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Operations Management
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Concept of Operations
Management
 Production
systems
 Operations
Management decisions
 Goods
 Ethics
versus services operations
and social responsibility
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Production systems
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The production system produces goods and services by
transforming inputs into desired outputs.
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Since World War II operations systems have benefitted from
mechanisation, automation, robotics and a huge number
of technical innovations.
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Service industries have experienced advances in information
and communication technology, which have generated
increases in productivity.
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Transformations
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Transformation is the process of taking a series of raw
materials to create desired products and services.
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There are three key elements of an operation system:
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inputs
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processes
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outputs
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Inputs that are typical in an operation system are: human
skill/effort, raw materials, facilities, machinery & equipment
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Operations management decisions
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Strategic versus planning decisions
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Operations managers have to be involved in the decision
making process at a strategic level. Strategic planning such
as the marketing of what is produced, clearly has to go handin-hand with operations decisions such as how the product is
sold.
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Planning decisions at the operational level include decisions
about the day-to-day operations such as:
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What are the stock levels to be maintained?
How will the production processes be scheduled?
What type of layout is required for the process?
What type of maintenance is required?
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Role of operations manager
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The function of the operations manager is to coordinate the
transformation of inputs into desired goods and services.
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The operations manager in an organisation may be known by
other titles including:
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factory manager

materials manager

production manager
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quality manager
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supply officer
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Goods versus services operations
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Many differences exist between goods and services
management.
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Currently many modern organisations provide both goods
and services. For example a record label will produce
physical CDs (goods) as well as tours (services).
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Ethics and social responsibilities

The need for ethical and socially responsible management
(ESM) applies to the operations function as it does to all
functions of the organisation. Operations managers, for
example, make decisions that involve elements of ethics or
social responsibility – decisions that involve fair treatment of
employees or the use of environmentally friendly materials.
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The processes used in the manufacturing processes must be
in accordance with the standards set by the environment in
which they operate. This means that they must adhere with
the laws and regulations with regard to many different areas
including the disposal of waste and emissions.
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Operations Management Strategy
 Operations
management strategy
relates to choices of:
 Product
 process
 f acilities
 quality
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Product choice
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Organisations must be able to produce a product of quality
and at a cost that allows it to be marketed at a competitive
price.
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There are five stages to new product development once an
opportunity or need has been identified. In order they are:
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exploring and generating ideas
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rough screening
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business analysis or thorough screening
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prototype development
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testing
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Product definition
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Product definition is the selecting and documenting of all the
features of a good or service to be produced and all the
inputs needed for production.
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The requirements for the manufacture of the products also
need to be defined such as the type of machinery needed for
production and the process involved. Is the product going to
be a completed product or require some assembly by the
customer? If so, what type of instructions will need to
accompany the product?
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Process choice
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Operations managers need to make choices about the types
of technologies used, the flow of the production process and
the overall capacity of the production process.
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The technology used to transform inputs into goods and
services is known as process technology. The technology is
only as good as the way it is used.
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Research and development (R&R) should also play a vital
role in management’s planning of new process technology.
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Process flow
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Process flow involves developing detailed specifications of
the physical facilities as well as the human skills and effort
required to produce the desired volume.
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Design and layout must accommodate the different types of
production processes and organisation is likely to use. In
manufacturing five types of processes can be identified:
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project – one-of-a-kind or customised projects
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job shop – small batches of different sorts of products
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batch – different sorts/batches of products
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assembly line – large volumes of a narrow range
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continuous flow – high volume process that runs endlessly
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Quality choice
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Approaches to quality control:
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Quality control – a process or strategy for monitoring the quality
of a good or a service during its production or delivery. Statistical
techniques such as sampling and analysis are used.
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Quality assurance (QA) – the certified achievement of a level of
quality in the production of a good or service. Organisations need
to meet specified standards set down for their industry.
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Total quality management (TQM) – quality circles (teams of
employees of usually four to ten people led by team leaders)
meet regularly to discuss production (QA) and quality
improvements, and to find solutions to workplace problems.
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Total quality approach
 There
are three central principles
in the total quality approach:
 continuous improvement
 customer focus
 employee participation &
teamwork
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Continuous improvement
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Quality is seen as a journey rather than a destination.
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The principle of continuous improvement expects all
employees at all levels of an organisation to seek ways to
improve work performance – their own, their team’s and the
performances of the whole organisation.
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Continuous improvement often includes benchmarking and
identifying best practice in a particular production process
or area of work.
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Customer focus
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In the total quality approach, quality is based on the
expectations of the customer – quality is in the eye/mind of
the customer.
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TQM demands that all employees serve the customer.
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In any production process problems with quality can be
prevented at the earliest stage if internal customers are
treated well. Worked passed on to the stage of the process
should improve the next stage. It should never make the work
of the internal customer more difficult.
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Employee participation and
teamwork
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Employees are a key part of the total quality approach. The
broad participation of employees in the decisions-making
encourages everyone to take responsibility for quality.
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The aim of each employee is to eliminate errors in operations
by doing right the first time (zero defects), therefore
delivering quality to other employees in the process.
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Planning and control
 The
planning and control function which
operations managers must undertake
involves the management issues such as:
 inventory management
 production control
 maintenance
 quality control
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Inventory management
  Inventory
is an organisation’s stock of materials.
The inventory that must be managed in operations
are:
  material inputs to production (raw materials,
supplies, parts)
  work-in-progress (unfinished goods)
  finished goods (not yet delivered)
  spare parts for machinery & equipment
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Techniques
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Early stages of operations planning result in the development
of a general guide to operations. This general guide to
operations is known as a master production schedule
(MPS). The MPS covers:
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what goods and services are to be produced
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the production methods to be used
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where production is to take place
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the volume to be produced
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when production is to take place
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the staff needed to do the work
The MPS is used as a starting point to plan materials needs in detail.
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Inventory control
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Inventory control takes two main forms:
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physical control – this involves stock, security control, physical
movement of stock and regular stocktakes (physical count of
stock)
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accounting control – this refers to maintaining a secure
accounting system as well as a regular comparisons between
accounting records and physical inventory.
The just-in-time (JIT) approach to inventory control has been taken
up by many large organisations. Under JIT inputs are delivered
just before their time of use in operations (so they do not sit idle
or need storage).
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Production control
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Production control involves the careful planning and
scheduling of the production process. This is done through
the use of a number of scheduling techniques or the
outsourcing of certain processes.
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Production planning and scheduling:
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The scheduling of the activities is another vital part of the
whole production process. For example, knowing when each
part of the process is going to take place, that is, exactly
which day certain raw materials are going to be needed.
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Dispatching
  Dispatching
is a set of instructions that sends the
inputs in the transformation process to where they
are needed. Instructions can be given in many
different ways. These instructions may include:
  verbal orders
  written instructions
  customer inputs
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Scheduling techniques
  The
planning of the schedule requires input from
all parties with jobs to complete in the production
process. The schedules which are most commonly
used are:
  Gantt chart
  Program evaluation and review technique (PERT)
  Critical Path Analysis