OPERATIONS MANAGEMENTOperations Management is defined as the design, operation and improvement of the systems that create and deliver

the firms primary product and service. Operations Management is a functional field of business with a clear line management responsibility. It is not only about manufacturing and relevant to people working in the shop floor, but it is about getting the day to day work done quickly, efficiently without errors and at low cost. It is not Operations Research (OR) of (IE) Industrial Engineering. Operations Research is the application of quantitative methods to decision making. Industrial Engineering is an engineering discipline. Operations Management uses the decision-making tools of Operations Research/Industrial Engineering like critical path scheduling and factory automation for the benefit of the organization. Operation Management uses analytical thinking to deal with real world problems. Operations Management encompasses work planning, control of quality, improving productivity and effectiveness of performance of individuals on the job within the operations function, management decisions can be divided into three broad areas. Strategic long term decision. Tactical intermediate term decisions. Operational planning and control (short term) decisions.

Strategic issues address questions such as: --- How will we make this product? ---Where do we locate the facility. ---How much capacity do we need. ---When do we add more capacity. Decisions here affect the companys long-term effectiveness in terms of how it can satisfy customer needs. The decision here must be in alignment with corporate strategy and become operating constraints under which the organizations must operate in the short and medium term time frames. Tactical planning primarily addresses how to effectively schedule material and labour, e.g., ---How many workers do we need? ---When do we need them? ---When should material be delivered? ---How much finished goods inventory is needed? These tactical decisions in turn become the operating constraints under operational planning and control. Operational planning and control management decisions within are narrow and short term. At this level they include: --What job do we do today. --When do we assign what tasks.

--What jobs have priority. Operational Management hence is a dynamic field, which encompasses many aspects of a transformation process - -i.e.: one that uses resources to convert inputs into desired outputs. The inputs may be raw materials, a customer or a finished product of another system. In general, transformation processes can be categorized as follows: Physical : as in manufacturing. Locational: as in transportation. Exchange: as in retailing Storage: as in warehousing Physiological: as in health care. Informational: as in telecommunication. These transformations are not mutually exclusive but interactive. Input Output Transformation Relationships System Primary Inputs Hungry customer Resources Primary Transformation function well prepared, well served Agreeable environment. Fabrication and Assembly Move to destination Typical Desired Output. Satisfied customer

Restaurant

Food, cook, waiter, environment Tools, Equipment workmen Airplanes, Crew Schedules

Automobile Factory Airline

Steel Plastic Travelers

Quality Cars on time safe delivery.

The challenges of Operations Management will hence be: Coordinating the relationship between mutually supportative but separate organization e.g. a contract manufacturing. Optimizing global supplies, production and distribution networks E.g. reverse auctions Increased co-production of goods and services. Use of Internet for order booking etc. Managing customer touch points. Customer support

OPERATIONS STRATEGY. An operations strategy involves decisions that relate to the design of a process and the infrastructure needed to support the process. Process design includes the selection of appropriate technology, sizing the process over time, the roll of inventory in the process and locating the process. Infrastructure decisions involve the logic associated with the planning and control system, quality assurance and control approaches, work payment structures and organizing of the operations function. Typically a strategy breaks down into three major components Operations effectiveness Customer management Product innovation. Operations effectiveness relates to the core business process needed to run the business. These processes span all the business functions for taking customer orders, handling returns manufacturing, shipping etc. Customer management relates to better understanding and leveraging customer relationship. Product innovation involves the development of new products, markets, relationships to sustain growth. Operations strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long term competitive strategy. Operations strategy can be viewed as part of a planning process that coordinates operaational goals with those of a larger organisatrion. Since the goals of the larger organization change over time the operation strategy must be designed to anticipate future needs. The operating strategy must build in capabilities to adopt to the changing product and/or service needs of the firms customers. Operations strategy cannot be designed in a vacuum. It must be linked vertically to the customer and horizontally to other parts of the enterprise. Overlying the

framework in Senior managements strategic vision of the firm. This Vision identifies in general terms, the target market the firms product line, its core enterprise and operations capabilities. Selection of the target market is difficult as you cannot serve all customers given the core capabilities or compitencies which are the skills which differentiate the service or manufacturing firm from its competitors. STRATEGIC VISION Customer needs New products Existing products

Competitive Dimensions And requirements Order fulfillment after sales Service Quality Dependability Flexibility Price speed _________________________________________________________ Enterprise Capabilities Core capabilities Operation capabilities Supplies Capabilities New product

_____________________________________________________________________ R&D Technology Systems People Distribution Financial HR IT _________________________________________________

Developing a Manufacturing Strategy.

The main objective of manufacturing strategy development are: To translate required competitive dimensions obtained from marketing into specific performance requirements for operations. To make plans necessary to ensure that operations and enterprise capabilities Are sufficient to accomplish them.

The steps for prioritizing these dimensions are : 1.Segment the market according to the product group. 2.Identify the product requirements, demand patterns a profit margins of each group. 3. Determine the order winners and order qualifiers for each group. 4. Convert order winners into specific performance requirements. Comparision of how two Product Groups differ in their manufacturing requirements: Manufacturing requirement Pr group 1 Differences Product Customer Product Specs Product Range Design changes Delivery Std med equipment Hospital/Clinics Not high tech but Periodic update Narrow 4 variants Infrequent Customer lead Important ship directly from Stock Pr group 2 Electronic meaning devices Med & other CEM Varies some high specs & other less so Wide many types & variants Some customerisation Continuous process On time delivery important

Quality Demand Variation Volume/line Margins

Conformance/Reliability Financial year related but predictable High Low

Performance/Conformance

Lumpy & unpredictable Medium/low Low to very high

External Performance Dimensions

Order Winners

Price Product Reliability Delivery lead time Product Specification Quality Conference

Product Specs Product Range Delivery dependability Dependability Delivery lead time Price

Main Operations Performance Cost quality New product flexibility Range flexibility Dependability

The above table shows how two product groups manufactured by the same manufacturer differ in their manufacturing requirements. The first product group is a range of standard electronic medical equipment sold directly off the shelf to clinics. The second product group is a wider range of medical equipment sold to OEM and are customized to individual requirement. The two groups exhibit very different market competitive characteristics. Therefore different external preference objectives are required for the manufacturing oprns. Each product group also different priorities for its internal performance objective. Product Gr 1 needs to concentrate on Cost and Quality All Internal performance objectives should be bent to achieving this. Product Gr 2. needs the flexibility to cope with a wide product range and considerable product design turbulance . Such diverse competitive needs will definitely require two sepr focused manufacturing processes , each devoted to providing the things that are important in their separate markets .

Operations Strategy in Services.

Operations strategy in service firms is generally inseparable from the Corporate Strategy. For Medical Service Organizations, the service delivery system is the business, and hence any strategic decision must include operations consideration. The customer is the focal point of all decisions and actions of the service organization. In the Service Triangle Service Strategy The Customer Support Systems Employees

The Customer is the center of things. This Organization, - the airlines, the banks, the hospitals exist to serve the customer, and the systems and the employees exist to facilitate he process of service. Service organizations also exist to serve the workforce, because they generally determine how the service is perceived by the customer. The customer gets the kind of service that the management deserves in other words, how management treats the worker, is how the worker will treat the public. If the workforce is well trained and well motivated by management they will do a good job for their customers. The roll of operations is a major one .It is responsible for procedures ,equipment and facilities ,it is also responsible for managing the work of the service workforce. Most services contain a mix of tangible and untangible attributes, and hence there is a need for different approach based on the strategy.. Eg a fast food joint needs different training to the waiters than an exclusive French restaurant. Hence service organizations are generally classified according to who the customer is and to the service they provide. In service as opposed to manufacturing high contact services are Experienced where as Goods are Consumed. Customer contact and extent of contact define the degree of interaction of all in the system. Service eg Facility Location Facility Layout High contact A Bank Branch Office Operations near Customer Size should accommodate the customers physical and Low contact RBI clearing house Operations ear supply or Transport head Focus on production efficiency

Product design Process design

Planning Production

Worker skills

Quality Control Time standards Capacity Planning

psychological needs Environment as well as the physical product define the nature of service Stages of production process have a direct immediate effect on the customer Orders cannot be stored Smooth production flow is needed or the result is loss of business The direct workforce constitutes a major part of the service product and must be able to interact with the public Quality standards are often in the eye of the beholder and thus variable Service time depends on customer needs so time standards are loose To avoid loss of sales Capacity must be set to match peak demand

The product is defined by fewer attributes The customer is concerned only with the completion dates Both backlogging and smooth flow are acceptable The direct workforce need only have the right technical skills Quality standards are generally measured and thus fixed Time standards are tight as operations are on documents Storable output permits capacity to some average demand level

Service strategy hence begins by selecting operations focus i.e.the performance priorities by which the service firm will compete. These include: 1. Treatment of the customer in terms of friendliness and helpfulness. 2. Speed and convenience of service delivery. 3. Price of the service. 4. Variety of service (one stop philosophy) 5. Quality of the tangible goods that are central or accompanying the service. 6. Unique skills that constitute the service offering Piano lessons, brain surgery, hair styling..

Comparisons in Operations Strategy Planning.

Manufacturing 1. Business definition:: Who is the customer? What customer function do we serve How do we meet them

Services Who is the customer. What customer functions do we erve What is the nature of customer interaction How do we deliver it

2. Basis of computation: Cost Quality physical -Conference -Performance Delivery Speed Reliability Flexibility Product Design Features and range After Market service

Cost Service quality Conference Performance Perceived Quality Information content Expertise Image/tangable Capacity Capacity & size Capacity scheduling Delivery - Speed - Reliability - Location - Flexibility - Service designs - Feature and range - Customer contact - After Market Service Interfunctional strategic planning Front office activities Procedures and scripting Personnel selection training And supervision. Internal Marketing Client resources

Facilities design Backroom interface Functional Strategies: Operation Marketing Human Resources R&D Finance

Back room operations Traditional marketing Traditional human resources R&D Finance

Definitions
Alfred Chandler defined strategy as the determination of the basic long term goals and objectives of an enterprise, and the adoption of coarse of action and the allocation of resources necessary for carrying out these goals. William Glueck defined strategy as a unified comprehensive and integrated plan designed to ensure that the basic objectives of the enterprise are achieved. Henry Mintzberg defines strategy as a pattern in a stream of decisions and action. Eg the introduction of the Honda Cub in the US. The intended strategy was to introduce the 200 and 300 cc motorbikes in the mobike enthusiasts segment - it failed but executives used cub 50 cc to move all around. Sears Roebeck asked if they could sell the cub in their malls for the non-motorcycle enthusiast - today every 2nd motorcycle sold is a Honda. After deciding on the mission, objectives and the target market, the company has to choose between the fundamental strategic competitive option of Meaningful differentiation and Cost leadership. Meaningful differentiation means different and superior in some aspects of the business that has value to the customer. The fundamental objective in to make the product better by Better design with customer use in view. Better delivery of existing or quicker delivery of improvement Better flexibility of changing needs of the customer and environment. Cost leadership in offering the product and service at the lowest price in the industry.

 remove non value added items from product. Reduce OverHeads of inventory carrying etc. Successful strategies are those which have Improved Responsiveness in terms of = minimizing time to respond0 =timely response =accessibility thru better locations ,better geographical proximity, better logistics and communication. =wider product/service choice thru reduced cycle time/setup time. =increased productivity. =Reduced prices through Overall improvement in production delivery value chain. better design of product/service. Improved Quality through =better skills/knowledge attitude orientation of all in organization. = improved technology. =Reduced complexity, confusion. ms from product-> .