5 Ps in Operations Management Product
The role of Operations Management is to ensure that the product is manufactured as per the specification and the plan.
Plant
In order to make the product, plant and equipment is required; Operations Management has to consider that the plant meets specifications and is in keeping with the requirements
Process
There are many ways of producing the product and Operations Management has the responsibility to choose the best way.
Programme
The production programme ensures that the schedules of production are met.
People
Production depends on people and their skills and motivation. Operations Management has to ensure that skilled and motivated workers are available
Techniques & Procedures used in the Production/Operations Systems are as follows:
Forecasting Location and layout techniques
Product design and analysis, work study
Production Control Techniques
Aggregate Planning Master Production Schedule Material Requirement Planning Capacity Planning
Scheduling and Control
Line Balancing Line of Balance Single Machine Scheduling Flow Shop Scheduling Job Shop Scheduling
Maintenance Management
Feedback and Control Technique
Quality Control Inventory Control
Types of Production Systems
Classification of Production System Basis Classification Examples
Types of Output
Products
Consumer Goods: Furniture, T.V etc Producer Goods: Milling machines etc
Transportation, Health, Banking services, Education systems etc Construction of bridge, dam, road etc Hospital, auto repair, Machine shop, furniture Company, etc. High Volume TV factory, auto factory etc Postal, Telephone, Power corporation, Oil refinery, chemical plant
Services
Types of Flow
Projects Job Shop
Flow shop
Continuous Process
Types of Production Systems
Classification of Production System Basis Classification Examples
Types of specification Under service type
Customized
Standardized
Medical Care, Legal services
Insurance, wholesale stores
Flow Shop
Its a conversion process in which successive units of output undergo the same sequence of operations, using specialized equipments usually positioned along a production line Ex: Auto assembly, assembly of electric motors, assembly of computers keyboards etc.
Note: Extreme form of flow shop is treated as a CONTINUOUS
PROCESS (constant flow of materials) Flow Shop: Continuous flow shop: same type of output like fertilizers, cement etc Intermittent flow shop: the process is interrupted to set up to handle different specification of the same basic design
Job Shop
Units of different types of product follow different sequences through different shops. System has more flexibility System results into more set-up time more in-process inventory Complex Scheduling Varying Quality
Batch manufacturing
Produces some intermediate varieties of products with intermediate volumes Few or several products will have to share the production resources to balance their utilization Production equipment in batch manufacturing must be capable of performing a variety of tasks Range of possible operations is much narrower than a job shop
Project
It refers to the process of creating a complex one-of-a-kind product or service with a set of well defined tasks in terms of resources required and time phasing. Eg: Dam constructions Starting new industries Fabricating boilers
STRATEGIC MANAGEMENT
Complex Nature of Organization Reasons: Increased rate of Environmental, social and technology change Increased Internationalization of Business organization Increased scarcity & cost of Natural resources The process of making decisions about their future in this complex and changing environment is called STRATEGIC MANAGEMENT
Two Phases of STRATEGIC MANAGEMENT: Strategy Formulation Strategy Implementation
Strategy Formulation: It concerned with making decisions with regard to
Defining the organizations philosophy and mission
Establishing long and short range objectives to achieve the
organizations mission
Selecting the strategy to be used in achieving the organizations
objectives.
Strategy Implementation: concerned with aligning the organizational structure, systems and process with the chosen strategy
Strategies exist at different levels in an organization The hierarchy of strategies can be given as:
Mission
Objectives
Corporate strategies
Business Unit strategies
Functional strategies
Mission
Defines line of business Identifies its products and services Specifies the market (at present and for future)
Objective
Long term: specify the results desired in pursuing the organizations mission and normally extend beyond the current fiscal year Short term: objectives are performance targets, normally of less than one year duration
Corporate strategies
Established at the highest level of management and involve a long range time horizon
Business Unit strategies
It deals with the mechanism of competing in a given business. It is narrower in scope than corporate strategies
Functional Strategies
These includes the activities of the functional areas, production, finance, marketing and personnel. Note: functional strategies must support business strategies but they are mainly concerned with HOW TO type of issues.
Corporate Strategies:
Stable growth strategy
Growth Strategy
Concentration on a single product or service Vertical diversification Horizontal diversification Conglomerate diversification
Endgame strategies Retrenchment strategies
Turnaround strategy Disinvestment strategy Liquidation strategy
Combination strategies
Simulation strategy Sequential strategy
Stable Growth Strategy
The objectives, percentage increase in each years level of achievement expected, and mix of products and services offered to customers continue to be the same
Growth Strategy
Organizations will attempt to postpone or even eliminate the danger of price competition in their industry Organizations will develop new products, new markets, new processes and new uses for old products
Concentration on a single product or service
Aims to increase sales, profits or market share faster than it had in the past. Sometimes the sales turnover may not be as expected
To overcome such situations: following are the measures
Same product can be offered in new sizes, options, styles and
colours
New product can be developed in the existing product line The market can be extended into new geographic areas
Non-users can be encouraged to start buying while light users can
be encouraged to buy more frequently
Market share can be increased through proper pricing strategies,
product differentiation and advertising
Concentric diversification:
Involves adding new products or services that are similar to the organizations present products or services The products or services that are added must lie in the scope of the organizations know-how and experience in technology, product line, distribution channels or customer base
Vertical diversification
Forward integration: moves an organization into distributing its own products or services Backward integration: moves an organization into supplying some or all of the products or services used in producing its present products or services
Horizontal diversification:
organization buys one of its competitors facility or gets into his market. Can be achieved through mergers
Conglomerate diversification
Aims to add new products or services that are significantly different from the organizations present products or services
Endgame strategies
These strategies are used in an environment of declining product demand This category of strategies includes leadership strategy, niche strategy, harvest strategy and disinvestment strategy Leadership strategy: aims to achieve an above average profitability by becoming one of the few companies remaining in the industry Niche strategy: Attempts to identify a segment of the declining industry that will either maintain stable demand or decline slowly Harvest strategy: Aims to decrease investments, reduce maintenance, advertising and research in order to cut costs and improve cash flow Quick disinvestment strategy: Aims to sell off the business in the early stage rather than harvesting and selling it later.
Retrenchment strategies:
Used during economic recessions and during poor financial performance of organizations. These are short-term strategies. Can be achieved by: Change management personnel both at the top and bottom levels Cut down on capital expenditure Centralize decision-making in an attempt to control costs Reduce recruitment Reduce advertising and promotion expenditures Fire employees if required Sell off some assets Tighten inventory control Improve the collection of accounts receivable
Combination strategies:
Involves more than one strategy at the same time. This category can be divided into simultaneous and sequential strategies ex: Retrenching in certain areas or products while pursuing a growth strategy in other areas or products
