April 30, 2019

Zero-Based Productivity Management of Supply Chain - McKinsey Way Supply Chain Industrial Engineering


All focus areas of industrial engineering have application in supply chain productivity management. McKinsey way (2019) shows the application clearly by proposing that the redesign has to start with cost measurement. Process based industrial engineering and value based industrial engineering are the core industrial engineering methods. Economic analysis and optimization are to be used. Human effort engineering is indicated in direct labor redesign. The whole exercise has to be planned, organized and controlled by productivity management.


Supply Chain Industrial Engineering - Video Presentation

Published on 7 Apr 2013
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Supply Value Chain Redesign - Zero-Based Approach - McKinsey Way (2019)


Companies can identify substantial waste and increase value (Value Analysis and Value Engineering) by applying zero-basing to every part of the supply chain. An end-to-end assessment of the supply chain, including the intersections between functions (for example, the effect of specification choice by design department on manufacturability, or the quality of information shared between functions due to lack of trust) is critical to reduce complexity, optimize planning, and improve the coordination required to optimize the full supply chain.

By undertaking such efforts, some business firms have achieved overall cost savings of up to 50 percent. 

Where is  the value in a zero-based approach redesign of supply chain?


McKinsey consultants recommend start by breaking costs into four crucial categories—direct labor (including equipment), indirect labor (including equipment), warehouse and logistics, and materials  (including conversion yields)—and building  a bottom-up view on the existing cost base. The category which may have the highest opportunity  varies by industry and type of manufacturing. In more automated settings or continuous manufacturing, equipment category may have higher opportunity. Direct-labor may be more important in  manual assembly to find savings opportunities.

Establishing granular transparency


Companies have to  seek  granularity into costs. This  visibility of lower and lower level costs, gained by aggregating ledger account data from internal sources and benchmarking data from external sources, enables organizations to establish relevant benchmarks across spending categories. Data is collected from existing recorded data  and is augmented by specially made cost studies using  observations and targeted sampling where data is lacking. The  data has to point out  regulatory and customer special requirements, which act as constraints in the problem. 


Benchmarks for each value activity of the supply chain


Benchmarks are developed for each value activity of the supply chain. From the benchmarks technology to be used, capacity to be created and resources  needed to support the organization’ business strategy are determined in a zero-based approach to supply chain value activity design.  This analysis acts as a reset or a redesign or a zero-based design, giving managers a better understanding of best possible practice of each supply chain value activity.  Benchmarks are set with intelligent decision making  to determine aspirational—yet practical—business targets (smart goals).  Benchmarks at the narrow cost-bucket level often identify potential value improvement opportunities that would remain hidden in more traditional, high-level analysis 

Defining the survival state and Evaluating Organization Choices


The survival minimum performance of the supply chain and each value activity is defined by customer value requirement ( satisfying—but not exceeding—customer requirements for service, features, and specifications), regulatory requirements (such as hygiene standards), and nonnegotiable customer requirements, often related to quality.

The costs of activities related to satisfying  customer requirements and the costs of the organization’s own choices (often based on contingencies or concessions or delight features) are calculated and challenged for their contribution to the final customer value. Activities that are determined to be low-value are challenged before they are included in the future state. 

Value Analysis and Value Engineering in Supply Chain Value Activities


Value Engineering - Value Analysis Techniques - Video Presentations

A classic example is where an organization has included an extra quality check as the result of a customer claim event—and continues to follow it long after the quality risk has been fully mitigated by addressing the root cause.

Making informed strategic choices


Once the survival minimum is established and cost of additional features are determined, the supply chain redesign team then rebuilds the supply-chain function specifically to support business strategy. This design of a strategic optimum is calculated at every step to enable the organization to make conscious choices. 

After the strategic optimal supply value chain is specified,  the team designs each value activity by  further simplification (basic engineering thinking at mechanism level) and automation  solutions. These improved engineering solutions are subjected mathematical and statistical optimization to decide optimal factor levels. All value activities in the end-to-end supply chain are redesigned at a single step to make the right trade-offs to ensure system optimization rather than functional excellence.


Read the original McKinsey article

April 29, 2019

The Managerial Function of Leading - Harold Koontz

Principles of Management Revision/Review Articles - List

The managerial function  of leading is defined as the process of influencing people so that they will contribute to organization and group goals.

We have to remember we are explaining the whole process of managing in five steps. Planning, organizing, staffing (resourcing), leading and control. It is during the phase of leading that staff are actually told what is expected of them in next year, next five years or next ten years. The mission, objectives, vision and goals of the company are communicated to them. It means plans are to be communicated and many of the plans or budgets have to be clear. Resources are actually allocated and put under control of some people during the leading stage. Actions that come out of the control stage are implemented through leading function.

So the managerial function of leading is focused on contribution of group members  to organization and group goals. It explores more content when compared to  the process of leading examined in organizational behavior texts.

Koontz et al. clarify this by saying there is more to managing than just leading. Leading is an essential function of managers. Managing involves planning the result of the organization, setting up the organization structure with technology, facilities and people, acquiring various equipment and staff who are competent and controlling activity to correct deviations from the plans during the execution stage.

In the area of leading, behavioral sciences make a major contribution to managing.

Behavioral or Human Factors in Managing


The individuals who join organizations have needs and objectives that important to them and to achieve them only they join organization. Managers, in the function of leading have to ensure that each role in the organization contributes to the aim of the enterprise and also satisfies the needs and objectives of the individual who performs the role. Managers need to have an understanding of multiple roles that people play in society, the individuality of people, and the personalities of people.

Multiplicity of Roles


Both managers and people working in their organizations are members of a broad social system which has a tradition of human dignity and also membership in multiple groups with different descriptions of roles.

Average Person is a Useful Concept But Individual Differences Have to be Acknowledged and Managed


In the organization policies are designed for all persons assuming that they are alike. Even though, not all the needs of individuals can be satisfied by an organization, managers need to have latitude in making individual arrangements. There is need to fit the job to the specific person doing the job to some extent.

The importance of Personal Dignity


In an organization, the actions of managers should not violate the dignity of people. The concept of individual dignity means that people must be treated with respect, no matter what their position in the organization.

Consideration of The Whole Person


A person has knowledge, attitudes, skills and personality traits. Each person has a separate bundle. The human being is influenced by external factors and reacts to them quickly and unpredictably. People cannot come to an organization for work, forgetting many other things that are impacting them. Managers have to recognize that whole person is coming into the organization and be prepared to deal with them.

Yearning - Compassionate Leadership - Relevance for Operations Managers

Yearn (v.i) - Oxford Dictionary Meaning:  to be filled with longing or compassion or tenderness
hence, yearning (n)

But Oxford thesaurus says yearning: longing, craving, desire, want, hankering, wish

In this write-up, filled with compassion or tenderness meaning is used.

Compassion or tenderness is essential in leaders. Leaders have to take of care performance (wealth) along with happiness and health. Equity is a principles of management given by Fayol. He said it is justice with kindness.  Operations management system or operations system is a social system with the objective of sustainable social group. In the working of any group of people leadership is important. But leaders have to continuously demonstrate compassion and thus provide an example for every body in the group to show similar behavior to adjust to the irritants that are part of relationships and transactional activities.

Earliest article on Compassion and Leadership  be me.

Latest on Compassionate Leadership


The Dalai Lama on Why Leaders Should Be Mindful, Selfless, and Compassionate

The Dalai Lama with Rasmus Hougaard
FEBRUARY 20, 2019, Harvard Business Review Article
https://hbr.org/2019/02/the-dalai-lama-on-why-leaders-should-be-mindful-selfless-and-compassionate

Dalai Lama Quotes on Compassion


Fear and anxiety easily give way to anger and violence.

The opposite of fear is trust, which, related to warmheartedness, boosts our self-confidence.

Compassion also reduces fear, reflecting as it does a concern for others’ well-being.

This, not money and power, is what really attracts friends.

When the mind is compassionate, it is calm and we’re able to use our sense of reason practically, realistically, and with determination.

Be selfless

We are naturally driven by self-interest; it’s necessary to survive.

But we need wise self-interest that is generous and cooperative, taking others’ interests into account.

Cooperation comes from friendship, friendship comes from trust, and trust comes from kindheartedness.

Once you have a genuine sense of concern for others, there’s no room for cheating, bullying, or exploitation; instead, you can be honest, truthful, and transparent in your conduct.

Be compassionate

The ultimate source of a happy life is warmheartedness.

When it comes to human beings, compassion can be combined with intelligence. Through the application of reason, compassion can be extended to all 7 billion human beings.

Destructive emotions are related to ignorance, while compassion is a constructive emotion related to intelligence. Consequently, it can be taught and learned.

Actions motivated by anger and greed tend to be violent, whereas those motivated by compassion and concern for others are generally peaceful.

We won’t bring about peace in the world merely by praying for it; we have to take steps to tackle the violence and corruption that disrupt peace. We can’t expect change if we don’t take action.

People often don’t realize that warmheartedness, compassion, and love are actually factors for our survival.




“Managing compassionately is not just a better way to build a team, it’s a better way to build a company.” - LinkedIn’s Jeff Weiner: How Compassion Builds Better Companies
https://knowledge.wharton.upenn.edu/article/linkedin-ceo-how-compassion-can-build-a-better-company/

Be selfless - Be compassionate

Become Better Leader – Human Relations First Perspective
________________

________________


About a Course on Compassion Science

PSY BEH 192B: THE SCIENCE & PRACTICE OF COMPASSION

The purpose of this course is to teach the emerging science of compassion, which explores the roots of a meaningful, purposeful, and happy life. Students will discover how cutting-edge research is yielding fundamental insights into the nature of human kindness, the origins of empathy, the promotion of altruistic behavior, and the benefits of living a more compassionate life. The fundamental premise of the course is that connecting to others, behaving in kind ways, and contributing to something larger than yourself is a primary driver of human happiness and flourishing. Students will gain expertise in cross-disciplinary research from psychology, evolutionary biology, neuroscience, and beyond.

UC Irvine Undergraduates:
Search course codes 54340 (Lecture) and 54341 (Discussion) on the UCI Schedule of Classes to see course details for the Winter 2019 term. No authorization code is required.
http://blumcenter.uci.edu/students/education/science-compassion/









A good bibliography on Compassion  is given below.


Compassionate Leadership - Bibliography


2018

Learning and Practice Steps for Compassionate Leadership as Physician
Good Presentation with multiple steps for practice
Indicates self compassion as also an important step.
https://icph2018.com/app/uploads/2018/10/Developing-Resilient-Teams-by-Creating-compassionate-leaders.pdf


Audio - Jeff Weiner: Defining Compassionate Leadership
On this podcast episode, LinkedIn’s CEO discusses the need for company values and how to prepare the workforce for the fourth industrial revolution.
November 30, 2018
https://www.gsb.stanford.edu/insights/jeff-weiner-defining-compassionate-leadership

Compassion is now a foundational aspect of leadership. One study from 2012 found that compassionate leaders appear stronger and have more engaged followers. Other studies have found that organizations with more compassionate leaders have better collaboration, lower turnover, and employees who are more trusting, more connected to each other, and more committed to the company. In a recent survey of  1,000 leaders from 800 organizations, 91% of them said compassion is very important for their leadership and 80% said they would like to enhance their compassion and would like to have avenues for it.

HBR article
Assessment: Are You a Compassionate Leader?
Rasmus Hougaard, Jacqueline Carter, Jason Beck
MAY 15, 2018
https://hbr.org/2018/05/assessment-are-you-a-compassionate-leader


2017
Compassionate Leadership: A Mindful Call To Lead From Both Head And Heart
Margie Warrell
Contributor
https://www.forbes.com/sites/margiewarrell/2017/05/20/compassionate-leadership/

Why a Compassionate Leader Gets Results
March 22, 2017/John C. Maxwell
https://www.success.com/why-a-compassionate-leader-gets-results/

2016

RESEARCH PAPER
COMPASSIONATE LEADERSHIP:
WHAT IS IT AND WHY DO ORGANISATIONS NEED MORE OF IT?
Meysam Poorkavoos
https://www.roffeypark.com/wp-content/uploads2/Compassionate-Leadership-Booklet.pdf

Academy of Management ProceedingsVol. 2016, No. 1
Operationalizing Compassionate Leadership Behavior
Brad Shuck, Meera Alagaraja, Jason Immekus, Denise M. Cumberland and Maryanne Honeycutt-Elliott
https://journals.aom.org/doi/abs/10.5465/ambpp.2016.14266abstract


2014

Compassionate Leadership: How to create and maintain engaged, committed and high-performing teams
Manley Hopkinson
Hachette UK, 04-Dec-2014 - Business & Economics - 240 pages

This book will introduce you to the art of compassionate leadership - the art of getting the best for and out of people through the fulfilment of self-worth. It will show leaders how to give their teams a real sense of purpose and direction in order to motivate and inspire them to perform at a high level.

To illustrate his message, author Manley Hopkinson draws on his background as a board member of companies including ATLAS Consortium and Hewlett Packard Defence UK, his career as an inspirational speaker and his adventure experiences as skipper in the BT Global Challenge (a round the world yacht race) and The Polar Race (an expedition style race to the Magnetic North Pole).
https://books.google.co.in/books?id=LsSlAgAAQBAJ


2012

Compassionate Leaders are Effective Leaders
Great companies have compassionate leaders, says Google's "Jolly Good Fellow."
BY CHADE-MENG TAN | SEPTEMBER 11, 2012
https://greatergood.berkeley.edu/article/item/compassionate_leaders_are_effective_leaders


2011

Compassionate Leadership

Ted Engstrom, Paul Cedar
Baker Books, 18-Jul-2011 - Religion - 176 pages

What do compassionate leaders with years of experience have to say to leaders of today? What does Christ's example show us about leadership? What are the perils and pitfalls that can ensnare young Christian leaders? In Compassionate Leadership, Ted Engstrom and Paul Cedar bring their considerable experience to bear on the issues facing young leaders of today. Instead of discussing power, management, and organization, their advice involves being generous, believing in people, and helping to meet needs, encouraging friends, getting excited about the good things that happen to others, and helping others in their walk with the Lord. Jesus told us that to become great, we must be compassionate servants. Here's how.
https://books.google.co.in/books?id=yIq8BAAAQBAJ

NRao Management Blog - NRaoMtr - Domain Authority - 89/100


30 April 2019
Backlink profile for http://nraomtr.blogspot.com
Domain with all its subdomains
Domain rating 26
Backlinks 15,306  95% dofollow
Referring domains 322 25% dofollow
https://ahrefs.com/backlink-checker

30 April 2019

PAGE AUTHORITY MOZ (PA) 37
External links to page 2,307
URL age (Years) 7.3
DOMAIN AUTHORITY MOZ (DA) 21
External links to domain 13,175
Website age (Years) 7.3
https://www.seoreviewtools.com/website-authority-checker/

2.4.2017

I came to know today that I can check domain authority for blogs.

I checked the DA for http://nraomtr.blogspot.com/

The website for it is http://www.seoreviewtools.com/website-authority-checker/

It gave me the score as 89/100.

It says social shares are 213. I know it is a big number when compared to my other blogs.

89 is a good performance.  I am happy.

Thanks to the blogger for the page http://www.girlgonedreamer.co.uk/2017/03/blogging-tips-learn-from-others.html


Updated on 30 April 2019,  2 April 2017

April 27, 2019

Management Theory and Practice - Bulletin Board


Theodore Kinni, Contributing Editor, MITSMR   https://twitter.com/TedKinni
http://readingwritingmanagement.blogspot.com/

April 2019

One of the best tests of effectiveness of a social system is the number of ideas generated lower down and accepted higher up. - Bill Reddin

September 2018

7 daily habits of the best managers
August 9, 2018
Kristin Tyndall, editorKristin Tyndall, Senior Editor
https://www.eab.com/daily-briefing/2018/08/09/7-daily-habits-of-the-best-managers


March 2018

Managing Greatest people - Steve Jobs


The greatest people are self-managing -- they don't need to be managed. Once they know what to do, they'll go figure out how to do it. What they need is a common vision. And that's what leadership is: having a vision; being able to articulate that so the people around you can understand it; and getting a consensus on a common vision.

__________________

 __________________


Among Planning, Organizing, Resourcing and Staffing, Directing and Controlling, directing activity can be minimized when you have greatest people in your team. Recruiting them is important. Once you have such people Managing can be planning, organizing and controlling the main events. The processes can be left to the people to figure out and execute. You don't have to micro manage things.

Jobs terms people with highest maturity of business processes and tasks as greatest people.

https://www.thriveglobal.com/stories/27110-a-young-steve-jobs-once-gave-this-priceless-leadership-lesson-here-it-is-in-a-few-sentences

https://www.forbes.com/sites/susankalla/2012/04/02/10-leadership-tips-from-steve-jobs/

https://blog.dcrworkforce.com/build-effective-team-steve-jobs

November 2017


Transformations by New CEOs
https://www.bcg.com/publications/2017/transformations-people-organization-that-work-why.aspx?linkId=44591301

Amoeba Management - Kazuo Inamori - Full Web Page on the topic with various links

http://global.kyocera.com/inamori/management/amoeba/

27 August 2016

Why Companies Can’t Perceive Customer Insights and Can't Turn the limited Customer Insight into Growth

BCG Perspectives
16 August 2016

Many companies spend more time looking inward. Check in your next internal meeting, record on one sdie each mention of an internal topic, such as financial or operational performance, plans, metrics, organization, employees, or culture. On the other side, record each discussion of an external topic, related to competition such as technology, innovation, purpose, testing, social media conversations, or topics related to customer,  customers’ behaviors, needs, and wants. You will be surprised to see that internal topics dominate the external topics. Hence people spend more time in preparing for answering internal issues related questions and spend less time customers and competition.  This is not a good way of allocating top management and middle management resources. At each meeting, the priority area is to be decided and adequate time is to be given to that area. There has to be balance in various activities of the organisation. This principle was given by Henri Fayol way back in 1920s.
https://www.bcgperspectives.com/content/articles/center-customer-insight-marketing-sales-why-companies-cant-turn-customer-insights-growth/

Values of Business Schools


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Updated  30 March 2018,  12 November 2017, 20 October 2016,  27 August 2016,  18 September 2015

April 26, 2019

Xenogamy (Cross Fertilization) - Evolution of Operations Management





                                          Location: NITIE Office Room in Old Academic Building

Manufacturing has progressed from individual or cottage or craft based activity into industrial organisation and now into the post-industrial economy. There are many key thinkers and turning points in the development of modern operations management that plans, organizes, resources, directs and controls a net work of manufacturing, storing and transport facilities connected by information and financial flows and supplies goods and services at  prices market is willing to buy and at costs that give adequate profits to all the participants in the supply chain.

Production and Operations Management - The Beginning

1886 - ASME - Henry Towne - Shop Management and Works Management


American Society of Mechanical Engineers (ASME) made the beginning in the field of works management and shop management.

Henry Towne, in a paper presented to the society (ASME) in 1886 observed that  the work of all engineers, especially that of the mechanical engineers, includes the executive duties of organizing and superintending the operations of industrial establishments, and of directing the labor of the artisans whose organized efforts yield the fruition of his work.

To insure the best results, the organization of productive labor must be directed and controlled by persons having not only good executive ability, and possessing the practical familiarity of a mechanic or engineer with the goods produced and the processes employed, but having also, and equally, a practical knowledge of how to observe, record, analyze and compare essential facts in relation to wages, supplies, expense accounts, and all else that enters into or affects the economy of production and the cost of the product. 

It will probably not be disputed that the matter of shop management is of equal importance with that of engineering, as affecting the successful conduct of most, if not all, of our great industrial establishments, and that the management of works  has become a matter of such great and far-reaching importance as perhaps to justify its classification also as one of the modern arts. A vast amount of accumulated experience in the art of workshop management already exists, but there is no record of it available to the world in general. Surely this condition of things is wrong and should be remedied. The remedy should originate  from  engineers, and, for the reasons above indicated, particularly from mechanical engineers. So, Towne put forward the question, "why should it not originate from, and be promoted by The American Society of Mechanical Engineers?"

The discussion and the dissemination of useful knowledge in this specialty, group themselves under two principal heads, namely: Shop Management, and Shop Accounting. A third head may be named which is sub-ordinate to, and partly included in each of these, namely: Shop Forms  and Blanks. Under the head of Shop Management fall the questions of organization, responsibility, reports, systems of contract and piece work, and all that relates to the executive management of works, mills and factories. Under the head of Shop Accounting fall the questions of time and wages systems, determination of costs, whether by piece or day-work, the distribution of the various expense accounts, the ascertainment of profits, methods of book-keeping, and all that enters into the system of accounts which relates to the manufacturing departments of a business, and to the determination and record of its results.

This work, if undertaken by the society, may be kept separate and distinct from the present work of the society (engineering work) by organizing a new "section" (which might be designated the " Economic Section'').


In the case of shop information of  a manufacturing establishment, there is now in use, in connection with the manufacturing accounts and exclusive of the ordinary commercial accounts, some twenty various forms of special record and account books, and more than one hundred printed forms and blanks. .The primary object to which all of these contribute is the systematic recording of the operations of the different departments of the works, and the computation therefrom of such statistical information as is essential to the efficient management of the business, and especially to increased economy of production. All of these special books and forms have been the outgrowth of experience extending over many years, and represent a large amount of thoughtful planning and intelligent effort at constant development and improvement. The methods in use presently,  would undoubtedly be of great value to others engaged in similar operations, and particularly to persons engaged in organizing and starting new enterprises. The society can provide a platform for explaining the present practices and many would come forward to engage in such a dialogue to benefit from the idea generated in the discussions.

Costs of products were reduced by many companies without encroaching upon the earnings of the men engaged and the results we know are quite striking.

A portion of the cost reductions indicated resulted from improved appliances, larger product, and increased experience, but after making due allowance for all of these, there remains a large portion of the reduction which, to the writer's knowledge, is fairly attributable to the operations of the peculiar piece-work system adopted. Henry Towne, promised to present the details and operations of this system followed in his company in the proceedings of the new section of  the society, in due time. He expressed the hope that other, and probably much more valuable, information and experience relating to systems of contract and piece-work would doubtless be contributed by other members.

One can clearly see in the paper by Towne, the acceptance of the idea of "Xenogamy (Cross Fertilization)" to develop the subjects of shop management and works management.

For the full paper of Towne

The Engineer as an Economist- Henry Towne

Gain Sharing, Piecework and Day Work Systems


Henry Towne presented his ideas on involving labor in cost reduction work of the production organization in the paper "Gain Sharing" presented in 1889. This paper advocated bonus to all the employees based on the reduction achieved in the cost of production relative to a base year. Halsey in 1891 presented a paper and argued for production time as the basis for paying bonus to the individual workers. F.W. Taylor presented a more comprehensive system in 1895. It is very important to note that Taylor, proposed that organization of "Elementary Rate Fixing Department" as the fundamental step to achieve cost reductions. To implement the changes proposed by the rate fixing departments, differential piece rate system has to be introduced.


Elementary Rate Fixing Department (1895 - Taylor)

Taylor started this department of section in his company and its successful record was presented to the ASME in 1895. This department has to study the productive capabilities machines and men in a scientific manner and establish the speeds at which machines can work and men can work and based on the speed information has to decide the time required for completing various jobs or tasks. Such scientific information has to be used to set piece rates. This department must have status equal to the engineering department of the organization.  So Taylor organized the first industrial engineering department that is parallel to the engineering department of the company and is focused on the study of machines and men and in actual working on specific  jobs and in designing best methods of working that reduce cost of production.


Shop Management (1905 - Taylor)


Taylor responded to the call by Towne to described innovations in the field of management done by engineers who had done managerial work as part of engineer's functions. He contributed a paper on redesign of belts based on cost data (1893) and another paper on increasing productivity and reducing costs by organizing elementary rate fixing department and installing differential piece rate system.

In 1895, he presented a book length paper on shop management. He described many practices that will contribute to productivity improvement and effectiveness improvement. He also indicated the innovations of many others in the field of shop management. Taylor also contributed to discussions on shop accounting and its contribution to improving productivity.

In the paper "Shop Management", Taylor wrote, "The art of management has been defined, "as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way.""  No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the other phases of the art may be left in the background. Once again, we have to carefully note this sentence. Taylor said, the many other items are left in the background and issues related to managing men are highlighted.

For more details of shop management

F.W. Taylor - Shop Management - With Appropriate Sections and Themes


Works Management - Harvard Business School and New York University


Works management was taught at Harvard Business School (HBS). James Gunn who first mentioned the word industrial engineering in 1901 worked in HBS. C.B. Thompson who wrote many papers and book on Scientific Management worked in HBS.

A New York University Engineering College, Walter Rautentrauch, organized a course on works management during 1908 to 1911. C.B. Going taught Industrial Engineering as a part of that course.


Industrial Engineering Course - Penn State College


Hans Diemer is the first full time industrial engineering faculty. He started the four year industrial engineering course in Penn State College. He published his proposed 4 year program in an article. Walter Rautentrauch criticized the course for lack sufficient attention to manufacturing, the key focus of industrial engineering.

In the modern era, Elwood Buffa is given the credit for developing Production Management subject.




A detailed writeup on Operations Management

Operations Management by Martin Spring in Oxford Handbook of Management
https://books.google.co.in/books?id=1dk-DgAAQBAJ&pg=PA57#v=onepage&q&f=false

Books on Shop Management, Works Management, Production Management and Operations Management


The Commercial Management of Engineering Works
by Francis G. Burton
Publication date 1899
Publisher The Scientific publishing co.
https://archive.org/details/commercialmanag00burtgoog/page/n4

Production factors in cost accounting and works management
byChurch, A. Hamilton (Alexander Hamilton), 1866-1936
Publication date 1910
Topics Cost accounting, Factory management
Publisher New York, The Engineering magazine
https://archive.org/details/productionfacto00churgoog/page/n7

The human factor in works management
by Hartness, James, 1861-1934
Publication date 1912
https://archive.org/details/humanfactorinwo01hartgoog/page/n7

The Science Of Works Management
by Batey, John
Publication date 1914
https://archive.org/details/dli.bengal.10689.10563/page/n5

Creative Construction - Path for Effective Innovation Management



Creative Construction: The DNA of Sustained Innovation




Creative Construction, a readable practicum of a book aimed at senior leaders written Gary Pisano, HBS. He writes in it, building an organization’s capacity to innovate involves three essential leadership tasks: (1) creating an innovation strategy, (2) designing an innovation system, and (3) building an innovation culture.”

_________________


_________________

James Taylor

https://hbr.org/ideacast/2019/01/the-harsh-reality-of-innovative-companies.html

Human Component of Supply Chain Management Will Come Down - Machine Component Will Increase.


HBR Article

The Death of Supply Chain Management
Allan Lyall, Pierre Mercier, Stefan Gstettner
JUNE 15, 2018
https://hbr.org/2018/06/the-death-of-supply-chain-management


Technologies will soon take over supply chain management.


Within 5-10 years, the human component of  supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end work flows and requires very little human intervention.

With a digital foundation in place, companies can capture, analyze, integrate, easily access, and interpret high quality, real-time data — data that fuels process automation, predictive analytics, artificial intelligence, and robotics, the technologies that will soon take over supply chain management.

April 25, 2019

What is Operations Management?



Picture Source:  https://en.wikipedia.org/wiki/Tillamook_County_Creamery_Association

While marketing uncovers needs of people in general and uncovers needs of people at a particular point and books orders for the goods and services, it is the operations function of a business firm that develops goods and services and produces and delivers them to customers at the place where they desire the delivery.

MIT's Explanation of Operations Management.


Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want.

http://mitsloan.mit.edu/omg/om-definition.php

Harvard Business School - Operations


As the world of operations has changed, so have interests and priorities within the Unit. Historically, the TOM Unit focused on manufacturing and the development of physical products. Over the past several years, we have expanded our research, course development, and course offerings to encompass new issues in information technology, supply chains, and service industries.

The field of TOM is concerned with the design, management, and improvement of operating systems and processes. As we seek to understand the challenges confronting firms competing in today's demanding environment, the focus of our work has broadened to include the multiple activities comprising a firm's "operating core":

the multi-function, multi-firm system that includes basic research, design, engineering, product and process development and production of goods and services within individual operating units;

the networks of information and material flows that tie operating units together and the systems that support these networks; 

the distribution and delivery of goods and services to customers.

https://www.hbs.edu/faculty/units/tom/Pages/default.aspx

University of Strathclyde, Glasgow


Operations management is a value-adding area of an organisation concerned with innovation, production and distribution of goods and services to customers whilst ensuring that the use of organisational resources remains efficient and effective.

http://www.strath.ac.uk/siom/whatis/



Understanding Operations Management
Open University UK Note

http://openlearn.open.ac.uk/mod/oucontent/view.php?id=397333&direct=1


Slides on Operations Management

Slides based on book by Roberta Russell and Bernard W. Taylor
919 slides
http://www.slideshare.net/taquilla/operations-management-919-slides-presentation


April 23, 2019

Understanding Resource Utilization: Machine, Material, Man, Information and Energy




Picture source: https://archive.defense.gov/photos/newsphoto.aspx?newsphotoid=6931

Understanding of Product and Resources Used in Producing It.


A business cannot be started unless the customer requirement is understood and a product or service that satisfies those requirements is developed and designed. Once a product is developed, complete understanding the products features that the benefits they provide to the customer or the requirements they satisfy is to be understood by many in the business. The marketing and sales people have to know the product thoroughly and also the customer requirements which were targeted to be satisfied by the product.

A production or operation system is designed to produce the goods or services. Resources are used in the production system. In resource planning, which is part of organization function of management, based on the products to be produced and the output over a long period, resource requirements are determined and the resources are acquired. Operations managers have to understand the services that each resource can provide and its utilization. Such an understanding will provide opportunities to increase utilization and also cost effective utilization.

Operations managers have to understand the utility of  machine, material, man, information and energy. They have to assess the rationality of each of these resources or entities in their role in the operations system they are running.

Product - Customer requirements and approval of the design in the form of prototype. Operations analysis from the manufacturability angle, quality angle, and productivity angle.

Machine - Understanding the operations that can be performed on the machine. Is the operation specified and machine selected right decision from quality and cost angles?

Material - Is the material specification right? In value engineering, a question regarding applicable standards is raised. Are applicable standard materials being used in appropriate way?

Man - Operations managers have to understand the man. They have to study human sciences adequately and utilize the practice implications of various theories developed in human sciences and organization behavior subject. Ergonomics is an applied science related work of man.

Information -The role of information in shop management or operations management was indicated by F.W. Taylor in 1895. Emphasis on written operations instructions is the first point that highlighted the importance of information and information system. The evolution of information systems into Internet of Things  systems, a comprehensive information system that includes machines and men makes understanding information systems imperative for operations managers.

Energy - Energy is now a significant input in operations/production systems. Automation has increased in operations systems. Now operations managers have to understand energy utilization and ways to conserve energy.

Understanding all the resources or inputs used in a process is part of process analysis.

Understanding manufacturing processes is essential to ensuring a firm's competitiveness. A process is any part of an organization that takes inputs and transforms them into outputs that ideally are of greater value to the customer than the original inputs. Processes can be analysed and improved for increasing effectiveness and efficiency. Effectiveness improves when a process can produce to better specifications in terms size and performance. Efficiency is improved when a process utilizes less resources and produces less number of defects. Operations managers use industrial engineering techniques to improve efficiency of processes.



In the book (Chase et al.), Using examples of a fast food restaurant and a Las Vegas slot machine, processes are described and cycle time and utilization are presented. In the slot machine example, the diagram or process flowchart is discussed.

Analyzing a process allows some important questions to be answered, such as: What is the production rate?  How much does the process cost? What is the process capability? etc.  The purpose of the analysis needs to be clarified first to select an analysis technique.

Processes can be either single-stage or multiple-stage. For multiple-stage processes buffers or storage areas exist between manufacturing activities. Key manufacturing issues arising from multiple-stage operations include buffering, blocking, starving, and bottlenecks.

An additional way to classify manufacturing processes is either as make-to-order or make-to-stock. The type of process depends on whether the production is initiated in response to an actual order or whether customer orders are filled from existing finished goods inventories. Hybrid processes combine features of both make-to-order and make-to-stock environments.


Process Metrics

Measuring process performance is an important activity. Companies can be compared to others in a benchmarking process.

The most common process metric is utilization. Utilization is the ratio of the time that a resource is actually being used relative to the time it is available for use.

Productivity is the ratio of output to input. It is also popularly used to assess a firm's performance. Efficiency is defined as the ratio of the actual output to a standard output.

Run time is the time required to produce a batch of parts. Setup time, and operation time along with throughput time and throughput rate are also important metrics.

Process velocity (also known as throughput ratio) is the ratio of the total throughput time to the value added time.

The chapter ends with a discussion of ways to reduce throughput time and offers suggestions including performing activities in parallel, changing the sequence of activities, and reducing interruptions.

An operations manager uses job design techniques to structure work to meet the physical and behavioral needs of the employee. Work measurement methods are used to determine the most efficient means of performing a given task, as well as to set reasonable standards for performing it. Work performance standards are important to the workplace so accomplished can be measured and evaluated. Standards permit better planning and costing and provide a basis for compensating the work force and even providing incentives.

Trends in job design include quality as part of the worker's job. Today many workers are cross-trained to perform multiskilled jobs and total quality programs are important for all employees. Team approaches, information, use of temporary workers, automation, and organizational commitment are other key issues in job design decisions.

Behavioral considerations in job design include how specialized a job will be. Specialization has unique advantages and disadvantages. At the other extreme from specialization are the concepts of job enlargement and job enrichment. Sociotechnical systems of the interaction between technology and the work group influence job design as do ergonomic or physical consideration.

Work methods determine how the work should be accomplished in organizations, while work measurement determines how performance may be evaluated. Work methods can be established for an overall productive system, a worker alone, a worker interacting with equipment, and a worker interacting with other individuals.

Work measurement and standards exist to set time standards for a job. A technique used in work measurement is the time study. Examples of time studies are included for a four-element job and for a nursing environment. Finally, work sampling is compared to time study.

Another issue in job design is the financial incentive plan. These plans determine how workers should be compensated. In preparing a financial incentive plan, management must consider individual, group, and organization wide rewards.

Total 'X' Managements in Operations Management



Total 'X' Managements  - Total indicates that all in the company have to focus on the activity. All can mean all departments. All can mean all employees. Each employee has to a role to play and contribute something for the activity for the organization as a whole to succeed.

Education and training are to be provided to all in the performance of the activity subject to the idea that appropriate education and training are provided. Many total 'X' managements are initiated. In this article, some of them will be described.

Total Improvement Management


Total Improvement Management is a concept promoted by Dr. H. James Harrington, CEO of Harrington Institute Inc.

He identifies Total Quality Management (TQM), Total Resource Management (TRM), Total Cost Management (TCM), Total Productivity Management (Tpmgmt), and Total Technology Management (TTM) as five improvement movements competing for the scarce budget resources of an organization. To aid management decision making in this competitive situation, an improvement pyramid is advocated by Harrington.



A Video by Harrington Group
______________

_
______________


A Presentation by Harrington (Good Presentation - Download and read it)

H. James Harrington, (1995) "The new model for improvement: total improvement management", Management Decision, Vol. 33 Iss: 3, pp.17 - 24

Total Improvement Management - Book By Harrington
http://books.google.co.in/books/about/Total_Improvement_Management_The_Next_Ge.html?id=NmfHaWfUkL0C


Article by Harrington

2 page brochure

Determination of Optimum Productivity Improvement Programs: Total Productivity Based Model
Mohamed Zaki Ramadan,



Total Effectiveness Management


Total Effectiveness Management by Understanding Means
Google Book Page Link
https://books.google.co.in/books?id=URg3rlZk7ZkC&pg=PA6#v=onepage&q&f=true

Advances in Design

Hoda A. ElMaraghy
Springer Science & Business Media, 2006 - Technology & Engineering - 576 pages

Advances in Design examines recent advances and innovations in product design paradigms, methods, tools and applications. It presents fifty-two selected papers which were presented at the 14th CIRP International Design Seminar held in May 2004 as well as the invited keynote papers. Dr. Waguih ElMaraghy was the conference Chair and Dr. Hoda ElMaraghy was on the program committee.
https://books.google.co.in/books?id=URg3rlZk7ZkC

Christer Karlsson, Christer Norr, (1994) "Total Effectiveness in a Just‐in‐Time System", International Journal of Operations & Production Management, Vol. 14 Issue: 3, pp.46-65, https://doi.org/10.1108/01443579410058522
https://www.emeraldinsight.com/doi/abs/10.1108/01443579410058522


Total Productive Maintenance (Management)


This concept was first introduced by M/s Nippon Denso Co. Ltd. of Japan, a supplier of M/s Toyota Motor Company, Japan in the year 1971. Total Productive Maintenance is an innovative approach to maintenance that optimizes equipment effectiveness and  eliminates breakdowns and promotes  day-to-day activities involving total workforce

A strategic approach to improve the performance of maintenance activities is to effectively adapt and implement strategic TPM initiatives in the manufacturing organizations. TPM brings maintenance into focus as a necessary and vitally important part of the business. The TPM initiative is targeted to enhance competitiveness of organizations and it encompasses a powerful structured approach to change the mind-set of employees thereby making a visible change in the work culture of an organization. TPM seeks to engage all levels and functions in an organization to maximize the overall effectiveness of production equipment. This method further tunes up existing processes and equipment by reducing mistakes and accidents. TPM became  a world class manufacturing (WCM) initiative that seeks to optimize the effectiveness of manufacturing equipment. Whereas maintenance
departments are the traditional center of preventive maintenance programs, TPM seeks to involve workers from all departments and levels, including the plant-floor to senior executives, to ensure effective equipment operation.


Modem manufacturing requires that to be successful, organizations must be supported by both effective and efficient maintenance practices and procedures.  One approach to improving the performance of maintenance activities is to implement and develop a TPM strategy. The TPM implementation methodology provides organizations with a guide to fundamentally transform their shopfloor by integrating culture, process, and technology. 


TPM is a methodology originating from Japan to support its lean manufacturing system, since dependable and effective equipment are essential pre-requisite for implementing Lean manufacturing initiatives in the organizations. While Just-In-Time (JIT) and Total Quality Management (TQM) programs have been around for a while, the manufacturing organizations off late, have been putting in enough confidence upon the latest strategic  maintenance tool as TPM. TPM is the corner stone activity for most of the lean manufacturing philosophies and can effectively contribute towards success of lean manufacturing. TPM is a production-driven improvement methodology that is designed to optimize equipment reliability and ensure efficient management of plant assets  . TPM has been depicted as a manufacturing strategy comprising of following steps :

- maximizing equipment effectiveness through optimization of equipment
availability, performance, efficiency and product quality;
- establishing a preventive maintenance strategy for the entire life cycle of
equipment;
- covering all departments such as planning, user and maintenance departments;
- involving all staff members from top management to shop-floor workers; and
- promoting improved maintenance through small-group autonomous activities.

Nakajima (1989), a major contributor of TPM, has defined TPM as an innovative approach to maintenance that optimizes equipment effectiveness, eliminates breakdowns, and promotes autonomous maintenance by operators through day-to-day activities involving the total workforce. The emergence of TPM is intended to bring both production and maintenance functions together by a combination of good working practices, team-working and continuous improvement   TPM is a system (culture) that takes advantage of the abilities and skills of all individuals in an organization. An effective TPM implementation program provides for a philosophy based upon the empowerment and encouragement of personnel from all areas in the organization. 

TPM is about communication. It mandates that operators, maintenance people and
engineers collectively collaborate and understand each other’s language. TPM describes a synergistic relationship among all organizational functions, but particularly between production and maintenance, for the continuous improvement of product quality, operational efficiency, productivity and safety ( Sun et al., 2003). According to Chaneski (2002), TPM is a maintenance management programme with the objective of eliminating equipment downtime. TPM is an innovative approach to plant maintenance that is complementary to Total Quality Management (TQM), Just-in-Time Manufacturing (JIT), Total Employee Involvement (TEI), Continuous Performance Improvement (CPI), and other world-class manufacturing strategies ( Schonberger, 1996; ). According to Besterfield et al. (1999), TPM helps to maintain the current plant and equipment at its highest productive level through the cooperation of all functional areas of an organization.




TPM harnesses the participation of all the employees to improve production equipment’s availability, performance, quality, reliability, and safety. TPM endeavours to tap the “hidden capacity” of unreliable and ineffective equipment. TPM capitalizes on proactive and progressive maintenance methodologies and calls upon the knowledge and cooperation of operators, equipment vendors, engineering, and support personnel to optimize machine performance, thereby resulting in elimination of breakdowns, reduction of unscheduled and scheduled downtime, improved utilization,
higher throughput, and better product quality. The principal features of TPM are the pursuits of economic efficiency or profitability, maintenance prevention, improving maintainability, the use of preventive maintenance, and total participation of all employees. The bottom-line achievements of successful TPM implementation initiatives in an organization include lower operating costs, longer equipment life and lower overall maintenance costs. Thus TPM can be described as a structured equipment-centric continuous improvement process that strives to optimize production effectiveness by identifying and eliminating equipment and production efficiency losses throughout the production system life cycle through active team-based participation of employees across all levels of the operational hierarchy. The following aspects necessitate implementing TPM in the contemporary manufacturing scenario:

. To become world class, satisfy global customers and achieve sustained
organizational growth.
. Need to change and remain competitive.
. Need to critically monitor and regulate work-in-process (WIP) out of “Lean”
production processes owing to synchronization of manufacturing processes.
. Achieving enhanced manufacturing flexibility objectives.
. To improve organization’s work culture and mindset.
. To improve productivity and quality.
. Tapping significant cost reduction opportunity regarding maintenance related
expenses.
. Minimizing investments in new technologies and maximizing return on
investment ROI.
. Ensuring appropriate manufacturing quality and production quantities in JIT
manufacturing environment.
. Realizing paramount reliability and flexibility requirements of the organizations.
. Optimizing life cycle costs for realizing competitiveness in the global
marketplace.
. Regulating inventory levels and production lead-times for realizing optimal
equipment available time or up-time.
. To obviate problems faced by organizations in form of external factors like tough
competition, globalization, increase in raw material costs and energy cost.
. Obviating problems faced by organizations in form of internal factors like low
productivity, high customer complaints, high defect rates, non-adherence to
delivery time, increase in wages and salaries, lack of knowledge, skill of workers
and high production system losses.
. Ensuring more effective use of human resources, supporting personal growth
and garnering of human resource competencies through adequate training and
multi-skilling.
. To liquidate the unsolved tasks (breakdown, setup time and defects).
. To make the job simpler and safer.
. To work smarter and not harder (improve employee skill).


In addition, TPM implementation in an organization can also lead to realization of intangible benefits in the form of improved image of the organization, leading to the possibility of increased orders. After introduction of autonomous maintenance activity, operators take care of machines by themselves without being ordered to. With the achievement of zero breakdowns, zero accidents and zero defects, operators get new confidence in their own abilities and the organizations also realize the importance of employee contributions towards the realization of manufacturing performance (Dossenbach, 2006). TPM implementation also helps to foster motivation in the workforce, through adequate empowerment, training and felicitations, thereby enhancing the employee participation towards realization of organizational goals and objectives. Ideally, TPM provides a framework for addressing the organizational objectives. The other benefits include favourable changes in the attitude of the operators, achieving goals by working in teams, sharing knowledge and experience and the workers getting a feeling of owning the machine.



Framework of total productive maintenance


TPM seeks to maximize equipment effectiveness throughout the lifetime of the equipment. It strives to maintain the equipment in optimum condition in order to prevent unexpected breakdown, speed losses, and quality defects occurring from process activities.

There are three ultimate goals of TPM: zero defects, zero accident, and zero breakdowns (Nakajima, 1988; ).

Organizational manufacturing priorities and goals realized through TPM

- Productivity (P) Reduced unplanned stoppages and breakdown improving equipment availability and productivity Provide customization with additional capacity, quick change-over and design of product
- Quality (Q) Reduce quality problems from unstable production
- Reduced in field failures through improved quality
- Provide customization with additional capacity, quick change-over and
design of product
- Cost (C) Life cycle costing
- Efficient maintenance procedures
- Supports volume and mix flexibility
- Reduced quality and stoppage-related waste
- Delivery (D) Support of JIT efforts with dependable equipment
Improves efficiency of delivery, speed. and reliability
Improved line availability of skilled workers
Safety (S) Improved workplace environment Realizing zero accidents at workplace
Eliminates hazardous situations
Morale (M) Significant improvement in kaizen and suggestions
Increase employees’ knowledge of the process and product
Improved problem-solving ability
Increase in worker skills and knowledge
Employee involvement and empowerment


Nakajjima suggests that equipments should be operated at 100 percent capacity 100 percent of the time (Nakajima, 1988). Benchmarking on overall equipment effectiveness (OEE), productivity (P), quality (Q), cost (C), delivery (D), safety (S) and morale (M) etc. can facilitate an organization to realization of zero breakdown, zero defect, zero machine stoppage, zero accidents, zero pollution, which serve as the ultimate objective of TPM. TPM has been envisioned as a comprehensive manufacturing strategy to improve equipment productivity. The strategy elements include cross-functional teams to eliminate barriers to machine uptime, rigorous preventive maintenance programs,
improved maintenance operations management efficiency, equipment maintenance training to the lowest level, and information systems to support the development of imported equipment with lower cost and higher reliability.

Swanson (2001) describes the four key components of TPM as worker training, operator involvement, teams and preventive maintenance. As TPM is a common element to the lean drive, it requires not nly flexible equipment, but also flexible employees involved in the production process (Sahin, 2000). The practices of TPM help eliminate waste arising from an unorganized work area, unplanned downtime, and machine performance variability.



McKone et al. (2001) identify training, early equipment design, early product design, focused improvement teams, support group activities, and autonomous and planned maintenance as the six major activities in TPM implementation. In measuring TPM implementation, Maier et al. (1998) consider preventive maintenance, teamwork shop floor employee competencies, measurement and information availability work environment, work documentation, and extent of operator involvement in maintenance activities as factors reflecting TPM implementation. The basic practices of TPM are often called the pillars or elements of TPM.  TPM paves way for excellent planning, organizing, monitoring and controlling practices through its unique eight-pillar methodology. TPM initiatives, as suggested and promoted by Japan Institute of Plant Maintenance (JIPM), involve an eight pillar implementation plan that results in substantial increase in labor productivity through controlled maintenance, reduction in maintenance costs, and reduced production stoppages and downtimes. The core TPM initiatives classified into eight TPM pillars or activities for accomplishing the manufacturing performance improvements include Autonomous Maintenance; Focused Maintenance; Planned Maintenance; Quality Maintenance; Education and Training; Office TPM; Development Management; and Safety, Health and Environment ( Hatakeyama, 2006).

 TPM uses the following tools to analyze and solve the equipment and process related problems: Pareto Analysis, Statistical Process Control (SPC – Control Charts, etc.) Problem Solving Techniques (Brainstorming, Cause-Effect Diagrams and 5-M Approach) Team Based Problem Solving, Poka-Yoke Systems, Autonomous Maintenance, Continuous Improvement, 5S, Setup Time Reduction, Waste Minimization, Bottleneck Analysis, Recognition and Reward Program and Simulation. 

TPM provides a comprehensive, life cycle approach, to equipment management that minimizes equipment failures, production defects, and accidents. It involves everyone in the organization, from top-level management to production mechanics, and production support groups to outside suppliers. The objective is to continuously improve the availability and prevent the degradation of equipment to achieve maximum effectiveness. These objectives require strong management support as well as continuous use of work teams and small group activities to achieve incremental improvements.



Source for TPM
Total productive maintenance: literature review and directions
I.P.S. Ahuja and J.S. Khamba
International Journal of Quality & Reliability Management
Vol. 25 No. 7, 2008, pp. 709-756.

Some More

Total Quality Management

Total Cost Management


Total Productivity Management

Total Industrial Engineering

April 20, 2019

Resource Planning and Resourcing for Effective Operations

Principles of Management Revision/Review Articles - List


                 picture source: https://www.pexels.com/photo/car-brand-factory-tesla-776311/




Resource planning and resource acquisition are fundamental managerial functions according to Narayana Rao (2 March 2010).

Capacity is the ability to hold, receive, store, or accommodate. In a business sense, it is viewed as the amount of output that a system is capable of achieving over a specific period of time.

Strategic capacity planning has as its objective, to determine the overall capacity level of capital-intensive resources - facilities, equipment, and overall labor force size - that best supports the company's long-range competitive strategy. During capacity planning operations managers have to look at both resource planning (inputs) and output planning. The reason being for planning purposes, real (or effective capacity depends on what is to be be produced.  The resource plan reflects the knowledge of operations managers regarding what their current technology and labor force inputs can produce and the product mix that is to be demanded from these resources. The operations management view resource planning or capacity planning also emphasizes the time dimension.  Thus there are long-range, intermediate-range, and short-range capacity planning.

Capacity planning done at various levels of operations management differs with respect to scale. The vice president of manufacturing has to plan aggregate capacity of all factories within the firm. He has to determine the financial resources required to install the planned capacity. The incremental financial resources required have to come from the capital budget of the company and the COO (VP manufacturing) has to send the capital budget proposal to the CEO or head of the budgeting.

The manager of an individual plant with a given capacity has to plan the inventory levels in response to the sales plan. The inventory level is to be financed from the working capital outlay and the plant manager has to get this resources sanctioned as part of the annual budget.

The first level supervisor is connected to the monthly plan. The staff overtime and casual hiring are  also a resource issue and if he anticipates the need in any month, he has to request and get approvals for the resource.

Thus although, in many firms, in operations management, there is no one person with the job title "capacity manager" there are several managerial persons charged with the planning and effective and efficient use of capacity (resources). Capacity is the amount of resources available or made available to operations management to produce output over a particular period of time.


Economies of scale, experience curve and capacity flexibility are important issues or concepts that are to be incorporated into capacity decision making. The capacity level selected determines a company's cost structure, competitive position and management and staff support requirements. If capacity is inadequate competitors can easily enter the business. If capacity is excessive, utilization becomes poor and costs will be higher than the expected costs.

Capacity Planning Concepts

Best operating level
The best operating level of a plant is the production volume at which average cost is the lowest. Companies try to operate close to this point. If demand is consistently higher than the best operating level, then they increase the capacity to lower the cost close to the best operating level cost.

Economies of scale
This concept signifies that as production volumes increase, the average cost per unit decreases. Higher capacity plants have a lower production cost compared to lesser capacity plants.

The experience curve
As plants produce more units, they gain experience in their production methods, which in turn, results in reducing the per unit costs of production in a predictable manner.

Capacity focus

The concept of focused factory states that it is more effective to have different plants for products with significant difference in specifications especially in terms of performance specifications.

Capacity flexibility

Capacity flexibility means having the ability to rapidly increase or decrease production levels or to shift production capacity quickly from one product or service to another. Such flexibility is achieved through flexible plants, processes, and workers, as well as through strategies that use the capacity of other operations.

Issues to be considered in adding capacity include maintaining system balance, frequency of capacity additions, and the use of external capacity. Capacity strategies can be proactive, neutral, and reactive. Reactive and neutral strategies are not responsive to anticipating future growth or building a facility for future demand.

Capacity planning decisions are based on forecasts for product demand, labor requirements, and equipment requirements.

Decisions include whether to add capacity, determining capacity requirements, and planning service capacity throughout the product life-cycle stages.

Toyota production system operates on the concept of flexibility by being ready to increase production whenever required by employing temporary workers and overtime. It works for only two shifts normally and when required uses overtime to operate for eight extra hours.

Chapter Outline of
Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004

Capacity Management in Operations
Capacity Planning Concepts
Economies and Diseconomies of Scale
The Experience Curve
Where Economies of Scale Meet the Experience Curve
Capacity Focus
Capacity Flexibility
Capacity Planning
Considerations in Adding Capacity
Determining Capacity Requirements
Using Decision Trees to Evaluate Capacity Alternatives
Planning Service Capacity
Capacity Planning in Service Versus Manufacturing
Capacity Utilization and Service Quality

A Resource Plan identifies the physical resources required to complete a project. It lists each of the resource types (such as labor, equipment and materials) and how many of each you need.


Three steps.



Step 1: List the resource required

List the resources required to complete the project.

Labor. Identify all the roles involved in performing the project, including all full-time, part-time and contracting roles.
Equipment. Identify all of the equipment involved in performing the project. For instance, this may include office equipment (e.g. PCs, photocopiers, and mobile phones), telecommunications equipment (e.g. cabling, switches) and machinery (e.g. heavy and light machinery).
Materials. Identify all of the non-consumable materials to complete project activities such as materials required to build physical deliverables (e.g. wood, steel and concrete).
Hardware/software. Identify if applicable.
More resources as required


Step 2: Estimate the number of resources required

The next step is to estimate the number of each resource.

Labor, estimate how many hours you need per role
Equipment, estimate how many pieces of equipment needed
Materials, estimate how much material, in terms such as square meters, kilograms, number of units, etc.
As much as possible, also indicate the date the resources are needed and the consumption rate per day, week or month.

Step 3: Construct a resource schedule

Create a resource schedule which specifies the:

Resources required to complete the project
Timeframes for the consumption of each resource
Quantity of each resource required per week/month
Total quantity of resource consumed per week/month
Assumptions and constraints identified


https://tenstep.com/use-these-three-steps-to-create-a-resource-plan/