Study note - 1

1. Operations management – Introduction

2. Objectives of Operations management

3. Scope of operation management

4. Production management vs operations management

5. Characteristic of modern operations function

6. Recent trends in Production/Operations management

Meaning of Operations Management
▪ Operations management is the management of that part of an organization that is
responsible for producing goods and/or services.

▪ Every book you read, every video you watch, every e-mail you send, every telephone
conversation you have, and every medical treatment you receive involves the operations
function of one or more organizations.
Meaning of operating system
▪ An Operating System is defined as a configuration of resources combined for the provision
of goods or services.

▪ Retail organizations, hospitals, bus and taxi services, tailors, hotels and dentists are all
examples of operating systems.

▪ Any operating system converts inputs, using physical resources, to create outputs, the
function of which is to satisfy customers wants.

▪ Various inputs such as capital, labour, and information are used to create goods or services
using one or more transformation processes (e.g., storing, transporting, and cutting).
▪ The first objective is the customer service which means the service
for the satisfaction of customer wants.

▪ Customer service is therefore a key objective of operations

management.

▪ The Operations Management must provide something to a

specification which can satisfy the customer in terms of cost and
timing.

▪ Thus, primary objective can be satisfied by providing the ‘right

thing at the right price at the right time’.
▪ Another major objective is to utilize resources (Materials, Machines and Labour) for the
satisfaction of customer wants effectively, i.e., customer service must be provided with the
achievement of effective operations through efficient use of resources.

▪ Inefficient use of resources or inadequate customer service leads to commercial failure of an

operating system.

▪ Operations management is concerned essentially with the utilization of resources, i.e.,

obtaining maximum effect from resources or minimizing their loss, under utilization or
waste.
 Production management Operations management
The term production management is more Operations management is more frequently used
used for a system where tangible goods where various inputs are transformed into
are produced. intangible services.
It covers manufacturing organizations. It will cover such service organizations as banks,
airlines, pollution control agencies, educational
institutions, libraries, consultancy firms and police
departments, in addition, of course, to
manufacturing enterprises.
Production management precedes Operation management is the term that is used
Operations management. nowadays.
 Characteristic of modern operations function
1. Manufacturing as competitive advantage ▪ In the past production was considered to be
like any other function in the organisation.
When demand was high and production
capacities were inadequate, the concern.
▪ But today’s scenario is contrasting. Plants
have excess capacities, competition is
mounting and firms look and gain
competitive advantage to survive and
succeed.
2. Service orientation ▪ As was stated earlier, service sector is
gaining greater relevance these days.
▪ The production system, therefore, needs to
be organized keeping in mind the peculiar
requirements of the service component.
▪ There is increased presence of professionals
on the production.
 Characteristic of modern operations function
3. Disappearance of smokestacks ▪ Protective labour legislation, environmental
movement and gradual emergence of
knowledge based organizations have
brought total transformation in the
production system.
▪ Today’s factories are aesthetically designed
and built, environment friendly - in fact, they
are homes away from homes.
4. Small has become beautiful ▪ It was E.F. Schumacher who, in his famous
book Small is Beautiful, opposed giant
organizations and increased specialization.
▪ For him, small was beautiful.
▪ Businessmen, all over the world, did not
believe in Schumacher’s philosophy. Inspired
by economies of scale, industrialists went In
for huge organizations and mass production
Q. Enumerate the characteristics of a modern operations function.
(December 2019)
 Recent trends in Production/Operations management
1. Global market place ▪ Globalization of business has compelled many manufacturing
firms to have operations in many countries where they have
certain economic advantage.
▪ This has resulted in a steep increase in the level of competition
among manufacturing firms throughout the world.
2. Production/Operati ▪ More and more firms are recognizing the importance of
ons strategy production/ operations strategy for the overall success of their
business and the necessity for relating it to their overall business
strategy.
3. Total quality ▪ TQM approach has been adopted by many firms to achieve
management customer satisfaction by improving the quality of goods and
services.
4. Flexibility ▪ The ability to adapt quickly to:
• Changes in volume of demand,
• in the product mix demanded, and
 Recent trends in Production/Operations management
5. Time reduction ▪ Reduction of manufacturing cycle time and speed to market for a
new product provide competitive edge to a firm over other firms.
▪ When companies can provide products at the same price and
quality, quicker delivery (short lead times) provide one firm
competitive edge over the other.
6. Technology ▪ Automation, computerization, information and communication
technologies have revolutionized the way companies operate.
▪ Technological changes in products and processes can have great
impact on competitiveness and quality, if the advanced
technology is carefully integrated into the existing system.
7. Worker involvement ▪ The recent trend is to assign responsibility for decision making
and problem solving to the lower levels in the organisation. This is
known as employee involvement and empowerment.
▪ Examples of worker involvement are use of work teams or quality
improvement teams.
 Recent trends in Production/Operations management
9. Environmental ▪ Today’s production managers are concerned more and more with
issues pollution control and waste disposal which are key issues in
protection of environment and social responsibility.
▪ There is increasing emphasis on reducing waste, recycling waste,
using less-toxic chemicals.
10. Corporate ▪ Downsizing or right sizing has been forced on firms to shed their
downsizing (Right obesity.
sizing) ▪ This has become necessary due to competition, lowering
productivity, need for improved profit and for higher dividend
payment to shareholders.
11. Supply chain ▪ Management of supply-chain, from suppliers to final customers
management reduces the cost of transportation, warehousing and distribution
throughout the supply chain.
12. Lean production ▪ Production systems have become lean production systems which
use minimal amounts of resources to produce a high volume of