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MNG3702 NOTES
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MNG3702 NOTES,PRODUCTION AND OPERATIONS MANAGEMENT
TOPIC 1: Foundations
STUDY UNIT 1: Introduction to Production and Operations Management
Definition of Production/Operations Management
Production and Operations Management (POM) refers to the discipline focused on
overseeing the processes involved in the creation and delivery of products and services.
It encompasses a range of activities, from planning and organizing resources to
managing day-to-day operations. POM is a fundamental function in any organization
because it directly influences efficiency, quality, and customer satisfaction. Although it
may not always be explicitly labeled as operations management, its principles are
integral to the success of any business.
Focus on Managing Processes
POM concentrates on managing processes because all managerial activities
fundamentally revolve around process optimization. Effective operations management
ensures that resources are used efficiently and effectively, which is crucial for achieving
organizational goals. By focusing on processes, POM enables managers to:
Improve productivity by streamlining workflows.
Reduce costs through the elimination of waste.
Enhance quality by establishing standard procedures.
Increase flexibility to respond to market changes.
Distinguishing Operations Processes
Operations processes can be categorized based on four key dimensions:
1. Volume:
o High Volume: Characterized by mass production, high repeatability, and
lower unit costs. These operations often utilize automation and
standardized procedures to maximize efficiency.
o Low Volume: Involves producing smaller quantities, resulting in higher
unit costs due to less repetition and the need for more personalized
services.
2. Variety:
o High Variety: Operations that produce a wide range of products or
services to meet diverse customer needs. This often requires greater
flexibility and adaptability, resulting in higher costs.
o Low Variety: Focused on a narrow range of standardized products or
services, leading to more efficient processes and lower costs.
3. Variation:
, o High Variation: Refers to fluctuations in customer demand, requiring
operations to be adaptable and flexible. High variation can lead to
increased operational costs if not managed effectively.
o Low Variation: Stable demand patterns allow for predictable operations,
resulting in efficient use of resources and lower costs.
4. Visibility:
o High Visibility: Operations with a significant degree of customer
interaction, where customer satisfaction is influenced by their perception
of the process. These require staff with strong customer service skills.
o Low Visibility: The production process occurs away from customer sight,
allowing for higher efficiency and lower contact costs.
Activities of Production/Operations Management
The activities within POM encompass a variety of functions that ensure operational
effectiveness, including:
Understanding Strategic Objectives: Aligning operations with the
organization's overall strategy to achieve long-term goals.
Developing an Operations Strategy: Formulating a plan that details how the
operations function will support the broader business objectives.
Designing Products, Services, and Processes: Creating specifications for
what is produced and how, ensuring that they meet customer needs and
operational capabilities.
Planning and Controlling Operations: Scheduling resources, managing
workflows, and ensuring that operations adhere to established plans and
standards.
Improving Operational Performance: Continuously seeking ways to enhance
efficiency, reduce costs, and improve quality through various methods, such as
Lean and Six Sigma.
General Model of Production/Operations Management
The foundational model of POM can be understood through two primary concepts:
1. Input-Transformation-Output Model:
o This model illustrates the process flow where resources (inputs) are
transformed through various processes into final products or services
(outputs). The transformation process may involve several stages,
including the treatment of materials, information, and customer interaction.
2. Categorization of Operations Management Activities:
o The activities of POM can be grouped into key areas, including:
Operations Strategy: The overarching plan guiding operational
decisions.
Design: Involves the specification of products and processes.
, Planning and Control: Focuses on managing resources and
workflows effectively.
Improvement: Emphasizes enhancing processes and performance
metrics.
Key Insights on Production and Operations Management
Understanding Operations Management
Operations management is integral to any organization, encompassing the
management of resources involved in producing and delivering products and services. It
involves two meanings:
Operations as a Function: Refers to the segment of the organization
responsible for creating products or services for external customers.
Operations as an Activity: Involves the management of processes across
various organizational functions.
Common Characteristics Across Operations
Despite the diversity of operations, several common characteristics exist:
Modeling as Input-Transformation-Output Processes: All operations can be
analyzed through this framework, where inputs are transformed into outputs.
Mixed Production of Products and Services: Most operations produce a blend
of both products and services, highlighting the need for flexibility.
Interconnected Supply Networks: Operations are part of a larger network that
includes suppliers and customers, each contributing to meeting customer
demands.
Internal Customer-Supplier Relationships: Operations consist of internal
relationships where one process acts as a supplier to another.
Differences Between Operations
Operations can differ significantly based on:
Volume: The rate of output varies, with high-volume operations being capital-
intensive and low-volume operations being more labor-intensive.
Variety: High-variety operations require flexibility to meet diverse customer
needs, while low-variety operations focus on efficiency.
Variation in Demand: Operations may experience high variability in customer
demand, necessitating agile processes, while low variability allows for
streamlined operations.
Visibility: The degree of customer interaction can impact the level of service and
operational costs, with high visibility requiring greater attention to customer
perceptions.
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