Introduction

Operations Planning & Control

Operations
• It is the process by which goods or services are created.

• It can also be defined as a means of

converting the raw materials into
finished products by performing a set
of manufacturing operations in a
predetermined sequence that
transforms material from a given to
desired form.
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 Introduction
Operations Planning & Control
Planning
It means preparing the scheme in advance before the actual work is started.

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 Introduction
Operations Planning & Control
Control

It means the supervision of all the relevant operation with the help of a
control mechanism that feeds back the progress of the work.

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 Introduction
Production & Operations Function

It is concerned with design and control systems responsible for the

productive use of raw materials, human resources, equipment and
facilities in the development of a product or service.

The words Production and Operations are used synonymously.

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 Introduction
Production is a creation of Utility.
Operation is often defined as a transformation process.

Operations can take many different forms…

1) Physical – Manufacturing operations
2) Locational – Transportation operations
3) Exchange – Retail operations
4) Physiological – Health care
5) Psychological – Entertainment
6) Informational - Communication 5
 Introduction
A set of various activities which are involved in manufacturing certain
products is named as Production Management.

If the same concept is extended to service management then the set of

various management activities are called Operations Management.

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 Introduction
Production System
It is that part of an organization that produces the products. Production
is the basic activity of all organizations and all the other activities
revolve around production activity. The output of the production is the
creation of goods or services which satisfy the needs of the customer.

In some organizations the product is a physical good, example

refrigerator while in others it is a service, example insurance.

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 Introduction

The production system has the following characteristics,

1) Production is an organized activity, so every production system has
an objective.
2) The system transforms various inputs into useful outputs.
3) Production system does not operate in isolation from the other
organizational systems such as finance, marketing, etc.
4) There exists a feedback about the activities which is essential to
control and improve system performance.

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 Introduction
Adjustments Monitor
Needed Output
Random Fluctuations
Inputs Conversion Output
1. Men process 1. Goods
2. Materials 2. Services
3. Machines
4. Information Comparison of
5. Energy Actual v/s Desired

Feedback

Production System 9
 Introduction

Types of Production System

1) Make to Stock
2) Make to Order
3) Assemble to Order
4) Engineer to Order

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 Introduction
Make to Stock
In this system, manufacturers stocks the finished goods in inventory for
immediate shipment. This system ensures immediate delivery of good
quality, reasonably priced, off the shelf standard products.

Example – Ready to wear garments, televisions

Normally, the customer does not accept delay in delivery and the
management is required to maintain adequate stock of finished products.
Thus system implies the manufacture of products based on well known
and predictable demand pattern.
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 Introduction
Operations management focuses entirely on replenishment of inventory,
actual customer order cannot be identified in the production process.

The main advantage of this system being the short delivery time and the
limitation being high cost of inventory.

MTS items are generally mass consumed and pass through multiple
channels before reaching the end user. Most of the data about customers
is not known and hence feedback from distribution channel will act as
an important source of information.

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 Introduction
Make to Order
In this system, the production activities are initiated only after the
confirmation of the order and the products are not supplied from the
stock and hence the lead time is long.

MTO production system describes a manufacturing facility in which the

final product is usually made from parts already designed but may
include some custom designed components also.

The order processing cycle begins when the customer specifies his
requirements of the product.
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 Introduction
MTO is demand responsive strategy and only the product design and
some standard raw material are held in stock.

Example – Custom tailored clothing.

In MTO there is a direct interaction with customers during all the stages
but it is extensive during engineering phase. Manufacturer quotes
delivery schedule and price and there is a discussion between the
customer and the producer regarding the alternatives to reduce cost and
reduce delivery time.

The production schedule changes with change in customer orders from

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one period to another.
 Introduction
Assemble to Order
When number of alternative combinations or options are available to
customers and he is not ready to wait until product is made,
manufacturers produce and stock standard component parts.

Example – Computers

When the customer places the order, the manufacturers does the
assembly from the parts selected. Since the parts are manufactured and
stocked, the only time needed is to assemble before delivering product
to customer.
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 Introduction
Engineer to Order
In ETO system a product is engineered and produced after and order has
been received. In this system the manufacturer can meet the exact
specifications of their customers.

In ETO, engineering activities need to be added to product lead time.

Upon receipt of a customer order, the engineering requirements and
specifications are not known in detail. There is a substantial amount of
design and engineering analysis required.

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 Introduction
Many a times ETO and MTO terms are used synonymously. The thin
difference is, in ETO new engineering products are ordered which
includes entire new design process. In MTO, companies typically have a
fixed design and specification to start with. The existing design is
followed, even if the customer requests some customization of
dimensions or materials.

In ETO, engineers do not know the final specifications or materials.

This is much more creative process and requires a much more closer
relationship with clients, ultimately leading to a product that is unique.
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 Introduction
Phases in OPC
Forecasting
Order Writing
Prior Planning
Product Design

Planning Phase Process Planning and Routing

Material Control
Action Planning Tool Control
Loading
Scheduling
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 Introduction

Action Phase Dispatching

Data Collection
Progress
Reporting
Data Interpretation
Control Phase
Expediting
Corrective
Action Replanning

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