Production and Operations Management
Production, the creation of products and services, is an essential function in every firm. The production turns inputs, such as natural resources, raw materials, human resources, and capital, into outputs, which are products and services.
Production and operations management involves three main types of decisions, typically made at three different stages:
- Production planning. The first decisions facing operations managers come at the planning stage. At this stage, managers decide where, when, and how production will occur. They determine site locations and obtain the necessary resources.
- Production control. At this stage, the decision-making process focuses on controlling quality and costs, scheduling, and the actual day-to-day operations of running a factory or service facility.
- Improving production and operations. The final stage of operations management focuses on developing more efficient methods of producing the firm’s goods or services.
Definition:
Production / Operations Management is defined as the process which transforms the inputs/resources of an organization into final goods (or services) through a set of defined, controlled and repeatable policies.
By policies, we refer to the rules that add value to the final output. The value-added can be in different dimensions, but the industrial set-up is mostly concerned with the duo of quality and throughput.
Operations Management
As to deliver value for customers in products and services, it is essential for the company to do the following:
- Identify the customer needs and convert that into a specific product or service (numbers of products required for a specific period of time)
- Based on product requirement do back-ward working to identify raw material requirements
- Engage internal and external vendors to create a supply chain for raw material and finished goods between vendor → production facility → customers.
Difference between Production and Operations Management
Production and operations management are more similar than different: if manufacturing products are a prime concern then it is called production management, whereas management of services is somewhat broader in scope and called operations management (because manufacturing services sound absurd, right?).
The line between products-based and services-based organizations is blurring rapidly as well— car manufactures need to service their cars and the retailers manufacture their own brand labels.
A high-level comparison which distinct production and operations management can be done on the following characteristics:
- Output: Production management deals with the manufacturing of products like (computer, car, etc) while operations management cover both products and services.
- Usage of Output: Products like computer/car are utilized over a period of time whereas services need to be consumed immediately
- Classification of work: To produce products like computer/car more capital equipment and less labor are required while services require more labor and lesser capital equipment.
- Customer Contact: There is no participation of customers during production whereas for services a constant contact with a customer is required.