OPERATIONS MANAGEMENT

Planning

OPERATION MANAGEMENT

HR

PRODUCT

MATERIALS

SCHEDULING

FACILITIES

PLANNING

PROCESSES

LAYOUT

Operations ManagementProduct Definition Process

Product: The end result of the manufacturing process to be

offered to the market place to satisfy a need or a want.

Operations ManagementProduct Design and Development

Marketing and Product Design and Development are the two most critical contributors for the success of any New Product in the market;

- Product definition is conceptualised through market lead - The concept is translated into the tangible product by the design and

development team. Will be suicidal, if the conceptualization of the Product definition on the

basis of customer need/want is insufficient/incorrect and/or the Product designed on the basis of market lead fails to meet the

customer need/want and/or inefficient vis-à-vis competition and/or is not cost effective (capital costs and operating costs) or any other reason that may hinder sales of the Product.

Operations ManagementProduct Design

Critical Factors: - Must meet the required need/want of customers, critical for the

success of the organisation - Must be manufacturable, with minimum additional capital

investments - Must have an edge over competition - Must have versatility yet cost effective - Must be cost effective - Must be an out come of a team work – Marketing, Manufacturing, Industrial Engineering and Design/Development teams

Operations ManagementProduct Design

Importance: - Basis for investments and long term commitments - Organisation profitability depends on success of the Product/Service acceptance by market - Decides the Product/Service Cost - Failures discourage management in considering launch of the new products

Operations Management

Capacity planning

• Capacity is the maximum output rate of a facility• Capacity planning is the process of establishing the

output rate that can be achieved at a facility:– Capacity is usually purchased in “chunks”– Strategic issues: how much and when to spend

capital for additional facility & equipment– Tactical issues: workforce & inventory levels, & day-

to-day use of equipment

PRODUCTION MANAGEMENT

To achieve the objectives, key areas of interest are;

- Manufacturing Systems- Materials Management- Methods- Plant layout- Human Resource

DISTINCT STAGES OF PRODUCTION SYSTEM

• Planning – To analyze given data and devise scheme for the best utilization of

resources

• Operations To perform action as per the plan

• Control To supervise operations with appropriate control mechanism that feeds

back information about the progress of the work. The mechanism is also responsible for subsequent adjusting, modifying and redefining plans and targets to attain the goal.

Aggregate Planning

• Concerned with the overall operations over a specified time horizon.• Determines the efficient way of responding (allocating resources) to

market conditions• Effective allocate system capacity (plant, equipment and manpower) over

designated period.• A good production plan should > be consistent with organisation policy > meet demand requirements > be within capacity constraints > minimizes costs

Aggregate Planning

• Game plan to consider an integrated view of Marketing, Finance and Operations

• Managerial objective is to develop an integrated game plan whose manufacturing portion is the production plan

• States the mission manufacturing must accomplish as a part of the Corporate objectives

• Production plan will link strategic goals to production and is coordinated with sales objectives, resource availabilities and financial budgets

Aggregate Planning

• Planning Level Orientation Policy, Product, Process Long Range & Plant decisions Strategic

Intermediate Range Aggregate Planning Linking Activity

Short Range Operations Decisions Operations

Relationship between aggregate planning and other planning stages

Aggregate Planning• Long Range: - Products - Processes - Plant Location - Plant Layout Intermediate Range (Aggregate): - Output rates - Employment level - Inventory - Subcontracting Short Range: - Job assignments - Machine loading - Job Sequencing - Lot sizes

Aggregate Planning

• Key Linkages of Production PlanningMarketing PlanningThe Game PlanThe Financial Plan

Resource planningProduction planningDemand Management

Master Production Scheduling

Aggregate Planning

• Top Down Planning Strategic Planning Aggregate Planning Master Production Planning Material Requirement Planning Detailed Scheduling (Shop Floor Level)

Aggregate Planning

• Planning Stages

Aggregate Plan Product Groups Master Production Schedule Products Material Requirement Planning Components

The production plan needs to be expressed in meaningful units, but it also needs to be expressed in manageable number of units.

Aggregate Planning- Production plan is not a Forecast of a Demand

- It is the planned production, stated on an aggregate basis, for which manufacturing management is responsible.

- Organisations attempt to satisfy variations in demand by manipulating the variables in its control

- Pure and Mixed Strategies can be used to indicate the variables in its control.

PURE STRATEGY:- Output is changed by varying only one of the variables under control MIXED STRATEGY: - Output is changed by varying two or more variables at a time

Aggregate Planning

• Potential responses to demand fluctuations: - Vary workforce size - Carry Product Inventory - Use Overtime - Extra Shifts - Vary load via Product mix - Subcontract - Vary customer services - Add contracyclical products - Vary marketing (price, advertising)

Aggregate Planning Strategies

• Supply: - Workforce : Hire/Fire Overtime/Slack Temporaries Extra shifts - Demand: Pricing Promotion Customer Service Backorders

Aggregate Planning Functions

Current Status Production rates, work force size, inventory levels

Demand Forecasts AGGREGATE PLANNING Aggregate PlanCustomer Orders MODEL Production rates, workforce size Inventory levels Capacity Constraints equipment, materials personnel, overtime, extra shifts, subcontracting

Structured approach to Aggregate Planning

• Set policies on controllable variables• Establish forecast interval and horizon• Develop demand forecasting system• Select unit of aggregate capacity• Determine relevant cost structure• Apply aggregate planning techniques

PRODUCTION MANAGEMENT

The management of those resources & activities that are required to produce goods for

consumers or to the organizations. The Production Management is generally concerned with

Manufacturing Industries.

PRODUCTION MANAGEMENT

To be effective, requires the focus and attention to details related to;- Utilization of materials- Utilization of plant & machinery- Utilization of menwith the Product design and plant design being optimum for the requirements.

PRODUCTION MANAGEMENT

To achieve the objectives, key areas of interest are;

- Manufacturing Systems- Materials Management- Methods- Plant layout- Human Resource

Production Management

• Preplanning:- Covers an analysis of data and outline of basic sales reports,

market research, product development and design.- Problems of equipment policy and replacement- New processes and materials, layout and workflow- Collection of data on 4 Ms –materials, methods, machines

and manpower (and money) with respect to availability, scope and capacity

Production Management

• Planning:- Once task specified, thorough analysis of 4Ms to select

appropriate materials, methods and facilities- Followed by routing, estimating and scheduling- Detailed, realistic and precise planning leads to achieving

schedules with greater efficiencies- Short term and long term planning , for immediate and more

distant future- Functions include , standardization and simplification of

products, materials and methods

Production Management

• Controls:- Through dispatching, inspection and expediting - Control of inventories, scrap, analysis of WIP, transportation

FUNCTION OF PPC

• Materials• Methods• Machines & Equipment• Routing• Estimating• Loading & Scheduling• Expediting• Inspection• Evaluating

Production Management

• Materials- Raw materials- Semi Finished Products- Standard Finished Parts > Specifications (dimensions and quality) > Quantities and availability > Delivery Dates > Standardisation and variety reduction > Procurement and Inspection - including semi finished from subcontractors

Production Management

• Methods:- Analyze possible methods of manufacture- Define best method, for given facilities/circumstances

- Selection of processes for components and assemblies- Sequence of Operations- Division of Products into assemblies/subassemblies, within

limitations of the layout

Production Management

• Machines and Equipment:- Relate methods to machines/facilities- Maintenance Policy- Tool Management- Design and economy of jigs and fixtures- Replacement policy for plant and machinery

Production Management

• Routing:- Once methods and sequence of operations have been laid down > Define each operation in detail > Plan for production orders- Routing prescribes the flow of work in the plant and related to

considerations of layout, of temporary storages, location of raw materials and components and of material handling system.

- A fundamental production function on which all subsequent planning is based.

Production Management

• Estimating:- Based on Production Orders and detailed operation sheets,

operation times are worked out- Application of Methods and Routing, work measurement,

with performance standards- Human factor in Time and Motion study and hence time

schedule

Production Management

• Loading and Scheduling:- Machine loading to their capability and capacity for the task- In conjunction with routing to ensure smooth work flow- Together with estimating to ensure prescribed methods, feeds,

speeds- Toughest job as determines the utilisation of the resources and

hence efficiency of the plant- Scheduling must dovetail the operations, to avoid delays on

subsequent operations, and minimise WIP- Requires careful analysis of process capacities, coordination and

knowledge of allowances, maintenance breakdowns etc.

Production Management

• Dispatching:- Execution of planning function- Routine of setting productive activities in motion, through, > Release of orders and instructions > As per the sequence-route sheets, loading schedules - Authorizes start of production operations by releasing

materials, components, tools, fixtures and instructions sheets to the operator

- Ensures material movement according to the planned routing

sheets and to schedules

Production Management

• Expediting:- To keep close watch on the progress of the work- Expediting- Follow up- Progress is a logical step after

dispatching- Dispatching initiates the execution production plan,

expediting maintains and sees them through to their successful completion.

- Keeps close liasion with scheduling to have prompt feedback

and corrections.

Production Management

• Inspection:- Generally not a part of the PPC but critical in execution of the

execution of the current plan.- The limitations forms the basis for improvements and also

planning.

Production Management

• Evaluating:- Most essential function as link between control and future

planning- Dispatching and Expediting are concerned with immediate

issues, but valuable information gathered in the process with proper feedback mechanism is very useful for evaluation and

hence for improvement in utilsation of methods and facilities - Must get its due attention as future profits depend on

utilising best feedback for corrections

Production Management

• Layout:- Affects allocation of machines to perform given tasks- Important at design stage inselection of production processes- Rigid layout may hamper integration of additional equipment,

lack of space or limited mobility of equipment- May have long transportation lines, increase production

costs, WIP and cycle time- Restrictions imposed affect PPC.

Production Management

• Simplification and Standardisation - Different types of materials and methods for production of

different components, models or products- Leads to variety of materials at different stages – bought outs,

manufactured, sub assemblies/assemblies etc.- Also in processes – tools, machines, jigs and fixtures etc.- Simplification and Standardisation aims at defining a limited

variety of different types which can satisfy the basic requirements with higher plant efficiency

- Joint responsibility of Design, Materials management, R&D,PPC and others

Production Management

Time and Motion Study:- Relates to efficient utilisation of manpoer and to scheduling

problems.- Consists of Operation analysis and Work Measurement- Operation analysis/Method study: Evaluation,selection and

development of an efficient method for a given task- Work Measurement: relates to establishing standard times

for the various operations in the process of estimating function in production planning. Scheduling cannot be performed without such data.

Inventory Control

• Importance of materials availability at various stages of production.

• Inventory Control & Stores Management • Complex Function

– No over stocking• Finance• Obsolescence • Space etc

Inventory Control

– No stock Outs • Loss of production, • Loss of business• Imbalances adding costs

Inventory Management

• What is meant by Inventory?• Why inventory is necessary?• What are the various forms of the inventory?• What are the costs involved in inventories?• What are the risks associated with the

inventories?

Materials Management

Importance : - Materials form major part of the Product cost – 60% or so - With contribution at say 15%, every % saved in materials is equal to approx 4% increase in Sales. - Has direct bearing on the profitability - Timely and right quality of materials availability decides the overall productivity of any organisation. - Cannot afford too much or too little – both dangerous for survival and growth.

Materials Management

• Functions: - Material Planning and controlling

- Purchasing/Vendor development

- Stores and inventory control

Inventory Management• Forms bulk of current assets. Stock outs - Loss of profit from the missed sales - Loss of customer and good will - Loss of production - Reduced machine/men utilization Excessive Inventory - Inventory carrying costs - Cost of storage - Deterioration/obsolescence/pilferage

Thank you