PGDM -NITTE SOM

1/19/2015

Ashok Kumar

Learning Outcomes

Management Consultant / Teacher

1. Importance of Operations in any business

enterprise
( Appreciate )
2. Distinguish between manufacturing and services
and See it as a continuum
( Understand )
3. Systems perspective to Operations ( Some Insights )
4. Major issues that the organizations are facing in
respect to Operations management
5. Operations management as a Career choice ?

Operations Management
Unit 1 Session 1 -2

Conceptual

Contemporary

19 January 2015

Experiential
Learning

Discover the Value

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Ashok Kumar

PGDM -NITTE SOM

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Operations in a Restaurant

What is Operations ?

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Operations in an Hospital

Four Dimensions of Performance Customer perspective

Quality

Cost

Efficiency

Product quality (how good?)

Process quality (as good

as promised?)

Variety

Time

Customer heterogeneity

Responsiveness to
demand

Important for
- Performance measurement
- Defining a business strategy

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PGDM -NITTE SOM

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Four Dimensions of Performance:

Measurements for a
Cost

Efficiency

Quality

Cost

Quality

Product quality (how good?)

Efficiency
Measured by:
- cost per unit
- utilization

Product quality (how good?)

=> Price

Process quality (as good

as promised?)
=> Defect rate

Process quality (as good as

promised?)

Variety

Time

Customer heterogeneity

Four Dimensions of Performance: Trade-offs

Responsiveness to demand

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Variety

Time

Responsiveness to
demand

Measured by:
- customer lead time
- flow time

Customer heterogeneity
Measured by:
- number of options
- flexibility / set-ups
- make-to-order
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What Can Ops Management (This Course) Do to Help?

Step 2: Overcome Inefficiencies

What Can Ops Management (This Course) Do to Help?

Step 1: Help Making Operational Trade-Offs

Responsiveness
Responsiveness
High

High

Very short waiting times,

Comes at the expense of
Frequent operator idle time

Current frontier
In the industry
Competitor A
Eliminate
inefficiencies
Competitor C

Tradeoff

Low

Long waiting times,

yet operators are almost
fully utilized

Low labor
productivity

High labor
productivity

Low

Labor Productivity
(e.g. $/call)

High labor
productivity

Labor Productivity
(e.g. $/call)

Example:
Benchmarking shows the pattern above
Dont just manage the current system Change it!

Example: Call center of a large retail bank

- objective: 80% of incoming calls wait less than 20 seconds
- starting point: 30% of incoming calls wait less than 20 seconds
- Problem: staffing levels of call centers / impact on efficiency

Provides tools to identify and eliminate inefficiencies => Define Efficient Frontier

OM helps: Provides tools to support strategic trade-offs

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Competitor B
Low labor
productivity

Types of inefficiencies:
-Poor process design
- Inconsistencies in activity network

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What Can Ops Management (This Course) Do to Help?

Step 3: Evaluate Proposed Redesigns/New Technologies

Operations management

Responsiveness

High
Redesign
process

New frontier
Current frontier
In the industry
Low

Low labor
productivity

High labor
productivity

Systematic approach
Involves addressing various issues that an organization faces
Transformation processes are central to operations systems
Goal :
Costs to a minimum,
Obtain revenue in excess of costs through careful planning
and control of operations

Labor Productivity
(e.g. $/call)

Example:
What will happen if we develop / purchase technology X?
Better technologies are always (?) nice to have, but will they pay?
OM helps: Evaluates system designs before they occur
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Product or Service?
1.
2.
3.
4.
5.
6.
7.
8.
9.

Ayurvedic healing treatment

Legal / Tax consulting
Emergency maintenance services
Facilities maintenance
High quality restaurant meal
Fast food in a Eat-out joint
Customized durable goods
Fast moving commodities
General-purpose machines

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More examples

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4 Distinguishing features of Services

1.
2.
3.
4.

What is Operations Management?

Perishability
Simultaneity
Heterogeneity
Intangibility

The business function responsible for planning,

coordinating, and controlling the resources
needed to produce a companys products and
services

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Operations Management
as a Function

Operations Management is
The systematic design, direction and control of
processes that transform inputs into services and
products for internal, as well as external,
customers.

Inputs

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Transformation Processes
(Adding value)

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Outputs

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OMs Transformation Process

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Business Information Flow

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OM Managers take

Operations as a Set of Decisions

1. Strategic decisions
about products, processes, and facilities.

Strategic ( Design)
Decisions

long-term importance for the organization .

2. Operating decisions
-- resolve all of the issues concerning planning to meet customers'
demands for products and services.

3. Control decisions

-- with a wide variety of day-to-day problems in operations

(planning, analyzing, and controlling activities so that things like poor
worker performance, inferior product quality, and excessive machine
breakdowns do not interfere with the profitable operation of the
production system.
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Operating ( tactical ) Decisions

Development of new
capabilities
Maintenance of existing
capabilities
Design of new processes
Development and
organization of value
chains
Key performance measures

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Process improvement and

performance measures
Management and planning
of projects
Generation of production
and staffing plans
Inventory management
Resource scheduling

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Current Priorities - OM

Challenges in Operations management

1.
2.
3.
4.

Competitive pressures due to Economic reforms

Growing Customer expectations
Technological developments
Environmental issues

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1. Relate the operations system to customer/market

requirements
2. Acquire capabilities to tolerate product/service
proliferation
3. Develop systems and procedures that promote
learning.
4. Develop green manufacturing practices.

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Careers in Operations /SCM

Plant manager

Hospital
administrator

Branch manager

Department
manager

Call center
manager

Supply chain
manager

Purchasing
manager

Quality
manager

Business process
improvement
analyst

Lean
improvement
manager

Project manager

Production
analyst

Facilities
manager

Chief operating
officer

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