OM.pdf
- 1. Session 1 Introduction to Operations Management Dr Rajesh Sikka Dated: 3rd December 2022
- 2. Operations Management What is Operations? • Function/ Unit of a business organization responsible for producing goods or services How can operations management be defined • Management of systems or processes that create goods and/or provide services
- 3. Products/ Goods are physical items that include raw materials, parts, subassemblies, and final products. •Automobile •Computer •Oven •Shampoo Services are activities that provide some combination of time, location, form, value through human interface •Airlines •Education / Teaching •Salon •Legal Services Products/ Good or Service
- 4. SUPPLY CHAIN Nodes/ Elements of Supply Chain: Suppliers – Tier 1,2 Manufacturers/ Production units (Internal Departments) Channel Partners- Distributors, Retailers Customers Dr Rajesh SIkka
- 5. Manufacturing vs. Service 1. Degree of customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work
- 6. Why Operations Management? Every aspect of business is impacted by operations Many service jobs are closely related to operations • Financial services • Marketing services • Accounting services • Information services Operations and supply chains give better understanding: • World and Global environment • Global dependencies of companies and nations • Reasons why companies succeed or fail • The importance of working with others
- 7. Responsibilities of Operations Management •Planning • Capacity, utilization • Location • Choosing products or services • Make or buy • Layout • Projects • Scheduling • Market share • Plan for risk reduction, alternative or back up plans • Forecasting
- 8. Role of the Operations Manager Operations Function - All activities directly related to manufacturing products/ goods or providing services. Main function of the operations manager is to manage by decision making: • System & Process Design Decisions • System & Process Operation Decisions
- 9. Production systems classification Craft Production : Highly skilled workers use simple, flexible tools for production of small quantity of customized goods. Lean production : Use minimum resources to produce large volume of high-quality goods with variety. Dell Mass production: Low skilled workers use specialized machines and equipment to produce large volumes of standardized goods. • Ford, Maruti Suzuki
- 10. Production systems - Agile - Lean manufacturing Flexibility to quickly and economically shift from one product to another Minimum disruption Quick response to changes in customer demand. Effective inventory control system Keys to being an agile manufacturer are : • Reduction in inventories, • Reduction in turnaround times, • Availability of automated flexible machinery, • Rapid collection and processing of information
- 11. Environmental Concerns •Sustainability • Using resources in ways that do not harm ecological systems that support human existence • Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making • All areas of business will be affected • Product and service design • Consumer education programs • Disaster preparation and response • Supply chain waste management • Outsourcing decisions
- 12. Operations Management Decision Making • Most operations decisions involve many alternatives that can have quite different impacts on costs or profits • Typical operations decisions include: • What • When • Where • How • Who
- 13. General Approach to Decision Making • Modeling - key tool used by all decision makers • Model - an abstraction of reality. • Common features of models: • Simplifications of real-life phenomena • Unimportant details of the real-life systems removed • Focus on most important aspects of real-life system
- 14. Quantitative Approaches •Decision making approach - to obtain mathematically optimal solution • Linear programming • Queuing techniques • Inventory models • Project models • Forecasting techniques • Statistical models
- 15. Influence of Japanese Manufacturers •Refined and developed management practices to enable increase in productivity • Focus on Quality • Just-in-Time production
- 16. Session 2 Operations Management & Strategy Dr Rajesh Sikka Dated: 10th December 2022
- 17. Current Business Environment Requirements Better quality Higher productivity Lower costs Ability to respond quickly to customer needs Increasingly important requirements
- 18. Operations Management •Focuses on three related areas- important to business organizations: Competitiveness Strategy Productivity
- 19. Competitiveness •Competitiveness: Effectiveness of organization in meeting wants and needs of customers relative to others offering similar goods or services Organizations compete through combination of different functions including Operations What do customers want? How can these customer needs best be satisfied?
- 20. Impact of Marketing •Identifying consumer wants and/or needs •Pricing •Quality •Advertising and promotion
- 21. Businesses Compete Based on Operations • Product and service design • Cost • Location • Quality • Quick response • Inventory management • Supply chain management • Service • Skills and competencies of human resources
- 22. Why Some Organizations Fail • Neglecting operations strategy • Failing to leverage strengths and opportunities and/or failing to recognize competitive threats • High emphasis on short-term financial performance at the expense of R&D • High emphasis on product and service design and not enough on process design and improvement • Ignoring investments in capital and human resources • Failing to establish good internal communications and cooperation • Failing to consider customer wants and needs
- 23. Hierarchical Planning in Organizations Vision Mission Goals Organizational Strategies Tactics Functional Strategies
- 24. Goals The mission statement serves as the basis for organizational goals Goals Provide detail and the scope of the mission Goals can be viewed as organizational destinations Goals serve as the basis for organizational strategies
- 25. Intended Strategy vs Realized Strategy Intended Strategy By Design Emergent Strategy Decisions Response to internal and external situations Realized Strategy Outcome of actions by/ decisions in Operations Operations Strategy links Directed and Emergent Strategies leading to Realized Strategy
- 26. Session 3 & 4 Design issues for Process Dr Rajesh Sikka
- 27. Process Strategy • Vertical integration o extent to which firm will produce inputs and control outputs of each stage of production process • Capital intensity o mix of capital (i.e., equipment, automation) and labor resources used in production process • Process flexibility o ease with which resources can be adjusted in response to changes in demand, technology, products or services, and resource availability • Customer involvement o role of customer in production process
- 28. Process Planning • Process o Group of related tasks with specific inputs & outputs • Process design o tasks to be done & how they are coordinated among functions, people, & organizations • Process strategy o an organization’s overall approach for physically producing goods and services • Process planning o converts designs into workable instructions for manufacture or delivery
- 29. Process Selection • Projects o one-of-a-kind production of a product to customer order • Batch production o process many different jobs at the same time in groups or batches • Mass production o produce large volumes of a standard product for a mass market • Continuous production o used for very-high volume commodity products
- 30. Types of Processes PROJECT BATCH MASS CONT. Type of product Unique Made-to- order (customized) Made-to- stock (standardized ) Commodity Type of customer One-at-a-time Few individual customers Mass market Mass market Product demand Standalone Varying Stable Very stable
- 31. Process Selection With Break-Even Analysis • Study cost trade-offs based on demand volume • Cost o Fixed costs constant regardless of the number of units produced o Variable costs • vary with the volume of units produced • Revenue o price at which an item is sold
- 32. Process Selection With Break-Even Analysis • Total revenue o price times volume sold • Profit o difference between total revenue and total cost • Break-even Point: Total Revenue = Total Cost
- 33. Four Process Strategies 1. Process Focus 2. Repetitive Focus 3. Product Focus 4. Mass Customization Focus
- 34. Process Focus Process Focus • Production facility (for goods or services) focused on processes • Mainly oriented towards low-volume high-variety production • Product moves in small lots, • Operations grouped as per type of process, focused around skills required, equipment and layout • Production equipment is organized around specific processes • Mostly general purpose machines are used • Highly skilled personnel carry out the activities
- 35. Repetitive Focus Repetitive Focus • Major characteristics : • Production equipment and facilities organized as assembly lines for mass production. • Most sub-assemblies and modules having components manufactured in earlier assembly lines • Much more efficient than process-focused facilities • Less flexibility than process- focused • Process orientation towards product • Low cost and advantages of mass production
- 36. Product Focus Product Focus • Major characteristics • Production equipment and facilities are organized by product • High volume but can manage low variety of products • Long and continuous production cycles lead to efficiency in processes • Can have high fixed cost (machinery and equipment), but lower variable costs • Normally lesser skilled labor required in a Product focused process
- 37. Mass Customization Focus Mass Customization • Applicable both for Product and Services • Has characteristics of flexibility and personalization of custom-built products, and also having low costs of mass production • Provide unique value to customers in an efficient way • Customization of goods and services for individual customers in high volumes and at a relatively low cost feasible due to technology and flexibility in processes. • Mass customization helps in saving unnecessary additional costs and avoiding complexity to operations. • However it can also increase unnecessary costs and complexity unless customers perceives value in customization delivered
- 38. Redesigning of Processes • Remove waste, simplify, and consolidate similar activities • Link processes to create value • Let the swiftest and most capable enterprise execute the process • Flex process for any time, any place, any way • Capture information digitally at the source and propagate it through process • Provide visibility through fresher and richer information about process status • Fit process with sensors and feedback loops that can prompt action • Add analytic capabilities to the process • Connect, collect, and create knowledge around process through all who touch it • Personalize process with preferences and habits of participants
- 39. Session 5 & 6 Product and Service Design Dr Rajesh Sikka
- 40. Strategic Product and Service Design • Business of an organization is providing products and services it offers • Organization has to be structured around products and services • Product and service design – or redesign – should be aligned to organization’s strategy
- 41. What Does Product & Service Design Do? 1. Convert customer wants and needs into product and service requirements 2. Refine existing products and services 3. Develop new products and services 4. Formulate quality goals 5. Construct and test prototypes 6. Translate product and service specifications into process specifications Involve Inter-functional Collaboration
- 42. Key Questions for Organisation 1. Is there a demand for Product & Service • Market size • Demand profile 2. Can the Organisation meet that requirement • Manufacturability - capability of an organization to produce an item at an acceptable cost or profit • Serviceability - capability of an organization to provide a service at an acceptable cost or profit
- 43. Reasons to Design or Re-Design • Driving forces for product and service design or redesign are market opportunities or threats: • Economic • Social and Demographic • Political, Liability, or Legal • Competitive • Cost or Availability • Technological
- 44. Design Process • Effective design can provide a competitive edge o matches product or service characteristics with customer requirements o ensures that customer requirements are met in the simplest and least costly manner o reduces time required to design a new product or service o minimizes revisions necessary to make a design workable
- 45. Sustainability • Sustainability • Using resources in ways that do not harm ecological systems that support human existence • Key aspects of designing for sustainability • Life-Cycle assessment • 3-Rs • Reduction of materials • Re-using parts • Recycling
- 46. Reduce: Costs and Materials • Value analysis • Examination of the function of parts and materials in an effort to reduce the cost and/or improve the performance of a product • Common questions used in value analysis • Is the item necessary; does it have value • Are there alternative sources for the item • Can specifications be less stringent to save time or money • Can packaging be improved or made less costly
- 47. Re-Use: Remanufacturing • Remanufacturing • Refurbishing used products by replacing worn- out or defective components • Reasons to remanufacture: • Remanufactured products can be sold at lower price • Design for disassembly (DFD) • Designing a product to that used products can be easily taken apart
- 48. Recycle • Recycling • Recovering materials for future use • Applies to manufactured parts • Why recycle? • Cost savings • Environmental concerns • Design for recycling (DFR) • Product design that takes into account for recovering recyclable parts
- 49. Product Life Cycle Assessment • Product Life Cycle Assessment • Life-Cycle Assessment • Assessment of the environmental impact of a product or service
- 50. Standardization •Standardization • Extent to which there is an absence of variety in a product, service, or process • Same products are made in large numbers
- 51. Designing for Mass Customization • Mass customization • A strategy of producing basically standardized goods or services, but incorporating some degree of customization in the final product or service
- 52. Delayed Differentiation • Delayed Differentiation • Process of producing, but not completing final stage till customer requirement is known • Postponement
- 53. Modular Design • Modular Design • Standardization in which component parts are grouped into modules • Easy to replace or change
- 54. Rapid Prototyping and Concurrent Design • Testing and revising a preliminary design model • Build a prototype • form design • functional design • production design • Test prototype • Improve design
- 55. Form and Functional Design • Form Design • how the product will look? • Functional Design • how the product will perform? • reliability • maintenance
- 56. Robust Design • Robust design • Design that produces products or services to function over a range of conditions • Robust product or service – less likelihood of failure
- 57. Degree of Newness • Product or service design changes: o Modification of an existing product or service o Clone of a competitor’s product or service o New product or service
- 58. Quality Function Deployment Quality Function Deployment (QFD) An approach that integrates the “voice of the customer” into both product and service development Objective – to meet customer requirements at all stages Listening /understanding/ meeting customer needs
- 59. Concurrent Engineering • Concurrent engineering • Engineering design and manufacturing teams working together early in the design phase • Cross-functional team involvement • Objective - product designs to meets customer needs as well as manufacturing capabilities
- 60. Computer-Aided Design (CAD) • CAD • Product design using computer programs and graphics • Advantages: • Increase productivity of designers many times
- 61. Production Requirements in Design • Designers should consider production capabilities: • Equipment • Skills and capabilities of resources • Material • Schedules • Technologies • Special requirements
- 62. Manufacturability • Manufacturability • Ease of fabrication and/or assembly • It has important implications for • Cost • Productivity • Quality
- 63. Component Commonality • Products having high degree of • Useable in multiple products • Benefits: • Time savings • Standardized training • Economies of scale • Lesser inventory
- 64. Service Design Process • Service concept • Objective of service • Target customers • Service Levels • Service specifications • Performance requirements • Delivery requiremenst
- 65. Service Design • Important issues in service design • Extent of variation in service • Extent customer contact
- 66. Session 7 & 8 Location and Layout Decisions Dr Rajesh Sikka
- 67. Objectives of Facility Layout • Minimize movement and material-handling costs • Utilize space and labor efficiently • Eliminate bottlenecks • Reduce manufacturing cycle time and customer service time • Facilitate entry, exit, and placement of material, products, and people • Incorporate safety and security measures • Encourage proper maintenance activities • Provide a visual control of activities and flexibility to adapt to changing conditions • Increase capacity
- 68. Basic Layouts • Process layouts o group similar activities together according to process or function they perform • Product layouts o arrange activities in line according to sequence of operations for a particular product or service • Fixed-position layouts o are used for projects in which product cannot be moved
- 69. Fixed-Position Layouts • Typical of projects • Fragile, bulky, heavy items • Equipment, workers & materials brought to site • Low equipment utilization • Highly skilled labor • Typically low fixed cost • Often high variable costs
- 70. Designing Process Layouts • Objective : • Minimize material handling costs and Labour • Block Diagramming o minimize nonadjacent loads o use when quantitative data is available • Relationship Diagramming o based on location preference between areas o use when quantitative data is not available
- 71. Block Diagramming • Unit load o quantity in which material is normally moved • Nonadjacent load o distance farther than the next block • Steps o create load summary chart o calculate composite (two way) movements o develop trial layouts minimizing number of nonadjacent loads
- 72. Designing Service Layouts • Must be both attractive and functional • Free flow layouts o encourage easy viewing, increase impulse purchasing, flexible and appealing in appearance • Grid layouts o encourage customer familiarity, are low cost, easy to clean and secure, and good for repeat customers • Loop and Spine layouts o both increase customer sightigs and exposure to products, while encouraging customer to circulate through the entire store
- 73. Designing Product Layouts • Objective o Balance the assembly line • Line balancing o attempt to equalize the amount of work at each workstation • Precedence requirements o physical restrictions on the order in which operations are performed • Cycle time o maximum amount of time a product is allowed to spend at each workstation
- 74. Cycle Time Working production time available desired units of output d C Cd Desired Cycle Time
- 75. Flow Time and Cycle Time • Cycle time = max time spent at any work station • Flow time = time to complete work at all workstations
- 76. Procedure for Line Balancing i. Draw and label a precedence diagram ii. Calculate desired cycle time required for line iii. Calculate theoretical minimum number of workstations iv. Group elements into workstations, recognizing cycle time and precedence constraints v. Calculate efficiency of line vi. Determine if theoretical minimum number of workstations or an acceptable efficiency level has been reached. If not, go back to step for grouping elements.
- 77. Computerized Line Balancing • Assigning tasks to workstations o Longest operation time o Shortest operation time o Most number of following tasks o Least number of following tasks
- 78. Hybrid Layouts • Cellular layouts o group dissimilar machines into work centers (called cells) that process families of parts with similar shapes or processing requirements • Production flow analysis (PFA) o reorders part routing matrices to identify families of parts with similar processing requirements • Flexible manufacturing system o automated machining and material handling systems which can produce an enormous variety of items • Mixed-model assembly line o processes more than one product model in one line
- 79. Cellular Layouts • Identify families of parts with similar flow paths • Group machines into cells based on part families • Arrange cells so material movement is minimized • Locate large shared machines at point of use
- 80. Cellular Layouts • Advantages o Reduced material handling and transit time o Reduced setup time o Reduced work-in- process inventory o Better use of human resources o Easier to control o Easier to automate • Disadvantages o Poorly balanced cells o Increase in training and scheduling of workers o Increase in capital investment
- 81. Flexible Manufacturing Systems (FMS) • Consists of o programmable machine tools o automated tool changing o automated material handling system o controlled by computer network • Combines flexibility with efficiency • Layouts differ based on o variety of parts the system can process o size of parts processed o average processing time required for part completion
- 82. Mixed-Model Assembly Lines • Produce multiple models in any order on one assembly line • Factors in mixed model lines o Line balancing o U-shaped lines o Flexible workforce o Sequencing of different models for production