MODULE 1: Introduction to Operations Management

Terminologies:

● Operations Management - It refers to the management of systems or processes that

create goods and/or provide services
● Production of Goods - Results in tangible output such as automobile, eyeglasses, TV,
etc. that usually takes place in factory
● Delivery of Services - Generally, implies an act such as auto repair, physician’s
examination, lawn care, etc.
● Production - It is an act of either manufacturing or mining or growing of goods
(commodities) generally in bulk for trade
● System - It is an arrangement or assembly of interdependent processes (activities) that
are based on some logic and function.
● Production System - The methods, procedure or arrangement which includes all
functions required to (gather) the inputs, process or reprocess the inputs, and deliver the
marketable output (goods).
○ Tangible Goods
○ Intangible Goods
● Production Environment - It is a term used mostly by developers to describe the
setting where software and other products are actually put into operation for their
intended uses by end users.

Activities Involved in Operations and Production Management

1. Forecasting - such things as weather and landing conditions, seat demand for flights,
and the growth in air travel
2. Capacity Planning - essential for the airline to maintain cash flow and make reasonable
profit.
3. Scheduling - scheduling of planes for flights and for routine maintenance; scheduling of
pilots and flight attendants; scheduling of ground crews, counter staffs, and baggage
handlers.
4. Managing inventories - managing inventories of items such as food, beverage, in-flight
magazines, pillows, blankets, etc.
 5. Assuring quality - essential in flying and maintaining operations, where emphasis is on
safety, and important in dealing with customers at ticket counters, check-in, telephone
and electronic reservations, where the emphasis is on efficiency and courtesy.
6. Motivating and training employees - in all phases of operations, it is important to
encourage employees to offer quality service to their customers
7. Plant Location - locating the facilities according to managers’ decisions on which cities
to provide service for, where to locate maintenance facilities, and where to locate major
and minor hubs
8. Purchasing - receiving and inspecting the purchased goods - procurement of materials,
supplies, and equipment
9. Industrial engineering - often concerned with scheduling, performance standards, work
methods, quality control, and material handling
10. Distribution - involves the shipping of goods to warehouses, retail outlets, or final
customers
11. Maintenance - is responsible for general upkeep and repair of equipment, buildings and
grounds, heating and air-conditioning; removing toxic wastes; parking; and security

Components of Production System

1. Input - include raw-materials, machines, man hours, components or parts, drawing,

instructions and other paper works
2. Conversion Process - includes operations (actual production process). Operations may
be either manual or mechanical or chemical. Operations convert inputs into output.
3. Output - includes finished products, finished goods (parts), and services.
 MODULE 2: Evolution of Production & Operations Management

Terminologies:

● Total Quality Management - It is a management approach to long– term success

through customer satisfaction

Significant Events in Operations Management

Cost Focus
● Early Concepts (1776-1880)
● Scientific Management Era (1880-1910)
● Mass Production Era (1910-1980)
Quality Focus
● Lean Production Era (1980-1995)
Customization Focus
● Mass Customization Era (1995-2005)
Globalization Focus
● Globalization Era (2005-2020)

Significant People in Operations Management

● Frederick W. Taylor (1881) - Known as the father of scientific management, contributed
to personnel selection, planning and scheduling, motion study, and ergonomics.
● Henry Ford and Charles Sorensen (1913) - Combined what they knew about
standardized parts with the quasi-assembly lines of the meatpacking and mail-order
industries and added the revolutionary concept of the assembly line, where men stood
still and material moved.
● Walter Shewhart (1924) - Combined his knowledge of statistics with the need for quality
control and provided the foundations for statistical sampling in quality control.
● W Edwards Deming (1950) - Believed that management must do more to improve the
work environment and processes so that quality can be improved
● Joseph M. Juran (1951) - Wrote, edited, and published one of the most comprehensive
books on quality, Quality Control Handbook. His prescription focused on Quality
TrilogyQuality planning, quality control, and quality improvement.
 ● Philip B. Crosby (1979) - He established Philip Crosby Associates to develop and offer
training programs

EIGHT TQM PRINCIPLES

1. Customer-focused - The customer ultimately determines the level of quality.

2. Total Employee Involvement - All employees participate in working toward common
goals.
3. Process-centered - A fundamental part of TQM is a focus on process thinking.
4. Integrated System - Although an organization may consist of many different functional
specialties often organized into vertically structured departments, it is the horizontal
processes interconnecting these functions that are the focus of TQM
5. Strategic and Systematic Approach - A critical part of the management of quality is
the strategic and systematic approach to achieving an organization’s vision, mission, and
goals.
6. Continual Improvement - A major thrust of TQM is continual process improvement.
7. Fact-based decision-making - In order to know how well an organization is performing,
data on performance measures are necessary.
8. Communication - During times of organizational change, as well as part of day-to-day
operation, effective communications plays a large part in maintaining morale and in
motivating employees at all levels.
 MODULE 3: Product Developement

Terminologies:

● Goods - Goods are the material items that can be seen, touched or felt and are ready
for sale to the customers.
● Services - Services are amenities, facilities, benefits or help provided by other people.
● Invention - It refers to creating a product of imagination
● Innovation - It refers to a new thing or a new method of doing something
● Globalization - It refers to preparing a product or service to be offered in many markets
or worldwide, taking into account the different aspects of doing business in multiple
countries, including, but not limited to: language, time zone, measurement standards,
cultural differences, etc.
● Localization - It refers to the adaptation of a product or service to meet the needs of a
particular language, culture or desired population's "look-and-feel."

THE NEW PRODUCT DEVELOPMENT PROCESS

1. New-Product Strategy - This provides general guidelines for generating, screening, and
evaluating new-product ideas
2. Idea Generation - New-product ideas come from many sources, including customers,
employees, distributors, competitors, vendors, research and development (R&D), and
consultants
3. Idea Screening - It eliminates ideas that are inconsistent with the organization’s
new-product strategy
4. Business Analysis - Preliminary figures for demand, cost, sales, and profitability are
calculated
5. Development - The R & D (Research and Development) or engineering department
may develop a prototype of the product
6. Test Marketing - It refers to the limited introduction of a product and a marketing
program to determine the reactions of potential customers in a market situation
7. Commercialization - It involves ordering production materials and equipment, starting
production, building inventories, shipping the product to field distribution points, training
 the sales force, announcing the new product to the trade, and advertising to potential
customers

Quality Dimensions of Manufactured Products (Manufacturing Design):

● Performance - a product’s primary operating characteristics

● Features – the “bells and whistles” of a product
● Reliability – the probability of a product’s surviving over a specified period of time under
stated conditions of use
● Conformance – the degree to which physical and performance characteristics of a
product match pre-established standards
● Durability – the amount of use one gets from a product before it physically deteriorates
or until replacement is preferable
● Serviceability – the ability to repair a product quickly and easily
● Aesthetics – how a product looks, feels, sounds, tastes, or smells
● Perceived quality – subjective assessment resulting from image, advertising, or brand
names

Quality Dimensions of Services (Designing Services):

● Time
● Timeliness
● Completeness
● Courtesy
● Consistency
● Accessibility and Convenience
● Accuracy
● Responsiveness
 MODULE 4: Supply Chain Management

Terminologies:

● Supply Chain Management - A management system that coordinates and integrates all
of the activities performed by supply chain members into a seamless process, from the
source to the point of consumption, resulting in enhanced customer and economic value
● Reduced Bullwhip Effect - the magnified reduction of safety stock costs based on
coordinated planning and sharing of information
● Breadth - foreign manufacturing, office & retail sites, foreign suppliers & customers
● Depth - second and third tier suppliers & customers
● The GREENING of Supply Chains – Producing, packaging, moving, storing, delivering
and other supply chain activities can be harmful to the environment
● Outsourcing Benefits - a distribution technique that includes any kind of product or
service that can be distributed electronically, whether over traditional forms such as
fiber-optic cable or through satellite transmission of electronic signals.

The Foundations of Supply Chain Management

1. Supply
a. Supplier management - improve performance through Supplier evaluation
(determining supplier capabilities)
b. Supplier certification (third party or internal certification to assure product quality
and service requirements)
c. Strategic partnerships - successful and trusting relationships with
top-performing suppliers
d. Ethics and sustainability – recognizing suppliers’ impact on reputation and
carbon footprint
2. Operations
a. Demand management - match demand to available capacity
b. Use lean systems to improve the flow of materials to reduce inventory levels
c. Employ Six Sigma to improve quality compliance among suppliers
 3. Logistics
a. Transportation management - tradeoff decisions between cost & timing of
delivery / customer service via trucks, rail, water & air
b. Customer relationship management - strategies to ensure deliveries, resolve
complaints, improve communications, & determine service requirements
c. Network design - creating distribution networks based on tradeoff decisions
between cost & sophistication of distribution system
4. Integration
a. Supply Chain Process Integration - when supply chain participants work for
common goals. Requires intra-firm functional integration. Based on efforts to
change attitudes & adversarial relationships
b. Supply Chain Performance Measurement - Crucial for firms to know if
procedures are working

Supply Chain Integration

● Relationship Integration - The ability of two or more companies to develop social

connections that serve to guide their interactions when working together
● Measurement Integration - The performance assessment of the supply chain as a
whole that also holds each individual firm or business unit accountable for meeting its
own goals
● Technology and planning integration - The creation and maintenance of information
technology systems that connect managers across and through the firms in the supply
chain
● Material and service supplier integration - Requires firms to link seamlessly to those
outsiders that provide goods and services to them so that they can streamline processes
and provide quality customer experiences.
● Internal Operations Integration - Links internally performed work into a seamless
process that stretches across departmental and/or functional boundaries, with the goal of
satisfying customer requirements
● Customer Integration - A competency that enables firms to offer long-lasting,
distinctive, value added offerings to those customers who represent the greatest value to
the firm or supply chain
Key Business Processes of Supply Chain Management

● Customer Relationship Management(CRM) Process - Allows companies to prioritize

their marketing focus on different customer groups according to each group’s longterm
value to the company or supply chain
● Customer Service Management Process - Presents a multi-company, unified
response system to the customer whenever complaints, concerns, questions, or
comments are voiced
● Demand Management Process - Seeks to align supply and demand throughout the
supply chain by anticipating customer requirements at each level and create
demand-related plans of action prior to actual customer purchasing behavior
● Order Fulfillment Process - a highly integrated process, often requiring persons from
multiple companies and multiple functions to come together and coordinate to create
customer satisfaction at a given place and time
● Manufacturing Flow Management Process - Concerned with ensuring that firms in the
supply chain have the needed resources to manufacture with flexibility and to move
products through a multistage production process
● Supplier Relationship Management Process - Supports manufacturing flow by
identifying and maintaining relationships with highly valued suppliers
● Product Development and Commercialization Process - Includes the group activities
that facilitates the joint development and marketing of new offerings among a group of
supply chain partner firms
● Returns Management Process - Enables firms to manage volumes of returned product
efficiently, while minimizing returns-related costs and maximizing the value of the
returned assets to the firms in the supply chain