Prepared & Presented by:

Lal Prasad Aryal, (M. Phil)

e. mail : [email protected]
Phone : 9851124309
• Meaning and definitions of Operations Management
• Objectives of OM
• The transformation process
• Differences between production and service operations
• Operations and supporting functions;
• Role of the operations manager;
• Scope of operations management;
• Production system: Intermittent and continuous;
• Key issues for operations managers;
• Historical evolution of operations management;
• Productivity: concepts,
• Types of Productivity
• Factors affecting productivity;
• Productivity measurement,
• Concept on green productivity;
• Supply chain management ( concept only).
 Operations management is a set of activities on the basis of
which inputs are converted into the outputs as desired by the
customers.

 Operations management is also known as a process that

helps in turning input resources into outputs.

 Operations management is a value adding activity through

the conversion process/transformation process.

 Operations management is also a value creating activity

through understanding, matching or managing four rights
(i.e., right products or services, right time or timing, right
approaches or methods and right customers)
1. Figure 1.1 A Simple Production/Operations
System

Random Fluctuations
[Unplanned or unexpected events as
strikes, machinery breakdown]

Quality of Inputs Quality of Outputs

Adjustments Monitoring and Evaluation

Inputs Transformation Outputs

[M5 × I × L] Process [G or S]
 Manpower [M3 × S]  Goods or
 Machinery  Manpower  Service
 Money or capital  Machinery
 Materials  Management
 Management  Scheduling
 Information
 Land & building

Feedback
[Comparison between standard
and actual outcomes]
 Mainly, operations management has its three basic elements (i.e., Inputs,
Process and Outputs).

 Inputs are the basic resources that are useful for effective processing
and quality production of goods and services.

 Inputs may include materials, manpower, machinery, money/capital,

management/methods, information and land and building (also
popularly known as 5M×I×L).

 Processing is known as heart (major) to the operations activity essential

for converting inputs into outputs.

 Process may includes manpower, machinery/technology, management

and scheduling (also known as 3M× S).

 Outputs are the end results from quality inputs and processing as either
goods or services or both.
Some definitions of Operations Management are mentioned below:
 According to Lee J. Kraiewski, Larry P. Ritzman, "The term Operations
Management refers to the direction and control of the processes that
transform inputs into products and services."
 According to Richard B. Chase, Nicholas J. Aquilano & F. Robert
Jacobs, "Operations Management may be defined as the design,
operation and improvement operations of the production systems
that create the firm's primary products or services."
 According to Everett E. Adam Jr., Ronald J. Ebert, "The operations
manager's job is to manage the process of converting inputs into
desired outputs."
 According to Jay Heizer and Barry Render, "Operations management
is the set of activities that creates value in the form of goods and
services by transforming inputs into outputs.”
From the above definitions, operations are purposeful actions or
activities which are methodically as part of a plan of work by a process
that is designed to achieve the pre-decided objectives. It indicates that
operations management consists of tactics such as scheduling work,
assigning resources including people, equipment, managing
inventories, assessing quality standards, process type decisions and
the sequence for making individual items is a product mix set to put it
simply. Operations management is understood as the process whereby
resources or inputs are converted into more useful products.
 Operations management enables the systematic design, direction and control of
processes that transform inputs into services and product for internal, as well as
external, customers. Thus, the objectives of operations management are as
follows:
 To produce quality goods and services as per the customer’s demands and
expectations.
 To fulfillment of the interests of stakeholders (i.e., customers, suppliers,
employees, shareholders or investors, local community, government etc.).
 To make optimum utilization of various inputs like manpower, machine,
materials, money.
 To minimize costs and losses.
 To improve profits and values.
 To improve operation of production system in order to create value.
 To increase efficiency in production capacity by reducing the labour turnover
rate.
 To adapt the changing environment.
 To introduce friendly environment products with minimum wastage and scrap.
 To improve labour relation and energize the workers for higher production.
 To increase organizational goodwill and employees’ morale.
 To help managers develop the necessary skills in order to achieve numerous and
lucrative career opportunities.
 Every manufacturing or service organization transforms certain inputs
into outputs.
 For getting the desired output, the quality of the inputs has to be
monitored. The quality of the actual output obtained also has to be
continually compared with the desired outputs.
 As shown in figure below, feedback mechanisms are required to
monitor the performance of transformation or conversion process.
 In other words, the main part of production and operations
management system is transformation process.
 There may be some random disturbances hampering the
transformation or conversion process of converting the inputs into
desired outputs.
 These random disturbances are unexpected and sometimes not
planned for.
1. The Transformation/Conversion Process

Random Fluctuation

Adjustments Monitoring
Inputs
Conversion Outputs
Process

Feedback

• There are different factors or the elements which have great role in
transforming inputs into the desired outputs.
• Transformation process is the part of the system that adds value to
the inputs.
• Value can be added to an entity in a number of ways.
• In the transformation process, mainly manpower, machinery or
technology, management, schedule etc. play important role in
converting inputs into desired outputs.
• An example of transformation process is shown in figure below:
1. The Transactions Process for a Purely Manufacturing Organization (A Refrigerators
Manufacturer)

Quality of Inputs Quality of Outputs

inspection and Monitoring and
adjustment Evaluation

Inputs Outputs
 Machines & Equipment Transformation process  Good cooling
 Components performance of
refrigerators
 Parts, Sub-assemblies,
etc Random Disturbance  Consumption of
electricity
 Office Infrastructure  High turnover of workers &
 New Advance
(Computer, Furniture, managers
features
etc)  Recession
 Packing materials  Govt. taxation policies
 Capital  Strikes by trade union and others
 Land & building
 Workers Feedback
 Managers  Rising sales volume
 Lesser customer complains
 Positive responses of
customers.
 It is important to note that goods and services often occur jointly. For example,
having the oil changed in your car is a service, but the oil that is delivered is a
good. Similarly, house painting is a service, but the paint is a good.
 It can range from primarily goods, with little service, to primarily service, with few
goods.
 The essence of the operations function is to add value during the transformation
process.
 Value-added is the term used to describe the difference between the cost of inputs
and the value or prices of outputs.
 In non-profit organizations, the value of outputs (e.g., highway construction, police
and fire protection) is their value to society; the greater the value-added, the
greater the effectiveness of these operations.
 In the profit organizations, the value of output is measured by the prices that
customers are willing to pay for these goods or services.
 There are many factors that affect the design and management of operations
systems.
 Among them are the degree of involvement if customers in the process and the
degree to which technology issued to produce and/or deliver a product or service.
 The greater the degree of customer involvement, the more challenging it can be to
design and manage the operation.
 Technology choices can have a major impact on productivity, costs, flexibility, and
quality and customer satisfaction.
 Outputs can be classified as: need based, expectation based and new creation
based.
Characteristics Manufacturing Services
/Goods
Customer contact Low High
Uniformity of inputs High Low
Labour Content Low High
Uniformity of outputs High Low
Outputs Tangible Intangible
Measurement of Productivity Easy Difficult
Opportunity to correct quality problems before High Low
delivery to customer

Inventory Much Little

Evaluation Easier More
difficult
Patentable Usually Not
usually
1. Planning Functions
i. Development of Systems and Others (rules, regulations, policies and
strategies to the operations department).
ii. Product/Service Planning (product design, looks, features, costs, prices, quality
etc.).
iii.Location Planning (materials, manpower, market/customers, geographical
structure, climate, cost of land, socio-cultural issues, infrastructure-transportation,
communication, health, education, water supply, banking and insurance etc.).
iv.Layout Planning (internal settings and the fittings with the constructions of
different buildings and others such as machinery set-up, store rooms, warehouses,
rest rooms, office room, public or customer contact room, canteen, parking etc.).
v. Process Planning (processes understanding, development, evaluation, selection,
implementation etc.).
vi.HR Planning (understanding the requirement of manpower, recruitment, selection,
socialization, training and development, compensation management, performance
evaluation, dispute and conflict handling etc.).
vii.Forecasting (qualitative and quantitative techniques including short-term, mid-
term and long-term).
2. Organizing Functions
 Organizational hierarchy development for the operations department.
 Communication pattern or system development for the department.
 Selection and use of management and leadership styles.
 Job analysis structuring (job descriptions and job specifications).
 Job evaluation and measurement criteria development.
 Projects development with contracting and outsourcing provisions etc.

3. Controlling Functions
 Costs and prices
 Quality
 Materials
 manpower
 Machinery and technology
 System, process and procedures etc.
4. Behaviour Functions
As an operations manager, we have to control the behaviour of the
employees using following three management functions practically:
 Effective Communication

 Effective Motivation

 Effective Leadership.

5. Modeling Functions
Modeling are the approaches or methods that are used to simplify the
complexities at the workplace. As an operations manager, following
operations models are to be understood and used as per requirement:
 Linear Programing models

 Queuing Models

 Inventory models

 Control charts models

 Networking models

 Simulation models etc.

The following are the roles or duties and responsibilities of production
managers in manufacturing and service organizations:
 Purchaser Role: Purchasing production equipment and materials.
 Designer Role: Designing production process, product/ service design,
establishing work standards, production works etc.
 Selector Role: Location selection for the factory or service center, layout
settings within the factory service center, staffs selection etc.
 Planner Role: Capacity planning, production planning and scheduling.
 Coordinating Role: Supply chain management (Suppliers, operations and
marketing).
 Controller Role: Materials, manpower, production and quality control.
 Managing Role: Inventory management, maintenance management,
quality management, Budgeting or financial management etc. .
 Monitoring Role: Measurement and monitoring of productivity.
 Relational Role: Industrial relations or labour relation.
 Scope of Operations
Management

Location Facilities Plant Layouts Facilities

Product Design Process Design

Production and Planning Control Quality Control

Materials Management/ Handling Maintenance Management.

1.Location Facilities
 Location facilities for operations is a long-term capacity decision which involves a long
term commitment about the geographically static factors that affect a business
organization. It is an important strategic level decision-making for an organization. It
deals with the questions such as ‘where our main operations should be based?’
 The selection of location is a key-decision as large investment is made in building
plant and machinery. An improper location of plant may lead to waste of all the
investments made in plant and machinery equipments. Hence, location of plant should
be based on the company’s expansion plan and policy, diversification plan for the
products, changing sources of raw materials and many other factors. The purpose of
the location study is to find the optimal location that will results in the greatest
advantage to the organization.
2.Plant Layout
 Plant layout refers to the physical arrangement of facilities. It is the configuration of
departments, work centers and equipment in the conversion process. The overall
objective of the plant layout is to design a physical arrangement that meets the
required output quality and quantity most economically.
3. Material Handling
‘Material Handling’ refers to the ‘moving of materials from the store room to the machine
and from one machine to the next during the process of manufacture’. It is also defined
as the ‘art and science of moving, packing and storing of products in any form’. It is a
specialized activity for a modern manufacturing concern, with 50 to 75% of the cost of
production. This cost can be reduced by proper section, operation and maintenance of
material handling devices. Material handling devices increases the output, improves
quality, speeds up the deliveries and decreases the cost of production. Hence, material
handling is a prime consideration in the designing new plant and several existing plants.
4.Product Design
 Product design deals with conversion of ideas into reality. Every
business organization have to design, develop and introduce new
products as a survival and growth strategy. Developing the new
products and launching them in the market is the biggest challenge
faced by the organizations. The entire process of need identification
to physical manufactures of product involves three functions:
marketing, product development, manufacturing. Product
development translates the needs of customers given by marketing
into technical specifications and designing the various features into
the product to these specifications. Manufacturing has the
responsibility of selecting the processes by which the product can be
manufactured. Product design and development provides link between
marketing, customer needs and expectations and the activities
required to manufacture the product.
5. Process Design
 Process design is a macroscopic decision-making of an overall
process route for converting the raw material into finished goods.
These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities. Hence,
the important decisions in process design are to analyze the workflow
for converting raw material into finished product and to select the
workstation for each included in the workflow.
6. Production Planning and Control
 Production planning and control can be defined as the process of planning the
production in advance, setting the exact route of each item, fixing the starting and
finishing dates for each item, to give production orders to shops and to follow up
the progress of products according to orders.
 The principle of production planning and control lies in the statement ‘First Plan
Your Work and then Work on Your Plan’. Main functions of production planning
and control includes planning, routing, scheduling, dispatching and follow-up.
7. Quality Control
 Quality Control (QC) may be defined as ‘a system that is used to maintain a
desired level of quality in a product or service’. It is a systematic control of various
factors that affect the quality of the product. Quality control aims at prevention of
defects at the source, relies on effective feedback system and corrective action
procedure.
 Quality control can also be defined as ‘that industrial management technique by
means of which product of uniform acceptable quality is manufactured’. It is the
entire collection of activities which ensures that the operation will produce the
optimum quality products at minimum cost.

8. Maintenance Management
 Maintenance management means updating plants/machineries in a workable form.
In other words, maintenance management involves keeping track of assets and
parts. The purpose is to ensure that production proceeds efficiently and the
minimum amount of resources are wasted. This is generally accomplished by a
tailored combination of software, practices, and personnel that focus on achieving
these goals.
 The production system according to nature and the volume of production
(quantity of output) can be broadly classified into following two categories:
1. Intermittent Production System
 Intermittent production is justified when the production rate exceeds demand
rate. The quantities in intermittent production are decided based on the
balancing of two costs i.e. setup cost and inventory carrying cost. Batch
production aims at satisfying the continuous customer demand for an item.
However, the plant is capable of production rate that exceeds demand rate.
Batch production plants include machine shops, furniture manufacturing
company, hospitals, plastic units and press shops.

Characteristics of Intermittent Production System

 Production quantity is small.
 More number of set ups and hence higher set up cost.
 Plant and machinery set up is used for the production of items in a batch and
set up required to be changed for processing next batch of items.
 Amount of supervision required is less compared to job order.
 Plant and machinery are highly flexible.
 Manufacturing lead time and also cost are lower.
 Higher level of work in process inventory.
2. Continuous Production System
 Continuous production system manufacture highly standardized
non-discrete products in extremely large volumes using a
continuous process. Products that flow into continuous streams
fall in this category. Continuous production system develop
extensive long range resource requirement and they are more
capital intensive. Plant location, plan capacity, long range plan
for materials, manpower, energy and waste disposal are the
important aspects in continuous production system. Continuous
process scheduling will be capacity controlled and no other shop
floor control is required.
 The output (product) from continuous production have few
design low unit values and relatively high transportation costs,
cost per unit minimized by using high volume, dedicated
equipment arranged in production lines, minimizes cost per unit.
In continuous production system the production process
generally follows a specific and fixed sequence of operations.
Petroleum products, steel, sugar, flour, paper, cement,
fertilizers, etc. are some of the examples of products produced
continuous production system.
Characteristics of Continuous Production System
 Dedicated plant and equipments with zero flexibility.
 Material handling is fully automated.
 Wet or dry product flow measurable by weight or
volume.
 Component materials cannot be readily identified
with final product and the product cannot be
disassembled.
 Larger investment and usually capital intensive units.
 Process follows a pre-determined sequence of
operations.
 Maintenance is an important aspect.
 Unit cost is lower due to high volume
 Planning and scheduling is a routine action.
 Persons with (semiskilled) limited skills can be used
on the production line.
1. Designing the System
 Designing the system begins with product development. Product development involves
determining the characteristics and features of the product or service to be sold. It
should begin with an assessment of customer needs and eventually grow into a
detailed product design. The facilities and equipment used in production, as well as the
information systems needed to monitor and control performance, are all a part of this
system design process.
a. Product Design: It is a critical task because it helps to determine the characteristics and
features of the product, as well as how the product functions. Product design determines
a product's cost and quality, as well as its features and performance.
b. Process Design: It describes how the product will be made. The process design decision
has two major components: a technical (or engineering) component and a scale economy
(or business) component. The technical component includes selecting equipment and
selecting a sequence for various phases of operational production.
c. Facility Design: It involves determining the capacity, location, and layout for the
production facility. Capacity is a measure of a company's ability to provide the demanded
product in the quantity requested by the customer in a timely manner. Capacity planning
involves estimating demand, determining the capacity of facilities, and deciding how to
change the organization's capacity to respond to demand.
 Facility location is the placement of a facility with respect to its customers and
suppliers. Facility location is a strategic decision because it is a long-term commitment
of resources that cannot easily or inexpensively be changed.
 Facility layout is the arrangement of the workspace within a facility. It considers which
departments or work areas should be adjacent to one another so that the flow of
product, information, and people can move quickly and efficiently through the
production system.
2. Implementation
 Once a product is developed and the manufacturing system is designed, it must be implemented, a
task often more easily discussed than carried out. IF the system design function was done thoroughly,
it will have rendered an implementation plan which will guide activities during implementation.
Nonetheless, there will inevitably be changes needed. Decisions will have to be made throughout this
implementation period about tradeoffs.
3. Planning and Forecasting
 Running an efficient production system requires a great deal of planning. Long-range decisions could
include the number of facilities required to meet customer needs or studying how technological
change might affect the methods used to produce services and goods. The time horizon for long-term
planning varies with the industry and is dependent on both complexity and size of proposed changes.
Typically, however, long-term planning may involve determining work force size, developing training
programs, working with suppliers to improve product quality and improve delivery systems, and
determining the amount of material to order on an aggregate basis.
4. Managing the System
 Managing the system involves working with people to encourage participation and improve
organizational performance. Participative management and teamwork are an essential part of
successful operations, as are leadership, training, and culture. In addition, material management and
quality are two key areas of concern.
 Material management includes decisions regarding the procurement, control, handling, storage, and
distribution of materials. Material management is becoming more important because, in many
organizations, the costs of purchased materials comprise more than 50 percent of the total production
cost. Questions regarding quantities and timing of material orders need to be addressed here as well
when companies weigh the qualities of various suppliers.
5. Building Success with Operations
 To understand operations and how they contribute to the success of an organization, it is important to
understand the strategic nature of operations, the value-added nature of operations, the impact
technology can have on performance, and the globally competitive marketplace.
 Efficient organization operations are a vital tool in achieving competitive advantage in the daily contest
for customers/clients. What factors influence buying decisions for these entities? For most services
and goods, price, quality, product performance and features, product variety, and availability of the
product are critical. All these factors are substantially influenced by actions taken in operations.
 The history of operations management (POM) is very rich and
interesting.
 The development of operations management has its three phases:
manufacturing management phase, production management phase
and operations management phase.
 At the time of the manufacturing management phase (before 1930s),
labours were mostly used to manufacture goods and services to the
customers without providing sufficient facilities to them. No proper
system of manufacturing was used at that time.
 At the time of production management phase (between 1930s to
1970s), machineries or technologies was emphasized more rather
than used of labours. Mass production and economize of scale are
the main focus at that phase.
 At operations management phase (since 1970s..), quality processing
rather than mass production, mass customization, use of internet,
environmentally friendly production, e-business environment, JIT
production etc. are emphasized.
 The heritage of operations management can be better understood
with the help of following table:
1. Historical Events in Operations Management
Era Events/Concepts Dates Originator
Industrial Steam engine 1769 James Watt
Revolution Division of labour 1776 Adam Smith
Interchangeable parts 1790 Eli Whitney
Scientific Principles of Scientific Management 1911 F.W. Taylor
Management Time and motion studies 1911 Frank & Lillian Gilbreth
Activity Scheduling Chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
Human Relations Hawthorne studies 1930 Elton Mayo
Motivation theories 1940s Abraham Maslow
1950s Frederick Herzberg
1960s Douglas McGregor
Operations Linear Programming 1947 George Dantzig
Research Digital computer 1951 Remington Rand
Simulation, Waiting line theory, decision 1950s Operations Research Groups
theory, PERT/CPM
MRP, EDI, EFT, CIM 1970s Joseph Orlicky, IBM
Quality Revolution JIT (Just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (Total quality management) 1980s W.Edward Deming, Joseph Juran
Strategy and operations 1980s Wickham Skinner, Robert Hayes
Business process reengineering 1990s Michael Hammer, James Champy
Six Sigma 1990s GE, Motorola
Internet Internet, WWW, ERP, Supply Chain 1990s ARPANET, Tim Berners-Lee SAP, i2
Revolution Management Technologies, ORACLE
E-Commerce 2000s Amazon, Yahoo, eBay, Google and others
Globalization World Trade Organization, European Union 1990s Numerous countries and companies
and other trade agreements
Global supply chains, outsourcing, BPO, 2000s
Services, Science
Source: Russell & Taylor, (2009). “Operations Management”
 Productivity is the quantitative relationship between what we produce
and what we use as a resource to produce them i.e., arithmetic ratio of
amount produced (outputs) to the amount of resources (inputs). The
productivity can be expressed as:

Productivity = 𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒑𝒖𝒕𝒔 > 1

𝑻𝒐𝒕𝒂𝒍 𝑶𝒖𝒕𝒑𝒖𝒕𝒔

 The ratio of productivity must be greater than 1 from operations

perspective to define it. It is the multiplier effect of efficiency and
effectiveness of an operations manager’s work. Therefore, it can be also
defined as:

Productivity = Work Efficiency + Work Effectiveness

 The productivity refers to the efficiency of the production system. Thus,

the productivity is defined as the efficient use of resources such as:
capital, labour, land, materials, energy, information etc. in the
production of various goods and services.
 Productivity can be increased with the help of following actions:

1. When level (volume) of production is increased without

increasing in inputs (+outputs, Inputs).
2. When same level production maintained, decreasing the size
of inputs (Outputs, -Inputs).
3. When ‘rate of increase in output’ is more than that of
‘increasing rate in input’ (+Outputs > + Inputs).

 The concept of production and productivity are totally different.

Production refers to absolute output whereas productivity is a
relative term where output is always expressed in terms of
inputs. Increase in production may or may not be an indicator of
increase in productivity.
 Increasing or improving productivity is not a easy task today.
Up-to-date production system, modern technology, competent
manpower, friendly and safe working condition, supplier
partnering, teamwork, effective measurement of productivity,
encouraging management or leaders etc. are very important
aspects of increasing productivity today.
There are three basic types of productivity. They are as follows:
1. Partial Productivity
Partial productivity is the ratio of output to partial input. It helps to
measure the productivity of each input such as labour, capital, energy,
material and machine. Partial productivity determines the contribution of
each factor in producing and generating output. It can be measured as
follows:

Productivity = 𝑺𝒊𝒏𝒈𝒍𝒆 𝑰𝒏𝒑𝒖𝒕 > 1

𝑻𝒐𝒕𝒂𝒍 𝑶𝒖𝒕𝒑𝒖𝒕𝒔

2. Factor Productivity
Factor productivity measures total output on the one hand and labour,
capital, machine and material on the other hand. It can be measured as:
Productivity =𝑪𝒂𝒑𝒊𝒕𝒂𝒍+𝑳𝒂𝒃𝒐𝒖𝒓 > 1
𝑻𝒐𝒕𝒂𝒍 𝑶𝒖𝒕𝒑𝒖𝒕𝒔

3. Total Productivity
Total productivity is the ratio of total output to the sum of all inputs. Thus,
total productivity measures reflect the joint impact of all the inputs in
producing and generating of output. It can be measured as:
Productivity = 𝑻𝒐𝒕𝒂𝒍 𝑰𝒏𝒑𝒖𝒕𝒔 > 1
𝑻𝒐𝒕𝒂𝒍 𝑶𝒖𝒕𝒑𝒖𝒕𝒔
The factors affecting productivity can be classified into various groups. The following are
two main factors that affect productivity.
1. Internal Factors
 Internal factors refer to those factors which are in the control of management or
individual enterprises. All internal factors are not under the control but somehow they
can be adjusted and managed with some ease in comparison to the external factors.
These internal factors play a vital role in improving productivity level of an organization.
Internal factors are also known as micro-productivity factors. These factors can be
divided into two following groups.

a. Hard Factors: Hard factors are those internal factors which are quite inflexible towards
organizational change in comparison to soft factors. These hard factors are as follows:
Product, Plant/Equipment, Technology, Material and Energy etc.

b. Soft Factors: Soft factors are those factors which are quite flexible towards
organizational changes, compared to hard factors. These factors can be changed according
to the requirement of organizational management. Some of the soft factors are as follows:
Labour, Organization and Systems, Work Methods, Management, Capital etc.

2. External Factors
External factors refer to those factors which are not in the control of management or any
individual enterprises. The external factors directly/indirectly affect the productivity of an
organization but also an organization has no control over them. These external factors are
also called macro-productivity factors. They can be listed as follows:
 a. Structural Adjustment
 b. Natural Resources,
 C. Government and Infrastructure
 The measurement of productivity can be quite direct. Such is the
case when productivity is measured by labour-hours per ton of a
specific type of steel.
 Although labour-hours are a common measure of input, other
measures such as capital, materials, or energy can be used.
 Measuring productivity can be a challenge so that a manager picks
several reasonable measures.
 For example, a manager at an insurance firm might measure office
productivity as the number of insurance policies processed per
employees per week.
 In the case of services, it can be difficult to measure inputs and
outputs as discrete units. As a result, productivity measured in
services is usually geared more towards the availability and
utilization of resources.
 For example, the number of visits to the weight room per day can be
used as an indicator of the value generated by that facility.
 In the similar way, a manager at a carpet company might measure
the productivity of installers as the number of square yards of carpet
installed per hour.
 Following are the some measurements of productivity made at
various levels.
1. Productivity at International Level
Total Output of Country A
Country A’s Productivity = Total Input of Country A

Total Output of Country B

Country B’s Productivity = Total Input of Country B

2. Productivity at National Level

Real Gross Domestic Product (GDP) at Factor Cost
National Productivity = Active Population

Where,
GDP = Total goods and services produced by the nation
Active population = Total population  Non-active population
3. Productivity at Industrial Level
Real Value Added Contribution by Industry Group
Industrial Productivity = Economically Active Population of Industry Group

4. Productivity at Company/Firm Level

a. Partial Productivity
Total Output
Partial Productivity = Partial Input

b. Total Factor Productivity

Total Output
Total Factor Productivity = Capital + Labour

c. Total Productivity
Total Output
Total Productivity = Total Input
 Green Productivity was launched in 1994 in line with the 1992 Earth Summit
recommendations that both economic development and environmental
protection would be key strategies for sustainable development. With the
support from the government of Japan, The Asian productivity Organization
(APO), introduced green productivity (GP) as a practical way to answer the
challenge of sustainable development.
 Green Productivity (GP) is a strategy for simultaneously enhancing
productivity and environmental performance for overall socio-economic
development. It is the techniques and technologies to reduce the
environmental impact of the organizations or enterprise’s activities, goods
and services. The main objective of green productivity program is to enhance
productivity and simultaneously reduce the negative impacts on the
environment.
 Environment protection need to be accompanied by productivity and quality
improvement if it is to be more widely accepted by the industries. Even when
industries can meet environmental quality standards, environmental
protection alone is also seen as insufficient for sustainable development,
though it is a component of it.
 Environmental protection does not concern itself with broader issues of
natural resource use, bio-diversity and the ecological impacts of pollution.
The sustainability of the environment is at risk through the over exploitation
of natural resources and ecological disruptions through pollution and
ecosystem destruction that usually result from development activities.
Objectives of Green Productivity
The following are the few enlisted objectives of green productivity
 To enhance productivity and reduce negative impacts on the environment
 To have efficient productive use of resources
 To enhance sustainable development
 To reduce the poverty
 To greening the supply chain by leveraging the purchasing power in the private sector.
 To have water resource management through innovative approaches.
Advantages of Green Productivity
There are many advantages of green productivity. Some of the advantages are as follows:
 It helps in reducing utility costs.
 It promotes sustainable development
 It promotes environmental protection
 It helps to increase capital outlays and rebates and tax benefits can be facilitated
 It helps to increase business opportunities.
 It improves health and safety
Disadvantages of Green Productivity
The disadvantages of green productivity are as follows:
 It is difficult to regulate the air cooling feature which is required to maintain the
temperature of green buildings.
 The location for green building must need a correct structured orientation. It influences
how natural light enters the building, how to shade some part of it.
 The availability of materials is difficult in rural areas than in urban areas.
 In some cases, it takes more time to build a green building than an ordinary one. Due to
which, the cline can delay the construction.
 A supply chain is the sequence of organizations –their facilities,
functions and activities.

 The sequence begins with basic suppliers of raw materials and

extends all the way to the final customer.

 Facilities include warehouses, factories, processing centers,

distribution centers, retail outlets, and offices.

 Functions and activities include forecasting, purchasing,

inventory management, information management, quality
assurance, scheduling, production, distribution, delivery, and
customer service.

 Supply chain management is the strategic coordination of

business functions within a business organization and
throughout its supply chain for the purpose of integrating supply
and demand management.
 SCM is a strategic tool that used in competitive business environment in
order to provide better impact in the market (i.e., suppliers and
customers).

 It is an integrated system that covers raw materials acquired from

suppliers to finished goods to the end users (i.e., consumers).

 Supply chain managers are people at various levels of the organization

who are responsible for managing supply and demand both within and
across business organizations.

 They (managers) are involved with planning and coordinating activities

that include sourcing and procurement of materials and services,
transformation activities, and logistics.

 In other words, a supply chain encompasses all activities associated with

the flow and transformation of goods and services from the raw
materials stages to the end user (customer), as well as the associated
information flows.

 The role of an operations manager is great in managing and developing

good relationship with suppliers and marketing managers or experts.
This concept is better illustrated with the help of figure below:
Figure: Typical Manufacturing Supply Chain

Supplier A Consumer A

Supplier B Raw Material Manufacturing Warehousing Distribution Consumer B

(Storage) (Factory (Finished Channels
Production) Goods)

Supplier C Consumer C

Suppliers Operations Marketing

Management Management Management
Thank
You