Operations Management - Important Points for Quick Revision

Introduction to the Field  of Operations Management

The goal of operations management is wealth creation.
It is done by supplying quality goods and services effectively and efficiently

The essence of operations management: creating great value to the customer while reducing the cost of delivering the good or service.

In the context of this book, "operations" refers to the processes that are used to transform the resources employed by a firm into products and services desired by the customers. "Supply" refers to how materials and services are moved to and from the transformation processes of the firm.

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.

The historical roots of the development of OM are traced from scientific management through the moving assembly line, the Hawthorne studies, and on to today's current manufacturing topics including supply chain management and e-commerce. 

In operations management, three categories of decisions are taken.

Strategic (long-term) decisions

Tactical (intermediate-term) decisions

Operational planning and control (short-term) decisions

Strategic issues include what product (sevice) shall we make? How will we make the product? (technology decision) Where do we locate the facility or facilities? How much capacity do we build? Intermediate decisions can be thought of as annual plans, material purchase policies, staff levels adjustments and working capital support requirements for inventory financing. Operations decisions are daily machine dispatching decisions.

Operations Strategy and Competitiveness

Operations strategy involves decisions that related to the specifications and design of the product or service, design of a production process and the infrastructure needed to support the process, the role of inventory in the process, and locating the process. Operations strategy decision are part of corporate planning process that coordinates the goals of operations with those of marketing and that of larger organization.

Strategic operation decisions have to win the customer approval in absolute sense and they have to win in the competitive scenario, that means they have to win the customer approval in a relative sense (their offer must be superior to the target market customers relative to the offers of competitors).

Quality (which includes product benefits and features, reliability, durability) price and ease of purchase and servicing are the three operations related categories that customers use to evaluate before purchasing.

Project Management

Managing projects require planning, directing and controlling resources.

Projects begin with a statement of work, which can be a written description of the objectives. Breaking the work into smaller and smaller pieces that defines the system in detail is at the center of project management. Milestones or critical steps in the project might be completion of the design or production of a prototype. Maintaining control over projects requires the use of charts to show the scope of the entire project as well as the steps completed at a particular time. Other reports for detailed presentations of projects are used.  Work Breakdown Structure (WBS) shows projects in terms of tasks, subtasks, work packages and activities. A project is complete when all the tasks are completed.

CPM and PERT are  tools to assist the manager in meeting these objectives.

Product Design

Designing a product or service or buying the design or getting the design in case of contract manufacturer is what brings into existence a business entity in the first place and then onwards expansion occurs as new product units (Finished goods SKUs),  business lines and SBUs.

In the concept development, the product architecture is specified taking into consideration the new customer needs as identified by the marketing function. The product architecture converts the functional requirements of the product into product's components and subassemblies  that will provide the functions as a group. The product architecture is subjected to market evaluation and project evaluation. If  it passes this gate, approval is given for making a development sample of the product without detailed engineering. This product is subjected to technical testing and marketing testing and once again project evaluation is done. If it clears this second gate of customer acceptance of the development sample, detailed engineering is approved. Based on the detailed engineering, prototypes are made. Another round of technical and market evaluations are conducted. Clearing of this gate would result in approval for pilot plant. The pilot plan would produce the actual production output and a test marketing is now done for a final demand assessment. This final demand assessment is the basis for capacity decisions of the commercial plant.

the generic process of new product development as

Planning,

Concept development,

System level design,

Design detail,

Testing and refinement, and

Production ramp-up

Process Analysis

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.

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.

Ways to improve process metrics like reduce throughput time are part of this chapter.

Manufacturing Process Selection and Design

Process selection refers to the strategic decisions of selecting the kind of production process to have in a manufacturing plant.

production processes into four.

Conversion processes: They convert naturally available materials, called as minerals or ores into useful metals and materials in general shapes from which many different forms can be produced.

Fabrication Processes: Fabrication processes convert generally available processes materials into useful forms. Ex.:Making components required for an automobile using sheets as the raw materials and presses as the equipment.

Assembly Processes: Assemble various components into a useful product, machine or equipment.

Testing Processes: They are essential in production processes to assure that the processes output is up to the given specification. Testing may be done by the operator himself, another production operator in the subsequent stage or stages and specially designated inspector and many times also by the customer.

Process flow designs focus on the specific processes that raw materials, parts, and subassemblies follow as they move through the plant. Charts and drawings aid in process flow design.

Simulation in design

Simulation is now being used to help the design process. This is becoming increasingly important and widespread as computing power increases. Some of the visualizations used in design work can require very powerful computers. However, they can give an insight into how a potential process or product might work in practice which cannot be gained in any other way.