MANAGEMENT OF BUSINESS UNIT II MODULE 1 PRODUCTION AND OPERATIONS MANAGEMENT SEPTEMBER 13 2011

MS. KING

Operations Management
Used to be known as production management Switch in name has taken place to allow all business whether in primary, secondary or tertiary production to be analysed when considering the management of operations

WHAT IS OPERATIONS MANAGEMENT

Operations Management is concerned with the use of resources land, labour and capital
To provide goods and services that will satisfy the demand identified by the market research department

DEFINITION
Operations management is concerned with the use of resources land, labour and capital to provide goods and services that will satisfy the demands identified by the market research department. (Stimpson and Singh, 2007)

PRODUCTIONS/OPERATIONS MANAGEMENT
PROCESS
Combines and transforms various resources used in the production/operations subsystems of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore it is that part of an organisation which is concerned with the transformation of a range of inputs into required (products/services) having the requisite quality level

DEFINITION
According to Kumar and Surish, Production/Operations management is defined as the process, which combines and transforms various resources/services in a controlled manner as per the policies of the organisation. It is that part of an organisation, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level.

PRODUCTION AND OPERATIONS MANAGEMENT

Production Management
The set of interrelated management activities, which are involved in manufacturing certain products

Operations Management
If the same concept is extended to services management, then the corresponding set of management activities in offering certain service

HISTORICAL EVOLUTION OF P&O M

O & P M recognized as important factor in a countrys economic growth Adam Smith 18th century
Recognised the economic benefits of specialization of laour Recommended breaking of jobs into subtasks and recognises workers to specialised tasks in which they would become highly skilled and efficient

SCIENTIFIC MANAGEMENT
F. W. TAYLOR
Implemented Smiths theories Developed scientific management Managers developed techniques that focused on economic efficiency in manufacturing Workers studied to eliminate wasteful efforts and achieve greater efficiency

Historical summary of Operations Mgmt Date Contribution Contributor

1776 Specialization of labour in manufacturing 1799 Interchangeable parts, cost accounting 1832 Division of labour by skill; assignment of jobs by skill; basics of time study 1900 Scientific management time study and work study developed; dividing planning and doing of work 1900 Motion of study of jobs 1901 Scheduling techniques for employees, machines jobs in manufacturing 1915 Economic lot sizes for inventory control 1927 Human relations; the Hawthorne studies 1931 Statistical inference applied to product quality: quality control charts 1935 Statistical sampling applied to quality control: inspection sampling plans 1940 Operations research applications in World War II . Adam Smith Eli Whitney &others Charles Babbage Frederick W. Taylor Frank B. Gilbreth Henry L. Gantt F.W. Harris Elton Mayo

W.A. Shewart
H.F. Dodge & H.G. Roming P.M. Blacker and others.

Historical summary of Operations Mgmt Contd Contributor Date Contribution

1946 Digital computer 1947 Linear programming 1950 Mathematical programming, on-linear and stochastic processes 1951 Commercial digital computer: large-scale computations available. 1960 Organizational behaviour: continued study of people at work 1970 Integrating operations into overall strategy and policy, Computer applications to manufacturing, Scheduling and control, Material requirement planning (MRP) 1980 Quality and productivity applications from Japan: robotics, CAD-CAM John Mauchlly and J.P. Eckert G.B. Dantzig, Williams & others A. Charnes, W.W. Cooper & others

Sperry Univac
L. Cummings, L. Porter W. Skinner J. Orlicky and G. Wright W.E. Deming and J. Juran.

WHAT SHOULD OP MANAGER BE CONCERNED ABOUT

EFFICIENCY
Keeping costs as low as possible will help to give competitive advantage

QUALITY
The good or service must be suitable for the purpose intended

FLEXIBILITY
The need to adopt to new methods of working ad new products in increasingly important in todays world

OPERATIONS MANAGERS
Essentially OP Managers are aiming to produce goods and services of the required quality, in the required quantity, at the time needed, in the most cost effective way

PRODUCTION PROCESS
All stages of production in the production process is the same in ALL businesses Inputs converted or transformed into Outputs

DECIDING WHAT TO PRODUCE

Key Issue in the success of any business Two diverse approaches
Market Orientation
Knowing what the market wants and producing products to meet
Consumer needs that have been identified

Product Orientation
Producing what the business is good at

MARKET ORIENTATION AND PRODUCTION ORIENTATION

MARKET ORIENTED / LED
Firm focuses on consumer needs and wants Devotes production marketing resources to satisfying them Requires market research and market analysis to indicate present and future consumer demand Consumer put first Produce what consumers want rather than selling them a product they may not want to buy

MARKET ORIENTATION
Advantages in fast-changing, volatile consumer markets Increasing consumer awareness of competitors products, prices and image can result in significant fluctuations in popularity of goods and services

BENEFITS OF MARKET ORIENTATION

Newly developed products failing in the market are reduced
but not eliminated, if effective market research has been undertaken first

Appropriate products are likely to survive longer if these products meet consumer needs
Higher profits than those being sold following another approach

Constant feedback from customers market research never really ends

Product and how it is marketed adapted to changing tastes before it is too later and competitors get there first

PRODUCT-ORIENTATION
Product is developed Find a market for it

WHY DOES PRODUCT-ORIENTED CONCEPT EXISTS STILL

Invent believing
Consumers will find and purchase them
Development of the iPod
Driven more by technological innovation rather than by consumer needs Still a belief that that an innovative product once of good quality it will be purchased

Production-oriented businesses concentrate their efforts on efficiently producing high-quality goods

If the product is of high enough quality it will be purchased by consumers valuing this feature above market fashion or fad-type goods
Bottled water plants Making of crash helmets

RESPONDING TO EVERY PASSING CONSUMER TREND

May over-stretch its resources and end up not doing anything particularly well Offering choice and range so that every consumer need is met can be expensive

ASSET-LED MARKETING
The in-between market and product orientation
Based on market research Does not attempt to satisfy all consumers in all markets Firm will only consider its own qualities to make those products that use and take advantage of
strengths in terms of people Assets and image E.g. Levi Strauss restricts its product to clothing BMW does not enter the commercial vehicle or motor caravan markets

HOME WORK
CAPE Management of Business Unit II Stimpson & Singh
Chapter 1 Major decisions in production and factors involved in production
Pages 1 7 (end at value for money)