INTRODUCTIONTOOPERATIONMANAGEMENT

INTRODUCTION TO OPERATION MANAGEMENT

Operations management ​is the management of that part of an organization

that is responsible for producing goods and/or services. ​Operations management
is an area of ​management concerned with designing and controlling the process
of p​ roduction and redesigning business operations in the production of ​goods or

services.​ ​It is concerned with converting materials and labor into goods and
services as efficiently as possible to maximize the profit of an organization.
Operations management involves utilizing resources from staff, materials,
equipment and technology. ​It is the management of processes or systems that

create goods and/or provide services. It encompasses forecasting, capacity
planning, scheduling,managing inventories, assuring quality, motivating
employees, deciding where to locate facilities, buying material and equipment
and maintaining them, and more.

We can use an airline company to illustrate an operations system. The system
includes staff and airplanes, airport facilities, and maintenance facilities,
sometimes spread out over a wide territory. Most of the activities performed by
management and employees fall into the realm of operations management:

Forecasting such things as seat demand for flights, the growth in air travel, and

weather and landing conditions.

Capacity planning,​ deciding the number of planes and where to use them.
Scheduling of planes for flights and for routine maintenance; scheduling of

pilots and flight attendants; and scheduling of ground crews, counter staff, and
baggage handlers.

Managing inventories​ of such items as food and beverages and spare parts.

Assuring quality, essential in flying and maintenance operations, where the
emphasis is on safety. Also important in dealing with customers at ticket
counters, check-in, telephone and electronic reservations, and in-flight service,
where the emphasis is on efficiency and courtesy.

Employee motivation​ and training in all phases of operations.
Location of facilities according to top managers’ decisions on which cities to
provide service for, where to locate maintenance facilities,​ and where to

locate major and minor hubs.

Buying materials such as fuel, food, bags, and spare parts. Buying aircraft and

maintaining it.

Now consider a bicycle factory. This might be primarily an assembly operation:
buying components such as frames, tires, wheels, gears, and other items from
suppliers, and then assembling bicycles. The factory might also do some of the
fabrication work itself (forming frames, making the gears and chains) and buy
mainly raw materials and a few parts and materials such as paint, nuts and bolts,
and tires. Among the key operations management tasks in either case are
scheduling production, deciding which components to make and which to buy,
ordering parts and materials, deciding on the style of bicycle to produce and
how many, purchasing new equipment to replace old or worn-out equipment,
maintaining equipment, motivating workers, and ensuring that quality standards
are met. Obviously, an airline company and a bicycle factory are completely
different types of operations. One is primarily a service operation, the other a
producer of goods. Nonetheless, these two operations have much in common.
Both involve scheduling of activities, motivating employees, ordering and
managing supplies, selecting and maintaining equipment, and satisfying quality
standards. And in both businesses, the success of the business depends on
planning. Many companies use operations management strategies, tactics, and
actions in order to improve their efficiency and effectiveness. Efficiency refers to
operating at minimum cost and fast, whereas effectiveness refers to achieving
the intended goals (quality).

There are examples of these goods and services all around you. Every Book you

read, every video you watch, every email you send, every telephone conversation

you have, and every medical treatment you receive involves the operations

function of one or more organizations. So does everything you wear, eat, travel

in, sit on, and access the Internet with.

WHY STUDY OPERATIONS MANAGEMENT?

You may be wondering why you need to study operations management. Actually,
there are a number of very good reasons. One is that operations management
activities are at the core of all business organizations, regardless of what
business they are in. Because a large percentage of a company’s expenses occur
in the operations area, such as purchasing materials and workforce salaries,
more efficient operations—even a small reduction in operations costs—can result
in large increases in profit. Second, a large number of all jobs are in operations
management—such areas as purchasing, quality assurance, production planning
and control, scheduling, logistics, inventory management, and many more. Third,
activities in all of the other areas of business organizations, such as finance,
accounting, human resources, management information systems (MIS), and
marketing are all interrelated with operations management activities. So it is
essential for people who work in these areas to have a basic understanding of
operations management. Beyond all of this is the reality that operations
management is about management, and all managers need to possess the
knowledge and skills in the content areas you will learn about here. Among them
are productivity, strategy, forecasting, quality, inventory control, and scheduling.
Also, you will learn how to use a range of quantitative tools that enhance
managerial decision making.

FUNCTIONS WITHIN ORGANIZATIONS

Organizations are formed to pursue goals that are achieved more efficiently and
effectively by the concerted efforts of a group of people than by individuals
working alone. Organizations are devoted to producing goods and/or providing
services. They may be for profit (i.e., business) or nonprofit organizations. Their
goals, products, and services may be similar or quite different. Nonetheless, their
functions and the way they operate are similar. A typical organization has three
basic functions: operations, finance, and marketing These three functions, and
other supporting functions, perform different but related activities necessary for
the operation of the organization. The functions must interact to achieve the
goals and objectives of the organization, and each makes an important
contribution. For instance, unless operations and marketing work together,
marketing may promote goods or services that operations cannot profitably
deliver, or operations may turn out goods or services for which there is no
demand. Similarly, unless finance and operations work closely, funds for
materials, expansion, and new equipment may not be available when needed.

Operations

The operations function performs all the activities directly related to producing
goods or providing services. Hence, it exists both in fabrication and assembly
operations, which are goods-oriented, and in areas such as healthcare,
transportation, restaurant, and retailing, which are primarily service-oriented.

The operations function is the core of most organizations; it is responsible for the
creation of an organization’s goods or services. Inputs are used to obtain
finished goods or services using one or more transformation processes (e.g.,
storing, transporting, cutting). To ensure that the desired outputs are obtained,
measurements are taken at various points in the transformation process
(feedback) and then compared with previously established standards to
determine whether corrective action is needed (control). the conversion process.
provides two examples of inputs, transformation processes, and outputs.
It is important to note that goods and services often occur jointly. For example,
having the oil changed in your car is a service, but the new oil is a good.
Similarly, house painting is a service, but the paint is a good. The goods–service
package is a continuum. It can range from primarily goods, with little service, to
primarily service, with few goods. The essence of the operations function is to
add value during the transformation process: Value-added is the term used to
describe the difference between the cost of inputs and the value or price of
outputs. In nonprofit organizations, the value of outputs (e.g., highway
construction, police, and fire protection) is their value to society; the greater the
value added, the greater the efficiency of these operations. In for-profit
organizations, the value of outputs is measured by the prices that customers are
willing to pay for those

goods or services. Firms use the money generated by value-added for research
and development, investment in new facilities and equipment, paying workers,
and profits. Consequently, the greater the value-added, the greater the amount of
funds available for these purposes.
One way that businesses attempt to become more productive (i.e., making more
output with same or less inputs) is to examine critically whether the operations
performed by their workers add value. Businesses consider those that do not add
value wasteful. Eliminating or improving such operations decreases the cost of
inputs or processing, thereby increasing the value-added. For instance, a firm
may discover it is producing an item much earlier than the scheduled delivery
date to a customer, thus requiring the storage of the item in a warehouse until
delivery. In effect, additional costs are incurred by storing the item without
adding to the value of the item. Reducing storage time would reduce the
transformation cost and, hence, increase the value-added.

Finance

The finance function performs activities related to securing resources at
favourable prices and allocating those resources throughout the organization.
Finance and operations management personnel cooperate by exchanging
information and expertise in such activities as:

1. Provision of funds. T​ he necessary funding of operations and the amount

and timing of funding can be important and even critical when funds are tight.
Careful planning can help avoid cash-flow problems. Most for-profit firms obtain
the majority of their funds through the revenues generated by sales of goods and
services.

2. Economic analysis o​ f investment proposals. Evaluation of alternative

investments in plant and equipment requires inputs from both operations and
finance people.

Marketing

Marketing’s focus is on selling and/or promoting the goods or services of an
organization. Marketing is also responsible for assessing customer wants and
needs, and for communicating those needs and feedback to operations people
and to product design people (usually engineers in manufacturing companies).
That is, operations needs information about demand so that it can plan
accordingly (e.g., purchase materials or schedule work), while product design
people need information that relates to improving current products and services,
and designing new ones. Marketing, design, and production must work closely
together to successfully implement design changes and to develop and produce
new products. Marketing can provide valuable insight on what competitors are
doing. One important piece of information marketing needs from operations is the
manufacturing or service lead time in order to give customers realistic estimates
of how long it will take to fill their orders. Thus, marketing, operations, and
finance must interface on product and process design, forecasting, setting
realistic schedules, and quality and quantity decisions.

Other Functions

There are a host of other supporting functions that interface with operations.

Accounting ​supplies information to management on costs of labour, materials,

and overhead, and may provide reports on items such as scrap, downtime, and
inventories. Accounting includes accounts payables and accounts receivables.
Accountants gather the information needed for financial statements as well.

Management information systems (MIS) is concerned with providing

management with the information it needs to effectively manage. This occurs
mainly through designing systems (hardware and software) to capture relevant
information and preparing reports.

Purchasing has responsibility for procurement of materials, supplies,

equipment, and services. Close contact with operations is necessary to ensure
correct quantities and timing of purchases. The purchasing department is often
called on to evaluate vendors for quality, delivery time reliability, service, price,
and flexibility. Purchasing may also be involved in arranging incoming
transportation, receiving, and inspecting the purchased
goods.

The personnel or human resources department is concerned with recruitment

and training of personnel, labour relations, contract negotiations, wage and
salary administration, and ensuring the health and safety of employees.

Product design in manufacturing companies usually is done by engineers, but

in other companies it could be done by architects, scientists, chemists, and
chefs. Designers create goods and services from information given to them on
markets by marketing and provide product specifications to operations to make
the products.

Maintenance is responsible for general upkeep and repair of equipment,

buildings and grounds, heating and air-conditioning; removing toxic wastes;
parking; and perhaps security.

Manufacturing engineering is responsible for design or purchase of the

machines and equipment needed in the production process. Also called process
engineers, they are mainly trained as mechanical engineers, but other fields like
electrical and chemical may also be needed.

Logistics ​involves the transportation of raw material to the plant, storage, and

shipping of goods to warehouses, retail outlets, or final customers.

Example:​ Nestle Operations Management

➢ QUALITY MANAGEMENT

Quality Management System starts on farms. The Quality Management System
not only ensures the ongoing access to high quality raw materials but also enable
farmers to protect or even increase their income. Often the standard of living of

entire rural communities is raised as a result. The system helps address key
global environmental and social issues.

Quality is built in during product development according to the requirements of
the consumers and following all food safety and regulatory requirements.
Nestlé’s R&D network applies in this “Quality by design” to all of product. Nestle
apply internationally recognized Good Manufacturing Practices (GMP) to ensure
quality and food safety. GMP covers all aspects of manufacturing, including
standard operating procedures, people management and training, equipment
maintenance, and handling of materials.

● Nestlé Quality Policy
○ Build trust by offering products and services that match
consumer expectation and preference
○ Comply with all internal and external food safety, regulatory and
quality requirements
○ Gain a zero-defect, no-waste attitude by everyone in our
company
○ Make quality a group-wide objective
○

➢INVENTORY MANAGEMENT

Following types of inventories are kept by Nestle Pakistan Kabirwala.

RAW MATERIALS

Raw Material inventory of Nestle consists of milk. Their Raw Material is kept in
Silos. Silos are the big tanks, which are used to store the milk. Inventories of their
raw materials cannot be maintained in bulk quality and for a longer period of time.
The factory can store the milk up to 596000 liters. They have five silos for storing
the milk all have different capacities. The milk can remain for the period of 36
hours without losing quality.

WORK IN PROCESS INVENTORIES

Work in process inventories are not to huge. Whatever they put into production
they stop production after its completion if there is no unusual breakdown. The
unpacked goods inventory can be considered as the WIP inventory. The
condensed milk is stored in Bins. Bins are the big boxes in which the milk
powder is stored before packing it. Then through an automatic plant the milk is
packed. The butter is stored in huge tubs.

FINISHED GOODS INVENTORY

Inventories of packaging material can also be included in WIP inventories. The
packing material is purchased externally. The supplier of packing material is
packages private limited, Pakistan. There is a huge warehouse within the factory.
In the warehouse they store the finished goods.

MATERIALS MANAGEMENT

There is a separate department in the factory which is responsible for purchasing
the materials and managers its supply. There is a centralized system of material
management. The Whole operations of which are looked after by the operations
managers. There is also a stores officer which also looks after the materials
management.

INVENTORY CONTROL SYSTEMS

For controlling inventory, Nestle use Continuous Review which is the whole
computerized system. In this way they keep a continuous control over their
inventory. The stores officer not only maintains records but also makes visits at
the warehouses to see the actual situation of materials. The officer can review the
inventory at any time. Operations manager and the auditing people also check the
inventory and its records so that the risks of loss or manipulation may be
minimized.

C​ APACITY PLANNING OF NESTLE

The best mechanism for running a business is to match level of demand (goods,
services that customers need) with supply of capacity (resources, labor force that
the business inputs in the production process). They also define capacity as “the
maximum level of value –added activity over a period of time”. Thus three main
factors come into force here – the capacity of resources and labor force, the
process operation which itself leads to satisfying customers through matching
demand. It is very important to plan and coordinate all 3 factors very effectively
because a difference in capacity and performance easily affects: costs, revenues,
working capital, flexibility, quality of goods, speed of response and others.

PRODUCTION CAPACITY OF NESTLE

The world’s leading nutrition, health and wellness company Nestlé, with a 100
year presence in Turkey, is completing the construction of its breakfast cereals
production facility which is going to meet the domestic demand and make Turkey
an export and production base for the nearby countries. Nestlé is going to start
the production of the breakfast cereals, which it has imported up to this date, in

Turkey. Built with the support of the Investment Support and Promotion Agency
of Turkey (ISPAT) in Karacabey, Bursa, the breakfast cereals production facility
will begin production with a production capacity of over 10,000 tons in the
second half of 2011. All of the raw materials to be used in the production
processes will be procured domestically and Nestlé will buy 4,350 tons of sugar,
5,350 tons of wheat, 4,000 tons of corn and 1,000 tons of rice per year as of 2013.
By the completion of production facility, almost all Nestle products which are
sold in Turkey shall be produced in Turkey. The production facility, which will
transform Turkey into a regional hub in the breakfast cereals category, is
launched to the press through a meeting attended by Minister of Trade and
Industry.

➢MAIN FOCUS OF NESTLE

● People first

Employees, people and products are more important at Nestle than systems.
Systems and methods, while necessary and valuable in running a complex
organization, should remain managerial and operational aids but should not
become ends in themselves. It is a question of priorities. A strong orientation
toward human beings, employees and executives is a decisive, if not t​ he decisive,
component of long-term success. Nestle in very much keen about T​ ALENT
MANAGEMENT and their HR department works to hire and retain the best
industry personnel.

● Quality products

Our focus is on products. The ultimate justification for a company is its ability to
offer products that are appealing because of their quality, convenience, variety
and price — products that can stand their ground even in the face of fierce
competition.

● Research and development

Foresight Nestle is probably unique in the food industry in having an integrated
research and development program that engages in applied and basic research in
the fields of human physiology, health, nutrition and raw materials. Our research
and development program gives us the capacity to create new types of products
that we cannot even imagine today, especially in the critical area where
preventive medicine and food products overlap.

➢Human Resource Management

The long-term success of the Company depends on its capacity to attract, retain
and develop employees able to ensure its growth on a continuing basis. This is a
primary responsibility for all managers.
The Nestlé policy is to hire staff with personal attitudes and professional skills
enabling them to develop a long-term relationship with the Company.
Therefore the potential for professional development is an essential standard for
recruitment.
Each new member joining Nestlé is to become a participant in developing a
sustainable quality culture which implies a commitment to the organisation and a
sense for continuous improvement leaving no room for complacency.

Importance of Production Management

Helps to Introduce New Products

Production management helps to introduce new product within the market. It
conducts analysis and development. This helps the firm to develop newer and
higher quality product. These products are productive within the market as a
result of the offer full satisfaction to the purchasers.

Expansion of the Firm

The production management helps the firm to get bigger and grow. This is often
as a result of it tries to enhance quality and cut back prices. This helps the firm to
earn higher profits. These profits facilitate the firm to expand and grow.

Minimizes price of Production

Production management helps to reduce the value of production. It tries to
maximize the output and minimize the inputs. This helps the firm to attain its
price reduction and potency objective.

Accomplishment of Firm’s Objectives

Production management helps the business organization to attain all its
objectives. It produces product that satisfy the customer’s wants and needs. So,
the firm can increase its sales. This can facilitate it to attain its objectives.

Reputation, Goodwill and Image

Production management helps the firm to satisfy its customers. This will increase
the firm’s name, goodwill and image. an honest image helps the firm to expand
and grow.

Helps to Face Competition

Production management helps the firm to face competition within the market.This
can be as a result of production management produces product of right amount,
right quality, and right value and at the correct time. These product are delivered
to the purchasers as per their necessities.

Optimum Utilization of Resources

Production management facilitates optimum utilization of resources like work
force, machines etc. therefore the firm will meet its capability utilization objective.
this may bring higher returns to the organization.

Supports different useful Areas

Production management supports different useful areas in a corporation, like
selling, finance and personnel. The marketing department can notice it easier to
sell good-quality product and therefore the finance department can get a lot of
funds as a result of increase in sales. it’ll conjointly get a lot of loans and share
capital for enlargement and modernization. The staff office are going to be ready
to manage the human resources effectively because of the higher performance of
the production department.

Types of Production system
Mass Production System: T​ ake a second to look around your home.

What do you see? Furniture? Books? Boxes of food? No matter what your eyes
fall on, it's more than likely that several things in your home have been mass
produced.
Mass production is a method of production that uses a standardized process of
creating interchangeable parts in large quantities for a low price. In other words,
a standard process for making products is repeated so each time the product is
finished it is exactly the same as all the other parts. The parts are then said to be
interchangeable. Whether you use the first part created or the millionth part, they
should be exactly the same, with no variation in the outcome.
Mass production decreases the amount of time that workers spend on each

individual product. This can allow manufacturers to lower the cost per unit--if the

production of each unit is cheaper, its price can be as well. With mass

production, manufacturers are also able to increase the amount of units

produced and are able to control product quality because the process of
producing the good does not vary.

To recap, benefits of mass production include:

● Lower cost per unit
● Decreased time producing products
● Increased output
● Quality control

In this age of mass consumption, many products that we use on a daily basis are
mass produced. It could be anything from the furniture you are sitting on to the
toys you played with as a kid. The mass production of goods depends on the
mass consumption of goods. As the number of consumers and their need for
goods increases, it becomes necessary to adopt practices that increase
production.

Example: T​ h​ e manufacturing of cars, guns and fast food are examples of

mass production. Mass production is a method of producing goods in large
quantities at a low cost per unit. The machine tool industry gave rise to the idea
of mass production. Innovators in Britain and the United States began producing
interchangeable parts.

Although Henry Ford invented an improved version of the assembly line, the first
car to be mass produced in the United States was the 1901 Curved Dash
Oldsmobile.

Here, i would like to explain an example of H​ ONDA MOTORS.

Car Plant

HUM's first car plant was opened on 10th October 1992 and has a production
capacity of 150,000 cars per year. Operating on a two shift basis, the line
comprises Weld, Paint, Assembly Frame, Material Logistics and Vehicle Quality.

● Press Division

The car manufacturing process begins in the Press Division where we press
the body panels for the cars built on site. To start with we receive blanks: flat
metal sheets that have already been cut into the basic shape of the panel.

● Material Logistics Division

The main function of Material Logistics is to receive and deliver parts for
the Weld, Assembly Frame and Paint Departments on a ‘just in time’ basis.
Material Logistics is also responsible for maintaining the accurate inventory
control of production parts.

● Weld Division:

T​ he Weld Department produces complete welded car bodies In the final part
of the process, the doors, tailgates, fenders and bonnet are fitted and the body
undergoes a series of final quality checks. The completed body is then
transferred by the lift conveyor to the Paint Department.

● Paint Division

The main objectives of the Paint Division are to provide vehicles with a high
gloss, attractive, colourful finish, with a long term durable resistance to
corrosion.Whilst the car bodies are being painted, the Plastic Operations
Department are moulding and painting bumper.

● Assembly Frame Division

Components are physically installed onto the painted body while larger
components such as the dashboard, doors and engine are pre-assembled in
sub-assembly areas next to the main line.Next the cars transfer to an overhead
conveyor where the bumpers, fuel lines and exhaust assemblies are fitted. Then
the engine is fitted and the suspension and steering components are precisely
aligned. Wheels and tyres are put in place and the front and rear windscreens are
installed.The cars are now entering the final stages of assembly. The carpets,
seats and doors are installed Each car also receives enough fuel for it to be
driven off the production line straight into the Vehicle Quality Department for
inspection.

● Vehicle Quality Division

These checks include the engine bay, wheel alignment, brake performance,
chassis, water leakage, emissions and track tests.A final series of quality
verification processes are carried out to ensure that vehicles passed to our
customers consistently meet Honda’s high quality standards.Analysis: This

provides data that helps us maintain a consistent quality approach to all our
completed vehicles. A legal record of each manufactured vehicle, which is
retained for future reference.

Flexible Manufacturing System (FMS) or Flexible
Production System

Flexible Manufacturing System (FMS) is a computer-controlled process
technology suitable for producing a moderate variety of products in moderate,
flexible volumes."

Meaning of Flexible Manufacturing System FMS

Before we proceed to understand the meaning of a flexible manufacturing system
(FMS), first let's revise the individual meaning of three important words that
makes a term called FMS.
In context of this article, individual meaning of three important words viz.,
flexible, manufacturing and system are stated below.

1. Flexible m​ eans the capability (potential) of any process (system) whether

automated or manual to resume its original form after performing action or
series of actions such as strengthening, compression, melting, recycling,
etc.

2. Manufacturing includes any of those processes (manual or automated)

which are primarily or supplementary required for the production of a
marketable finished product (goods).

3. System can be explained as a logical and functional arrangement of

interrelated activities that operate altogether to achieve a common goal.
With this basic revision, now let's move ahead and discuss the meaning of a
flexible manufacturing system.
Flexible Manufacturing System is abbreviated as FMS. FMS is a
computer-controlled system. It is an automated factory. It contains many
workstations. Each workstation contains a set of computer-controlled machines.
Each workstation performs a different function (job). For e.g. One workstation
does only drilling of holes, another workstation focuses solely on painting, etc.
The full FMS is controlled by a central computer. Here, materials are moved from

one workstation to another and from one machine to another by
computer-controlled machines and robots.
So, the full production process is divided into many workstations. Each
workstation performs one specific function. The finished goods of one
workstation is the raw material of the next workstation and so on. The materials
are moved by automatic machines. The materials are loaded and unloaded on the
machines by robots.

Example:

Assume a scenario where the entire (from start until end) process of
manufacturing a Steam Iron is completely automated.
In this case, the production of a steam iron will go through following automated
(computer-controlled) stages or steps.

1. First, the computer-controlled system handles drilling of holes in a steam
iron.

2. It then handles the painting and/or coating of the internal and external parts
of a steam iron.

3. The automated system then performs a Quality Check of a steam iron.
4. Finally, robots do the fast packaging of those steam irons that are ready for

retail sales.
The above example using FMS is depicted in the following diagram.

THE CUSTOMER DRIVEN PRODUCTION

When a business goes out and gets information on its customers, and
subsequently develops a product based on the information gathered, then it falls
under the customer-driven category. In short, the focus is on the customer. How
do you make the customer happy? What can your business do to address their
needs? How can you meet and exceed their expectations?

This type of business, which is also often referred to as a market-driven
business, operates under the assumption that it can only survive if the customers
are satisfied. Thus, you have to make every effort of delivering high quality
products and services, coupled with ​excellent customer service ​and support.

Product development in this setting is largely based on what the customers want.
Market research is conducted, focusing on the needs and preferences of
customers. Based on the information obtained, the product development team
will then come up with a design that addresses those needs. Once the p​ roduct is
launched,​ it will be something that is created primarily to satisfy those needs.

In terms of marketing, a product-driven business is not greatly invested in
marketing the product. After all, the product has been designed and created with
the customer in mind, so it goes without saying that there is already a market
(and customers) for it.

Example: ​Samsung: A Customer-Driven Production

One of the more well-known customer-driven brands is S​ amsung,​ establishing
itself as a business that puts a lot of its efforts and resources in understanding
the customers and the market, and designing and marketing effectively to fit that
customer or market.

The first step it takes before developing a product or making important business
decisions is to find out what the customer wants. From there, they will do what
they could to fulfill those needs and requirements. Samsung is always seen to
heavily invest in customer care and after-sales services and efforts.

Samsung may not have revolutionized the smartphone, as Apple did when it
created iPhone. However, what Samsung did was listen to the clamor of users
who are looking for more affordable alternatives to the iPhone. Then it proceeded
to launch a string of smartphones with features that can easily rival those of
iPhone, and offered it at more affordable prices.

Stage 1. Understand

The first step towards innovation is to understand what trends are exploding in
the world. To accomplish this, PIT conducts field research, and collects data,
ideas and information to gain insight into the user’s perspective. The team also
studies the market and stays current with who and what is making the most
noise.

Stage 2. Ideate

In the second step thinkers and designers generate and discuss ideas by
analyzing the data collected from field research, essentially brainstorming tens or
hundreds of ideas that might provide innovation or solutions to the task at hand.

Stage 3. Concept Development

In this stage, the team compiles all the information they’ve accumulated thus far:
the business strategy, the research, and the ideas they’ve generated. They take
this wealth of information and build and refine it into one defining concept. The
concept is then developed into a solid business case for the business units.

Step 4. Concept Finalization

At the final stage, PIT works with the business units to finalize product concepts
based on market and consumer requirements.

Production Process

Production is a process of workers combining various material inputs and in
order to make something for consumption (the output). It is the act of creating
output, a good or service which has value and contributes to the utility of
individuals.

The Production process and time required to make an apple IPad and a gallon of
gasoline are different.

● Production process use either an​ analytical o​ r​ synthetic​ system,
● Time requirements call for either a ​continuous o​ r​ Intermittent ​process.

➢Analytical Production System

It reduces a raw material to its component parts in order to extract one or
more marketable products.

Example: Petroleum r​ efining breaks down crude oil into several marketable

products, including gasoline, heating oil and aviation fuel.

➢Synthetic Production System

It is the reverse of an analytical system. It combines a number of raw
materials or parts to produce finished products.

Example: ​TOYOTA ​assembly lines manufacture a car by assembling various

parts such as car body,seats, engine, electronic wiring etc

➢Continuous Production system
I​ t generates a finished products over a lengthy period of time.

Example: ​Steel industry provide a best classical example. Its blast furnaces

never completely shut down.. Petroleum refinery, chemical plants and nuclear
power plants also include in continuous production system. A shutdown can
damage equipments with extremely costly results.

➢Intermittent Production system

In the intermittent production system, goods are produced based on
customer's orders. These goods are produced on a small scale. The flow of
production is intermittent (irregular). In other words, the flow of production is not
continuous. In this system, large varieties of products are produced. These
products are of different sizes. The design of these products goes on changing. It
keeps changing according to the design and size of the product. Therefore, this
system is very flexible.

Example: ​The work of a goldsmith is purely based on the frequency of his

customer's orders. The goldsmith makes goods (ornaments) on a small-scale
basis as per his customer's requirements. Here, ornaments are not done on a
continuous basis. Similarly, the work of a tailor is also based on the number of
orders he gets from his customers. The clothes are stitched for every customer
independently by the tailor as per one's measurement and size. Goods (stitched
clothes) are made on a limited scale and is proportional to the number of orders
received from customers. Here, stitching is not done on a continuous basis.

TECHNOLOGY AND THE PRODUCTION PROCESS

Production continuous to change rapidly as computer technologies develop.
Many manufacturing plants are completely automated. It also means that
companies can design produce and adapt products more quickly to meet
customer's changing needs.

Green Manufacturing Process

It is about implementing any kind of substitution in the manufacturing process
which leads to a reduction in energy consumption, resource consumption, waste
by-products, and water usage. The design, processing and commercial use of
materials processes and products, which are economical and sustainable while
minimizing pollution and risk to human health and the environment.

Process of Green Manufacturing

● Lead-Free Soldering for electronics Reduce Emission of Pollutants
● Use of environment-friendly chemicals
● Use the lead-free solders to manufacture the products and don’t allow any

intentionally added Pb in the products, then the products can be defined as
lead-free products.
● Packaging Materials – Disposal and Environment-friendly No release of
toxic substances in product life End of Life Treatment –
● Recycling of Components,
● Collection of equipment .
● Use of Biodegradable materials .

Example: R​ avi Green Engineering (Pvt.) Ltd. aims to achieve world-class

health, safety and environmental performance levels in all its business
activities.RG is committed to managing its health, safety and environmental
issues in a manner that meets the expectations of the stakeholders, which

includes employees, community, our clients and customers.Harmony with the
environment is one of the highest priorities of Ravi Green Engineering (Pvt.) Ltd.

Robots

Robot comes from the Czech word robota, meaning drudgery or slave-like labor.
A reprogrammable, multifunctional manipulator designed to move material, parts,
tools, or specialized devices through various programmed motions for the
performance of a variety of tasks. The first modern industrial robots, called
Unimates, were developed by George Devol and Joe Engelberger in the late 50's
and early 60's. Most robots are designed to be a helping hand. They help people
with tasks that would be difficult , unsafe , or boring for a human to do. 90% of all
robots used today are found in factories. These robots are referred to as
industrial robots . Although many types can be found in manufacturing today the
most common are jointed arm robots.Ten years ago, 9 out of 10 robots were
being bought by auto companies now, only 50% of robots made today are
bought by car manufacturers. State of the Industry. An estimated 140,000
industrial robots are in use in the United States. Robots are slowly finding their
way into warehouses, laboratories, research and exploration sites, energy plants,
hospitals, even outer space. Specific task for robots

● Assembling products
● Handling dangerous materials
● Spraying finishes
● Inspecting parts, produce, and livestock
● Cutting,polishing and Welding

The robots of today are based on computer technology.The robotics industry is
thriving.Higher production capacity can be achieved using robots.Higher quality
products are manufactured using robots. Robots don’t talk back!

Computer-Aided Design and Manufacturing

CAD/CAM (computer-aided design and computer-aided manufacturing) refers to
computer software that is used to both design and manufacture products.
CAD is the use of computer technology for design and design documentation.
CAD/CAM applications are used to both design a product and program
manufacturing processes, specifically, CNC machining. CAM software uses the
models and assemblies created in CAD software to generate tool paths that drive
the machines that turn the designs into physical parts. CAD/CAM software is
most often used for machining of prototypes and finished parts.

It is the use of computer-based software tools that assist engineers and
machinists in manufacturing or prototyping product components. Its primary
purpose is to create a faster production process and components with more
precise dimensions and material consistency, which in some cases, uses only
the required amount of raw material (thus minimizing waste), while
simultaneously reducing energy consumption. CAM is a programming tool that
makes it possible to manufacture physical models using computer-aided design
(CAD) programs”

Computer Integrated Manufacturing

Combination of separate applications, such as computer aided design (CAD),
computer aided engineering (CAE), computer aided manufacturing (CAM),
robotics, and manufacturing resource planning (MRP-II). Its objective is to
streamline the manufacturing processes and to integrate them with other
business functions (such as accounting, financing, distributing, marketing)
The CIM approach increases the speed of the manufacturing process and uses
real-time sensors and closed-loop control processes to automate the
manufacturing process. It is widely used in the automotive, aviation, space and
ship-building industries.
CIM is a manufacturing approach that provides a complete automation of a
manufacturing facility. All the operations are controlled by computers and have a
common storage and distribution. The various processes involved in a CIM are
listed as follows:

● Computer-aided design
● Prototype manufacture
● Determining the efficient method for manufacturing by calculating the

costs and considering the production methods, volume of products,
storage and distribution
● Ordering of the necessary materials needed for the manufacturing process
● Computer-aided manufacturing of the products with the help of computer
numerical controllers
● Quality controls at each phase of the development.
● Product assembly with the help of robots
● Quality check and automated storage

● Automatic distribution of products from the storage areas to waiting
lorries/trucks

● Automatic updating of logs, financial data and bills in the computer system
The CIM approach has found a wide range of applications in industrial and
production engineering, mechanical engineering and electronic design
automation. CIM increases the manufacturing productivity and lowers the total
cost of manufacturing. It also offers great flexibility, quality and responsiveness.

The Job of Production Managers

As a ​production manager, you'll be involved with the planning, coordination

and control of manufacturing processes. You'll make sure goods and services are
produced efficiently and that the correct amount is produced at the right cost and
level of quality.

Functions of Production Management

The components or functions of production management are as follows:

1. Selection of Product and Design,
2. Selection of Production Process,
3. Selecting Right Production Capacity,
4. Production Planning,
5. Production Control,
6. Quality and Cost Control,
7. Inventory Control, and
8. Maintenance and Replacement of Machines

The above functions of production management are briefly discussed below.

1. Selection of Product and Design

Production management first selects the right product for production. Then it
selects the right design for the product. Care must be taken while selecting the
product and design because the survival and success of the company depend on
it. The product must be selected only after detailed evaluation of all the other
alternative products. After selecting the right product, the right design must be
selected. The design must be according to the customers' requirements. It must
give the customers maximum value at the lowest cost. So, production
management must use techniques such as value engineering and value analysis.

2. Selection of Production Process

Production management must select the right production process. They must
decide about the type of technology, machines, material handling system, etc.

3. Selecting Right Production Capacity

Production management must select the right production capacity to match the
demand for the product. This is because more or less capacity will create
problems. The production manager must plan the capacity for both short and
long term production. He must use break-even analysis for capacity planning.

4. Production Planning

Production management includes production planning. Here, the production
manager decides about the routing and scheduling.
Routing means deciding the path of work and the sequence of operations. The
main objective of routing is to find out the best and most economical sequence of
operations to be followed in the manufacturing process. Routing ensures a
smooth flow of work.
Scheduling means to decide when to start and when to complete a particular
production activity.

5. Production Control

Production management also includes production control. The manager has to
monitor and control the production. He has to find out whether the actual
production is done as per plans or not. He has to compare actual production with
the plans and finds out the deviations. He then takes necessary steps to correct
these deviations.

6. Quality and Cost Control

Production management also includes quality and cost control. Quality and Cost
Control are given a lot of importance in today's competitive world. Customers all
over the world want good-quality products at cheapest prices. To satisfy this
demand of consumers, the production manager must continuously improve the
quality of his products. Along with this, he must also take essential steps to
reduce the cost of his products.

7. Inventory Control

Production management also includes inventory control. The production
manager must monitor the level of inventories. There must be neither over
stocking or under stocking of inventories.
If there is an overstocking, then the working capital will be blocked, and the
materials may be spoiled, wasted or misused.
If there is an understocking, then production will not take place as per schedule,
and deliveries will be affected.

8. Maintenance and Replacement of Machines

Production management ensures proper maintenance and replacement of
machines and equipments. The production manager must have an efficient
system for continuous inspection (routine checks), cleaning, oiling, maintenance
and replacement of machines, equipments, spare parts, etc. This prevents
breakdown of machines and avoids production halts.

Example: Unilever’s Production Management

1. Design of Goods and Services.
The objective in this strategic decision area is to develop products that suit the
organization. Unilever’s operations management attends to product development
issues and challenges. Success is achieved through continuous innovation to
address consumer expectations. In ​Unilever’s marketing mix,​ the high variety of
consumer goods creates a complex set of needs for this decision area. For
example, the company must maintain high productivity in developing new
variants of soaps and lotions, while keeping beverage development highly
productive. Operational requirements are based on these productivity and
process needs to support the development and production of Unilever’s
consumer goods. Operations managers at Unilever ensure design for effective
output levels. These output levels correspond to market demand and
organizational capacity.

2. Quality Management.

In this strategic decision area, operations managers deal with satisfying
consumers’ expectations on product quality. Unilever’s approach involves
implementing quality standards in operational processes to satisfy product
quality requirements. For example, the company applies a threshold for defects
and related issues in production operations. These operations management
standards are derived from Unilever’s market research data, as well as
conventions in the consumer goods industry. To maintain high productivity in
quality management, corporate standards and local standards are applied for
certain product lines to support the company’s generic and product development
strategies.

3. Process and Capacity Design.​

The objective of operations management in this strategic decision area is to
ensure adequate resources and develop processes to support production.
Unilever applies robotics and automation in most of the production processes
under its control. This approach maximizes operational efficiency and
productivity. For example, Unilever’s automation of the production of its home
care products prevents inconsistency in quality. Operations managers can also
adjust production capacity to address fluctuations in demand based on seasons
and special occasions. Moreover, Unilever conducts regular evaluations of
processes and capacity requirements to keep the business productive, while
minimizing issues in operations.

4. Location Strategy

Efficiency and cost-effectiveness of locations of operations are the objectives in
this strategic decision area of operations management. Unilever aims to minimize
production costs and transport costs of its consumer goods to reach target
markets. The company’s operations managers maintain facility locations that
optimize proximity to labor markets, suppliers, and target consumers. For
example, Unilever’s production hubs are typically proximal to the largest
consumer goods markets. The company also avoids locations that have political
and cultural issues that adversely affect operational productivity. This approach
contributes to keeping Unilever’s business processes productive.

5. Layout Design and Strategy

Efficient movement of information and resources is the operations management
objective in this strategic decision area. Efficient flow of information is achieved
through computing technologies and networks in Unilever’s facilities. For
example, operations managers easily access pertinent data through mobile and
online consoles. Such data is applied to decide on business process adjustments
to ensure productivity in Unilever’s facilities. Also, the company’s operational
requirements are the direct basis for layout designs. For instance, Unilever
maintains productive inventory operations through aisle layouts that minimize
the travel distance of consumer goods across distribution facilities.

6. Inventory Management

Optimal inventory ordering and holding are the objectives in this strategic
decision area of operations management. Unilever is concerned with maintaining

an adequate inventory of consumer goods to enable the business to respond to
changes in the market. For example, the company’s inventory size is sufficient to
address sharp increases in demand. Thus, operations managers must accurately
determine how much materials and consumer goods are needed in Unilever’s
inventory. These amounts must sufficiently support the company’s productivity
goals in its operations. To do so, Unilever applies the perpetual method and
periodic method of inventory management. In addition, operational goals for the
inventory are met through just-in-time (JIT) inventory management. JIT minimizes
holding time and corresponding costs in Unilever’s inventory operations.

7. Scheduling

This strategic decision area focuses on short-term and intermediate schedules
for resource utilization. For human resources, Unilever relies on localized
operations management to address needs in local or regional consumer goods
markets. For example, regional operations managers implement and adjust
schedules based on regional market conditions. This approach makes Unilever’s
operations flexible in satisfying target consumers. The flexibility also contributes
to high operational productivity.

8. Maintenance.

Operations managers aim at high reliability and stability of business processes
in this strategic decision area. Unilever maintains redundancy measures to
ensure process capacity when demand suddenly peaks. Also, the company’s
operations management involves a flexible scheme that allows some degree of
organizational movement of personnel within facilities. For example, Unilever
assigns designated personnel to other areas for sufficient capacity and
productivity when demand fluctuates in the consumer goods market. In addition,
operational issues are proactively addressed through regular monitoring,
evaluation and problem solving. For instance, Unilever has dedicated teams that
analyze business processes to preventively implement solutions that keep
operations highly productive.

Importance of Quality

Quality management has become an essential part of all businesses. No
matter what type of industry you call your executive home, this topic is sure
to be on the forefront of all business processes you implement.

Quality management is the process of controlling, ensuring, and improving
quality; both in business operations and productivity. If customers are
satisfied, chances are they feel they are receiving high-quality products that

are constantly improved upon in order to keep up with the ever-changing
times

Products and services are also important parts of quality management. No
matter what a particular organization sells, quality is a necessary part of it.
Customers expect good products and services and want to know that their
hard earned money is going toward something that will not only benefit them
now, but will also last for a long time.

A successful business is like a well-oiled machine. Team members work
together to ensure their area turns out quality work. All those areas come
together in one big corporation that offers customers products or services
that serve a specific purpose. That is why it is important for managers to keep
all areas informed of what is going on in the organization as a whole. If each
area understands what the others are doing and why they exist, the work
turned out will be more uniform and pointed toward a specific cause.

High quality means success. Happy customers will be returning ones and that
is what every organization strives for at the end of the day. Quality
management is a process that must receive constant attention in order to be
successful. That is why there are employees devoted to controlling,
maintaining, and improving quality on an ongoing basis.

Managing quality is crucial for small businesses. Quality products help to
maintain customer satisfaction and loyalty and reduce the risk and cost of
replacing faulty goods. Companies can build a reputation for quality by gaining
accreditation with a recognized quality standard, such as ISO 9001, published by
the International Organization for Standardization.

Customer Expectations

Your customers expect you to deliver quality products. If you do not, they will
quickly look for alternatives. Quality is critical to satisfying your customers and
retaining their loyalty so they continue to buy from you in the future. Quality
products make an important contribution to long-term revenue and profitability.
They also enable you to charge and maintain higher prices.

Reputation

Quality influences your company’s reputation. The growing importance of social
media means that customers and prospects can easily share both favorable
opinions and criticism of your product quality on forums, product review sites
and social networking sites, such as Facebook and Twitter. A strong reputation
for quality can be an important differentiator in markets that are very competitive.
Poor quality or a product failure that results in a product recall campaign can
create negative publicity and damage your reputation.

Meeting Standards

Accreditation to a recognized quality standard may be essential for dealing with
certain customers or complying with legislation. Public sector companies, for
example, may insist that their suppliers achieve accreditation with quality
standards. If you sell products in regulated markets, such as health care, food or
electrical goods, you must be able to comply with health and safety standards
designed to protect consumers. Accredited quality control systems play a crucial
role in complying with those standards. Accreditation can also help you win new
customers or enter new markets by giving prospects independent confirmation of
your company’s ability to supply quality products.

Costs

Poor quality increases costs. If you do not have an effective quality control
system in place, you may incur the cost of analyzing nonconforming goods or
services to determine the root causes and retesting products after reworking
them. In some cases, you may have to scrap defective products and incur
additional production costs to replace them. If defective products reach
customers, you will have to pay for returns and replacements and, in serious
cases, you could incur legal costs for failure to comply with customer or industry
standards.

Quality Control

A definition of quality control is:
The process of inspecting products to ensure that they meet the required quality
standards
This method checks the quality of completed products for faults. Quality
inspectors measure or test every product, samples from each batch, or random
samples – as appropriate to the kind of product produced.
The main objective of quality control is to ensure that the business is achieving
the standards it sets for itself.
In almost every business operation, it is not possible to achieve perfection. For
example there will always be some variation in terms of materials used,
production skills applied, reliability of the finished product etc.
Quality control involves setting standards about how much variation is
acceptable. The aim is to ensure that a product is manufactured, or a service is
provided, to meet the specifications which ensure customer needs are met.
There are several methods of quality control.
At its simplest, quality control is achieved through inspection. For example, in a
manufacturing business, trained inspectors examine samples of
work-in-progress and finished goods to ensure standards are being met.

For businesses that rely on a continuous process, the use of statistical process
control ("SPC") is common. SPC is the continuous monitoring and charting of a
process while it is operating. Data collected is analysed to warn when the
process is exceeding predetermined limits With quality control, inspection is
intended to prevent faulty products reaching the customer. This approach means
having specially trained inspectors, rather than every individual being
responsible for his or her own work. Furthermore, it is thought that inspectors
may be better placed to find widespread problems across an organisation.

ISO STANDARDS

The ISO 9000 family of ​quality management systems standards is designed to
help organizations ensure that they meet the needs of customers and other
stakeholders while meeting statutory and regulatory requirements related to a
product or program. I​ SO 9000 deals with the fundamentals of quality management
systems, ​including the seven quality management principles upon which the
family of standards is based. ISO 9001 deals with the requirements that
organizations wishing to meet the standard must fulfill.

Third-party certification bodies provide independent confirmation that
organizations meet the requirements of ISO 9001. Over one million organizations
worldwide a​ re independently certified, making ISO 9001 one of the most widely
used management tools in the world today. However, the ISO certification
process has been criticized ​as being wasteful and not being useful for all
organizations.

HISTORY

ISO 9000 was first published in 1987 by ISO (​International Organization for
Standardization​). I​ t was based on the BS 5750 series of standards from B​ SI that
were proposed to ISO in 1979. ​However, its history can be traced back some
twenty years before that, to the publication of the ​United States Department of
Defense MIL-Q-9858 standard in 1959. MIL-Q-9858 was revised into the NATO
AQAP series of standards in 1969, which in turn were revised into the BS 5179
series of guidance standards published in 1974, and finally revised into the BS
5750 series of requirements standards in 1979 before being submitted to ISO.

PAKISTAN STANDARDS AND QUALITY CONTROL
AUTHORITY

Quality Control Center (QCC), of Pakistan Standards & Quality Control Authority
(PSQCA) is committed to ensure continual improvement of testing facilities and

processes, including human resource development, to achieve customers’
satisfaction. In accordance with ISO 17025, QCC is also committed to:

● Consistently provide quality testing services to its customers to meet their
needs & requirements.

● Ensure that all personnel are competent for the assigned tasks, familiarize
with quality documentation and should follow & implement policies and
procedures accordingly.

● Provide appropriate trainings to its staff, especially to the technical
personnel to ensure integrity of testing services and to meet the national,
regional and international test method requirements.

● Strictly maintain Customers’ confidentiality.
● Being a multi-functional organization, PSQCA ensures not authorize to any

component or person to interfere or influence others work.
● Ensure active participation of the employees of QCC during planning and

continuous improvement and sustained efforts to meet the quality
objectives.

Conclusion

The decisions where and when to locate a facility and how big to make it are
critical to the success Of every business be it a ​manufacturing or service
operation. As a result, significant analysis and ​planning are required to ensure
that a potential location will properly support the long-term strategy and
objectives of the firm. In addition the decision where to locate a new facility is
complex involving both qualitative and q​ uantitative factors.​ Like so many topics in
operations ​management today location decisions and capacity planning are
being significantly influenced, not only by advances in i​ nformation technology
but also by the trend toward globalization. As more firms continue to focus on
their core competencies, management has changed its perspective on available
capacity, while at the same time becoming more dependent on its suppliers. The
growth in international markets as well as cheaper labor and other incentives
offered by foreign countries,also has significantly affected decisions on where to
locate new operations.

Key Terminology

● Capacity planning—​ T​ he process of determining the production

capacity needed by an organization to meet changing demands for its
products. Different types of capacity exist. For example, ​design
capacity is the maximum amount of work that an organization is
capable of completing in a given period; ​effective capacity is the
maximum amount of work that an organization is capable of completing

in a given period due to constraints such as quality problems, delays,

and material management.

● Efficiency​—P​ erforming activities at the lowest possible cost.
● Enterprise resource planning (ERP)​—​Large, sophisticated software

systems used for identifying and planning the enterprise-wide

resources needed to coordinate all activities involved in producing and

delivering products.

● Forecasting​—​The process of predicting future events, including

product demand.

● Location analysis​—I​ dentifying the best location for facilities.
● Mass customization—​ ​The ability of a firm to highly customize its

goods and services at high volumes through its operations

management function.

● Operations management (OM)​—​The business function that refers to

the transformation process of converting raw materials into finished

goods and services; OM used to be called production and operations

management (POM) or just production. As the field evolved from being

primarily tactical (e.g., making inventory and scheduling decisions on

the manufacturing floor) to being strategic (today there are many CEOs

from the OM field), the term moved to focus on the broad notion of

operations rather than mere production.

● Product design—​ T​ he process of deciding on the unique and specific

features of a product.

● Process ​selection—The process of identifying the unique features of

the production process that will give the product its unique

characteristics. Process selection typically goes hand in hand with

product design, as we need to create a process that gives rise to the

particular product design desired. An excellent product design is

worthless if a process for its creation cannot be developed.

● Productivity​—A​ measure of how efficiently an organization converts

inputs into outputs. It is usually measured by a ratio of output divided

by input. Productivity is essentially a scorecard of how efficiently
resources are used and a measure of competitiveness. Productivity is
measured on many organizational levels—from measuring labor and
machine productivity to measuring the productivity of an entire
organization or even a nation. As a result it is of interest to a wide
range of people.

● Quality m​ anagement—The process used to ensure the quality of a

product, including measuring quality and identifying quality problems.
● Reengineering—The process of redesigning a company’s processes to

increase efficiency, improve quality, and reduce costs. In many
companies things are done in a certain way that has been passed down
over the years. Operations management is a key player in a company’s
reengineering efforts.
● Scheduling—The process of deciding on the timing and use of
resources within an operation; it addresses questions such as who will
work on what work schedule and in what sequence jobs will be
processed.

● Value added—​ A term used to describe the net increase created during

the transformation of inputs into outputs. The OM function seeks to
create value added in the transformation process.

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