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Week 1: Understanding Operations

Week 1: Understanding Operations

“Introduction … Operations in an Organization … Alternative Configurations in Operations … Performance Measures in Operations … Wrap-Up”
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Summaries

  • Week 1: Understanding Operations > 1.1 Operations in an Organization > Importance of Operations Management
  • Week 1: Understanding Operations > 1.2 Alternative Configurations in Operations > Alternative Flow Systems - A Quick Recap
  • Week 1: Understanding Operations > 1.3 Performance Measures in Operations > Performance Measures Part 1
  • Week 1: Understanding Operations > 1.3 Performance Measures in Operations > Performance Measures Part 2
  • Week 1: Understanding Operations > 1.4 Week 1 Wrap-Up > Summary

Week 1: Understanding Operations > 1.1 Operations in an Organization > Importance of Operations Management

  • That is with the value and with the efficiency, it is converted into the operations in the most… …important three spheres of cost, quality and delivery.
  • One day there can be extraordinary performance and other day there can be a disaster.
  • Operations Management ensures and controls a sustainable delivery of … most efficient … operation and it will help us to… …improve day by day on the previous performances.

Week 1: Understanding Operations > 1.2 Alternative Configurations in Operations > Alternative Flow Systems – A Quick Recap

  • First we saw the continuous flow systems, auto-mobile manufacturing, process industries and so on.
  • Second, we saw intermittent flow systems where we talked about a variety of different types of industries… …where customization was the issue, and thirdly we saw the jumbled flow systems.

Week 1: Understanding Operations > 1.3 Performance Measures in Operations > Performance Measures Part 1

  • We said how flow and variety, volume, all influence complexity of operations management.
  • Suppose, we want to improve the operations and start making certain operational choices and changes in the system which we always do.
  • The question that we need to answer is how do we assess the impact of these choices that we make in operations? Also, we would like to know which aspects of business does it really affect and which of them are important? So, in order to understand these aspects of choices, making a certain impact on performance of operations, and so on… …we will understand this in some detail by taking a couple of examples.
  • Let’s look at this example here which is to do with let’s say IndiGo Airlines and suppose let’s look at some of the capacity decisions.
  • In this case, we took an example and showed how it affects cost and the responsiveness.
  • What we see here is some of the capacity choices, some of the operational choices can affect cost… …responsiveness, flexibility as some of the examples that we have taken.
  • We have seen two small examples, one – certain capacity choices… …how it affects performance metrics like cost and responsiveness and operational choices which can potentially affect cost… …responsiveness and flexibility.
  • Let’s build these stat further and see what more we should think about in terms of these performance metrics.
  • Let’s call them as manufacturer A and manufacturer B. Now, manufacturer A has a production volume of 5 million and manufacturer B has production volume of 10 million… …which is the basic reference with which we may be able to compare.
  • Now, the number of employees for manufacturer A is 35,000 and the number of employees for manufacturer B is 120,000.
  • Design to customer delivery; manufacturer A 27 months and manufacturer B 36 months, which can affect, of course, the flexibility… …it can also affect the delivery and the flexibility because how well they are able to respond.
  • Number of models of that product being offered; manufacturer A has much higher 45… …which means he is better off in terms of flexibility compared to manufacturer B. Defects at the assembly line; 1,400 ppm, whereas, manufacturer B has 8,900.
  • Order to delivery time directly affects both flexibility and delivery.
  • What is really happening here is several choices that an operation system makes which manifest in terms of some of the measures… …which we showed here, and all of them map onto certain metrics… …certain performance measures, which may be important for the customers.

Week 1: Understanding Operations > 1.3 Performance Measures in Operations > Performance Measures Part 2 

  • Just now we saw small little examples and performance metrics such as cost, quality which we saw in some detail… …will help us assess the impact of these choices.
  • I think we need to put these two together and make an appropriate choice… …that is very important step in terms of improving operations.
  • Let’s put together few important quality measures, performance measures.
  • Top of the list is going to be quality and quality one can measure in terms of parts per million, defects per million opportunities… …quality cost, first pass yield.
  • The second important performance metric could be cost and moment we say cost, it can be measured in terms of cost of production… …procurement cost, investment in inventory, so many such measures are possible.
  • Delivery quote-customer ask for something how quickly we can deliver-waiting times-variety of measures on waiting times-all of them …come under responsiveness.
  • Number of new models, patents, that we could develop process patents, product patents and all those which we can do and then learning.
  • Therefore training time, suggestions per employee and such measures.
  • So we need measures on that and finally, improvement.
  • Improvement per say needs also some measures, so organisations use measures like non-value added content… …reduction in some of the measures over a period of time.
  • Which of these are important for our organisation and why? And once we develop that clarity, then out of this dashboard of performance measures… …we will be able to focus on a few of them, so that we will truly build competitiveness for organisations and benefit from that exercise.

Week 1: Understanding Operations > 1.4 Week 1 Wrap-Up > Summary

  • Doesn’t really matter and there are several decisions regarding capacity, design, supply chain, resource deployment… …and so many other operational choices, which are all part of this decision making and all these in a collective sense create the competitive… …advantage for firms from operations.
  • What’s the first step in this? First step in this process is actually understanding operations particularly the configurations and some broad patterns… …in organisations.
  • This led us to an understanding that volume and the variety of offerings which organisations make determines the flow patterns… …in organisations and we also found that ultimately they influence the complexity of managing operations.

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