Managing

Product and
Service
Operations
ENGR. MARY KAYE
PAQUIBOT
WHAT IS OPERATIONS?
Operations refers to "any process that accepts
inputs and uses resources to change those inputs in
useful ways."
Examples of final goods and services are as follows:
1. Services like those for the construction of ports, high-rise buildings,
roads, bridges, etc., which are produced by constructions firms;

2. Electrical products like transformers, circuit breakers, switch gears,

power capacitors, etc., which are produced by electrical
manufacturing firms;

3. Mechanical devices like forklifts, trucks, loaders, etc., which are

produced by manufacturing firms;

4. Engineering consultancy services like those for construction

management and supervision, project management services, etc.,
which are produced by engineering consultancy firms.
OPERATIONS
MANAGEMENT
Operations is an activity that needs to be managed
by competent persons.

Aldag and Stearns accurately defined Operations

Management as "the process of planning,
organizing, and controlling operations to reach
objectives efficiently and effectively.”
 EFFICIENCY vs
EFFECTIVENESS
EFFICIENCY
It s related to "the cost of doing something, or the
resource utilization involved."

EFFECTIVENESS
Effectiveness refers to goal accomplishment.
OPERATIONS AND THE
ENGINEER MANAGER
The engineer, as operations manager, must find ways to
contribute to the production of quality goods or services
and the reduction of costs in his department. The typical
operations manager is one with several years of
experience in the operations division and possesses an
academic background in engineering.
 TYPES OF
TRANSFORMATION
Various types of transformation process:
PROCESS
Manufacturing processes
a) job shop
b) batch flow
c) worker-paced line flow
d) machine-paced line flow
e) batch/continuous flow hybrid
f) continuous flow

Service processes
a) service factory
b) service shop
c) mass service
d) professional service
MANUFACTURIN
G PROCESSES
“are those that refer to the making of
products by hand or with machinery.”
 Job Shop
A job shop is one whose production is "based on sales orders for a variety
of small lots."
• Depending upon the customer's needs, a job shop may produce a lot
consisting of 20 to 200 or more similar parts.
• The type of layout used by job shops is the process layout, where similar
machines are grouped together.
• The typical size of operation is generally small. Job shops are labor
intensive and machines are frequently idle.
 Batch Flow
The batch flow process is where lots of generally own designed
products are manufactured. It is further characterized by the
following:

1. There is flexibility to produce either low or high volumes.

2. Not all procedures are performed on all products.
3. The type of equipment used are mostly for general purpose.
4. The process layout is used.
5. The operation is labor intensive, although there is less
machine idleness.
6. The size of operation is generally medium-sized.
Batch Flow
Worker-Paced Assembly Line
An assembly line refers to a production layout arranged in a
sequence to accommodate processing of large volumes of
standardized products or services.

The quality and quantity of output in a worker-paced

assembly line depends to a great extent to the skill of the
labor utilized.
 Worker-Paced Assembly Line
The worker-paced assembly line is characterized by the following:

1. The products manufactured are mostly standardized.

2. There is a clear process pattern.
3. Specialized equipment is used.
4. The size of operation is variable.
5. The process is worker-paced.
6. The type of layout used is the line flow.
7. Labor is still a big cost item.
Machine-Paced Assembly Line
This type of production process produces mostly standard products with
machines playing a significant role. Among its other features are as follows:

1. The process is of clear, rigid pattern.

2. Specialized type of equipment is used.
3. The line flow layout is used.
4. Capital equipment is a bigger cost item than labor.
5. Operation is large.
6. The process is machine-paced.
Machine-Paced Assembly Line
 Continuous Flow
The continuous flow processing is characterized by "the rapid rate at
which items move through the system."

1. There is economy of scale in production, resulting to

low per unit cost of production.
2. The process is clear and very rigid.
3. Specialized equipment are used.
4. The line flow layout is used.
5. Operations are highly capital intensive.
6. The size of operations is very large.
7. Processing is fast.
Continuous Flow
 Batch / Continuous Flow
Hybrid
This method of processing is a combination of the batch
and the continuous flow.

Two distinct layouts are used, one for batch and one for
the continuous flow. The typical size of operation is also
very large giving opportunities for economies of scale.
 Batch / Continuous Flow
Hybrid
Examples of companies using the batch/continuous flow hybrid are breweries,
gelatin producers, and tobacco manufacturers.
Service Processes
Service processes are those that refer to the
provision of services to persons by hand or with
machinery.
Service Factory
A service factory offers a limited mix of services which
results to some economies of scale in operations.

This also affords the company to compete in terms of price

and speed of producing the service.

The process layout preferred by the service factory is the

rigid pattern of line flow processing.
Service Shop
A service shop provides a diverse mix of services. The layout
used are those for job shops or fixed position and are
adaptable to various requirements.
Mass Service
A mass service company provides services to a large number of
people simultaneously. A unique processing method is, therefore,
necessary to satisfy this requirement.
The process layout used is typically fixed position where
customers move through the layout.
PROFESSIONAL SERVICES
These are companies that provide specialized services to other firms
SUMMARY:
or individuals.
1. Engineering
— Engineeringoractivities
managementneed toconsulting
be managedservices whichare
and engineers help in
improving
sometimes the plantin layout
placed or the
positions efficiency
where of a company.
they have to learn
management
2. Design skills. which supply designs for a physical plant,
services
— Successful
products, andmanagers become
promotion possible only if those having the
materials.
3. ability and motivation
Advertising agenciesare which
given the opportunity
help promotetoamanage.
firm's products.
4. Accounting services.
5. Legal services.
6. Data processing services.
7. Health services.
PROFESSIONAL SERVICES
Professional service firms offer a diverse mix of services.

SUMMARY:
Professional service firms are, oftentimes, faced with delivery problems brought
about by non-uniform demand. Strategies that may be used depending on the
— Engineering activities need to be managed and engineers are
situation are as follows:
sometimes placed in positions where they have to learn
management skills.
1. The use of staggered work-shift schedules.
2. — Successful
The hiring ofmanagers become
part-time staff.possible only if those having the
ability and motivation are given the opportunity to manage.
3. Providing the customer with opportunity to select the level of
service.
4. Installing auxiliary capacity or hiring subcontractors.
5. Using multi-skilled floating staff.
6. Installing customer self-service.
 IMPORTANT PARTS OF
PRODUCTIVE SYSTEMS
Productive systems consist of six important activities as
follows:

1. Product Design
2. Production Planning and Scheduling
3. Purchasing and Materials Management
4. Inventory Control
5. Work Flow Layout
6. Quality Control
 PRODUCT DESIGN
Product design refers to "the process of creating a set of product
specifications appropriate to the demands of the situation."

Customers expect that the products they buy would perform

according to assigned functions. Customers avoid buying products
with poor product design.
Companies wanting to maintain or improve its market share keeps
a product design team composed of engineers, manufacturing, and
marketing specialists.
PRODUCTION PLANNING AND
SCHEDULING
Production planning may be defined as "forecasting the future
sales of a given product, translating this forecast into the demand it
generates for various production facilities, and arranging for the
procurement of these facilities.

Scheduling is the "phase of production control involved in

developing timetables that specify how long each operation in the
production process takes."
PURCHASING AND MATERIALS
MANAGEMENT
The management of purchasing and materials must be undertaken
with a high degree of efficiency and effectiveness specially in firms
engaged in high volume production.

Materials management refers to "the approach that seeks efficiency

of operation through integration of all material acquisition,
movement, and storage activities in the firm"
INVENTORY CONTROL
Inventory control is the process of establishing and maintaining
appropriate levels of reserve stocks of goods."

There are ways of achieving proper inventory control. They are as

follows:
1. Determining Reorder Point and Reorder Quantity

2. Determining Economic Order Quantity

3. The Use of Just-In-Time (JIT) Method of Inventory Control

4. The Use of the Material Requirement Planning (MRP) Method of

Planning and Controlling Inventories.

WORK-FLOW LAYOUT
Work-flow layout is the process of determining the physical arrangement of the
production system. In the transformation process, the flow of work may be done
either haphazardly or orderly.
A good work-flow layout will have the following benefits:
1. Minimize investment in equipment.
2. Minimize overall production time.
3. Use existing space most effectively.
4. Provide for employee convenience, safety, and comfort.
5. Maintain flexibility of arrangement and operation.
6. Minimize material handling cost.
7. Minimize variation in types of material-handling equipment.
8. Facilitate the manufacturing (or service) process.
9. Facilitate the organizational structure.
QUALITY CONTROL
Quality control refers to the measurement of products or services
against standards set by the company.

Certain standard requirements are maintained by the management to

facilitate production and to keep customers satisfied.

Poor quality control breeds customer complaints, returned

merchandise, expensive lawsuits, and huge promotional
expenditures.
Assignment No. 1
Draw the Transformation process fit for your company.
Indicate where improvements in the flow could be
introduced.