OPERATIONS MANAGEMENT

IN SUPPLY CHAIN MANAGEMENT

Presented By :

Skierians

END OF THIS PRESENTATION WE WILL COME TO KNOW ABOUT :

What operation management is? Business Functions . Important business

functions for OM. Location of Operations In Organizational Chart. Difference B/w manufacturers and service

organization. Classification of OM Transformation process. Relation of SCM And OM Examples For SCM And OM Conclusion References

OPERATIONS MANAGEMENT

WHAT IS OPERATION MANAGEMENT?

The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services.

WHAT IS OPERATION MANAGEMENT? (CONT:)

It is a management function

Organization’s core function

Every organization has OM function

Service or Manufacturing

For profit or Not for profit

BUSINESS FUNCTIONS Marketing Sales Target market Product line Finance and control R&D Labor Purchasing Production Distribution

TYPICAL ORGANIZATION CHART

DIFFERENCES BETWEEN MANUFACTURERS AND SERVICE ORGANIZATIONS

Services: Intangible product Product cannot be

inventoried High customer contact Short response time Labor intensive

Manufacturers: Tangible product Product can be

inventoried Low customer

contact Longer response time Capital intensive

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

CLASSIFICATIONS OF OPERATION MANAGEMENT

As we know that Operation management deals with two things that is Product and services so to work with these two individually there is a separate system these are:

Productive SystemService System

PRODUCTIVE SYSTEM

If we are talking about the goods or products then we have to discuss about productive system.

And these are types of productive system.

Process Focused SystemProduct Focused SystemProduction to stock/order

PROCESS FOCUSED SYSTEM

PRODUCT FOCUSED SYSTEM

PRODUCTION TO STOCK/ORDER

SERVICE SYSTEM

On contrast when we talk about services there is service system and there kinds which are:

Stagnant personal servicesSubstitutable personal ServicesProgressive servicesExplosive services

STAGNANT PERSONAL SERVICES

SUBSTITUTABLE PERSONAL SERVICES

PROGRESSIVE SERVICES

EXPLOSIVE SERVICES

TRANSFORMATION PROCESS

OM’S TRANSFORMATION ROLE

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

WHAT IS THE CONNECTION B/W SCM & OM

Go to Transformation process slide

CONT:

Yes each of these elements in transformation process is connected with SCM .

HOW?This can be explained with decision making in

operation management and some of the calculations which will make all of us to understand that how SCM is Connected with OM.

DECISIONS

All organizations are based on decisions Decisions follow a similar path

First decisions very broad – Strategic decisions

Strategic Decisions – set the direction for the entire company; they are broad in scope and long-term in nature

Following decisions focus on specifics - Tactical decision

CONT:

Tactical decisions focus onSpecific day-to-day issues

Resource needs, schedules, & quantities to produce

Tactical decisions are very frequentStrategic decisions less frequentTactical decisions must align with strategic

decisions

Ingredient Amount Required/Cookies

Flour 0.02 kg

Margarine 0.005 kg

Sugar 0.01 kg

Eggs 0.04 of an eggs(1 egg for 25 cookies)

Water 0.005 litre

Example of Raw material calculation for cookies manufacturer

CALCULATION

Formula: Forcasted Demand + ending stock percent of

Amount Example : If the forecast demand per month is 50,000

units of cookies.If the amount of stock at the end of the month is 5% of the amount.

nthcookies/mo500,52

500,2000,50

)000,50%(5000,50

The materials required for the month:

Ingredient Amount Required/Month

Flour 0.02kg/unit x 52,500 = 1050kg

Margarine 0.005kg/unit x 52,500 = 2025kg

Sugar 0.01kg/unit x 52,500 = 525kg

Eggs 0.04/unit x 52,500 = 2100 units

Water 0.005litre/unit x 52,500 = 262.5 litre

(Units)OutputofNumberTotal

(RM)CostOperationsTotalUnitperCost

OverheadlabourDirectmaterialDirectCostsOperations

Cost per unit calculation

HOW PRODUCTION IS GOING ON?

InputofValueTotal

OutputofValueTotalIndextyProductivi

The productivity index (P.I) can be more or less than 1.

P.I > 1 = business running efficientlyP.I < 1 = business running inefficiently

This All Calculations Decisions shows that SCM is playing a vital roll in OM because it is being used in each and every

portion of Operation management

FURTHER EXPLANATION

CONCLUSION

As we know that SCM works with the whole Organization and if we say that Operations management is one which works in between the whole organization that will not wrong because ,

All business functions need information from OM in order to perform their tasks

REFERENCES :

R. Dan Reid & Nada R. Sanders 3rd Edition © Wiley

Elwood S. Buffa & Rakesh K. Sarin 3rd Edition © Wiley

Internet Sir Abdullah Alamin