The

transformation process of inputs

into the form of output, thereby adding
value to some entity.
Output may be a product or service. If it is
a
product centric that is known as
production, If it is a service centric then
that is known as operation.

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BBA-305

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 It

is concerned with the production of

goods and services, and involves the
responsibility of ensuring that business
operations are efficient and effective.
It is also the management of resources,
the distribution of goods and services to
customers.

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 The

field of study that focuses on the

effective planning, scheduling, use, and
control of a manufacturing or service
organization through the study of concepts
from design engineering, industrial
engineering, management information
systems, quality management, inventory
management, accounting, and other
functions as they affect the organization"
-APICS
The
Association
for
Operations Management

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 Operations

management
closely
interrelated with all other functional areas
of the business environment.
The following figure shows the various
functions of operations management in
other functional areas.

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 The

Industrial
Revolution
Division of Labor
Scientific Management
Mass Production
Lean Production

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 Operations

management did not begin

until
the Industrial Revolution in the 1700s
Prior to that time only craft
production
Mechanically powered machines replaced
the laborer as the primary factor of
production and brought workers to a
central location called Factory.
The revolution first took hold in textile
mills, grain mills, metalworking, and
machine- making facilities
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 Adam

Smiths Wealth of Nations (1776)

proposed the division of labour.
Production process was broken down into
a series of small tasks, each performed
by a different worker.
Allowed him or her to become very
proficient
at those tasks

 In

the early 1900s F.W. Taylor approached

the
management of work as a science.
Based on observation, measurement,
and analysis, he identified the best
method for performing each job
The methods were standardized for all
workers, and economic incentives were
established to encourage workers to
follow the standards

 American

manufacturers became adept at

mass production over the next 50 years
and
easily dominated manufacturing
worldwide.
Elton Mayo and Hawthorne studies,
introduced the idea of workers
motivation and Productivity
Theories of motivation were developed
by
Hertzberg, Maslow, McGregor, and others
Computers
and automation led still
another
upsurge in technological
advancements

 Japanese

manufacturers changed the rules

of production from mass production to
lean production
Lean production prizes flexibility (rather
than
efficiency) and quality (rather than quantity)

 Jidoka,

means, not allowing defective parts

togo from one work station to the next.
It specifically refers to machines or
the production line itself being able
to stop automatically in abnormal
conditions
This Autonomation allows machines to
run
autonomously, as they will stop
when a problem occurs.
Ultimately, it is about transferring human
(or better) intelligence to machines.

 Strategic

Decisions
Operating
Decisions
Control Decisions

 These

decisions are of strategic

importance and have long-term
significance for the organization.
Examples include deciding:
the design for a new products production process
where to locate a new factory
whether to launch a new-product development
plan

 These

decisions are necessary if the

ongoing production of goods and services
is to satisfy market demands and provide
profits.

Examples
include deciding:
much finished-goods
inventory to carry
how
the amount of overtime to use next week
the details for purchasing raw material next
month

 These

decisions concern the day-to-day

activities of workers, quality of products
and services, production and overhead
costs,
and
machine
maintenance.
Examples include deciding:
labor cost standards for a new
product
frequency of preventive maintenance
new quality control acceptance
criteria

Computer Integrated Manufacturing, known as

CIM.
In the 1980s, Computer Integrated
Manufacturing was developed and promoted
by machine tool manufacturers and the
CASA/SME (Computer and Automated Systems
Association /Society for Manufacturing
Engineers).
CIM used to describe the complete automation of
a manufacturing plant, with all processes
functioning under computer control and digital
information tying them together.

 Global

Competition
Quality, Customer Service, and
Cost Challenges
Rapid Expansion of Advanced
Technologies
Continued Growth of the Service
Sector
Scarcity of Operations Resources
Social-Responsibility Issues

 Changing

nature of world business

International companies
Strategic alliances and production
sharing
Fluctuation of international
financial conditions

The US gross domestic product (GDP) is, at $10

trillion, the largest in the world.
Companies all over the globe are aggressively
exporting their products/services to the US
Many US companies are targeting foreign
markets
to shore up profits.
The global economy that interconnects the
economies of all nations has been termed
the global village.
One of the most important new markets is
China.

 International

companies are those whose

scope of operations spans the globe as
they buy, produce, and sell.
International firms search out
opportunities for profits relatively
unencumbered by national boundaries.
Operations managers must coordinate
geographically dispersed operations.

 Strategic

alliances are joint ventures

among international companies to
exploit global business opportunities.
Alliances are often motivated by
Product or production
technology
Market access
Production capability
Pooling of capital

 Japanese

companies have long

practiced keiretsu, the linking of
companies into industrial groups.
A financial keiretsu links companies together with
cross-holding of shares, sales and purchases
within the group, and consultation.
A production keiretsu is a web of interlocking
relationships between a big manufacturer
(Toyota) and its suppliers.

 Production

sharing means that a product

might be designed and financed in one
country, its materials produced in other
countries, assembled in another country,
and sold in yet other countries.
The country that is the highest-quality,
lowest-cost producer for a particular
activity would perform that portion of the
production of the product.

 Pros

(Plus)

Productivity grows more quickly (living standards

can go up faster)
Global competition and cheap imports keep a lid
on prices (inflation less likely to derail economic
growth)
Open economy spurs innovation (with fresh ideas
from abroad)
Export jobs often pay more than other jobs
US has more access to foreign investment (keeps
interest rates low)

 Cons

(Minus)

Millions of Americans have lost jobs due to

imports or production shifts abroad
Most displaced workers find new jobs that pay
less
Workers face pay-cuts demands from employers
Service and white-collar jobs are increasingly
vulnerable
US employees lose their comparative advantage
when companies build advanced factories abroad

Outsourcing refers to hiring out or subcontracting

some of the work that a company needs to do.
This strategy is being used more and more as
companies strive to operate more efficiently.
Outsourcing has many advantages and
disadvantages.
Companies try to determine the best level of
out- sourcing to achieve their operations &
business goals.
More outsourcing requires a company to have
less
equipment, fewer employees, and a smaller
facility.

company might outsource any of the

following manufacturing related functions:
Designing the product
Purchasing the basic raw materials
Processing the subcomponents,
subassemblies,
major assemblies, and finished product
Distributing the product

 Many

companies even outsource some

service
Payroll such as:
functions
Billing
Order processing
Developing/maintaining a
website
Employee recruitment
Facility maintenance