MODULE 3: Basics of Operations Management

• It is the administration of business practices to create the highest levelof efficiency possible within an organization.

  Operations Management
• Key Functions of Operations Management

  • Planning
  • Organizing
  • Coordinating
  • Controlling
• Tangibility of Output is TANGIBLE/PHYSICAL

  Manufacturing
• Tangibility of Output is INTANGIBLE

  Services
• Types of Operations Management Decisions

  • Strategic Decisions
  • Tactical Decisions
  • Operational Decisions
• Long-term decisions that define the overall direction of the company, such as facility location, product design, and supply chain management.

  Strategic Decisions
• Short- to medium-term decisions that focus on achieving specific objectives, such as scheduling, inventory management, and quality control.

  Tactical Decisions
• Day-to-day decisions that ensure smooth operations, such as employee scheduling, equipment maintenance, and order processing

  Operational Decisions
• Historical Development of Operations Management

  1. Pre-Industrial Revolution
  2. Industrial Revolution (18th-19th Century)
  3. Quality Management (20th Century)
  4. Today’s OM (21st Century)
• Production was largely craft-based, with highly skilled workers creating products by hand.

  Pre-Industrial Revolution
• Mechanization, rise of factories with focus on mass production; development of assembly lines, division of labor, and scientific management principles.

  Industrial Revolution (18th-19th Century)
• Emerged post-World War II with a focus on improving product quality and reducing defects

  Quality Management (20th Century)
• Lean Manufacturing, advanced technologies, automation, robotics,artificial intelligence, and data analytics

  Today’s OM (21st Century)
• Today’s OM Environment

  • Globalization
  • Technology and Automation
  • Sustainability and Ethical Practices
  • Customization and Flexibility
• Companies operate and compete in a global market, requiring efficient supply chain management and adaptability

  Globalization
• The use of advanced technologies, such as robotics, AI, and IoT, to enhance productivity and quality.

  Technology and Automation
• The need to quickly respond to changing customer preferences and market conditions

  Customization and Flexibility
• Emphasis on environmentally friendly practices and corporate social responsibility

  Sustainability and Ethical Practices
• Key Takeaways of OM Practices

  • Lean and Agile Practices
  • Technology and Data Integration
  • Customization and Efficiency
  • Sustainability and Ethical Operations
  • Customer-Centric Operations
• Toyota, Dell, and Zara all emphasize lean principles and agility, allowing them to minimize waste, improve efficiency, and rapidly respond to market changes.

  Lean and Agile Practices
• Companies like Amazon and McDonald's leverage technology for process optimization, supply chain management, and enhancing customer experience.

  Technology and Data Integration
• Dell and McDonald's demonstrate how businesses can offer mass customization while maintaining operational efficiency.

  Customization and Efficiency
• Starbucks emphasizes sustainability and ethical sourcing as part of its operations strategy.

  Sustainability and Ethical Operations
• Across all the cases, a strong focus on customer satisfaction is evident—whether it’s Starbucks’ personalized service, Amazon’s rapid delivery, or Zara’s fast fashion.

  Customer-Centric Operations
• Interaction Between Operations Management vs Other Business Functions

  • Operations and Marketing
  • Operations and Finance
  • Operations and Human Resources (HR)
  • Operations and Research & Development (R&D)
• Operations and Marketing

  • Marketing Inputs: customer demand forecasts, sales trends, product/service requirements, customer expectations and feedback
  • Operations Outputs: production capacity, lead times, and productavailability
• Operations and Finance

  • Finance Inputs: budgets, cost estimates, and financial performance metrics, cost constraints and profitability goals
  • Operations Outputs: production costs, resource utilization, and capital expenditures
• Operations and Human Resources (HR)

  • HR Inputs: staffing plans, training needs, and labor regulations, also aids in workforce development to meet operational demands.
  • Operations Outputs: workforce needs, productivity levels, and employee performance, need for specific skills or changes in workforce requirements.
• Operations and Research & Development (R&D)

  • R&D Inputs: new product designs, process innovations, and technological developments
  • Operations Outputs: product manufacturability, process efficiency, and any operational challenges