BA4204 - OPERATIONS

MANAGEMENT
COURSE OBJECTIVE:
• To provide a broad introduction to the field of operations
management and explain the Concepts, Strategies, Tools
and Techniques for managing the Transformation
Process that can lead to competitive advantage.
BA4204 - OPERATIONS
MANAGEMENT
UNIT I - Introduction to Operations
Management
• Operations Management:-
• Nature, Importance, Historical Development,
• Transformation processes,
• Differences between services and goods,
• A system perspective, Functions,
• Challenges, Current priorities, Recent trends.
• Operations Strategy:-
• Strategic fit, Framework. Productivity; World-class
manufacturing practices.
UNIT I - Operations Management - Introduction
Things to know:-
Something that happens, especially something important or
Event
unusual.
Action Something that you do, often for a particular purpose
Activity Something that you spend time doing.
Act of putting something in order to get output (Raw
Input
materials, fuels, Data, efforts, People etc.. )
The amount / Quantity that a person or machine produces
Output
(Product, Power, Result, Achievement, Service etc..)
Series of Actions/Events/Activities that are performed to
process
achieve a particular result.
UNIT I - Operations Management - Introduction
“Activities that businesses engage in on a daily basis
to increase the value of the enterprise and earn a profit.”

Operations Management

“a process of getting the work or the task done that is required

for achieving the goals of an organization in an
efficient and effective manner.”
UNIT I - Introduction to Operations
Management
• Operations Management:-

Operations management (OM) is the management of the

processes that transform inputs into goods and services
that add value for the customer.

Operations management (OM) is the administration of

business practices to create the highest level of efficiency
possible within an organization.
UNIT I - Introduction to Operations
Management
Operations Management:-
• Administration of Business Practices.
• To create the highest level of efficiency possible within an
organisation.
• It is concerned with converting materials and labour into
goods and services as efficiently as possible to maximize the
profit of an organization.
• Operations management teams attempt to balance costs with
revenue to achieve the highest net operating profit possible.
Boundary of Operations:-

• Suppliers
• Customers
• The Environment.
UNIT I - Operations Management - Introduction

The Systems Model

UNIT I – Operations Management :-
A system perspective
 Operations example in Manufacturing:
Food Processing:-
INPUTS PROCESS OUTPUTS

Raw vegetables Cleaning Clean vegetables

Metal sheets Cutting/Rolling/Welding Cans

Energy, Vegetables Cutting Cut vegetables

Energy, Water, Boiled
Cooking
Vegetables vegetables
Energy, Cans, Boiled
Placing Can food
vegetables
 Operations example in service:
Health care:-
Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
Types of Operations:-
Operation Examples

Goods producing Farming, mining, construction

Warehousing, trucking, mail,

Storage/transportation
taxis, buses, hotels, location
Trade, retailing, wholesaling,
Exchange
renting, leasing, loans
Radio, movies, TV, concerts,
Entertainment
recording

Newspapers, journals, magazines,

Communication
radio, TV, telephones, satellite
Definitions:-
• Operations management is the management of an
organization’s productive resources or its production
system.
• A production system takes inputs and converts them
into outputs.
• The conversion process is the predominant activity of
a production system.
• The primary concern of an operations manager is the
activities of the conversion process.
Business Operations
Overlap :-

Production/
Operations

Marketing Finance
Operations Interfaces:-

16
Goods & Services
• Services Intangible Products/tasks that satisfy the needs
of consumers and business users.
• Goods Tangible products that customers can see, hear,
smell, taste, or touch.
 Manufacturing (=Goods) vs. Service
operations:-
• Production of goods (goods oriented)
• Tangible products
• Automobile
• Refrigerator
• Services (TV and auto repair, lawn care)
• Government
• Regulatory bodies, FAA, FDA
• Wholesale/retail
• Financial services
•18Education
Goods vs. Service Operations (Cont)
• Differences
1. 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
Manufacturing vs. Service !
Characteristic Manufacturing Service
Output Tangible Intangible
Customer contact Low High
Uniformity of output High Low
Labor content Low High
Uniformity of input High Low
Measurement of productivity Easy Difficult
Opportunity to correct Easy Difficult
quality problems
 Goods-service Continuum

Steel production Home remodeling Auto Repair Maid Service Teaching

Automobile fabrication Retail sales Appliance repair Manual car wash Lawn mowing

High percentage goods Low percentage goods

Low percentage service High percentage service
Functions of Operations Management:-
• Planning,
• Scheduling,
• Purchasing,
• Controlling,
• Quality control and
• Inventory control.
Responsibilities of Operations Manager:-
• Capacity, utilization
• Location
• Choosing products or services
• Make or buy
• Layout
• Projects
• Scheduling
• Market share
• Plan for risk reduction, plan B?
• Forecasting
Roles of Operations Manager:-
Responsibilities of Operations Manager:-
Scope of Operations Management

• Location of facilities
• Plant layouts and material handling
• Product design
• Process design
• Production and planning control
• Quality control
• Materials management
• Maintenance management.
current priorities in operations management:-
Operations strategy:-
Benefits:-
• An operations strategy is a plan that
defines how a company’s operations •Improved Efficiency
will support its overall business
goals. •Cost Reduction
• It focuses on optimizing
• Processes, •Competitive Advantage
• Resources, and •Customer Satisfaction
• Capabilities
to achieve Efficiency, Quality, and •Scalability and Growth
Customer Satisfaction.
Operations strategy:-
• An operational strategy is a detailed roadmap that outlines
how the organization will optimize its processes and
people to enhance
• Product/Service Delivery,
• Maximize Profits, and
• Achieve LONG-TERM business goals.
It is a part of the overall business strategy.
• Primary purpose : To identify and rectify inefficiencies in
order to improve day-to-day operations.
• It involves optimizing every facet of a product lifecycle, from
the procurement of raw materials to the final logistics
involved with delivering the product/service to the end user.
Components of Operational Strategy:-
• Workforce Management
• Process Management
• Quality Management
• Supply Chain Management
• Equipment & Tools
Types of Operational Strategy:-
• Cost Leadership Strategy
The cost leadership strategy is an operational model that
focuses on reducing the cost of production and offering
products/services at the lowest price point. This strategy
involves optimizing production processes, leveraging
economies of scale, and reducing overhead costs.
A budget airline that offers tickets at a lower cost by
trimming down complimentary services demonstrates a
perfect cost leadership strategy in action.
Types of Operational Strategy:-
• Quality Improvement Strategy
The quality improvement strategy focuses on enhancing
product/service quality to achieve operational excellence and
higher customer satisfaction. It involves identifying
inefficiencies and making continuous improvements in
functional and operational areas.
Healthcare facilities introducing new protocols to reduce
medical errors and hospital-acquired infections for improved
patient safety is a real-life quality improvement strategy
example.
Types of Operational Strategy:-
• Flexibility Strategy
The flexibility strategy focuses on improving an
organization’s ability to adapt quickly to dynamically
changing market conditions, customer preferences, and other
environmental factors.
An example of this strategy would be clothing retailers
that swiftly adjust their inventory based on seasonal trends and
customer demand.
Types of Operational Strategy:-
• Speed or Time-Based Strategy
The speed or time-based strategy focuses on accelerating
the entire product lifecycle to expedite the time it takes to
deliver the final outcome to the end user. This strategy enables
companies to cut down on waste and unnecessary movements
using lean principles.
For instance, fast food chains can optimize their
logistics to ensure quick order processing and delivery,
thereby enhancing customer service and loyalty.
Types of Operational Strategy:-
• Innovation Strategy
The innovation strategy is a structured roadmap that
allows companies to develop new products and services that
deliver more value to their customers. Successful innovation
requires businesses to invest significantly in R&D to
understand customer points and gaps in the market to design
breakthrough products and services.
For example, smartphone companies routinely upgrade
their devices with new features to boost sales, attract new
audiences, and beat the competition.
Types of Operational Strategy:-
• Capacity Strategy
The capacity strategy focuses on ensuring that a company
can efficiently meet current and future demand while avoiding
inventory excess or shortage. This involves planning and
managing production capacity, scaling operations, and
investing in requisite infrastructure.
Manufacturing firms continuously adjust their production
to efficiently manage customer demand and minimize delays or
wastage.
Types of Operational Strategy:-
• Outsourcing Strategy
The outsourcing strategy involves delegating specific
operational or functional processes to third-party vendors to
reduce labor costs. It allows businesses to focus on their core
competencies and improve operational efficiency. To outsource
work, companies need to identify reliable partners, negotiate
contract terms for permanent and contingent workers.
For example, IT companies regularly outsource customer
service operations to low-cost locations to reduce expenses
and ensure high-quality technical assistance.
Importance of Operational Strategy:-
• A solid operational strategy is the bedrock of a successful
business.
• It helps businesses improve operational efficiency by
reducing process waste and maximizing the utilization of
resources such as
• People,
• Finance,
• Equipment,
• Infrastructure, and Digital assets.
Subsequently, it enables companies to control costs and
enhance profit margins.
Importance of Operational Strategy:-
• With efficient operations, businesses are able to function
with shorter turnaround times and accelerated service
delivery.
• This combination of efficiency, quality, and value-driven
pricing elevates customer satisfaction and retention.
• All these factors cumulatively translate to better revenue
generation and profitability.
• Besides, a well-rounded operational strategy provides a
structured approach to innovate and improve the entire
product lifecycle.
Examples of Strategic Fit in Operations:-
•Supply Chain Management:
A company that prioritizes speed and flexibility in its supply
chain to meet fast-changing customer demands.
•Manufacturing:
A manufacturing company that invests in automation and
lean manufacturing practices to achieve cost leadership.
•Service Operations:
A service company that focuses on personalized customer
service and quick response times to build customer loyalty.
Strategic Fit:-
• Strategic fit means that the way an organization operates (its
processes, resources, and capabilities) directly supports and
reinforces its chosen business strategy.
• In operations management, strategic fit refers to the
alignment between an organization's operational
capabilities and its overall business strategy, ensuring that
operations support the achievement of strategic goals.
• Strategic fit is the degree to which your strategy, structure,
culture, and resources are aligned with your external
environment.
Strategic Fit:-
Achieving Strategic Fit:-
•Understand Customer Needs:
-Conduct thorough market research
Assess Internal Capabilities:
-strengths and weaknesses
•Develop a Clear Strategy:
Define a clear and concise operations strategy that aligns
with the overall business strategy.
•Align Operations:
-Best Strategies
•Continuous Improvement:
-Regularly review and refine
World Class Manufacturing :-
• World Class Manufacturing (WCM) is a management
philosophy and organizational strategy focused on achieving
the highest levels of quality, cost-effectiveness, and timely
delivery in manufacturing, aiming for industry leadership.
• Core principles:
• Continuous Improvement
• Eliminating Waste
• Focus on Quality
• Cost Optimization
• Timely Delivery
WCM Key Pillars:-
WCM Key Pillars:-
•Safety: Ensuring a safe working environment for all
employees.
•Cost Deployment: Optimizing resource allocation and
reducing costs.
•Focus Improvement: Continuously seeking ways to improve
processes and outcomes.
•Autonomous Maintenance: Empowering operators to
perform basic maintenance tasks.
•Workplace Organization: Maintaining a clean, organized,
and efficient workplace.
WCM Key Pillars:-
•Professional Maintenance: Ensuring that equipment is
maintained by qualified professionals.
•Quality Control: Implementing robust quality control
measures to ensure product quality.
•Logistics: Optimizing the flow of materials and products.
•People Development: providing training and development
opportunities
•Environment: WCM recognizes the importance of
environmental sustainability and encourages organizations to
implement environmentally responsible practices in their
production processes.