Namaskar Friends, welcome to session 3 in
our course on Operations Management. We are currently in week one of our discussion in
the course and we have 12 weeks of discussion in which every week we will have half an hour
5 sessions or 5 sessions of half an hour each. So, total the course will be for 30-hour duration
divided into 12 weeks, each week divided into 5 sessions of half an hour each. As I have
explained in the introductory part also and the last session also emphasized on this point,
within first week our focus is to understand the basic aspects of operations management.
And we are trying to figure out that what is the importance of this course for engineers?
And in the last class if you remember we have seen that what are the objectives?
So, to summarise what are the objectives? The objectives are that we must be able to
convert our resources that is; raw materials into the final product effectively and efficiently;
that means, we must be able to produce the right quality of the product in right quantity
at required time and with acceptable cost. So, there are four parameters that we can
say are the major objective that we need to meet. That is, we must be able to produce
the product of the best quality that is available. Then the quantity required, we must know that
what is the quantity required? What is the demand in the market? And accordingly we must
be able to produce that quantity. Then the time when the demand is there we must have
that product in the market; it may so, happen that we may have to face the loss of sales
because there is demand, but the product is not available.
So, we have to ensure that the product is available at the right time when the customer
has a requirement of that product or he needs that product or he wants that product; the
product should be available. And then the cost justification is also very very important
that if the product is of the reasonable cost; the customer will definitely buy it that is
the value of that product to the customer must be worth the money he is spending or
she is spending; then only he will try or he will love to buy that product.
So, basically the main objective of the course on operations management is to ensure quality,
to ensure quantity, to ensure timely delivery of the product as well as the cost effectiveness
of the product; so, these are the overall objective. So, what operations management
usually do is it converts the raw materials or the resources that can be men, material,
machine, money, equipment, infrastructure; into a final product; now the product can
be a tangible product or it can be a service. How it converts? That is a transformation
as we have seen in the previous session and we have to manage this whole system in order
to meet our objective; objectives I have already highlighted right quality, right quantity,
right time and at right cost. So, we have to run this system in such a way that all
these four important points are met. It may so, happen that we are using our resources
most efficiently and effectively, but the cost of our product is very high.
So, we are not maybe entirely meeting the objectives of operations management means;
we are not managing the things properly why? Because the cost is exorbitantly high and
as per competition our product is not doing that well; so, we have to figure out that
how to objectively meet all these four requirements of quality, quantity, time and costs so, that
the customer is more than willing to buy our product.
So, those were the major objectives of operations management that, how to manage our operations
in order to meet these requirements or objectives? That was what we have covered in the previous
session, the summary of what we have covered. Now our focus in today’s session is that
what are the functions and scope of operations management.
Now, function is that what is expected what are the deliverables, but we expect or what
are the things that operations management must exercise its control over. So, that we
are able to meet our objectives what must the operations management team do in order
to meet the objectives. So, in the overall hierarchy or in the overall
organisation of the complete operations where do the operations fit in or how do the operations
manage or how do the operations are managed in the whole process of the organisational
structure that we will try to understand today, that what are the major functions and we will
see that what is the scope, where all operations management team has a role to play and how
they are able to manage or what are the specific areas where the team or the operations team
must focus in order to deliver the objectives or in order to meet the objectives.
So, we will see today that what are the functions and where are the focus area or what is the
scope of operations of the operations management team or the scope of functioning of the operations
management team, we will try to see that there are 5p’s where of operations team must focus
in order to meet the objective. So, let us start our discussion for today
the title for today’s course is operations management, focus area is functions and scope. Now this diagram we have seen in the previous
session also if you remember there was organisational chart in which on the top of the organisation
there was the CEO. And then there were Vice Presidents 3 Vice President, Vice President
Finance, Vice President of Operations and Vice President of Marketing.
So, there I have explained that our focus area in this course is the operations. So,
we have seen that what the vice president of operations is expected to do. So, we have
seen that he is responsible he is accountable for ensuring that, whatever raw materials
are being purchased or whatever raw materials are coming into the factory your coming into
the organisations are converted, into the products or services in the most effective
and the cost efficient manner optimal utilisation of resources we can also say that whatever
resources are at his disposal. Now, resources can be in terms of man power
resources is can be in terms of the premises or the factory resources can be in terms of
the infrastructure resources can be in terms of machines, resources can be number of other,
resources maybe outsourcing resources. So, whatever are the resources available with
the operations team they have to ensure that those resources are optimally utilised that
best possible usage of those and resources is ensured. So, the operations team has to
focus on converting the raw material into the products or the services.
So, in our course also in the overall organisational hierarchy for the overall organisational structure
of any company our focus would be on managing the operation. So, although if you cannot
independently maybe managed we have to see or collaborate or coordinate or corporate
with marketing and finance department also, but the major focus would be on managing the
operations. So, the course is designed in context of operations and their management. Now, activities of operations department they
convert the available capital into physical resources convert the physical resources into
saleable goods and services. So, that is what is expected in the last session we have seen
one diagram where a production system was shown that you have a transformation stage
in which your raw materials are converted into the products or the services. Activities of operation department, so we
need to understand that what the operation department do in order to understand that
where is the scope of operations management, that what all they must control, what all
they must focus on in order to meet the objectives that we have covered in the previous session.
So, the additional activities required to fulfil the previous activities now previous
activities were very generic in nature very general in nature that you have to convert
the raw materials into the final product so very general things, but the additional how
to do that. So, we have to ensure that production of goods at the right time and sufficient
quantity to meet the demand. So, that is what operations department has
to ensure that right time goods are available goods are produced and at right quality also
production of goods at minimum cost also I have highlighted in the discussion production
of goods of acceptable quality. So, all these 4 points are again coming in to picture that
operations department operations management has to ensure that we are producing the product
of right quality, in right quantity, of right cost and at right time. So, these 4 things
I think all of us must remember as learners of this course that 4 keywords are very very
important and these keywords are quality, quantity, time and cost Q Q T C.
So, we may remember it as Q Q T C or whatever you can your frame your own method of remembering
these four words, because any question related to why you are studying operations management
or why do you study operation management, you all will be able to answer if you remember
these 4 keywords that we have to ensure the products of right quality in right quantity
within the price limit or at right cost and it right time.
So, if you remember this four words you will be very easily able to answer the basic fundamental
questions related to the subject of operations management and all this has to be ensured
by the operations management department and therefore, this lies under the functions of
operations management. Now, what are the functions of operations
management or operations personnel forecasting the demand for the products definitely we
are going to cover this in our course all of you know and we have discussed it also
in the session one or the first session of this course that what all we are going to
cover in this course. So, one thing that we are definitely going to cover is the forecasting
the demand for the products we will see that what are the qualitative methods are forecasting,
what are the quantitative methods of forecasting, within qualitative estimate survey method,
Delphi method will in quantitative we main focus on simple average, moving average, weighted
moving average, exponential smoothing, time series model for forecasting we will see what
all we can cover. But one of the important functions of operations
management is to forecast the demand and this demand is definitely going to help us in the
decision making process when we have to decide, what we have to decide, as an engineer we
leave apart the production manager, as an engineer what I need to decide I need to decide
that based on the demand, how I should procure the raw material, how I must plane my production
that is time at what time what should be done, who are the people, who are responsible for
making the product, how many people I should hier if the demand is less, who are the people
who I can do away with. So, basically once I know the demand it will
help us or help me in making number of decisions related to managing my operation. So, one
of the major functions of operations management is to forecast the demand then arranging for
the procurement of required factors of productions. So, as I have already told once you know that
this is going to be my demand back calculation can be done that when I should procure the
material what materials I should procure. So, all that can be done and is additional
function of operations management. Then arranging for the services such as maintenance
store keeping, material handling, inspection and quality control; all these are functions
of operations management. We have to ensure that we have to check the quality also because
one of the objective of operations management is to ensure the right quality of the product
that we are producing. So, we have to check that is a function of the operations management
that you have to check the quality, you have to plan for the production, we have to see
that schedules are met. So, when you have to compare the planned progress
with the actual progress; definitely you are exercising control. So, control basically
is what in hostels or in houses where we stay definitely there are some control procedures
in hostel maybe the students may not be allowed to go out after 11 o’clock. So, that is
the control on their; you can say freedom or we it is a control on their, we can say
free will to roam around wherever they feel like.
So, whenever the system feels that the things are not going as per plan a control is exercised
you check the things that for example, I have taken the similar example in the previous
session also for example, that we have to produce 100 components in 100 days.
So, maybe 1 component per day, but after 50 days suppose we have produced only 25 components
100 components; 100 days 1 component per day after 50 days we find out that we have only
produce 25 components, what does that mean? Our planning has not been successful, our
plan was to produce 1 component per day, but we have produced only 25 in 50 days, it means
we are lacking. So, when we check this that we are lacking
we have to exercise this is the process of exercising the control and then what we need
to do? We know that in the remaining 50 days we have to produce 75 components; then we
will speed up, we will rush up, we will expedite so that we are able to match up the overall
target of 100 components in 100 days. So, that is basically the process of exercise
in the control. So, in the operations management we have to
do the planning, we have to do the control, we have to do the evaluation and. So, that
our overall objectives are met that at the end of the day or on the delivery date; we
have a product of the right quality, right quantity time already I have told on the delivery
date and the cost is also reasonable or competitive. So, we have to see that we arrange the services
such as maintenance store keeping material handling inspection and quality control in
order to meet the objective. So, these are the functions of operations management or
the personal involved in operations management. Now, utilising effectively the factors of
production and service facilities available to produce the product, now here you can see
in any manufacturing facility you will have different types of infrastructural facilities
available; you may have different types of machines available.
Let us take two examples an example of a maybe we can say automotive manufacturing of cars
you have an assembly line that is an example of a facility. So, you have assembly line
and from one end you start assembling the car and on the other end or at the end of
the assembly line you get your completely assembled car, number of stages are there
number of processes are happening in the assembly line.
Now, as a major function of operations management we have to manage the overall facility that
is the overall assembly line effectively and efficiently we must be able to meet our target
if the target is maybe one car per minute overall. So, we must be able to meet that
target we have to run our assembly line or we have to ensure it is our functions that
we have to ensure the assembly line of rates with that speed that, we are able to produce
one car per minute or per 10 minutes that depends on the efficiency of the assembly
line, but the point is whatever is the target we have to run the system effectively and
efficiently to meet that target. So, we have to take into account each individual process,
each individual operation in the overall assembly line to ensure the target to ensure that we
meet the target. Similarly, let us take an example of power
production in case of coal based power project. So, when coal is being used for producing
the power we have a target this much megawatt of power must be produced with this type of
facility now the facility may include boilers it may include turbines.
So, the overall system we have to maintain effectively and efficiently. So, that the
input that is coal it is coming and it is getting converted into power. Now conversion
process of coal into power is this boilers and condensers and whatever is the overall
system now this system has to be managed by the operations personal. So, that we are able
to meet our target of production of power. Similarly, in hydropower also maybe we are
using water as the input we are stopping the water making a dam and then using that water
to produce the electricity. So, we have a target that this power plant hydro based power
plant must be able to produce this much of power, we have to run our turbine we have
to manage our penstock we have to manage the overall system in such a way that the overall
objective of production of power is managed. So, that is; you can say point that is related
to this function that is utilising effectively the factors of production and service facilities
now facilities can be power plant facilities can be assembly line, which are available
with us to produce the product. So, we have to effectively and efficiently manage our
facilities to produce the product. So, these are the functions of operations personal.
Now, coming onto the second part of our discussion today, that is the scope of operations management. Now, scope means that where we have to functions
we have already seen so there a thin line between functions and scope. Now scope of
operations management depends on the decisions. So, we have to see that what all decisions
we have to take or what are the areas where we have to take the decision. So, that we
are able to meet our objective. Now the strategic level decisions are let us see what all decisions
we have to take new product identification and design. If you remember session one, we
have seen that in week 2 of our course we will focus on product design and development.
So, that is all that is well within the scope of this course of operations management.
So, the strategic level decisions are new product identification and design process
design and planning or we can say production planning and control that also, we are going
to cover in this course then facilities location and a layout planning that also is there being
discussed or will be discussed in one week during our discussion design of material handling
system I think that is also included in the course then capacity planning is also included
in the course. So, these are the strategic level decisions that we need to take as operation
managers in order to ensure that we meet our objectives successfully.
So, again I am reading it for you that what all is within the scope of operations management
that is product design and development, process design and planning or production planning
and control facilities location and layout planning design of material handling system
capacity planning, we have to do I think lot of brain work in order to ensure that we come
up with the operations system or we come up with a production system, which is highly
effective and efficient and we are able to meet our target of a right quality product
of right quantity at right time at minimum cost.
So, if you remember in the last session it is not only the strategic decisions that we
have to take what are the other type of decisions just think over that if you can recollect
in the previous session we have seen two types of decisions. So, one was strategic if you
remember these are long term decisions then there was short range or short time spend
decisions also which were the tactical decisions. So, let us see the tactical or operational
level decisions are the production planning once we know, but we are going to produce
we have the demand data available with us our product, what we want to produce is known
to us the demand data is also available with us strategically, we know what technology
we are going to use, we have fair amount of idea about our capacity, what we need to do
then is that we have to plan maybe on monthly basis or quarterly basis that how we are going
to manage our production, how we are going to manage our operations. So, that we are
able to satisfy the demand data that is available with us.
Similarly, we have to exercise the production control also that how much we are meeting
or how close we are 2 hours planed progress. So, we in production planning we will make
a plan. So, that it will be a futuristic plan that in the next 3 months this is the we can
say targets or the shorter distance targets or the shorter time interval targets that
we are going to meet. Maybe after every 15 days we have drawn a chart that after every
15 days this much must be our progress, but maybe control will help us to draw another
diagram where we will see that what is the actual progress.
So, we have to exercise a fair amount of control to be successful many times we see in our
daily lives also we are not able to match up to the planned progress. For example, in
recording this course or running this course we may so have planned that we must be able
to complete this much percentage of recording by the end of July it May. So, happened that
we are not able to meet the target than what is expected that we have to pull up our socks
we have to rush through we have to put extra efforts to meet the overall target of completion
of the recording process. So, in tactical operations we can see that
we have to do production planning. So, in the previous slide we have seen strategic
decisions which are long term decision tactical will be short term. So, may be 3 months or
may be 6 months we will plan and then we will exercise a control that whether we are meeting
the planned progress or not or whether we are lacking behind or sometimes in rare cases
it may also happens that we are ahead of the plan.
So, plan was to meet a particular target, but we have already met the target and we
are already ahead of our planned progress that may also, happen other activities then
in strategic level we have seen there are 5 activities, but in technical we have to
manage their other issues also like the inventory or the materials management, maintenance,
replacement, cost reduction, cost control and work system design. So, we have to see
that all the objectives outlined in the previous session are met successfully and for that
2 or 3 or 4 we can say systems may not be able to help us to achieve the target.
So, we have to in place of systems I think I must use the word components that 3 or 4
management of 3 or 4 components successfully may not ensure that we are able to meet all
our targets or all our objectives of operations management there are majorly 4 or 5 objectives
of operations management. So, in order to meet those objectives, we
have to manage the complete gambit or the complete system of operations starting from
the demand, then the forecasting, then the planning, then we have seen that the inventory,
we have to manage, we have to manage the production plan, we have to manage the production control,
we have to manage the maintenance, we have to manage the line or the assembly line.
We have to manage the facilities or the transformation process, that is converting the raw material
into the final product, we have to manage the work system design where, we have to ensure
that the workers are feeling comfortable while working for the organisation they are able
to deliver the task or the jobs or the activities assigned to them in the most effective and
efficient manner. So, it is the overall management of the complete operation system where wherein
we have so many diverse areas of focus and then if we are able to manage all these areas.
Let me again maybe revise what we have to cover, because this is important because in
order to meet the objectives we have to manage all these areas and if we manage them properly,
we can become a good operations manager, we have to manage the product design, we have
to manage the process planning, we have to manage the facilities. Layout and location we have to manage the
material handling system, we have to manage the capacity or the capacity planning, we
have to do production planning. We have to ensure production control then
the other activities like inventory control, maintenance, safety, cost reduction, cost
control, work system. So, you can yourself now imagine that this has got a wide scope
or a large scope of work that comes under the overall umbrella of operations management.
So, to summarise we can club now some of you may be wondering there. So, many diff diverse
things or so many things have come into picture how we will remember all these things as I
have seen from product to process to control to materials to work system. So, many things
have come into picture. So, we can very quickly see that operations management framework can
be divided into 5p’s. Now, these 5p’s are product plant as we
have seen we have to do the facilities location and layout planning then the program which
is related to the time finally, the processes that is related to the management of facilities
and finally, people as we have seen in the last slide work system design. We have to fit the job as per the person’s
capability. So, that the person is able to perform his task in the most effective and
efficient manner without getting too much of fatigue and boredom. So, we have to ensure
the working environment for the people. So, with this I think I will stop the discussion
or I will close the discussion for today and in next session we will try to have a brief
round off maybe discussion on these 5 points and then we carry forward our discussion related
to the basics other basics and fundamental aspects related to operations management as
all of you are well aware that our week 1 of discussion is regarding the fundamentals
of operations management. Thank you.
