CHAPTER 1: UNDERSTANDING OPERATIONS, material without altering

PRODUCTION AND ORGANIZATION physical attributes of the raw

MANAGEMENT material. Annealing process
(heating at high
INTRODUCTION temperatures and then
cooling), is example of
 The very essence of any business is to production by modification or
cater needs of customer by providing improvement.
services and goods, and in process o PRODUCTION BY ASSEMBLY:
create value for customers and solve  Car production and
their problems. Production and computer are example of
operations management talks about production by assembly.
applying business organization and
management concepts in creation of
goods and services.

PRODUCTION
 Production is a scientific process which
involves transformation of raw
IMPORTANCE OF PRODUCTION FUNCTION
material (input) into desired product
AND PRODUCTION MANAGEMENT
or service (output) by adding
 Successful organizations have well
economic value. Production can
defined and efficient line function and
broadly categorize into following
support function. Production comes
based on technique:
under the category of line function
o PRODUCTION THROUGH
which directly affects customer
SEPARATION:
experience and there by future of
 It involves desired output is
organization itself.
achieved through separation
 Aim of production function is to add
or extraction from raw
value to product or service which will
materials. A classic example
create a strong and long-lasting
of separation or extraction is
customer relationship or association.
Oil into various fuel products.
And this can be achieved by healthy
o PRODUCTION BY MODIFICATION OR
and productive association between
IMPROVEMENT:
Marketing and Production people.
 It involves change in
Marketing function people are frontline
chemical and mechanical
representative of the company and
parameters of the raw
 provide insights to real product needs  Products like
of customers. computer/car are utilized
 An effective planning and control on over a period of time
production parameters to achieve or whereas services need to
create value for customers is called be consumed
production management. immediately
o CLASSIFICATION OF WORK:
OPERATIONS MANAGEMENT  To produce products like
computer/car more of
As to deliver value for customers in products
capital equipment and
and services, it is essential for the company to
less labor are required
do the following:
while services require
1. Identify the customer needs and more labor and lesser
convert that into a specific product or capital equipment.
service (numbers of products required o CUSTOMER CONTACT:
for specific period of time)  There is no participation
2. Based on product requirement do of customer during
back-ward working to identify raw production whereas for
material requirements services a constant
3. Engage internal and external vendors contact with customer is
to create supply chain for raw material required.
and finished goods between vendor →
production facility → customers. Production management and operations
management both are very essential in
Operations management captures above meeting objective of an organization.
identified 3 points.
OPERATIONS: POLICY AND STRATEGY
PRODUCTION MANAGEMENT VS.
OPERATIONS MANAGEMENT INTRODUCTION
A high-level comparison which distinct  It is very important for an organization
production and operations management can to have well defined objective. A well-
be done on following characteristics: defined objective facilitates
o OUTPUT: development of strategies and policy
 Production management thereby creating value for customers.
deals with manufacturing
of products like OPERATION STRATEGY
(computer, car, etc.) while  Operational strategy is essential to
operations management achieve operational goals set by
cover both products and organization in alignment with overall
services. objective of the company. Operational
strategy is design to achieve business
effectiveness or competitive
o USAGE OF OUTPUT: advantage.
  The final step is to convert
Operational strategy is planning process operations and production
which aligns the following: strategies into day-to-day
activities like production
schedule, product design,
quality management etc.

As organizations are always customer-

In this global competitive age organization
centric, production and operation strategy for
goal tend to change from time to time
organization are built around them
therefore operations strategy as a
consequence has also be dynamic in nature. PRODUCTIVITY
A regular SWOT analysis ensures that the  Measurement of formulated
organization is able to maintain competitive operations and production strategy is
advantage and business leadership. important to maintain alignment with
the organization objectives. In simple
STRATEGIC MANAGEMENT PROCESS FOR
terms productivity is defined as sum of
PRODUCTION AND OPERATION
total output per employee or per day.
 For success of organizational strategic
Productivity of company is dependent
objective, strategic planning has to
on industry and environmental
trickle down to various function areas
conditions in which it is operating.
of the business. In order to build
 Two essential parts of productivity are
strategic management processes a
labor and capital. In scenario of
sequential process as below is
limited resources, optimum and
followed
efficient utilization of labor and capital
o COMPETITION ANALYSIS:
will generate favorable productivity.
 In this step company
Productivity measurement also
evaluates and studies current
enables company to identify areas
competition in the market
which require improvement or special
and practices that are
focus. Also, productivity provides ready
followed in the industry for
report card to measure status against
operations and production
company’s production objective.
vis-à-vis company policies
 Productivity measurement can be
o GOAL SETTING:
classified in three categories based on
 Next step involves narrowing
the inputs used for calculation. Partial
down the objective towards
productivity ration of output is
which the organization wants
compared to one of resource used for
to move towards.
example, labor productivity where
o STRATEGY FORMULATION:
output is compared to the labor wages.
 The next step is breaking
 Total productivity measure takes into
down of organizational goals
consideration sum of all input factors
into operations and
which are used for the output.
production strategies.
 In the modern age technology plays an
o IMPLEMENTATION:
important part in productivity.
WASTIVITY INTEGRATION OF TECHNOLOGY WITH
 Another important factor is the case of PRODUCTION SYSTEM
production is wastivity. Not 100% of  Technology drives efficiency in
input would be converted to output, organization and increases’
there is going to waste during productivity of the organization.
production. Wastivity is reciprocal of However, bringing technology in the
productivity. Classic examples of production system is highly complex
wastivity are defective products and process, and it needs to following
services which either have to be re- steps:
cycle or disposed of completely. Other o TECHNOLOGY ACQUISITION:
example is idle capacity of material,  Technology acquired
man-power equipment etc. should align with overall
objectives of the
MANAGING TECHNOLOGY IN OPERATIONS organization and should
MANAGEMENT be approved after
elaborate cost-benefit
INTRODUCTION analysis.
 In last decade or so technology has o TECHNOLOGY INTEGRATION:
changed the way organization  Technology affects all
conduct their business. Advent of aspects of production i.e.
technology in operation management capital, labor and
has increased productivity of the customer. Therefore, a
organization. solid technology
integration plan is
TECHNOLOGY AND OPERATIONS required.
MANAGEMENT o TECHNOLOGY VERIFICATION:
 The scope of Technology and  Once technology
operation management has evolved integrated, it is important
over a period of time and has moved to check whether
from development of products into technology is delivering
design, management and operational effectiveness
improvement of operating system and is been used to its
and processes. fullest.
 Usage of technology in operation
management has ensured that TECHNOLOGY IN MANUFACTURING AND
organizations are able to reduce the DESIGN
cost, improve the delivery process,  Technology is getting extensively used
standardize and improve quality and in customization of design products
focus on customization, thereby and services. The usage of computers
creating value for customers. and supporting electronic systems is
integral part of modern industrial and
services industry. Current techniques
 can be broadly classified into following manufacturing, marketing, human
categories: resource and finance through a
o COMPUTER-AIDED DESIGN (CAD): common software platform. The main
 CAD facilitates linking of two benefits of the ERP solution are that it
more complex components not only reduces database errors but
of design at very high level of also delivers value to customer
accuracy thus delivering through faster delivery and order
higher productivity. fulfillment.
o COMPUTER-AIDED AUTOMATION IN PRODUCTION AND
MANUFACTURING SYSTEM (CAM): OPERATIONS
 Precision is very essential in  Automation reduces manual
operating any machines and intervention in the manufacturing
therefore, Computerized process. It increases productivity and
Numerically Controlled reduces margin of error thereby
machines are used, thus facilitating economies of scale. There is
ensuring highest level of this-advantages of automation also,
accuracy. such as unemployment, high
o STANDARD FOR THE EXCHANGE OF breakdown cost and initial capital
PRODUCT DATA: investment. Therefore, automation
 As the name suggests may not be suitable in all situations
product design is and in the end alignment with an
transmitted among CAM and overall organization objective is
CAM in three dimensions. important.
Standard for The Exchange of CHALLENGES
Product Data process  Technology can be facilitating factor in
sharing of product across all bringing about change in operations
phases of product life cycle and production management. But it
and serves as neutral file may not be feasible to use technology
exchange. in all aspects with challenge coming
through high initial cost of investment,
SOFTWARE SYSTEMS IN MANUFACTURING high cost of maintenance and
 There are various software systems mismanagement.
available to integrated operations and
manufacturing functions with other VALUE ANALYSIS: AND APPLIED CONCEPT
business functions of organization. FOR MANUFACTURING AND SERVICE
Some of the common software INDUSTRY
systems are Enterprise Resource
Planning (ERP), Supply-Chain INTRODUCTION
Management (SCM), New-Product  All organizations strive to create value
Development (NPD) and Customer for their customers. This value creates
Relationship Management (CRM). mind space for product and services.
 Enterprises Resources Planning (ERP) Value analysis, therefore, is a scientific
links all business functions like method to increase this value.
  Value is a perception hence every o DEFINE PRODUCT AND FUNCTION:
customer will have their own  The next step is to define all the
perceptions on how they define value. primary function of the product
However, over-all at the highest level, and service through satisfying
value is quality, performance, style, the basic need and then taking
design relative to product cost. next step in delighting the
Increasing value necessarily does not customer. For this better
mean decrease in all-inclusive cost of understanding of product
production but providing something components and characteristics
extra for which a premium can be is required.
charged. o EVALUATION OF ALTERNATIVES:
 Through brainstorming possible
The objective and benefits of value analysis alternatives can short listed
can be summarized as below: which can provide value to the
primary function of the product.
 Value analysis aims to simplify
Cost evaluation at high level
products and process. There by
needs to be done for all the
increasing efficiency in managing
alternatives, and the cheapest
projects, resolve problems, encourage
alternative is short listed.
innovation and improve
o SECONDARY FUNCTION EVALUATION:
communication across organization.
 Secondary functions of the
 Value analysis enables people to
product and services are
contribute in the value addition
studied and evaluated.
process by continuous focus on
o RECOMMENDATION:
product design and services.
 Value Analysis done has to
 Value analysis provides a structure
communicate to the various
through cost saving initiatives, risk
level of the management team
reduction and continuous
as to get acceptance.
improvement.
VALUE ANALYSIS TEAM
ACTIVITIES FOR VALUE ANALYSIS  The process of value analysis is carried
 Activities for value analysis are out by value analysis team. So, it
separated into following activities: becomes paramount that team
o PRODUCT/SERVICE: selection for value analysis also follows
 The 1st step is to identify the a structured process. Value analysis
product or service which is team consists of trained and qualified
based on usage/demand, team members who have background
complexity in development and knowledge about the project.
and future potential. Team leader is selected by the project
o COST ANALYSIS: manager. Team size for value analysis
 The next step understands in is 5 to 8.
detail cost structure in
developing and
manufacturing the product.
VALUE ANALYSIS PROCESS ability of a nation to compete with
 Value analysis process can be divided other countries and on the nation’s
into three phases of mainly pre- economy. The ideal situation for a
analysis, analysis and post analysis. business organization is to achieve
Pre-analysis contains activities of an economic match of supply and
project selection and team selection.
demand. Excessive supply or
Analysis phase as the name suggests
capacity is wasteful and costly;
consists of activities like investigation,
having too little means lost
speculation, evaluation, development
opportunity and possible customer
and presentation of the report. Post
analysis consists of activities’ dissatisfaction. The key functions on
implementation of the report and the supply side are operations and
regular audit. supply chains and sales and
marketing on the demand side. While
FUNCTIONAL ANALYSIS PART OF VALUE the operations function is responsible
ANALYSIS for producing products and/or
 Function analysis is required to delivering services, it needs support
transform the project elements from and input from other areas of the
design of product towards function of
organization.
product. The main categories are
Basic, Secondary, Required Secondary Business organizations have three (3) basic
Aesthetic, Unwanted, Higher Order and functional areas, which are the following:
Assumed.
 FINANCE – It is responsible for securing
OPERATIONS MANAGEMENT AND THE financial resources at favorable prices,
ORGANIZATION allocating those resources throughout
IMPORTANCE OF OPERATIONS
the organization, budgeting, analyzing
MANAGEMENT
investment proposals, and providing
 Operations is the part of a business
funds for operations.
organization that is responsible for
 MARKETING – The business function
producing goods and/or services.
responsible for assessing consumers’
Goods are physical items that include
wants and needs, and selling and
raw materials, parts, sub-assemblies
promoting the organization’s goods or
such as motherboards that go into
services.
computers, and final products such
 OPERATIONS – This is responsible for
as cell phones and automobiles.
producing the goods or providing the
Services are activities that provide
services offered by the organization.
some combination of time, location,
It doesn’t matter whether the business is a
form, or psychological value.
retail store, hospital, manufacturing firm, or
 The operations function in business
other business types; all business
can also be viewed as the collective organizations have these three (3) basic
success or failure of companies’ functions.
operations functions that impact the
Operations Management is the distribution, delivery, and customer service.
management of systems or processes that
The essence of the operations function is to
create and/or provide services (Stevenson,
add value during the transformation
2021). It is chiefly concerned with planning,
process. Value-added is the term used to
organizing, and servicing. As such, it is
describe the difference between the cost of
delivery- focused, ensuring that an
inputs and the value or price of outputs.
organization successfully turns inputs to
outputs in an efficient manner. The inputs  In nonprofit organizations, outputs
themselves could represent anything from (such as highway construction,
materials, equipment, and technology to police and fire protection) are their
human resources such as staff or workers value to society. Thus, the greater
(Dhoul, 2021). the value-added, the greater the
effectiveness of these operations.
To maximize revenues, the business should
 In for-profit organizations, the value
stock fast-moving items that customers are
of outputs is measured by the prices
willing and happy to pay for. The business
that customers are willing to pay for
should also negotiate friendly credit terms
with suppliers to get the required products those goods or services. Firms use
on credit to prevent stock-outs (the the money generated by value-
situation where an item is out of stock). added for research and
development, investment in new
Operations and supply chains are facilities and equipment, worker
intrinsically linked, and no business salaries, and profits. Consequently,
organization could exist without both. A the greater the value-added, the
supply chain is the sequence of greater the amount of funds
organizations involved in producing and available for these purposes.
delivering a product or service.
Many factors affect the design and

management of operations systems.

Figure 1. Simple product supply chain Among these factors are the degree of

The sequence begins with basic suppliers of involvement of customers in the process

raw materials and extends all the way to the and the degree to which technology is

final customer. Facilities might include used to produce and/or deliver a product

warehouses, factories, processing centers, or service.

offices, distribution centers, and retail 1. The greater the degree of customer
outlets. Functions and activities include involvement, the more challenging it
forecasting, purchasing, inventory can be to design and manage the
management, information management, operation.
quality assurance, scheduling, production,
 2. Technology choices can significantly Operations management rightly
impact productivity, costs, flexibility, ensures this coupled with a quality
quality, and customer satisfaction. product. Customers make an
organization thrive, and they must be
treated well in every way necessary and
possible.
4. REDUCED OPERATING COST
 Through productivity, quality products,
and customer satisfaction, the cost
incurred on product servicing is
maximally reduced. It simultaneously
leads to increased revenue. Only
operations management can make
Figure 2. The operations function
this possible. Waste reduction, or the
The operations function starts with the
practice of preventing waste by
input or the resources mobilized, then decreasing or eliminating the amount
proceeds to the transformation or of materials initially used (Clinton
conversion process (where the input is County, n.d.), is an efficient activity in
converted into output) and produces the reducing operating costs. The exact
output or the product or service. The number/size of products is produced
output is then marketed to or experienced as requested via proper operations
by the customers (Morato, 2016). management.
KEY BENEFITS OF EFFECTIVE OPERATIONS
MANAGEMENT CAREER OPPORTUNITIES AND PROFESSIONAL
SOCIETIES
1. PRODUCT QUALITY  There are many career opportunities in
 Operations management sees that the the operations management and
quality of products or goods will suit supply chain fields. Among the
customers’ standards on and after numerous job titles are the following:
delivery. When a product is of quality, it o Operations Manager
gives you an edge compared to your o Production Analyst
competitors. o Production Manager
2. PRODUCTIVITY o Inventory Manager
 It is defined as the ratio of input to o Purchasing Manager
output and is the only way to verify o Schedule Coordinator
employees’ input. Operations o Distribution manager
management ensures appropriate o Supply chain manager
staffing of employees to resources to o Quality Analyst
get maximum results. o Quality Manager
3. CUSTOMER SATISFACTION Other titles include:
 One of the best feelings for a manager o Office Manager
or retailer is achieving the utmost o Store Manager
satisfaction from their customers. o Service Manager
People who work in the operations field employees, deciding where to locate
should have a skill set that includes people facilities, and more.
and knowledge skills. People skills are the  Illustration: An airline company’s
ability to communicate and deal with people system consists of airplanes, airport
effectively, especially in business. These facilities, and maintenance facilities,
sometimes spread out over a wide
include political awareness, mentoring
territory. The activities include the
ability and collaboration, negotiation, and
following:
communication skills. Meanwhile,
o Forecasting weather and landing
knowledge skills are necessary for
conditions, seat demand for flights,
credibility and sound decision-making. and the growth in air travel.
These include product and/or service o Capacity planning to maintain
knowledge, process knowledge, industry, cash flow and make a reasonable
global knowledge, financial and accounting profit. (Too few or too many planes,
skills, and project management skills. or even the right number of planes
but in the wrong places, will hurt
profits.
o Locating facilities is according to
managers’ decisions on which
cities to provide service for, locate
maintenance facilities, and locate
major and minor hubs.
o Facilities and layout in achieving
effective use of workers and
equipment.
Table 1. Sample operations management job
o Scheduling of planes for flights and
descriptions
routine maintenance; scheduling of
pilots, flight attendants, ground
SCOPE OF OPERATIONS MANAGEMENT crews, counter staff, and baggage
 Operations management people are handlers.
involved in product and service design, o Managing inventories such as
process selection, selection and foods and beverages, first-aid
management of technology, design of equipment, in-flight magazines,
work systems, location planning, pillows and blankets, and life
facilities planning, and quality preservers.
improvement of the organization’s o Assuring quality where the
products or services. emphasis is on safety. It is
 The operations function includes many important in dealing with
interrelated activities, such as customers at ticket counters,
forecasting, capacity planning, check-in, telephone and electronic
scheduling, managing inventories, reservations, and curb service,
assuring quality, motivating emphasizing efficiency and
courtesy.
 o Motivating and training employees Moreover, interconnected systems
in all phases of operation. increase intrusion risks in the form of
industrial espionage or the illegal and
KEY ISSUES FOR TODAY’S BUSINESS
unethical theft of business trade
OPERATIONS
secrets for use by a competitor to
Several issues are considered high priorities
achieve a competitive advantage
of many business organizations. Primary
(Kenton, 2020).
issues involve the following (Stevenson,
o Competing In A Global Economy. Low
2021):Economic Conditions. Trade disputes
labor costs in third-world countries
and tariffs have created uncertainties for
have increased pressure to reduce
decision-makers.
labor costs. Companies must carefully
o Innovation. Finding new or improved
weigh their options, including
products or services are only two (2) of
outsourcing some or all of their
the many possibilities that can provide
operations to low-wage areas,
value to an organization. Innovations
reducing costs internally, changing
can be made in processes that reduce
designs, and improving productivity.
costs, increase productivity, expand
markets, or improve customer service. KEY TRENDS IN OPERATIONS MANAGEMENT
o Quality Problems. The numerous IN A POST COVID WORLD (ZAMOLO, 2021)
operations failures related to product  Times are changing more quickly than
design and testing, oversight of individuals can adapt. Operations
managers are expected to be flexible
suppliers, risk assessment, and timely
and predict some of the emerging
response to potential issues emphasize
trends to help the operations of the
the need to improve the way operations
organization.
are managed.
 Business operations managers, in
o Risk Management. The need for particular, will be leaned upon more
managing risk is underscored by recent than ever to see companies through
events that include financial crises, their recovery and help them run more
product recalls, accidents, global health efficiently through the aftermath of
crises, natural and man-made COVID-19.
disasters, and economic ups and  Here are five (5) key trends every
downs. Managing risks starts with operations manager should know for
identifying risks, assessing vulnerability the post-pandemic period:
and potential damage (liability costs, 1. Information Everywhere
reputation, demand), and taking steps  A greater reliance on mobile devices
to reduce or share risks. will be an integral part of an
o Cybersecurity. The need to guard organization’s IT infrastructure.
against intrusions from hackers whose Companies should prepare for the
maximization of all the information
goal is to steal the personal information
generated from these devices.
of employees and customers is
Businesses are also encouraged to
becoming increasingly necessary.
 invest in an information accessibility additional valuable information that
program (programs or applications might be within the interest of the
that allow companies to disseminate organization. The platform should
information to every user ‘on an equal provide easy access, be highly user-
basis with others’) with a superior user- friendly, and offer security in a single,
experience design. For instance, STI intuitive interface.
Education Services, Inc. has websites 2. Company-Wide
where employees and students can Communication/Mobilization
easily access important information,  Communications will prove more
and these websites can be easily crucial than ever for companies after
accessed using mobile phones. the pandemic. Hierarchical structures
 Data and experience show that or organizations that consist of several
digitally enabling the front line departments will give way to “flatter”
workforce is an impact investment that models or the organization structures
can optimize productivity, increase with few middle management levels,
safety, and reduce costs in the current or in some cases, no middle
uncertain climate. With access to real- management at all. These flatter
time information, digital empowerment organizational structures will facilitate
adds to a front liner's capacity to the flow of information without
leverage data-driven decision-making continuing dated models that only
and eliminate barriers between served the upper management while
employees and managers (Howell, isolating whole departments to take
2021). For example, suppose the staff in part in critical decision-making when
operations can access the information these departments represent 80% of
about the number of customers who the global workforce. Moreover, flat
ordered a specific product or availed a organizational structures make the
particular service. In that case, they front liners feel involved and hold
might help assess what products important conversations in operations
should have more stock in a store or (Nouri, 2019). Good operational
how many more staff the team will communication is the core driver of
need to deliver important services. efficiency and productivity in any
 Furthermore, this will help employees organization. It technically connects
better utilize the time and the strategic alignment to real-world
organization’s money by providing a problem-solving to deliver quality
single point of contact for all their results. Good communication
communications and tools. For improves efficiency and productivity
instance, the Microsoft Teams and impacts how employees perceive
application is used by several the organization, which, likewise,
companies for managers and improves satisfaction and workforce
employees as a communication tool retention.
to update progress in sales and other
3. Safety First
outputs, equip everyone with the
 As companies work through and
company's current situation, and
recover from the impact of COVID-19,
 maintaining the health and safety of increasingly tied to global
both employees and the public will be performance objectives
a top priority for operations managers. encompassing product quality and
It will be necessary for operations delivery time to customer service.
managers to look for new ways to  Going forward, operations managers
reduce health incidents and workplace will work closely with customer service
accidents. This means companies will departments to better understand
need to understand new regulations their end-users. Relationship
around safety and compliance. It will management is more important in
be up to operations leaders to running a successful business than
implement swift changes to internal ever, so it’s no surprise that operations
processes and procedures to remain managers will find new ways to
compliant. optimize the process. Strengthening
4. Demand in Hand customer relationships will be critical
 The global health crisis caused rapid as the world begins the long and
shifts in consumer behavior, which has steady road to recovery from the
led to huge issues for the supply chain. impact of the pandemic. Thus, being
Many retail physical stores made digital customer centrist is now everyone’s
pivots and strengthened their online job — including operations managers.
presence. With this kind of velocity in
the changing consumer demand, CHAPTER 2: INTERNATIONAL PRODUCTION
operations managers will continue to AND OPERATIONS MANAGEMENT (IPOM):
hone and develop demand-responsive PRODUCT AND SERVICE DESIGN
supply chains.
 Operations managers must find ways INTRODUCTION
to be prepared for anything. An agile,  International production and
highly responsive supply chain can operations management deals with
help ensure that production levels can production of goods and services in
steadily meet demand without creating international locations and markets. It
excess inventory. Maintaining a healthy involves management process which
balance between inventory and meet has to take into consideration local
market demands will be a tricky dance production market (labor and capital)
that operations managers will have to and international customer
master quickly. requirements.
5. Customers Are Always Right NATURE OF IPOM
 Operations managers must  The foundation for international
understand the factors that influence production and operations is no
buying decisions and optimize the different to domestic production and
business accordingly. The role of an operations management. But there are
operations manager and the entire certain aspects which make
operational management team is international exposure a challenge for
evolving beyond simply acting as an an organization. The very 1st difference
agent of cost control. Operations are is international business environment
 where not just economics but also variation in quality
international quality standards have to standards whereas IPOM
be maintained. The 2nd aspect is the has to consider different
international stint makes the company international markets with
more aware of its surroundings thus different quality standard
making it more competitive. requirements
o Pricing:
As IPOM is dynamic in nature, organization  Pricing for Domestic POM
has to design it strategic objectives which may not be a challenge
cover following points: as competition would
o Meeting international quality also operate in the same
standards environment. IPOM has to
o Forecasting demand and consider the customer
production design paying capacity which
o Profitability may vary from developed
o Minimum production cost country to developing
o Adaptation to modern available country.
technology o Technology:
DOMESTIC POM AND IPOM  In domestic environment
 Organization has to clearly identify innovation and usage of
challenges it is likely to face in an technology is much more
international environment. Those comparable among
challenges can be categorized as competition. For IPOM
follows: owing to different quality
o Culture: and pricing requirements
 Domestic POM has to investment in technology
content with becomes important.
homogenous culture o Economies of Scale:
where as IPOM has to  Domestic POM has to deal
content with multi-culture with limited local market,
multi-ethnicity scenario. hence limiting scope of
o Business Environment: economies of scale
 Domestic POM has to whereas IPOM has to
consider local economy access to larger market
and social factors thus providing a change
whereas IPOM has to deal of achieving larger
with economic and social economies of scale.
factors across geography o Market Segmentation:
and countries.  Domestic POM is around
o Quality Standards: local market where as
 Domestic POM has to look IPOM has to developed
at single local market and diversified market.
therefore not much o Usage of resources:
  Domestic POM has to deal has to be finalized as not
with in-flexibility of to hurt production.
moving around of
resources within one EFFECTIVE PRODUCT DESIGN
location while IPOM has
advantage of moving INTRODUCTION
around of resources from  Organization success is dependent on
high-cost market to customer satisfaction and delight.
lowcost market. Customer satisfaction is achieved
through development of product and
IPOM STRATEGIES service, which have all attributes
 Organization needs to consider the required by the customer. A success
following point while developing IPOM product or services do not only have
strategies: attractive package design but should
o Production/Factory Location: be also able to provide robust
 The choice of location for performance.
the production facility  Thus, product design must be practical
depends on its proximity enough for production and powerful
near to the market and enough to provide a competitive
cost of production (labor) advantage.
in that particular
environment. PRODUCT DESIGN
o Factory Design, Layout And  A good product design has following
Quality Standards: common features:
 Organization need to o UTILITY:
standardize design and  The product design
layout across their should make product
production location as to utility as per expectation
minimize production of customers and provide
planning process, provide steady performance
flexibility in sharing through the product life.
technical knowledge and o AESTHETICS:
manpower.  Product aesthetics is
o External Vendor and important in success of
Procurement: the product. The product
 Organization needs to aesthetics is dependent
finalize the vendors to on market and end
provide raw material as customer.
well important o PRODUCIBLE:
components required to  Product design should
complete the final enable effective
product. Also, production of product
procurement schedule
 through available  Idea is converted into a
production methods. feasible solution to satisfy
o PROFITABILITY: the customer expectation,
 Product design should using available resource
make economic sense as and technology.
to deliver value to 3. Third Stage:
customer and  This is the last stage in
sustainability to the which the product is
organization. introduced in the market.
o DIFFERENTIABLE:
 A good product design FACTORS AFFECTING PRODUCT DESIGN
should enable product to  A successful product design is
be differentiate among its combination factors as follows:
competition. This can be o Correct Team Selection:
achieved by attractive  This is very essential to
packaging and also by get the correct team in
providing additional place which has expert
service on the product. designers who are not
only aware and
OBJECTIVES OF PRODUCT DESIGN comfortable with
 The essence of product design is to technology but also
satisfy customer and maximizes the understanding of
value for the customer at minimum customer expectation.
cost. The product or service should o Customer Involvement:
also be able to meet primary needs  Involvement of customer
and desire of the customer. This may in product design and
not require development of new testing can provide
product, but enhancement to existing insight into the direction
product or service. of the project
o Prototyping and Testing:
STAGES OF PRODUCT DESIGN  Product design is high risk
 Product design is a creative process concept as it involves
which looks at all the available options commitment of capital
and beyond. The process is can be and man-power;
divided into three stages: therefore, it is imperative
1. First Stage: that extensive
 His stage involves prototyping and testing
brainstorming, bringing are done with customer
ideas and analysis of and market.
customer and market o Raw Material:
feedback.  It is essential that raw
2. Second Stage: material to be used in the
production meets the
 quality standards of the  A product, for example, has attractive
end product. Furthermore, packaging to provide the right
procurement system aesthetics plus has function and
needs to be in place to features, which provide value to
ensure continuous, customers. Process design ensures
costeffective supply. that there is smooth and continuous
o Production Method And Process relationship between required output
Layout: and all the intermediate process.
 Feasibility of production  For example, manufacturing of Air-
method and process Conditioners, process design has to be
layout determines future such that maximum supply is
success of the product. achieved during the hot months of
o External Factors: summer when demand of the product
 Environmental and is at the highest. So, people, process
government regulations and machines need to align to give
play an important part in continuous production throughout the
product design. And year as to satisfy seasonal demand.
these norms are updated
from time to time, so PROCESS PLANNING
product design should Process development for process design can
have the flexibility to be summarized through following steps:
adapt. 1. Process Requirement:
 The very 1st step is to collect and
PRODUCT SELECTION gather information to give
 Production selection process is done structure with the end objective.
through a combination of financial That is to make process
analysis, risk analysis, existing product requirement document
portfolio, raw material supply and pre- highlighting various stages, risk
determined product criteria. and stakeholders for production.
This will include assessment of
PROCESS DESIGN AND ANALYSIS available technology, raw
material requirement,
INTRODUCTION factory/plant layout and
 The objective of organization is to demand forecast.
provide service and product, which 2. Team Building:
satisfy customer and create value for  Once the process requirements
them. A product and service designed are finalized, for each objective,
is based on the customer feedback a team is finalized based on skill
and requirement of the market. level and experience. Function of
Process design is where the product is the team is to get familiarize
broken down into parts, which further with the whole process
can be helpful in the actual 3. Planning and Implementation:
manufacturing process.
  Process planning team will broad view of the whole organization
develop module; policies and and should not have a myopic outlook.
procedure require for And the process should deliver
production, which are after customer value with constant
required approval internal as involvement of the management at
well as external is implemented. various stages.
4. Audit:  In order to achieve a good process
 A regular audit is carried out to design, effective process strategy is
ensure that process thus required, which deals with a singular-
implemented is in line and line-items required to manufacture the
delivering value to customers. end product. Effective process strategy
5. End of Life: deals with raw material procurement,
 Over a course of time there may customer participation, technology
be enhancement of the product investment, etc.
or product may get  Over a period of time process design
discontinued in these has undergone change and new
circumstances, process thus concepts like Flexible Manufacturing
develop is discontinued. Systems have been developed, which
delivers efficient and effective
PRODUCTION PROCESS production design and analysis
 Based on the nature of product and
service production or conversion INTEGRATED PRODUCT AND PROCESS
process can be divided into two broad DEVELOPMENT – MEANING, ADVANTAGES
categories, continuous production AND KEY FACTORS
(assembly line, oil refinery) and
intermittent production (job work, INTRODUCTION
service).  Objective of any organization is to
 Production process for both provide customer satisfaction by
manufacturing industry and service building product and services, which
industry can be classified into broad not only satisfy needs and want but
categories based on standardization also create value for them.
of product or service. It can range from  This requires product design based on
single project assignment like a the customer feedback and
building or bridge (manufacturing) to production process which not only
interior design (service) and mass minimizes cost but also provides a
production project like a car competitive advantage. However, most
(manufacturing) to a fast-food joint organizations tend to follow
(Services). conventional production method and
PROCESS DESIGN process.
 A successful process design has to  However, in the global age of new
take into account the appropriateness technology and competition
of the process to overall organization organization have to re-invent the way
objective. Process design requires a they cater to needs of customer, focus
 on specialization and customization is  Organization stands to benefit greatly
ever increasing. Given this scenario it is from the implementation of IPPD. Some
imperative for the organization to of the advantages are as follows:
integrate technology and innovation o Using modern technologies and
within the framework of integrated implement logical steps in
product and process development. production design, the actual
production is likely to come down,
INTEGRATED PRODUCT AND PROCESS thereby reducing product delivery
DEVELOPMENT (IPPD) time.
 Integrated product and process o Through optimum usage of
development combines the product resources and using efficient
design processes along with the process, organizations are able to
process design process to create a minimize cost of production thus
new standard for producing improving profitability of the
competitive and high-quality organization.
products. o Since extensive used of CAD model
 Integration of new technologies and are employed chances are of
methods provide a completed new product or design failure are
dimension to product design process. greatly reduced thus reducing risk
This process starts with defining of the for organization.
requirements of products based on the o As the focus is solely in delivering
customer feedback while considering value to customer, quality is
the design layout and other paramount importance and
constraints. Once the finer details are achieved through technology and
finalized, they are fed into CAD models methods.
where extensive testing and modeling
are done to get the best product. KEY FACTORS FOR IPPD
 With integration of production method  There are certain factors, which can
and technology with product design, it vastly improve IPPD. These factors are
is natural for integration of product as follows:
design and process design. Therefore, o IPPD success is greatly dependent
integrated product and process on agreement on the end objective
development can be defined as a which is the successful address to
process starting from product idea to customer requirements. All the
development of final product through stakeholders and management
modern technology and process should be aligned to the single
management practices while objective.
minimizing cost and maximizing o Since this is a scientific
efficiency. approach, its success
dependent on building up of
ADVANTAGES OF INTEGRATED PRODUCT AND plan, implementation of plan
PROCESS DEVELOPMENT (IPPD) and constant review of the
implemented plan.
 o With implementation of success of the manufacturing
modern methods and unit is the location.
technology comes usage of
modern tools and systems. Facility location determination is a business-
This tools, and systems need critical strategic decision. There are several
to be integrated within the factors, which determine the location of
organization framework. facility among them competition, cost and
o Skilled manpower is another corresponding associated effects. Facility
essential; therefore, location is a scientific process utilizing various
organization need to make techniques.
investment in human capital.
Customer is the focal point of IPPD. Therefore, Location Selection Factors
constant feedback from them is essential for  For a company which operates in a
IPPD to be a success. global environment; cost, available
infrastructure, labor skill, government
Therefore, IPPD is approach design to address policies and environment are very
all the concern of modern organization in the important factors. A right location
globalized world. provides adequate access to
customers, skilled labors,
FACILITY LOCATION – FACTORS INFLUENCING transportation, etc. A right location
THE LOCATION ensures success of the organization in
 Facility Location is the right location for current global competitive
the manufacturing facility, it will have environment.
sufficient access to the customers, Industrialization
workers, transportation, etc. For  A geographic area becomes a focal
commercial success, and competitive point for various facility locations
advantage following are the critical based on many factors, parameters
factors: and issues. These factors are can be
o Overall objective of an divided into primary factors and
organization is to satisfy and secondary factors. A primary factor
delight customers with its which leads to industrialization of a
product and services. Therefore, particular area for particular
for an organization it becomes manufacturing of products is material,
important to have strategy labor and presence of similar
formulated around its manufacturing facilities. Secondary
manufacturing unit. A factors are available of credit finance,
manufacturing unit is the place communication, infrastructure and
where all inputs such as raw insurance.
material, equipment, skilled Errors in Location Selection
labors, etc. come together and  Facility location is critical for business
manufacture products for continuity and success of the
customers. One of the most organization. So, it is important to
critical factors determining the avoid mistakes while making selection
 for a location. Errors in selection can be  Presence of other similar
divided into two broad categories manufacturing units
behavioral and non-behavioral. around makes business
Behavioral errors are decision made by area conducive for facility
executives of the company where establishment.
personal factors are considered before o Availability of Skill Labor:
success of location, for example,  Education, experience
movement of 8 personal and skill of available labor
establishment from hometown to new are another important,
location facility. Non-behavioral errors which determines facility
include lack of proper investigative location.
practice and analysis, ignoring critical o Free Trade Zone/Agreement:
factors and characteristics of the  Free-trade zones
industry. promote the
Location Strategy establishment of
 The goal of an organization is manufacturing facility by
customer delight for that it needs providing incentives in
access to the customers at minimum custom duties and levies.
possible cost. This is achieved by On another hand free
developing location strategy. Location trade agreement is
strategy helps the company in among countries
determining product offering, market, providing an incentive to
demand forecast in different markets, establish business, in
best location to access customers and particular, country.
best manufacturing and service o Suppliers:
location.  Continuous and quality
supply of the raw
FACTORS INFLUENCING FACILITY LOCATION materials is another
 If the organization can configure the critical factor in
right location for the manufacturing determining the location
facility, it will have sufficient access to of manufacturing facility.
the customers, workers, transportation, o Environmental Policy:
etc. For commercial success, and  In current globalized
competitive advantage following are world pollution, control is
the critical factors: very important, therefore
o Customer Proximity: understanding of
 Facility locations are environmental policy for
selected closer to the the facility location is
customer as to reduce another critical factor.
transportation cost and
decrease time in FACILITY LAYOUT – OBJECTIVES, DESIGN
reaching the customer. AND FACTORS AFFECTING THE LAYOUT
o Business Area:
 INTRODUCTION o To reduce movement of
 For an organization to have an workers, raw material and
effective and efficient manufacturing equipment
unit, it is important that special o To promote safety of plant as
attention is given to facility layout. well as its workers
Facility layout is an arrangement of o To facilitate extension or
different aspects of manufacturing in change in the layout to
an appropriate manner as to achieve accommodate new product
desired production results. Facility line or technology
layout considers available space, final upgradation
product, safety of users and facility o To increase production
and convenience of operations. capacity of the organization
 An effective facility layout ensures that An organization can achieve the above-
there is a smooth and steady flow of mentioned objective by ensuring the
production material, equipment and following:
manpower at minimum cost. Facility o Better training of the workers and
layout looks at physical allocation of supervisors.
space for 9 economic activity in the o Creating awareness about of health
plant. Therefore, main objective of the hazard and safety standards
facility layout planning is to design o Optimum utilization of workforce and
effective workflow as to make equipment
equipment and workers more o Encouraging empowerment and
productive. reducing administrative and other
indirect work
FACILITY LAYOUT OBJECTIVE
 A model facility layout should be able FACTORS AFFECTING FACILITY LAYOUT
to provide an ideal relationship Facility layout designing and implementation
between raw material, equipment, is influenced by various factors. These factors
manpower and final product at vary from industry to industry but influence
minimal cost under safe and facility layout. These factors are as follows:
comfortable environment. An efficient o The design of the facility layout should
and effective facility layout can cover consider overall objectives set by the
following objectives: organization.
o To provide optimum space to o Optimum space needs to be allocated
organize equipment and for process and technology.
facilitate movement of goods o A proper safety measure as to avoid
and to create safe and mishaps.
comfortable work o Overall management policies and
environment. future direction of the organization
o To promote order in
production towards a single DESIGN OF FACILITY LAYOUT
objective Principles which drive design of the facility
layout need to take into the consideration
objective of facility layout, factors influencing o Cellular Technology Layout
facility layout and constraints of facility o Combined Layout, and
layout. These principles are as follows: o Computerized Relative Allocation of
o Flexibility: Facility Technique
 Facility layout should provide
flexibility for expansion or CHAPTER 3: HUMAN RESOURCE AND JOB
modification. DESIGN
o Space Utilization: HUMAN RESOURCE STRATEGY FOR
 Optimum space utilization COMPETITIVE ADVANTAGE
reduces the time in material  Good human resource strategies are
and people movement and expensive, difficult to achieve, and
promotes safety. hard to sustain. Many companies have
o Capital: demonstrated that sustainable
 Capital investment should be competitive advantage can be built
minimal when finalizing different through a human resource strategy.
models of facility layout.  The objective of a human resource
strategy is to manage labor and
DESIGN LAYOUT TECHNIQUES design jobs, so people are effectively
There are three techniques of design layout, and efficiently utilized. Focusing on a
and they are as follows: human resource strategy, it should be
1. Two or Three-Dimensional ensured that people:
Templates: 1. Are efficiently utilized within
 This technique utilizes the constraints of other
development of a scaled-down operations management
model based on approved decisions; and
drawings. 2. Have a reasonable quality of
2. Sequence Analysis: work-life in an atmosphere of
 This technique utilizes computer mutual commitment and trust.
technology in designing the
facility layout by sequencing out Quality of work life means a reasonably safe
all activities and then arranging workplace, equitable pay, and the
them in circular or in a straight achievement of physical and psychological
line. requirements.
3. Line Balancing: Mutual commitment means that both
 This kind of technique is used for management and employee strive to meet
assembly line. common objectives.
Mutual trust is reflected in reasonable,
TYPES OF FACILITY LAYOUT documented employment policies that are
There are six types of facility layout, and they honestly and equitably implemented to both
are as follows: management and employee satisfaction.
o Line Layout
o Functional Layout When management has genuine respect for
o Fixed Position Layout its employees and their contributions to the
firm, establishing a reasonable quality of accept unstable employment. This policy
work-life and mutual trust is not particularly tends to treat labor as a variable cost.
difficult. 2. Hold employment constant: Holding
employment levels constant maintains a
CONSTRAINTS ON HUMAN RESOURCE trained workforce and keeps hiring, layoff,
STRATEGY and unemployment costs to a minimum.
However, with employment held constant,
employees may not be utilized fully when
the demand is low, and the firm may not
have the human resources it needs when
the demand is high. This policy tends to
treat labor as a fixed cost.

These policies are only two (2) of many

that can be efficient and provide a
Figure 1 suggests that many decisions made
reasonable quality of work life. Firms must
about people are constrained by other
determine policies about employment
decisions such as:
stability.
1. The product mix may determine seasonality
and stability of employment.
B. Work Schedules
2. Technology, equipment, and processes
 The standard work schedule in the
may have implications for safety and job
Philippines is still five (5) 8-hour days.
content.
Although, many variations exist.
3. The location decision may have an impact
1. Flextime: This allows employees,
on the ambient environment in which the
within limits, to determine their own
employees work.
schedules. This policy might allow an
4. Layout decisions, such as assembly line
employee to be at work at 8:00 a.m.
versus work cell, influence job content.
plus or minus two (2) hours with proper
notification; thus, allows more
DECISION AREAS OF HUMAN RESOURCE
autonomy and independence.
STRATEGY
2. Flexible workweek: This plan often
There are three (3) distinct decision areas of
calls for fewer but longer days, such as
human resource strategy.
four 10-hour days, or 12-hour shifts.
I. Labor Planning
Working 12-hour shifts usually mean
 Labor planning is the act of
working three (3) days one (1) week
determining staffing policies that deal
and four (4) days next; this is called
with the following:
compressed workweeks.
A. Employment-Stability Policies
3. Part-time status. This option means
1. Follow demand exactly: Following
shorter rather than lower days. This is
demand exactly keeps direct labor costs
particularly attractive to service
tied to production but incurs other costs.
industries, where staffing for peak
These other costs include hiring and layoff
loads is necessary. Fast food
costs, unemployment insurance, and
restaurants often hire part-time
premium wages to entice personnel to
 workers. Also, many firms reduce labor  It is the division of labor into
costs by reducing fringe benefits for unique or "special" tasks. This
parttime employees. component can be
The problem from the operations accomplished in several ways:
management perspective is that much  1. Development of
production work requires full staffing efficient dexterity and faster
operations. Moreover, some industries find learning by the employee
that their process strategies severely because of repetition
constrain their human resource scheduling  2. Less loss of time
operations. For example, a machine that because the employee
needs three (3) people cannot run at all if would not be changing
only two (2) show up or having a waiter show jobs or tools
up to serve lunch at 1:30 p.m. rather than 11:30  3. Development of
a.m. won't bring much help either. Another specialized tools and the
example is paper manufacturing; it requires reduction of investment
around-theclock staffing because each employee
exceptformaintenance and repair shutdown. has only a few tools
C. Job Classifications and Work Rules needed for a particular
 Many organizations have strict task
job classifications and work B. Job Expansion
rules that specify who can do  Moving from labor specialization
the tasks, schedule, and under toward more varied job design
what conditions they can do it, may improve the quality of work
often due to union pressure. life. Jobs can be modified
These job classifications and through the following:
work rules restrict employee  1. Job enlargement is the
flexibility on the job, which grouping of a variety of
reduces the flexibility of the tasks about the same skill
operations function. However, level; horizontal
part of an operations manager's enlargement.
task is to manage the  2. Job rotation is a system
unexpected. Therefore, the more in which an employee is
flexible a firm is in staffing and moved from one (1)
establishing work schedules, the specialized job to
more efficient and responsive it another.
can be.  3. Job enrichment gives
II. Job Design an employee more
Job design is an approach that specifies the responsibility that
tasks that constitute a job for an individual or includes some of the
a group. There are five (5) components of job planning and control
design: necessary for job
A. Labor (Job) Specialization accomplishment; vertical
expansion. A popular
 extension of job empowerment, ensure core job
enrichment is employee characteristics, and satisfy
empowerment, which many of the psychological
enlarges employee jobs needs of individual team
so that the added members.
responsibility and E. Motivation and Incentive Systems
authority are moved to  Incentive systems based on
the lowest level possible. individual or group productivity
C. Psychological Components of Job are used throughout the world in
Design various applications to
 These components focus on contribute to job 6 satisfaction
how to design jobs that meet and motivation. Production
some minimum psychological incentives often require
requirements. employees or crews to produce
 1. Skill variety. This requires at or above a predetermined
the worker to use a standard. The standard can be
variety of skills and based on a "standard time" per
talents task or number of pieces made.
 2. Job identity. This allows Both systems typically
the worker to perceive the guarantee the employee at
job as a whole and least a base rate. Incentives
recognize a start and a need not be monetary as they
finish can be in the form of awards,
 3. Job significance. This recognition, and other kinds of
provides a sense that the preferences such as a preferred
job has an impact on the work schedule.
organization and society. III. Labor Standards
 4. Autonomy. This offers Labor standards are the amount of time
freedom, independence, required to perform a job or part of a job, and
and discretion. they exist, formally or informally, for all jobs.
 5. Feedback. This provides Effective manpower planning is dependent
clear and timely on a knowledge of the labor required.
information about Effective operations management requires
performance. meaningful standards that help a firm
D. Self-Directed Teams determine the following:
 Self-directed teams represent a 1. Labor content of items produced (the labor
group of individuals working cost)
together to achieve a common 2. Staffing needs (how many people it will
goal. These teams may be take to meet required production)
organized for long- or short- 3. Cost and time estimates prior to
term objectives. Teams are production (to assist in a variety of decisions,
effective primarily because they from cost estimates to make-or-buy
can easily provide employee decisions)
4. Crew size and work balance (who does make the job easier or
what in a group activity or on an assembly impossible. In addition, through
line) the use of computer modeling,
5. Exceed production (so that both manager analyzing human motions and
and worker know what constitutes a fair day's efforts is possible.
work)
6. Basis of wage-incentive plans (what MAJOR ISSUES IN ERGONOMICS AND WORK
provides a reasonable incentive) ENVIRONMENT
7. Efficiency of employees and supervision (a 1. Operator Input to Machine. Operations
standard is necessary against which to managers need to ensure that operators
determine efficiency) have the strength, reflexes, perception, and
mental capacity to provide the necessary
Properly set labor standards represent the control. For instance, problems such as
amount of time that it should take an carpal tunnel syndrome may result when a
average employee to perform specific job tool as simple as a keyboard is poorly
activities under normal working conditions. designed.
Labor standards are set in four (4) ways: 2. Feedback to Operators. This is provided by
1. Historical Experience. Thisis based on the sight, sound, and feel; it should not be left to
number of labor hours required in doing a chance. Accurate feedback is necessary to
task the last time it was performed. avoid mishaps in the operations. For example,
2. Time Studies. This involves timing a sample America's worst nuclear experience was
of a worker's performance and using it to set largely due to poor feedback to the operators
a standard. about reactor performance.
3. Predetermined Time Standards. This is a 3. The Work Environment. This is the physical
division of manual work into small basic environment in which employees work affects
elements that have established and widely their performance, safety, and quality of work
accepted times. life. Illumination, noise and vibration,
4. Work Sampling. This is an estimate, via temperature, humidity, and air quality are
sampling, of the percentage of a worker's work environment factors under the control of
time on various tasks. the organization and the operations
manager. The manager must approach them
ERGONOMICS AND THE WORK ENVIRONMENT as controllable.
Ergonomics is the study of the human
interface with the environment and FOUR (4) MOST COMMON TOOLS OF
machines. Understanding ergonomic issues METHODS ANALYSIS
help to improve human performance. 1. Flow Diagrams. These are schematics
 Adults come in limited (drawings) used to investigate the
configurations and abilities; movement of people or material.
therefore, the design of tools 2. Process chart. This is a graphic
and the workplace depends on representation that depicts a sequence of
the study of people to determine steps for a process.
what they can and cannot do. 3. Activity chart
The design of the workplace can 4. Operation Chart