UNIT: 1- Introduction to Production & Operation Management

SYLLABUS
1. Introduction Operations Management: Meaning,
Definition
2. Scope and Functions.
3. Difference between Production and Operations
Management.
4. Management Guru’s and their Contribution.
5. The Roles and Functions of Operations Manager.
6. Industry 4.0; Productions and Operations
Management in Indian Context.
 Definition Operations Management
• “Operations Management” is the process in which
resources/inputs are converted into more useful
products.

• Operation management involves planning,

organizing, coordinating, and controlling all the
resources needed to produce a company’s goods
and services, it involves managing people,
equipment, technology, information, and all the
other resources needed in the production of goods
and services.
OBJECTIVES OF OPERATIONS MANAGEMENT

1. To attain maximum output with lowest cost.

2. To control pollution and wastage.
3. To ensure optimum capacity and resources
utilization.
4. To ensure quality of products.
5. To suggest changes in machinery and
equipment.
6. To ensure timely delivery of output.
7. To maintain inventory.
SCOPE OF OPERATIONS MANAGEMENT

1. Product selection and design

2. Process selection and planning
3. Location facilities
4. Layout and material handling facilities
5. Quality control
6. Inventory management
7. Capacity planning
Product selection and design:

Product design considers the product

size, weight, color etc. So it is very
important to select right product
keeping over all objectives in mind.
 Process selection and planning:

Selection of process involves taking decisions about

technology, machines and equipment.

Process design is a macroscopic decision-making of

an overall process route for converting the raw
material into finished goods.
 Location facilities
• The operation management helps to select
that particular location where distribution,
production cost and location cost is less.
Location of facilities for operations is a long-
term capacity decision which involves a long
term commitment about the geographically
static factors that affect a business
organization.
 Quality control:

• It is a staff function concerned with the

prevention of defects in manufacturing so
that, items may be made right way and ensure
the quality standard.
• Inventory management:
• It is the process of maintaining proper records of raw
materials semi finished goods and finished goods.

• Capacity planning:
• Capacity refers to a level of output of the conversion
process over a period of time. Industry creates challenging
problems in capacity planning, requiring in the long run,
expansion and contraction of major facilitates in the
conversion process. Some tools helps in capacity planning
are marginal costing, linear programming etc.
 Layout and material handling facilities:

Layout means positioning of machinery. The

machine should be so arranged that the flow of
production remains smooth.

There should be a proper choice of material

handling equipments. It is the configuration of
departments, work centers and equipment in
the conversion process.
 PRODUCTION MANAGEMENT. OPERATIONS MANAGEMENT
Production management is about managing Operation management is about the
activities related to production only management of overall business operations
which includes production and post-production
stages

Related to the aspects of production. Related to the regular business activities.

Production management objective is to provide In contrast, the objective of operations

the best quality product at minimal cost and on management is to ensure the best use of
time. company resources.
wherein the operations manager looks after the
In production management, the manager has to make product design, quality, quantity, process design,
decisions regarding the design, quality, quantity and location, manpower required, storing, maintenance,
cost of the product manufactured by the department. logistics, inventory management, waste management,
etc.

Unlike, one can find operations management in

Production Management can only be found in
every organization, i.e. manufacturing concerns,
the firms where production of goods is
service-oriented firms, banks, hospitals,
undertaken.
agencies, etc.
 MANAGEMENT GURU’S AND THEIR CONTRIBUTION.
GEORGE ELTON MAYO
 Elton Mayo is known as the founder of the Human Relations
Movement.
 The research he conducted under the Hawthorne Studies of the
1930s showed the importance of groups in affecting the
behavior of individuals at work.
 Mayo found that workers acted according to sentiments and
emotion. He felt that if you treated the worker with respect and
tried to meet their needs than they would be a better worker for
you and both management and the employee would benefit.
 If management would treat the employees with respect and give
them the attention at the work place that they needed, then the
workers would be more willing to work harder for the employer.
 Physical conditions or financial incentives had little motivational
value. He concluded that people’s work performance is
dependent on both social issues and job content.
 Peter Drucker
• Management by objectives (MBO), also known as management by
planning (MBP), was first popularized by Peter Drucker in his 1954
book The Practice of Management.
• Management By Objectives (MBO) is an performance
management approach in which a balance is sought between the
objectives of employees and the objectives of an organization
• MBO refers to the process of setting goals for the employees so
that they know what they are supposed to do at the workplace.

MBO Strategy has 3 basic parts:

• Objectives: Employees and their managers mutually set and agree
on the objectives. These individuals strive to reach those goals
during a normal operating period
• Performance reviews: Managers regularly conduct reviews to
determine how employees are to meeting their goals
• Rewards: Employees receive rewards based on how close they
reached their goals
 Michael E. Porter

Porter is considered to be the father of modern strategy.

Some of Porter’s popular studies are as follows:
 Five Forces Model
 Competitive advantage and strategies
 The value chain
 The generic strategies of cost leadership, product
differentiation.
 Global strategy
• Michael Porter proposed the theory Competitive
advantage in 1990 and theory suggests that states and
businesses should pursue policies that create high-quality
goods to sell at high prices in the market. Porter
emphasizes productivity growth as the focus of national
strategies. Porter Diamond suggests that countries can create
new factor advantages for themselves, such as a strong
technology industry, skilled labor, and government support of a
country's economy.
 Ishikawa’s
Fishbone Diagram (Cause & Effect Diagram) –
• This tool created by Kaoru Ishikawa is known as the Fishbone Diagram
owing to its shape. It is one of the seven basic Quality Control tools.

• A fishbone diagram clusters the roadblocks together to identify which

factors have the greatest impact.

• Ishikawa diagram is commonly used in product design and prevention of

quality defects to reveal the factors causing the overall effect.

• The diagram looks just like a fish's skeleton with the problem at its head
and the causes for the problem feeding into the spine.

• The fishbone diagram or Ishikawa diagram is a cause-and-effect diagram

that helps managers to track down the reasons for defects, variations or
failures of product or imbalance of business development
 Philip Bayard Crosby

• Philip Bayard Crosby is best known for his concept of

“Zero Defects”, he believed that an efficient quality
management must be “based on prevention-based
system”, and claimed that mistakes can be happened
because of lack of knowledge and the attention of
employees in the organization.
• He highlights when the quality improvement can be
happened that the management of the firm focuses
more on prevention by the attention and awareness
of employees, reduction of the cost, the emphasis
on controls rather than the inspection efforts, and
finally “Doing them right the first time”
Douglas McGregor – Life, Career and Theory
X/Theory Y
• Douglas McGregor was an American social
psychologist best known for Theory X/Theory Y –
opposing assumptions about human behavior
behind every management decision.
• He identified an approach of creating an
environment within which employees are motivated
via authoritative, direction and control or
integration and self – control, which he called
theory X and theory Y, respectively.
 Frederick W. Taylor
• Increasing specialisation and division of labour will make a
process more efficient.
• Systematically analyze the relationship between the worker
and task and redesign processes to ensure maximum
efficiency, e.g., use a bigger shovel so more grain can be lifted
with each action.
• Have written procedures for each task and ensure they are
followed by supervision and quality control.
• Get maximum prosperity for employer and employee alike by
linking pay and other rewards directly to work output.
• Select workers with the right skills and abilities for the
specific task and thoroughly train them to follow the
procedures.
• Management and workers equally responsible for
Hamel’s Words:
• To succeed in the future, organisations are
going to have to find ways of energizing
people, so that they bring not only their skills,
expertise and diligence to work, but they bring
their passion and their initiative as well.
ROLES AND FUNCTIONS OF OPERATIONS MANAGER.
Some of the key functions of the Operations Manager are:

1. Production planning:
2. Finance
3. Operation:
4. Product Design:
5. Production control:
6. Forecast:
7. Supply Chain Structure
8. Quality Management:
9. Workflow and Staffing
10.Delivery management
11.Continuous improvement:
 Other functions are
1. Assist in developing operating and capital budgets.
2. Monitor and control expense according to allotted budget.
3. Assist in interviewing, recruiting and training candidates.
4. Manage work assignment and allocation for staff.
5. Conduct performance review and provide performance feedback to staff.
6. Maintain accurate and clear documentation for operational procedures
and activities.
7. Work in compliance with company policies and procedures.
8. Ensure team follows standard operating procedures for all operational
functions.
9. Conduct regular meetings with team to discuss about issues, concerns,
updates etc.
10.Support operational risk and audit process for the purpose of preventive
maintenance.
 Industry 4.0; Productions and Operations Management in Indian Context.

• Industry 4.0 is revolutionizing the way companies

manufacture, improve and distribute their products.
Manufacturers are integrating new technologies, including
Robotics, Internet of Things (IoT), cloud computing and
analytics, and AI and machine learning into their
production facilities and throughout their operations.

• Industry 4.0 laid the groundwork for human/machine

collaboration, as well as machine-to-machine
collaboration and connectivity between the plant,
logistics, supply chain management, and the end user.
Digital integration now promises to connect all
stakeholders under a common platform.
• These smart factories are equipped with advanced
sensors, embedded software and robotics that
collect and analyze data and allow for better decision
making.

. Although the zero-people operations will minimize the

human costs, the robots and production facilities will
always be threatened by failures and anomalies in
certain circumstances

• Industry 4.0 incorporates Smart Factory practices that

provide workers, managers and executives with
greater visibility and more flexibility and control over
their manufacturing processes.
Future Factory: How Technology Is
Transforming Manufacturing

Case study: FANUC, the

Japanese robotics
company
• Operating a “lights-out” factory since
2001, where robots build other robots
completely unsupervised for nearly a
month at a time.

• The factory is outfitted with 20

industrial robots that can pick, pack,
and transfer packages with no human
presence or oversight.

• Without robots, it would take as many

as 500 workers to fully staff this 40K
square foot warehouse — instead, the
factory requires only five technicians to
service the machines and keep them
working.
• Ultimately, it's the network of these machines
that are digitally connected with one another
and create and share information that results in
the true power of Industry 4.0.
• Ultimately, it's the network of these machines that are
digitally connected with one another and create and
share information that results in the true power of
Industry 4.0.

• It connects physical with digital, and allows for better

collaboration and access across departments, partners,
vendors, product, and people.

• Industry 4.0 empowers business owners to better

control and understand every aspect of their operation,
and allows them to leverage instant data to boost
productivity, improve processes, and drive growth.