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Module I

Introduction
Operations Management in Service
and Manufacturing Industry
Service and manufacturing operations
have differences, but also similarities.
Both create mission statements and a
vision for how the organization will be run
and perceived by customers.
Each provider or manufacturer wants to
lead the market in its specific industry.
However, manufacturing and service
operations answer different questions
and formulate different strategies when
it comes to planning and managing the
way in which an organization is run.
Operations Processes
Processes are the essence of
operations management.

They transform inputs into outputs.

More than products or technologies,


the ability to do things well--
processes--constitutes a firm's
competitive advantage
Types of Processes
Batch
Projects Producti
on
Continu
Mass
ous
Producti
Producti
on
on
Projects
Projects represent one-of-a-kind production for
an individual customer.
They tend to involve large sums of money and last
a considerable length of time. For those reasons,
customers are few and customer involvement
intense.
Customers are heavily involved in the design of
the product and may also specify how certain
processes are to be carried out.
In some cases, the customer will have
representatives on site to observe the production
process, or send in inspectors to certify quality at
critical stages of project development.
Batch Production
A production system that processes items in
small groups or batches is called batch
production.

Batch production is characterized by


fluctuating demand, short production runs of a
wide variety of products, and small to moderate
quantities of any given product made to
customer order.

Work on a particular product is not continuous; it


is intermittent.
Mass Production
Mass production is used by producers who need to
create more standardized products in larger
quantities than batch production can economically
handle.
Products are made-to-stock for a mass market,
demand is stable, and volume is high. Because of the
stability and size of demand, the production
system can afford to dedicate equipment to the
production of a particular product.
Thus, this type of system tends to be capital-
intensive and highly repetitive, with specialized
equipment and limited labor skills.
Contd......
Mass production is usually associated with flow lines or
assembly lines. Flow describes how a product
moves through the system from one workstation
to the next in order of the processing requirements for
that particular product.
Batch production cannot be set up in this way because
the processing requirements are different for each
customer order.
Assembly line describes the way mass production is
typically arranged--most of the operations are assembly-
oriented and are performed in a line.
Goods that are mass-produced include automobiles,
televisions, personal computers, fast food, and most
consumer goods.
Continuous Production
Continuous processes are used for very
high-volume commodity products that are
very standardized.
The system is highly automated (the
worker's role is to monitor the equipment)
and is typically in operation continuously
twenty-four hours a day.
The output is also continuous, not discrete--
meaning individual units are measured,
rather than counted.
Steel, paper, paints, chemicals, and
foodstuffs are produced by continuous
production. Companies that operate in this
Operations Management
is.............
Management of any activity/process that
creates goods and/or services

Management of the efficient transfer of in


puts into outputs to effectively satisfy
customers.

...............................
Examples of Operations
Operations
Production Goods &
Services........
Storage/Tra Warehouses, trains,
nsportation Containers.......
Exchange Loans, trade ,
retailing.......
Entertainm TV, Concerts,
ent radio......
Operations is linked with.....

a n c
Fi n
e

Marketing

Operati
ons
Operations Management in Service
and Manufacturing Industry

Manufactu Consumer
Durables,
ring Transportation,
Operations Clothing, Home
appliances.......

Medical, Education,
Service Retail, Financial
Operations Sector,
Entertainment.......
Manufacturing vs. Service
Operations
Characteristics Manufactu Service
ring
Output Tangible Intangible
Customer Contact Low High
Uniformity of Output High Low
Man-Power Content Low High
Uniformity of Input High Low
Measurement of Easy Difficult
Productivity
Opportunity of Easier Difficult
correcting errors
Responsibilities of Operations
Manager

Plannin Controlli
g ng

Organizi
Staffing
ng
Operations Strategy/ Operations
Decisions
A plan specifying how an organization will
allocate resources in order to support
infrastructure and production.

An operations strategy is typically driven


by the overall business strategy of the
organization, and is designed to
maximize the effectiveness of
production and support elements while
minimizing costs.
s
About planning and controlling operations.
Concerns day to day activity of workers,
quality of products and services,

Decision
maintenance of equipment etc. Control
s
About planning production to meet demand.
Are necessary to satisfy the ongoing
Decision
production of goods and services needed to
satisfy demand.
ng
Required to generate profits s
Operati
About product , processes and facilities.
Decision
Are of strategic importance.
Long term significance for the organization
c
Strategi
Decisions
Types of Operations Strategy/
Strategic Decisions (some
examples)
Deciding whether to launch a new-product
development project.

Deciding on the design for a new product.

Deciding how to allocate scarce labour, raw


materials, capacity etc.

Deciding what new facilities are needed


and where to allocate them.
Operating Decisions
Deciding how much finished good inventory
to carry for each product.

Deciding what products and how much of


each to include in next months productions
schedule.

Deciding how many temporary employees


to hire next week.

Deciding how much to purchase from each


vendor next month...........
Control Decisions
Deciding what to do about a departments
failure to meet the planned labour cost
target.

Developing labour cost standards for a


revised product design that is about to go
into production.

Deciding what the quality control


acceptance criteria should be for a product
that has had o change in design.
Deciding how often to perform preventive
THE END