Unit 1: Introduction to Operations Management &
Productivity of operations
• Operations Management integrated with other business
functions
• Productivity concept, Basic productivity indices.
Operations Management
A systems Perspective
Forecasting
PROCESSING
Labour Process & Purchasing & Goods
OUTPUT
Product Inventory
INPUT
Design Control
Material
Capital Operations Material & Services
Planning & Capacity
Control Planning
Feedback
Quality Maintenance Process
Management Management Improvement
Operations Function
Linkages with other functions
Operations Support Layer
Customer Layer
Marketing Maintenance Quality
Ultimate Dealers
Customer Retailers Costing Planning Tooling
Material IT Design
Core Operations Layer
Testing Assembly
Layer of
Innovation Fabrication Machining
Innovation Supplier Layer
Strategy Service Delivery system
Sub-contractors Suppliers
Research &
Development
Other service providers
Operations Management
Functions
Design Issues Operational Control Issues
Product & Service Design Forecasting the Demand
Process Design Operations Planning & Control
Quality Management Supply Chain Management
Location & Layout of Facilities Maintenance Management
Capacity Planning Continuous Improvement of
Operations
• Design issues in Operations Management lay down overall
constraints under which the operations system functions
• Operational Control issues focuses on optimizing the use of
available resources in the short-term while delivering goods
and services as per plan under the given design constraints
Operations Management
Challenges
• Growing customer expectations
• Examples: Tariff plans and options provided by mobile
operators, options in passenger car
• Customers tend to demand more and refine their
expectations
• Manufacturing & Service organizations must learn to
respond to these expectations
• Need to develop capabilities to bring newer products and
services faster and yet profitably
Operations Management
Challenges
• Rapid technological advancements
• Example 1: ATMs & Internet Banking. Customers need not visit a
bank branch. Drafts and cheques replaced with electronic payment
gateways & fund transfer mechanisms.
• Example 2: Buying a train ticket. By visiting a Web site like
[Link] a customer can accomplish all tasks pertaining
to ticket booking and cancellation at leisure.
• Example 3: Procurement of goods & services. A manufacturing
organization can procure goods & services by organizing a reverse
auction on the Internet. In 3 to 4 hours, the best price for a component
and the supplier willing to provide the component at a desired quality
can be located.
• Example 4: New Product Development. A team of design personnel
from across different geographical locations can participate in new
product development using technological tools.
Operations Management
Challenges
• Environmental Issues
• Growing industrialization raises concerns regarding the depletion of natural
resources and the waste generated from production systems and end-of-life
products.
• Growing urbanization creates societal problems arising out of scarcity of
available resources and generation of solid wastes.
• Consumption of energy and water in countries like India is on the rise. Such a
situation requires better practices and newer methods of addressing these
requirements using better operational practices.
• Increasingly, firms are under pressure to take responsibility of restoring,
sustaining, and expanding the planet’s ecosystem instead of merely
exploiting it.
• OM practices must address environmental concerns in order
to ensure a sustainable production and a sustainable world
Manufacturing & Service
Similarities & Differences
Manufacturing Organizations Service Organizations
Differences
Physical durable product Intangible, perishable product
Output can be inventoried Output can’t be inventoried
Low customer contact High customer contact
Long response time Short response time
Regional, national, Intl. markets Local markets
Large facilities Small facilities
Capital intensive Labour intensive
Quality easily measured Quality not easily measured
Similarities
Is concerned about quality, productivity & timely response to its customers
Must make choices about capacity, location, layout
Has suppliers to deal with
Has to plan its operations, schedules and resources
Balance capacity with demand by a careful choice of resources
Has to make an estimate of demand
Evolution of Operations and Supply Chain
Management
Craft production
process of handcrafting products or services for individual customers
Division of labor
dividing a job into a series of small tasks each performed by a different worker
Interchangeable parts
standardization of parts that enabled mass production
Scientific management
systematic analysis of work methods
Mass production
high-volume production of a standardized product for a mass market
Quality revolution
an emphasis on quality and the strategic role of operations
Lean production
adaptation of mass production that prizes quality and flexibility
Historical Events in Operations Management (1 of 2)
ERA EVENTS/CONCEPTS DATES ORIGINATOR
Industrial Revolution Steam engine 1769 James Walt
Division of labor 1776 Adam Smith
Interchangeable parts 1790 Eli Whitney
Scientific Management Principles of scientific management 1911 Frederick W. Taylor
Time and motion studies 1911 Frank and Lillian Gilbreth
Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
Human Relations Hawthorne studies 1930 Elton Mayo
Motivation theories 1940s Abraham Maslow
1950s Frederick Herzberg
1960s Douglas McGregor
Operations Research Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting line theory, decision theory, 1950s Operations research groups
PERT/CPM
MRP 1960s Joseph Orlicky, IBM, and others
EDI, CIM 1970s Auto industry, DARPA
Historical Events in Operations Management (2 of 2)
ERA EVENTS/CONCEPTS DATES ORIGINATOR
Quality Revolution JIT (just-in-time) 1970s Taiichi Ohno (Toyata)
TOM (total quality management) 1980s W. Edwards Deming, Joseph Juran
Strategy and operations Wickham Skinner, Robert Hayes
Reengineering 1990s Michael Hammer, James Champy
Six Sigma 1990s GE, Motorola
Internet Revolution Interest, WWW ERP, supply chain Management, 1990s ARPANET, Tim Berners-Lee SAP, Oracle, Dell,
E-commerce, social networking Apple
2000s Amazon, Yahoo, eBay, Google,
Facebook, YouTube, Twitter, etc.
Globalization Word Trade Organization 1990s GATT
European Union 2000s Europe
Global supply chains Outsourcing China, India
Emerging economics
Sustainability Global warming 2010s, Today Numerous companies, scientists, statesmen and
Carbon footprint governments
Green products World Economic Forum,
Corporate social responsibility (CSR) Kyoto Protocol
UN Global Compact United Nations
Digital Revolution Big data, Internet of Things (IoT), 3D printing, Today Google, Apache, P&G, MIT, NSF, Amazon, and
Smart Cities, Autonomous Vehicles, Drones others
Productivity and Competitiveness
Competitiveness
degree to which a nation can produce goods and services that meet the
test of international markets
Productivity
ratio of output to input
Output
sales made, products produced, customers served, meals delivered, or
calls answered
Input
labor hours, investment in equipment, material usage, or square
footage
Measures of Productivity
Measures of Productivity
• Osborne industries is compiling the monthly productivity report for its
Board of Directors. From the following data, calculate;
• The labor productivity
• Machine productivity
• Multifactor productivity of dollars spent on labor, machine, materials and
energy.
The average labor rate is 15$ an hour, and the average machine usage is 10$ an
hour.
Case Study: How Akshaya Patra Nourishes Millions
of Children Across India
• The Akshaya Patra Foundation is an independent charitable trust
registered under the Indian Trusts Act 1882 (Reg. No. 154). We
endeavour to implement the Government of India’s PM POSHAN
Initiative (formerly the Mid-Day Meal Scheme) to solve at scale the
overarching societal issues of classroom hunger and malnutrition in
the country.
• With the firm belief that investing in child nutrition and education is
one of the most effective entry points for human development, we
strive to provide children with a hot, nutritious and tasty mid-day
meal every school day as an incentive to come to school. Thus, the
vision – ‘No child in India shall be deprived of education because of
hunger.’
Case Study: How Akshaya Patra Nourishes Millions
of Children Across India
• Despite making economic progress, India continues to grapple with alarming rates of
childhood malnutrition which hamper human capital development. The latest NFHS-5 data
reveals that 35.5% of children under 5 years are stunted (low height-for-age), 19.3% are
wasted (low weight-for-height) and 32.1% are underweight across India. The prevalence of
childhood malnutrition shows only marginal improvement over the previous NFHS-4
figures from 2015-16, highlighting the need for more concerted efforts. Malnutrition rates
vary considerably across states, with children in rural areas and from lower socio-
economic strata being disproportionately affected.
• Akshaya Patra started in 2000 by serving 1,500 children in 5 Bangalore schools. Relying on
corporate/individual donations and government subsidies, it has grown systematically by
setting up large, centralized kitchens in key urban hubs to cater to surrounding schools. Its
kitchens follow standardized cooking protocols and leverage automation to maximize
efficiency. Meals are distributed through a fleet of delivery vehicles to partnering
government schools. Detailed planning, resource mobilization, and stakeholder
engagement strategies enabled sustained expansion to kitchens serving 2.1 million
children daily by 2024.
Case Study: How Akshaya Patra Nourishes Millions
of Children Across India
• Scalability and Replication:
• With an ambitious target of serving 3 million children of India
by 2025, Akshaya Patra is exploring approaches like a hub-and-
spoke model with centralized kitchens supplying semi-cooked
meals to smaller spoke kitchens closer to new schools. There is
also potential to leverage its model for feeding pre-school
children through government's Anganwadi program. Akshaya
Patra trains government entities and other NGOs, shares best
practices and kitchen designs to enable replication.
Questions
• Choose one company that you are interested in learning about this
semester. Go to the company website and find out about their
products/services and how their supply chain is coordinated. Explore
the various perspectives of operations management which the
company is currently utilizing.
• As a student, what aspects of operations do you encounter in your
university? How do they relate to the “primary topics” in operations
discussed?
• Look for articles related to operations and supply chain management
online. What types of topics are discussed?
