Production Management Versus Operations Management

The primary objective of Production and Operations Management is to effectively manage and utilise those resources of the firm that are essential for the production of goods and services. Production management refers to the management of activities related to the production of goods.

On the other hand, operations management is a step ahead of production management, or it can be said that the production management is a part of the operations management. Operations Management, is simply the administration of business operations, by the managers of the organisation.

What is Production?

The Production Function shows the relationship between the quantity of output and the different quantities of inputs used in the production process. In other words, it means, the total output produced from the chosen quantity of various inputs.

Production is defined as the step by step conversion of one form of material into another form through chemical or mechanical processes to create or enhance the utility of the product to the user. At each stage of processing, there is value addition. Generally, production is the transformation of raw material into the finished goods. These may be fixed or variable depending upon the nature of the business. Production is a value addition process.

What is Management?

Management is the art of getting things done through and with people in formally organised groups.

An organisation fulfils the needs of its customers by providing products and services.

Job of a Production Manager:

To oversee the work of people and machinery to convert inputs(materials and resources) into finished goods and services in a given time scale for delivery to the end customer(s). It is not rocket science. It is as simple as that.

How to Manage Production:

By applying principles, conversion/operation and final goods and services.

Production Manager Tasks:

Typical Manufacturing Organisation:

When the principles of management are applied to the production function of the organisation, it is known as production management. It is a process of planning, scheduling, supervising and controlling the activities involved in the production of goods and services, i.e. the transformation of various resources into the value-added product, in an efficient and timely manner.

In this process, the decision regarding the quality, quantity, price, packaging, design, etc. are taken by the production and operations managers with the guidance and approval of the customer(s), so as to ensure that the output produced confirms the specifications.

The difference between production and operations management is very thin and blurred.

Definition of Operations Management

Operations Management, as a field, deals with the production of goods and services. It is defined as decision making in the operations function and integration of these decisions with other functions.

The unifying feature of service and manufacturing operations is that both can be viewed as transformation processes.

Operations Management is the management of day to day business activities, so as to ensure smoothness and effectiveness of operations in the organisation. It involves administration of production, manufacturing and provision of services in an organisation.

Operations management was previously called production management, clearly showing its origins in manufacturing. Historically, it all began with the division of production, starting as early as the times of ancient craftsmen, but spreading more widely only by adding the concept of interchangeability of parts in the eighteenth century, ultimately sparking the industrial revolution.

Operations Management is that branch of management, that deals with designing, implementing and controlling the production process, i.e. converting inputs into the output, using resources, in order to provide desired goods and services to customers while adhering to the policies stated by the management of the organisation.

Operations management is now a multidisciplinary functional area in a company, along with finance and marketing. It makes sure the materials and labour, or any other input, is used in the most effective and efficient way possible within an organisation – thus maximising the output.

Operations Management Flow chart:

Operations Management is all about the optimum utilisation of company’s resources, i.e. the resources must be utilised as much as possible, by minimising loss, wastage and under-utilisation.

Operations Management:

Organisation Operations Management System:

Four Major Decision Responsibilities of Operations Management

 1. Process: Decisions on this category determine the physical process or facility used to produce the product or service & the associated workplace practices – type of equipment, process flows, layout of the facility, job design & workforce policies.

2. Quality: Quality decisions must ensure that quality is designed and built into the product in all stages of operations – standards must be set, people trained and the product or service inspected.

3. Capacity: Must be aimed at providing the right amount of capacity at the right place at the right time – scheduling of people, equipment and facilities.

Short-range: sub-contracting, extra shifts, rental

Long-range: size of the physical facilities, suppliers.

4. Inventory: Determine what to order, how much to order and when to order; management of the flow of materials

Operations decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits. Examples can include; inventory levels, inventory management, to avoid delays and stoppages in production time.

Operations management requires being familiar with a wide range of disciplines. It incorporates general management, factory and equipment maintenance management by tradition. The operations manager has to know about the common strategic policies, basic material planning, manufacturing and production systems, and their analysis. Production and cost control principles are also of importance. Last but not least, it has to be someone who is able to navigate industrial labour relations.

General Model of Operations Management:

Operations Management Decisions:

As in all management functions, the management of human resources is an essential activity. In operations management, the planning of actual employment levels can have a great impact on whether an organisation can operate effectively.

Decisions involved in Operations Management

Corporate:

• Operations Strategy
• Make buying decisions
• Location
• Production
• Processes and facilities to be used

Tactical:

• Workforce management
• Inventory Management
• Quality Management
• Scheduling
• Plant Maintenance

What Drives Operations?

Competition!!

• Every organisation attempts to be successful in the marketplace by obtaining an acceptable market share through competitive strategies
• The competitive advantage adopted by the management will be determined by the organisations overall strategic plan and by the its strategic objectives
• Success is dependent on the organisation adopting efficient and effective operations with respect to the manufacturing of their products or the provision of their services

Some of the most commonly overlooked elements of Operations:

• Inventory Management
• Forecasting
• Administration
• Customer Relationship Management
• Supplier Relationship Management
• Facility Management

Key Differences Between Production and Operation Management

The difference between production and operation management are:

1. Production Management can be defined as the administration of the set of activities concerning the creation of goods or transformation of raw material into finished goods. Conversely, Operations Management is used to mean that branch of management which deals with the administration both production of goods and provision of services to the customers.
2. In production management, the manager has to make decisions regarding the design, quality, quantity and cost of the product manufactured by the department. On the contrary, the scope of operations management is larger in comparison to the production management wherein the operations manager looks after the product design, quality, quantity, process design, location, manpower required, storing, maintenance, logistics, inventory management, waste management, etc.
3. Production Management can only be found in the companies where production of goods is undertaken. Operations management can be found in every organisation, i.e. manufacturing concerns, service-oriented firms, banks, hospitals, agencies, etc.
4. The basic objective of production management is to provide the right quality goods in the right quantity at the right time and best price. In contrast, operations management aims at making the best possible use of organisation’s resources, in order to fulfil the customer’s wants and needs.

There is always room to improve when it comes to the processes used, the quality and capacity achieved, or as far as the level of inventory and human resources are concerned.

Conclusion

Operations Management is often overlooked in favour of marketing and finance. There are many ways to improve the efficiency of a business by paying attention to how the business is run. The business structure should match closely the level of competition in the market place. Operational audits are just as important as financial audits. It's all about the customer and the added value.

Production and Operations Management are so closely intertwined, that it is quite difficult to differentiate the two. Production management covers the administration of all the activities which are involved in the process of production. On the other hand, operations management entails all the activities involved in the production of goods and delivery of services such as material management, quality management, maintenance management, process management, process design, product design and so on.

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