MBA, Semester 2 Operations Management Ms. Aarti Mehta Sharma
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AMITY GLOBALBUSINESS SCHOOL Bangalore
MBA, Semester 2
Operations Management
Ms. Aarti Mehta Sharma
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Module 1
Importance
Scope
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AMITY GLOBALBUSINESS SCHOOL BangaloreFedEx
• Why are they successful?
– Fast
– On-time deliveries
– Relatively low cost
– Technology in shipment tracking
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Operations ManagementIs the design, operation, and improvement of
the systems that create and deliver the firm’s primary products and services
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AMITY GLOBALBUSINESS SCHOOL Bangalore
diff from….• Operations research / Management Sciences /
Industrial Engineering
• OM uses the above tools to take decisions
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AMITY GLOBALBUSINESS SCHOOL Bangalore
A manager is …
… someone who plans, acquires and manages resources needed to meet specific objectives.
PLANS ACQUIRES MANAGES
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AMITY GLOBALBUSINESS SCHOOL BangaloreOrganisation Chart
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AMITY GLOBALBUSINESS SCHOOL Bangalore
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AMITY GLOBALBUSINESS SCHOOL Bangalore
OM’s Transformation Process
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AMITY GLOBALBUSINESS SCHOOL Bangalore Operations Management
Management of the conversion process which transforms inputs such as raw material and labour into outputs in the form of finished goods and services.
InputsInputs(materials,(materials,employeesemployees
and/orand/orcustomers)customers)
Transformation ProcessTransformation Process
OutputsOutputs(Products(Products
andandservices)services)
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Transformation process at a Food Processor
Inputs Process Output
Raw Vegetables
Metal Sheets
Water
Energy
Labour
Building
Equipment
Cleaning
Making cans
Cutting
Cooking
Packing
Labelling
Canned vegetables
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Transformation process at a Hospital
Inputs Process Output
Doctors
Nurses
Building
Medical supplies
Equipment
Labs
Examination
Surgery
Monitoring
Medication
Therapy
Healthy patients
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AMITY GLOBALBUSINESS SCHOOL BangaloreTransformational Value – as a
competitive advantage
• To add value
– 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
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Types of Operations
Operations Examples
Goods Producing Farming, mining, construction,manufacturing, power generation
Storage/Transportation Warehousing, trucking, mailservice, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
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AMITY GLOBALBUSINESS SCHOOL BangaloreDifferences between Manufacturers
and Service Organizations
• Services:• Intangible product
• Product cannot be inventoried
• High customer contact
• Short response time
• Labor intensive
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AMITY GLOBALBUSINESS SCHOOL BangaloreDifferences between Manufacturers
and Service Organizations
• Manufacturers:• Tangible product
• Product can be inventoried
• Low customer contact
• Longer response time
• Capital intensive
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AMITY GLOBALBUSINESS SCHOOL 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
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AMITY GLOBALBUSINESS SCHOOL 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
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AMITY GLOBALBUSINESS SCHOOL Bangalore USA (Apr 2009)
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AMITY GLOBALBUSINESS SCHOOL BangaloreWhy OM ?
• For long-run success companies must place much important on their operations– 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
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AMITY GLOBALBUSINESS SCHOOL Bangalore Scientific management - 1900s
time lineYear Concept Tool Origination
1910 Principles of scientific management
Time study work study
Taylor (US)
Industrial Psychology
Motion study Frank and Lillian Gilbreth(US)
Moving Assembly Line
Activity Scheduling Chart
Henry Ford and Henry Gantt (US)
Economic Lot Size
EOQ applied to Inv control
Harris (US)
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AMITY GLOBALBUSINESS SCHOOL 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.
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AMITY GLOBALBUSINESS SCHOOL BangaloreBased on …
• Cost
• Quality
• Time
• Flexibility
• Innovation
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Competitive Priorities
• Every organization is concerned with building and sustaining a competitive advantage in its markets (see BMW).
• 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.
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AMITY GLOBALBUSINESS SCHOOL Bangalore
Time Line for Operations Strategies
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AMITY GLOBALBUSINESS SCHOOL Bangalore1930s
Concept Tool Origination
Quality Control
Sampling Inspection and stat tables for quality control
Shewhart, Dodge and Romig(US)
Hawthorne studies
Activity sampling for work analysis
Mayo and Tippett (England )
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AMITY GLOBALBUSINESS SCHOOL Bangalore1940s,50s and 60s
Concept Tool Origination
Multidisciplinary team approaches
Linear
Programming
OR groups (England) and Dantzig (US)
OR Tools Simulation,
Waiting line theory,decision theory,PERT,CPM
US AND Europe
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AMITY GLOBALBUSINESS SCHOOL Bangalore1970s
Concept Tool Origination
Widespread use of computers in business
Shop Scheduling, inventory control, forecasting, MRP
Company mfrers - IBM
Service Quality and Productivity
Mass Production in the service sector
Mc Donalds
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AMITY GLOBALBUSINESS SCHOOL Bangalore1980s
Concept Tool Origination
Strategy Paradigm
Mfg as a competitive weapon
Harvard Bus School faculty (US)
JIT,TQC and factory automation
Kanban, pokayokesCAD/CAM
Tai-Chi onho of Toyota (Japan), Deming and Juran
Synchronous mfg
Bottleneck analysis, theory of constraints
Goldratt (Israel)
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AMITY GLOBALBUSINESS SCHOOL Bangalore1990s
Concept Tool Origination
TQM,BPR Concurrent Engg,improvement paradigm
Michael Hammer and US consulting firms
Electronic Enterprise
Internat, World Wide Web
US Government, Netscape, Microsoft
SCM SAP, client / server software
SAP(Germany), ORACLE(US)
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AMITY GLOBALBUSINESS SCHOOL Bangalore2000s
E Commerce – Internet,
Amazon, eBay, Yahoo !
Outsourcing and FLATTENING of the world
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AMITY GLOBALBUSINESS SCHOOL 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.
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AMITY GLOBALBUSINESS SCHOOL Bangalore
?
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www.mospi.nic.in• Government for policy planning purposes
• Industrial Associations, Research Institutes and Academicians.
• Mining, Manufacturing and Electricity
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AMITY GLOBALBUSINESS SCHOOL Bangalore
• 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 ?
What do Operations Managers do?
role demands planning decisions coordination systems
role demands planning decisions coordination systems
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AMITY GLOBALBUSINESS SCHOOL Bangalore
• Read
“The Goal”
- Eliyahu M. Goldratt
“Jack Welch and the GE Way”
- Robert Slater