Operations management iqra university
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OPERATIONS MANAGEMENT
IN SUPPLY CHAIN MANAGEMENT
Presented By :
Skierians
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END OF THIS PRESENTATION WE WILL COME TO KNOW ABOUT :
What operation management is? Business Functions . Important business
functions for OM. Location of Operations In Organizational Chart. Difference B/w manufacturers and service
organization. Classification of OM Transformation process. Relation of SCM And OM Examples For SCM And OM Conclusion References
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OPERATIONS MANAGEMENT
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WHAT IS OPERATION MANAGEMENT?
The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services.
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WHAT IS OPERATION MANAGEMENT? (CONT:)
It is a management function
Organization’s core function
Every organization has OM function
Service or Manufacturing
For profit or Not for profit
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BUSINESS FUNCTIONS Marketing Sales Target market Product line Finance and control R&D Labor Purchasing Production Distribution
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TYPICAL ORGANIZATION CHART
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DIFFERENCES BETWEEN MANUFACTURERS AND SERVICE ORGANIZATIONS
Services: Intangible product Product cannot be
inventoried High customer contact Short response time Labor intensive
Manufacturers: Tangible product Product can be
inventoried Low customer
contact Longer response time Capital intensive
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SIMILARITIES-SERVICE/MANUFACTURERS
All use technology Both have quality, productivity, &
response issues All must forecast demand Each will have capacity, layout, and
location issues All have customers, suppliers,
scheduling and staffing issues
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CLASSIFICATIONS OF OPERATION MANAGEMENT
As we know that Operation management deals with two things that is Product and services so to work with these two individually there is a separate system these are:
Productive SystemService System
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PRODUCTIVE SYSTEM
If we are talking about the goods or products then we have to discuss about productive system.
And these are types of productive system.
Process Focused SystemProduct Focused SystemProduction to stock/order
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PROCESS FOCUSED SYSTEM
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PRODUCT FOCUSED SYSTEM
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PRODUCTION TO STOCK/ORDER
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SERVICE SYSTEM
On contrast when we talk about services there is service system and there kinds which are:
Stagnant personal servicesSubstitutable personal ServicesProgressive servicesExplosive services
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STAGNANT PERSONAL SERVICES
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SUBSTITUTABLE PERSONAL SERVICES
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PROGRESSIVE SERVICES
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EXPLOSIVE SERVICES
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TRANSFORMATION PROCESS
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OM’S TRANSFORMATION ROLE
To add value
Increase product value at each stage
Value added is the net increase between
output product value and input material value
Provide an efficient transformation
Efficiency – perform activities well at lowest
possible cost
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WHAT IS THE CONNECTION B/W SCM & OM
Go to Transformation process slide
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CONT:
Yes each of these elements in transformation process is connected with SCM .
HOW?This can be explained with decision making in
operation management and some of the calculations which will make all of us to understand that how SCM is Connected with OM.
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DECISIONS
All organizations are based on decisions Decisions follow a similar path
First decisions very broad – Strategic decisions
Strategic Decisions – set the direction for the entire company; they are broad in scope and long-term in nature
Following decisions focus on specifics - Tactical decision
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CONT:
Tactical decisions focus onSpecific day-to-day issues
Resource needs, schedules, & quantities to produce
Tactical decisions are very frequentStrategic decisions less frequentTactical decisions must align with strategic
decisions
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Ingredient Amount Required/Cookies
Flour 0.02 kg
Margarine 0.005 kg
Sugar 0.01 kg
Eggs 0.04 of an eggs(1 egg for 25 cookies)
Water 0.005 litre
Example of Raw material calculation for cookies manufacturer
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CALCULATION
Formula: Forcasted Demand + ending stock percent of
Amount Example : If the forecast demand per month is 50,000
units of cookies.If the amount of stock at the end of the month is 5% of the amount.
nthcookies/mo500,52
500,2000,50
)000,50%(5000,50
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The materials required for the month:
Ingredient Amount Required/Month
Flour 0.02kg/unit x 52,500 = 1050kg
Margarine 0.005kg/unit x 52,500 = 2025kg
Sugar 0.01kg/unit x 52,500 = 525kg
Eggs 0.04/unit x 52,500 = 2100 units
Water 0.005litre/unit x 52,500 = 262.5 litre
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(Units)OutputofNumberTotal
(RM)CostOperationsTotalUnitperCost
OverheadlabourDirectmaterialDirectCostsOperations
Cost per unit calculation
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HOW PRODUCTION IS GOING ON?
InputofValueTotal
OutputofValueTotalIndextyProductivi
The productivity index (P.I) can be more or less than 1.
P.I > 1 = business running efficientlyP.I < 1 = business running inefficiently
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This All Calculations Decisions shows that SCM is playing a vital roll in OM because it is being used in each and every
portion of Operation management
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FURTHER EXPLANATION
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CONCLUSION
As we know that SCM works with the whole Organization and if we say that Operations management is one which works in between the whole organization that will not wrong because ,
All business functions need information from OM in order to perform their tasks
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REFERENCES :
R. Dan Reid & Nada R. Sanders 3rd Edition © Wiley
Elwood S. Buffa & Rakesh K. Sarin 3rd Edition © Wiley
Internet Sir Abdullah Alamin
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