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Operation

ManagementUnit-1

(BBA Sem V)

Prepared By: Ms. Mitika Mahajan

(Assistant Professor, Rai University)

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What you are going to learn..

Operations Management

Nature, scope, process.

Operations strategy transshipment and transportation and ERP

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Introduction

Operations management is the management of

processes or systems that create goods and/or

provide services.

Operations is often defined as a transformation

process.

It encompasses forecasting, capacity planning,

scheduling, managing inventories, assuringquality, motivating employees, deciding where

to locate facilities, buying material and

equipment and maintaining them, and more.

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Example: Airline Company

Forecasting : Such things as seat demand forflights, the growth in air travel, and weatherand landing conditions.

Capacity planning: Deciding the number ofplanes and where to use them.

Scheduling of planes for flights and forroutine maintenance; scheduling of pilots and

flight attendants; and scheduling of groundcrews, counter staff, and baggage handlers.

Managing inventories of such items as foodand beverages and spare parts.

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Example: Airline Company

Assuring quality, essential in flying andmaintenance operations, where the emphasis is onsafety. Also important in dealing with customers atticket counters, check-in, telephone and electronicreservations, and in-flight service, where the

emphasis is on efficiency and courtesy. Employee motivation and training in all phases of

operations.

Location of facilities according to top managers

decisions on which cities to provide service for,where to locate maintenance facilities, and where tolocate major and minor hubs.

Buying materials such as fuel, food, bags, and spareparts. Buying aircraft and maintaining it.

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Operation as transformation Process

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Operation as transformation Process

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Nature of Operation Management

(Operations interfaces with a

number of supporting functions)

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Nature of Operation Management

(Operations interfaces with a

number of supporting functions)

Accounting supplies information to management on costs

of labour, materials, and overhead, and may provide

reports on items such as scrap, downtime, and inventories.

Accounting includes accounts payables and accounts

receivables. Accountants gather the information needed forfinancial statements as well.

Purchasing has responsibility for procurement of

materials, supplies, equipment, and services. Close contact

with operations is necessary to ensure correct quantitiesand timing of purchases. The purchasing department is

often called on to evaluate vendors for quality, delivery

time reliability, service, price, and flexibility. Purchasing

may also be involved in arranging incoming transportation,

receiving, and inspecting the purchased goods.

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The personnel or human resources department is

concerned with recruitment and training of personnel,

labour relations, contract negotiations, wage and salary

administration, and ensuring the health and safety ofemployees.

Product design in manufacturing companies usually is

done by engineers, but in other companies it could be done

by architects, scientists, chemists, and chefs. Designerscreate goods and services from information given to them

on markets by marketing and provide product

specifications to operations to make the products.

Maintenance is responsible for general upkeep and repair

of equipment, buildings and grounds, heating and air-

conditioning; removing toxic wastes; parking; and perhaps

security.

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Manufacturing engineering is responsible for design or

purchase of the machines and equipment needed in the

production process. Also called process engineers, they are

mainly trained as mechanical engineers, but other fieldslike electrical and chemical may also be needed.

Logisticsinvolves the transportation of raw material to the

plant, storage, and shipping of goods to warehouses, retail

outlets, or final customers. Management information systems (MIS) is concerned

with providing management with the information it needs

to effectively manage. This occurs mainly through

designing systems (hardware and software) to capture

relevant information and preparing reports.

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THE SCOPE OF OPERATIONS

MANAGEMENT To guide the system by decision making.

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Use of Operation Management

Many companies use operations

management strategies, tactics, and

actions in order to improve theirefficiency and effectiveness.

Efficiency refers to operating at

minimum cost and fast, whereaseffectiveness refers to achieving the

intended goals (quality).

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Evolution of different concepts in

Operation Management

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A comparison of craft, mass,

and lean production

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Operations StrategyAn Overview

What Is Operations Strategy?

Operations strategy is the development of a

long-term plan for using the major

resources of the firm for a high degree of

compatibility between these resources andthe firmslong term corporate strategy.

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Operations StrategyAn Overview

What Is Operations Strategy?

Some of the major long-term issues addressedin operations strategy include

How large do we make our facilities?

What type of process(es) do we install to makethe products or provide services?

What will our supply chain look like? What will be the nature of our workforce?

How do we ensure quality?

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Operations Strategy Means Adding

Value for the Customer

Perceived customer value= Total Benefits

Total Costs

In determining the value of a product, be ita good or a service, customers take into

consideration all of the benefits derivedfrom the product and compare it with all ofthe costs of that product.

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Value for the Customer

Interpretation

When this ratio is >1, customers perceive

value; the greater the number, the more

value.

When this ratio is

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Transshipment

Transfer of a shipment from one carrier, or morecommonly, from one vessel to another whereas intransit.

Transshipments are usually made

(1) where there is no direct air, land, or sea link betweenthe consignor's and consignee's countries,

(2) where the intended port of entry is blocked, or

(3) to hide the identity of the port or country of origin.

Because transshipment exposes the shipment to ahigher probability of damage or loss, some purchaseorders or letters of credit specifically prohibit it.

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Transportation

Any device used to move an item from

one location to another. Common forms of

transportation include

planes, trains, automobiles, and other two-wheel devices such as bikes or motorcycles.

The process of shipping or moving an item

from point A to point B.

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ERP(Enterprise Resource Planning)

A software to improve the performance of

the organizational resource planning,

management control and operational

control.

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Benefits of ERP

Accurate sales forecasting

Order tracking

Integrated purchase orders

Reduced cycle time

Faster information transactions

Lays groundwork for e-commerce

Reduction in business lead time

Improved customer satisfaction

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Selling Buyer concept of ERP system

Order Processing Cycle

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Steps of ERP system implementation

Project Planning

Requirement determination

Vendor selection

Plan of implementation

Implementation of ERP solution

Testing

Evaluation

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Steps of ERP system implementation

Project Planning: Deciding project goals,

recognizing business needs, and estimating

project cost

Requirement determination: Develop list of

specific requirements that company needs

Selection of vendor: two types of vendors

ERP providers

ERP implementers

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Steps of ERP system implementation

Plan of implementation: Scope, timeline,project sponsor, budget, risk analysis,communication, impact analysis, training,scope of management process, process for

feedback Implementation of ERP solution: Execute the

ERP according to needs of the company

Testing: Examine that all information

generated are precise and working properly Evaluation: focuses on the purpose and

objectives that were set in the planning stage.

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