Basic of Production

Production is the processes by which raw materials and other inputs are converted into finished goods or
Operation management is understand as the process whereby resources or inputs are converted into more useful
products. The term Production means to manufacture a tangible product. Production has been defined as
transformation of input into the output. If the output is tangible it is known as production management and if the
output is intangible it is known as operation management.

Input Output

Lab our
Capital Goods
Material Transformation or
Machine Services
Management
Method

Transformation is the conversion of input into output with the aid of conversion processes.
Type of transformation:
Physical: manufacturing, mining
Location services: transportation
Exchange services: Retailing, warehousing
Storage services: warehousing
Physiological: Health care
Informational: Telecommunications
Government services: Local, state control
Other private services: Insurance, finance, utilities, real estates, business and personal services e
Examples of conversion process

S.No System Primary Input Recourse Output

1. Hospital Patient Doctor, Nurses, Healthy
Equipment Individual
2. Restaurant Hungry Person Food, Ambiance, Satisfied
Staff, service Customer
3 University Graduation Teacher, Staff, Post Graduate
 Methodology
4 Departmental Shoppers Stocks of goods Satisfied
store Sales clerk customer
5 Automobile Sheet steel, engine part Tools, equipment High quality
factory workers cars

Difference between Production and Operation Management.

1 .Nature of Output:
Production is characterized by tangible output (Product) such as car, cycle, scooter etc. Where operation are
characterized by intangible output (Service) such as Banking, Transportation, Training.
2. Consumption of Output
In Production, output are used by customers over a period while in service output are consumer immediately.
3. Nature of Work
In production, Job use less lab our and more equipment while in service job use more lab our and less
equipment.
4. Customer Participation in conversion
In production, no participation of customer in conversion process occurs, whereas frequent customer
participation occurs in services.
5. Degree of Customer Contact.
In production, there exist little customer context while in service there exist direct customer contact.
6. Location
In production, location of system is in relation to regional, national and international markets while in service
location depends on location of local customer, clients and users.
7. Volume
In production, large units that can take advantage of economies of scale while in service relatively small units
to serve local markets.
8. Demand
In production, demand on system variable on weekly, monthly and seasonally basis while in service demand
commonly variable on hourly, daily and weekly basis.
9. Market
In production, market served by productive system is regional, national and international while service market
served by productive system is usually locals.
10. Nature of operation
In production, the system is complex and interrelated processing while in service, there is simple processing.
11. Investment
In production, it is capital intensive while in service, it may be lab our intensive.
12. Quality
In production quality can be easily determined, while in services it is with difficulty.
Characteristic of a service which is different from tangible of product
 Intangibly ( it cannot be touch, seen )
 Perish ability (it cannot be stored )
 Heterogeneity ( it cannot be same every time )
 Ownership ( Ownership cannot be transferred )
 Inseparability (it cannot be separate from service provider and service receiver )

Objective of Production/ Operation Management

Maximization Minimization
 Quality -Time
 Productivity - Cost
 Customer satisfaction - Accident
 Quantity of production - Breakdown
 Utilization of resource - Wastage
 Possible profit - Defective item
 Employee motivation - Scrape / rework
 Control on resources - repetition of work

Importance of Production/Operation Management

1. From customer point of view product is most important other dep’t. Like marketing, finance and HRM are
not as important as production depts.
2. Customer need is fulfilled only by product.
3. Management prime concern is customer satisfied so manage most should take into account the expectation of
the consumer and then convert them into specification for producing the product.
4. Standered of living of people depends on production of goods and services.

The importance of production management to the business firm is

 Accomplishment of firm objective
 Reputation, goodwill and images
 Help to introduced new product
  Able to survive in industry
 Support other functional areas
 Help to face competition
 Customer satisfaction will be increased
 Optimum utilization of recourses
 Minimize cost of production.
 Expansion of the firm.
The importance of production management to customer and society
 Higher standard of living
 Generate employment
 Improves quality and reduced cost.
 Spread effect.
 Consumer get better product
 Improvement of other service.
 Create utility
 Boost economy

Relationship of Production department with other Departments

Production department is the most important department in any organization. If production department does not
manufacture a good quality of product then other department cannot survive in the organization. Customer need
is fulfill only buy product and customer is not interested about the other department of the organization. If the
satisfaction of customer increased then other department can survive in the organization.
Information Technology

HRM Production Marketing

Finance
Major functions various Department
Production – The management of all activities related to production of goods like product design, process
analysis, location, layout, quality, inventory, purchasing, and storage. Maintenances, safety, wastage,
organization structure, capacity, etc.
Human Resource Management – The management of all activities related to People working in the
organization like recruitment, selection, orientation, training, performance appraisal, motivation, transfer,
promotion, grauity, retrenchement, increment and man power planning.
Marketing Department – The management of all the activities related to sales of the product like sales, test
marketing, distribution, promotion mix, pricing, branding of product.
Finance Department – The management of all activities related to money available in the organization like
rising of fund, investment of fund, capital structure, cost of capital, dividend policy, preparing of final accounts,
and management of wages.

Scope of POM / Responsibility of a Production / Operation Manager.

 Product Design and Development (modify existing or launching new product)

 Production process selection (techniques of converting input into output)
 Planning facility location (place where plant will start functioning )
 Planning facility layout (physical arrangement of activities )
 Capacity planning (maximum production at particular period of time)
 Work Study (study of all activity in a plant with work method & work measurement)
 Inventory Management (stock of items required for manufacturing)
 Purchase Management( buying right product at right price, right quality, right time )
 Store Management (place where items are kept)
 Quality Control( attributes of a product expecting by a customer )
 Maintenance Management (to keep assets in working condition)
 Waste Management (reduce, recycle and reuse of wastage )
 Safety Management (use camera, special dress, emergency exit, first aids boxes )
 Human Resource Management(structure, hierarchy, departments )

Recent trends in manufacturing / Major challenge in Production

 Global competition
 Environmental issue
 Time saving
 Corporate downsizing
 Work force diversity
 Rapid Technology changes
 Involvement of employees
 Re-engineeringEthical issues