UNIT 2

INTRODUCTION TO OPERATIONS
Product Design
• Product design is a crucial aspect of operations management as it directly impacts
the efficiency, cost, quality, and overall success of a product throughout its
lifecycle. Effective product design aligns with the organization's strategic
objectives and considers various factors such as customer needs, manufacturing
capabilities, and market trends.

• E.g., Cupholder
key points related to product design in operations
management:
1. Customer Requirements
 Understand and prioritize customer needs and preferences.

•Gather feedback through market research, surveys, and customer

interactions.

•Translate customer requirements into specific design features and

functionalities.
2.Cross-Functional Collaboration:

•Encourage collaboration between various departments, including

marketing, engineering, production, and supply chain, to ensure a
holistic approach to product design.

•Involve key stakeholders from different functions to gather diverse

perspectives.
Life Cycle Costing:

•Consider the entire product life cycle, including design, production,

distribution, use, and disposal.

•Evaluate the cost implications at each stage to optimize overall costs

and maximize profitability.
Design for Manufacturing (DFM):

•Design products with ease of manufacturing in mind to reduce

production costs.

•Minimize the number of components, use standard materials, and

simplify assembly processes.
Design for Quality (DFQ):

•Implement features that enhance product quality and reliability.

•Consider factors such as durability, maintenance requirements, and

failure analysis during the design phase.
Design for Sustainability:

•Incorporate environmentally friendly practices and materials (recycled

metal, wood) in product design.

•Minimize waste, promote recycling, and consider the environmental

impact of the entire product life cycle.
Technology Integration:

•Stay abreast of emerging technologies and integrate them into the

product design where applicable.

•Leverage technology to enhance functionality, performance, and user

experience.
Risk Management:

•Identify potential risks associated with the product design and develop
mitigation strategies.

•Consider factors such as changes in technology, market demand, and

regulatory requirements.
Regulatory Compliance:

•Ensure that the product design complies with relevant industry

standards and regulations.

•Address safety, environmental, and other compliance requirements

during the design phase.
Supply Chain Considerations:

•Assess the impact of product design on the supply chain, including sourcing
of materials and components. (Manufacturability, materials, packaging,
transportation and logistics)

•Optimize the supply chain for efficiency and cost-effectiveness.

In summary, effective product design in operations management involves a

comprehensive approach that takes into account customer needs,
collaboration across functions, cost considerations, quality, sustainability,
and risk management. A well-designed product can contribute significantly
to the success and competitiveness of an organization in the marketplace.
What is Service in Operations Management?
• a business whose work involves doing something for customers but not producing
goods; the work that such a service does.
• Traditional economics draws a clear distinction between goods and services.
Goods are tangible and consumable — pens, sunglasses, or shoes.
• Services are instantaneous exchanges that are intangible and do not result in
ownership—medical treatment, the postal service, or public transportation.
• Service operations management is a critical function in any service industry. It
involves planning, coordinating, and controlling the resources and processes
required to meet customer demand. Service operations managers must
continually strive for excellence and efficiency to deliver quality service and
remain competitive.
• As customer demands change, they must adapt as well. To achieve these goals,
service operations managers must implement continuous improvement initiatives.
It may involve streamlining processes, improving communication and
collaboration, and implementing new technologies.

• By carefully managing service operations, businesses can ensure they provide the
best possible experience for their customers.
Difference Between Service Operations and Operations
Management
• The main difference between service operations and operations management is
that service operations are concerned with customer service delivery. In contrast,
operations management is concerned with designing and controlling production
processes. Both fields are essential to the success of businesses, but they have
different focus areas.
• Service operations management is more customer-centric, while operations
management focuses on production efficiency. Both fields use various tools and
techniques to improve quality and efficiency. Still, service operations management
is more concerned with customer satisfaction, while operations management is
more concerned with maximizing production.
What is service design in operations management?

• Service design in operations management refers to the process of creating and

improving services to meet the needs of customers or users effectively and
efficiently. It involves designing the service experience, including the physical
environment, processes, interactions, and systems, to deliver value and
satisfaction to customers.
• Imagine a restaurant where there are a range of employees: hosts, servers,
busboys, and chefs. Service design focuses on how the restaurant operates and
delivers the food it promises—from sourcing and receiving ingredients, to on-
boarding new chefs, to server-chef communication regarding a diner’s allergies.
Each moving part plays a role in the food that arrives on the diner’s plate, even
though it is not directly part of their experience.
Key points

1. Understanding customer needs: Service design starts with understanding the

needs, preferences, and expectations of customers.
For example, a restaurant might conduct surveys or analyze customer feedback to
identify what types of food, ambiance, and service customers prefer.

2. Designing service processes: Service processes should be designed to deliver the

desired customer experience efficiently.
For instance, a bank might streamline its loan application process by implementing
online forms and automated approval systems to reduce wait times for customers.
3. Creating a seamless customer journey: Service design aims to create a
seamless and pleasant customer journey from start to finish. This could involve
designing user-friendly interfaces for digital services or ensuring that staff are well-
trained to provide excellent customer service.
For example, an e-commerce platform might optimize its website layout and
navigation to make it easy for customers to find and purchase products.

4. Incorporating physical and digital elements: Service design often involves

integrating physical and digital elements to enhance the overall experience.
For instance, a retail store might offer both in-person shopping and online ordering
options, allowing customers to choose the most convenient way to shop.
5. Prototyping and testing: Service design often involves prototyping and testing
different ideas and solutions to identify what works best for customers.
For example, a hotel might create mock-ups of new room layouts or service
offerings and gather feedback from guests before implementing them.

6. Continuous improvement: Service design is an iterative process that involves

continuously monitoring and improving services based on feedback and changing
customer needs.
For example, a transportation company might regularly review its routes and
schedules to optimize efficiency and customer satisfaction.
 Legal, ethical and environmental issues
Legal issues:
It is a question or problem that is answered or resolved by the law. Example: Law
and your rights, Immigration, Wills, probate and power of attorney.
Ethical issues:
An ethical issue is a circumstance in which a moral conflict arises in the workplace;
thus, it is a situation in which a moral standard is being challenged. Ethical issues in
the workplace occur when a moral dilemma emerges and must be resolved within a
corporation.
E.g., Conflict of interest, confidentiality, data privacy.
Environmental issues:
Environmental issues are defined as harmful effects to Earth and its natural systems
due to the actions of humans. Although climate change can also occur from natural
causes, human behavior has led to an increase in greenhouse emission.
Legal Issues: Example: Product Liability

• Legal requirements related to the safety and quality of products can present
challenges for operations managers. Failure to comply with product safety
standards can lead to lawsuits, fines, and damage to the company's reputation.

• For instance, a toy manufacturing company faces legal issues if their products
contain harmful substances or have design flaws that cause injuries to children.
• Ethical Issues: Example: Labor Practices

• Ethical considerations in labor practices involve fair treatment of employees,

ensuring workplace safety, and respecting human rights.
• An example is a clothing manufacturer outsourcing production to factories in
developing countries where labor laws are lax, leading to exploitative working
conditions, low wages, and child labor.
• Environmental Issues: Example: Pollution and Waste Management

• Operations management must address environmental concerns such as pollution,

resource depletion, and waste management to minimize the company's ecological
footprint.

• For instance, a manufacturing plant emitting harmful pollutants into the air or
water bodies without proper mitigation measures can face legal penalties and
damage to its reputation.
Addressing these issues requires proactive measures by operations managers:

• Legal Compliance: Implementing quality control measures, conducting regular

audits, and staying updated with relevant regulations to ensure compliance.

• Ethical Practices: Establishing codes of conduct, conducting ethical training for

employees, and engaging in transparent supply chain practices.

• Environmental Sustainability: Implementing eco-friendly technologies,

optimizing resource usage, adopting renewable energy sources, and reducing
waste through recycling and reuse initiatives.
Quality Function Deployment (QFD)
• Quality Function Deployment (QFD) is a structured approach used in operations
management and product development to translate customer needs and
preferences into specific technical requirements and process plans.

• The goal of QFD is to ensure that the product or service meets or exceeds
customer expectations.
• Identify Customer Needs (Voice of the Customer): The first step in QFD is to
gather information about customer needs, preferences, and expectations. This
information can be collected through surveys, focus groups*, interviews, or by
analyzing market trends and customer feedback.
•Example: In the automotive industry, customers may express a need for fuel
efficiency, safety features, comfort, reliability, and aesthetics in a new car.

*a group of people assembled to participate in a discussion about a product before it is launched,

•Create the House of Quality (HOQ): The House of Quality is a matrix used to
organize and prioritize customer needs and translate them into technical
requirements and design features. It typically consists of rows representing
customer requirements and columns representing technical features or product
characteristics.

•Example: In the automotive industry, the HOQ might include customer

requirements such as fuel efficiency, safety ratings, comfort features, reliability,
and aesthetics, and corresponding technical features such as engine efficiency,
airbag systems, suspension design, quality control processes, and exterior design
elements.
•Evaluate Relationships and Prioritize: Once the House of Quality is constructed,
relationships between customer requirements and technical features are assessed
using various methods such as correlation matrices or pairwise comparisons.
Prioritization is then done to identify which technical features are most critical for
meeting customer needs.

•Example: Through analysis ( doing a careful analysis of the problem.), it may be

determined that improving fuel efficiency has the highest priority, followed by
enhancing safety features and comfort.
•Develop Deployment (Action) Plan: Based on the prioritized technical features,
an action plan is developed to implement these features into the product or service.
This involves cross-functional collaboration among different departments such as
engineering, marketing, production, and quality assurance.

•Example: In the automotive industry, the action plan might involve redesigning the
engine for better fuel efficiency, integrating advanced safety technologies like
automatic braking systems, and enhancing interior features for increased comfort.
•Continuously Improve: QFD is not a one-time process; it's iterative and requires
ongoing monitoring and improvement. Feedback from customers and performance
data are used to refine the product or service and ensure that it continues to meet
changing customer needs and market demands.

•Example: Automakers regularly release updated models with improvements in fuel

efficiency, safety features, and other attributes based on customer feedback and
advancements in technology.
What is competitiveness in operations management?

•Competitiveness in operations management refers to an organization's ability to

effectively utilize its resources to produce goods or services that meet or exceed
customer expectations while maintaining profitability in the marketplace. It
involves achieving efficiency, quality, flexibility, and innovation in operations to
gain a competitive advantage over rivals.
Some key elements of competitiveness in operations
management:

• Efficiency: Efficiency involves optimizing resources such as labor, materials, and

equipment to minimize costs and maximize output. This can include improving
processes, reducing waste, and streamlining operations to achieve higher
productivity. For example, a manufacturing company might implement lean
manufacturing techniques to eliminate unnecessary steps in production and reduce
lead times.
Quality: Quality refers to meeting or exceeding customer expectations for product
or service performance and reliability. Operations management focuses on
implementing quality control measures to ensure consistency and reliability in
production processes.

For instance, a restaurant may implement quality control checks to ensure that every
dish meets the desired taste and presentation standards.
• Flexibility: Flexibility involves the ability to respond quickly to changes in
customer demands, market conditions, or technological advancements.
Operations managers must design processes and systems that can adapt to
fluctuations in demand or unexpected disruptions in the supply chain.

• An example of this is a clothing manufacturer that can quickly adjust production

schedules and product designs in response to changing fashion trends.
• A robust supply chain stays on course, so to speak. Yes, there are impacts, but they
do not severely hamper the flow of the supply chain or supply network. Example:
having a redundant production line, just in case (back up plans).

• A flexible supply chain can accommodate disruptions by changing its course and
even the target, the flow itself (the throughput) is not impacted. Example: switching
suppliers or re-designing a product. (capacity to adjust short-term change)

• A resilient supply chain is impacted, but it is able to come back to where it was.
This may often be the case after disruptions due to natural disasters or after
loosing the only single-source supplier.

*“Resilience is the ability to withstand adversity and bounce back from difficult life
events.”
Innovation: Innovation in operations management involves continuously
improving processes, products, or services to stay ahead of competitors and meet
evolving customer needs. This can include adopting new technologies, introducing
new products, or redesigning processes to increase efficiency or quality.

For example, a car manufacturer might invest in research and development to

develop fuel-efficient engines or integrate advanced safety features into their
vehicles.
Customer Responsiveness: Customer responsiveness involves understanding and
fulfilling customer needs and preferences in a timely manner. Operations managers
must ensure that production schedules, inventory levels, and distribution channels
are aligned with customer demand to minimize lead times and provide excellent
service.

An example of this is a retail company that uses demand forecasting to anticipate

customer preferences and stock the right products in the right quantities at the right
locations.
Productivity
•Productivity in operations management refers to the efficiency with which
resources are utilized to produce goods or services. It is a measure of how
effectively inputs such as labor, capital, materials, and energy are converted
into outputs, typically measured in terms of units produced per unit of input.
Essentially, it indicates how well an organization is utilizing its resources to
generate value.

•There are various ways to measure productivity depending on the context of the
operation, such as labor productivity, capital productivity, or total factor
productivity, which considers all inputs.
1. Labor Productivity

Labor productivity measures the output generated per unit of labor input. It can
be calculated as the total output divided by the total labor hours worked.

•Example: A manufacturing company produces 1,000 units of a product in a month

with 10 employees working 8 hours per day for 20 days in a month. The total labor
hours worked would be 10 employees * 8 hours/day * 20 days = 1,600 hours.
Therefore, the labor productivity would be 1,000 units / 1,600 hours = 0.625 units
per hour.
2. Capital Productivity:

1. Capital productivity measures the output generated per unit of capital

investment. It can be calculated as the total output divided by the total capital
invested.

•Example: A company invests $1,000,000 in machinery and equipment and

produces 100,000 units of a product. The capital productivity would be 100,000
units / $1,000,000 = 0.1 units per dollar invested.
3. Total Factor Productivity (TFP):

Total factor productivity considers all inputs (labor, capital, materials, etc.) and
measures the output generated per unit of combined inputs. It reflects the overall
efficiency of the production process.

•Example: A software development company produces a complex software

application using a combination of programmers, computers, office space, and
utilities. If the company increases its software output without a proportional
increase in inputs, its total factor productivity would increase.
• A machine can produce 100 parts in an hour, which might seem productive. Upon
evaluating efficiency, management notices that 20% of them are defective.
Another machine might produce only 85 parts per hour with zero defects. The first
machine is more productive, but the second machine is more efficient.

 Efficiency = useful output / input: This emphasized the need for quality outputs,
while productivity considers both quality and defect outputs.