Concept of Production and Operation Management – OM

Understanding the Concept of Production and Operation Management is very easy. in this post we are going to learn about the Concept of Production and Operation Management.

Production” and “Management” are common terms that are defined in many ways. Generally, Production is ‘the act or process producing’ and Management is the ‘art of managing’ thus defining Production Management as the ‘art of managing production process best support the organizational goals and policies’.

The concept of Production and Operation Management – OM


For this manage of production process various behavioral, statistical, modeling and scientific theories as well as techniques are widely used, thus making Production Management a multifaceted discipline of General Management.

The output of the production process is either goods intangible products or service that are intangible products or both goods Categorizing this, organizations that produce intangible and services.

Products are called Manufacturing organization and that provide service are called service organization.

However some lies in between i producing product as well as providing service.

Production Management when applied to service industry is often called as Operations Management.

The term ‘Production and the Operations management‘ is being increasingly replaced by simply Operations management, as the production function relating to the manufacturing organizations has become a part of the operations.

Operations management is the broad term which includes manufacturing as well as service organizations.

However, in general Production Management and Operation Management could be used simultaneously for both manufacturing and service organization.

Some Definitions of Operations Management


Operations management is the set of activities that creates value in the rm of goods and services by transforming inputs into outputs.

– Jay Heizer and Barry Render

Operations management can be defined as the design, operation and improvement functions of the production systems that make the firm’s primary products or services.

– Richard B. Chase, Nicholas J. Aquilano and F.Robert Jacobs

The Terms Operations Management refers to the direction and control of the processes that transform inputs into products and services.

– Lee J. Krajewski, Larry P. Ritzman

Production and Operations Management (POM) is defined as the design, operation, and improvement of the transformation process, which converts the various inputs into the desired outputs of the products and services

– Kaniska Bedi

Being one of the important functional area of general management, it has a separate identity, and line authority similar to other areas like Marketing, Finance, Human Resource Management, and Material Management.

As the scope and areas of these functional departments are quite interrelated, there must be strong co-ordinations and functional interactions between these departments to materialize the organizational goal.

Managing production process which is now defined as Production management is concerned with the management of conversion process i.e conversion of input to desired output.

Inputs may be land, labor, capital, management, raw material, etc that are previously planned and are available to the organization.

Desired outputs mean output having desired characteristics in terms of cost, quality, and quantity to achieve the interested parties (consumer or other stake holder’s satisfaction).

Difference between Production and Operations Management


Production and operations management are more similar than different: if manufacturing products is 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 sounds 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.

We will be referring to them jointly as POM from here on in this article, for the benefit and convenience of all the parties involved.

The fuss about production and systems


  • Production is a term which has caught the fancy of every industrialist ever since Adam Smith propounded the idea of “specialization of labor”. It is best envisioned as a piece-wise process (think about a typical production line with every worker doing one and only one task at a frenetic speed), and this piece-wise production enabled better quality, higher throughput, lower individual dependency and lesser labor costs.It is a bit hard to fathom that the same fundamental idea is responsible for both cheap cars (Ford pioneered large scale manufacturing sequences through assembly lines) and cheap burgers (though McDonald’s is actually in the real estate business).
  • The production systems are frequently classified in the following buckets:
    • Mass Production: Utilizes standardized discrete assemblies in a continuous process, suitable for very large volumes of production—all outputs following the same path. Generally associated with mind-numbing repetition, very specific machinery and a labor force low on skill/creativity.
    • Continuous Production: Non-flexible mode of production in which the whole sequence of operations is prearranged in a definite set-up.
    • Batch production: American Production and Inventory Control defines batch production as “a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” Enough said.
    • Job Shop Production: Characterized by custom specifications by customers for a limited quantity of products, use of general purpose machines and comparatively more creative/skilled labor.
  • There are a few decision areas which are of utmost importance in POM, such as design, quality, location selection, human resource allocation, supply chain management and maintenance.
  • The decisions arising from a POM perspective often decide the core priorities of an organization— What makes us better than the competitors? Will we compete on cost, quality, delivery time, design/form factor, ease of use, or something else?
  • There are some predefined objectives of production management, which can be broken down into:
    • right quality,
    • right quantity,
    • right time and
    • right cost
  • Production management can essentially be seen as an optimization problem — the goal is to make the process as predictable as possible (as all of us do not share the same enthusiasm for surprises).
  • The objectives of operations management are a tad more extensive and take a couple of things more into the fold: customer service and resource utilization.
    • Almost all the things in operation management converge towards a single focal point: the customer. Customer satisfaction is a barometer of things moving in the right direction.
    • Resource utilization is equally imperative — the process of obtaining the output from input through the path of least resistance, i.e. through least wastage and maximum utilization of resources.
    • Scoring high on one usually leads to deterioration in performance of the other (utilization v/s customer service), and their balance is usually the nightmare of an operations manager — but is definitely a worthy goal to look forward to.

Salary and Jobs in Operations Management


According to PayScale, POM is a male dominated profession with highly satisfied professionals (we refrain from making any hasty conclusions).

Professionals in Operations management jobs earn a decent pay package as well. The average salary of an operations manager is around Rupees 7.2 Lakhs (annually).

While IT majors like TCS, IBM and Amazon recruit a good chunk of people for jobs in operations management, Tata Motors et al seem to have a special liking towards them, perhaps because of the bigger potential leaps in operational efficiency.

Operations management is sufficiently entwined with a couple of terms which have managed to catch the fancy of almost every multi-national corporation out there: supply chain management and logistics.

In an increasingly small world where the average coffee pouch might have visited more countries than the average consumer, supply chain and logistics is definitely here to stay.

Organizations like Apple can boast of millions of phone sales every quarter due to the lean supply chain practices and impeccable logistics which they have cared to develop smartly over the years.

Being in touch with the ground reality and getting your hands dirty seems to be a smart choice after all.

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