Water
Gas oven
Vessel
Strainer
Cup & saucer
Worker
INPUTS
Cup of tea
OUTPUT
UNDERSTANDING PROCESSES
AND PROCEDURES
STEPS TO PRODUCE A CUP OF COFFEE
1
2
3
4
5
6
7
8
ACTIVITY/STEP
Maintain water in container at
elevated temperature
When input signal received, fill
cylinder with hot water
Add instant coffee powder
Add fine sugar
Add liquid milk
Stir contents in cylinder
Empty contents into serving cup
Eject serving cup to delivery chute
STEPS TO PRODUCE A CUP OF COFFEE
1
2
3
4
5
6
7
8
ACTIVITY/STEP
Maintain water in container at
elevated temperature
When input signal received, fill
cylinder with hot water
Add instant coffee powder
Add fine sugar
Add liquid milk
Stir contents in cylinder
Empty contents into serving cup
Eject serving cup to delivery chute
SPECIFICATIONS
Volume of water: 400 ml
Temperature: 95 degrees C
Quantity of water: 65 ml
Quantity: 12 gms.
Quantity: 10 gms.
Quantity: 15 ml.
Revolutions: 20
-
DEGREE OF FLEXIBILITY (VARIETY)
IN A PROCESS
Meeting varied customer preferences
MRTP FACTORS OF A PROCESS
Measurability
Repeatability
Transferability
Predictability
A procedure may not have these factors.
‘TAYLORISM’
Converting People into Machines
TAL GROUP’S PROCESS TO PRODUCE SHIRTS
HOW MUCH MATERIAL GOES INTO A SHIRT?
Clearly specified and monitored.
TAL GROUP’S PROCESS TO PRODUCE SHIRTS
ACTIVITY/STEP
1 Attach a collar
2 Attach a cuff
3 Sew whole shirt
STANDARD TIME
23Seconds
20Seconds
1,116 seconds
GETTING A DRUG THROUGH THE FDA
Animal
(preclinical)
testing
Normal
method
Phase I
20 to 80
people
Phase II
Several dozen
to 300 people
Phase III
Several
hundred
to 3,000
people
+ Drug company
consults with FDA
+ Submission of
new drug
application
Start
+ FDA assesses
company’s
research on safety
and effectiveness
Proposal
for human
testing
Accelerated
approval
Smaller, faster trials with fewer subjects
Approval
CLASSIFYING PROCESSES
PROCESS MATRIX FOR PRODUCTS
VARIETY
Job Shop (Boat Building)
Batch (Bakery)
Line Assembly
(Car Production)
Continuous Process
(Chemical Production)
VOLUME OF OUTPUT
PROCESS MATRIX FOR SERVICES
VARIETY
Job (Dentist)
Batch (Training)
Mass Service
(Train Service)
Continuous Service
(Electricity Supply)
VOLUME OF OUTPUT
COMPARING THE FOUR TYPES OF PROCESSES
FACTOR
JOB SHOP
BATCH
ASSEMBLY
LINE
CONTINUOUS
1 Cost
estimation
Difficult
Somewhat
routine
Routine
Routine
2 Equipment
used
General
purpose
General
purpose
Special
purpose
Special
purpose
3 Fixed costs
Low
Moderate
High
Very high
4 Variable costs
High
Moderate
Low
Very low
5 Cost per unit High
Moderate
Low
Low
6 WIP inventory High
High
Low
Low
7 Cost of work
stoppage
Moderate
High
Very high
Low
WHAT ABOUT SERVICES?
WHAT IS MASS CUSTOMISATION?
Dell’s Mass Customisation Strategy
PRACTICAL DIFFICULTIES WITH
MASS CUSTOMISATION