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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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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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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diff from….• Operations research / Management Sciences /

Industrial Engineering

• OM uses the above tools to take decisions

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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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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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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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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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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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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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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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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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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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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


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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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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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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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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E Commerce – Internet,

Amazon, eBay, Yahoo !

Outsourcing and FLATTENING of the world

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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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?

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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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• 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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• Read

“The Goal”

- Eliyahu M. Goldratt

“Jack Welch and the GE Way”

- Robert Slater

mba, semester 2 operations management ms. aarti mehta sharma

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