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Production and Operation Management PHGMT 210

0139C
Production and Operation Mgmt.
Introduction

LEARNING OBJECTIVES:

After completing this chapter, you should be able to:

LO1.1. Define the terms production, operations, production management PM), operations
management (OM) and production and operations management.
LO1.2 Explain the different categories and classifications of productions
LO1.3 Identify similarities and differences between production and operations management.
LO1.4 Explain the different functions and objectives of PM and OM.
LO1.5 Explain the difference between manufacturing and production.

“Focus on being productive, instead of busy.”

–Tim Ferris
Demy F. Gabriel DEng Info

Production and Operation Mgmt. Production and Operation Mgmt.

Introduction Introduction

Questions:

1. What are the similarities and differences between production and operations?
2. Which part of your organization is considered as production?
3. Which part of your organization is considered operation?
4. Is your job deals with production or operations?
5. What is production management (PM)?
6. What is operations management (OM)?
7. What makes OM different from PM?
8. Is it possible to have a product that is good quality but cheap?
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Introduction Introduction
Production Production

Production is a scientific process which involves transformation of raw material (input) Production is a scientific process which involves transformation of raw material (input)
into desired product or service (output) by adding economic value. into desired product or service (output) by adding economic value.

Production can broadly categorize into following based on technique:

Production through separation: It involves desired output is achieved through separation

or extraction from raw materials. A classic example of separation or extraction is Oil into
various fuel products.

Production Process

Production and Operation Mgmt. Production and Operation Mgmt.

Introduction Introduction

Production by modification or improvement: It involves change in chemical and Production by assembly: Car production and computer are example of production by
mechanical parameters of the raw material without altering physical attributes of the assembly.
raw material. Annealing process (heating at high temperatures and then cooling), is
example of production by modification or improvement.

Annealing of Aluminum
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The production systems are frequently classified in the following:

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 pre-arranged in a definite set-up.
Used to manufacture, produce, or process materials without interruption.

Batch production: 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.
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.

Mass Production:
Continuous Production:
Production and Operation Mgmt. Production and Operation Mgmt.
Batch production: Introduction Introduction
Job Shop Production:
Operations:

Operations is that part of a business organization that is responsible for producing

goods and/or services.

It is the work of managing the inner workings of your business so it runs as efficiently
as possible.

Whether you make products, sell products, or provide services, every managers has to
oversee the design and management of behind-the-scenes work.
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Introduction Introduction
Production and Operations Management (P&OM) P&OM primary objective:

Production and Operation Management deals with the creation of goods and services  To use the company’s resources to produce goods and services fit for the market.
through the application of the business concept.  To effectively manage and utilize those resources of the firm that are essential for
the production of goods and services. (minimize waste)
They are also vital in both service and manufacturing firms.

P&OM 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.

Production and Operation Mgmt. Production and Operation Mgmt.

Introduction Introduction
The decisions arising from a P&OM perspective often decide the core priorities of an Production management
organization. Some of these are:
1. What makes us better than the competitors?  involves planning, scheduling, supervising and control of the activities that concern
2. Will we compete on cost, quality, delivery time, design/form factor, ease of the production of goods to meet the needs of consumers and also generate profit for
use, or something else? the business. (POLCS)

Production management refers to the management of activities related to the  is the management of an organization production systems, which converts inputs
production of goods. into the desired product and services. (conversion process)

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, as the name suggests is the administration of business
operations, by the managers of the organization.
 involves using resources wisely, to create acceptable products. (minimize waste)

 is an effective planning and control on production parameters to achieve or create
value for customers. (value-added)
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Introduction
 deals with decision to production of goods according to specifications, in the amount
and by the schedule demanded and out of minimum cost. (minimal cost)
In this case, raw materials are being transformed into value-added products efficiently.
Introduction
Objectives of Production Management:
The four objectives of the production management is ‘to produce goods services of
right quality and quantity at the right time and right manufacturing cost.’

Production manager 1. Right Quality:

The production manager is also in charge of this area of the business. The quality of the product is established based on the customer needs in the market. The right quality is
In other words, decisions such as quantity, quality, price, design, packaging style and material for not necessarily the best quality of the product. It is determined by the cost of the product and the
the product, among others, are made by the production manager. technical characteristics as suited to the specific requirements of the customers in the market
He also ensures that the output matches the specifications. environment. (Quality vs cost)

2. Right Quantity:
The manufacturing organization should produce the products in the right number. If they are produced
more than demand the capital will block up in the form of inventory and if the quantity is produced in
short of demand, leads to a shortage of products. (No surplus, so shortage)

Production and Operation Mgmt. Production and Operation Mgmt.

Introduction Introduction
Objectives of Production Management: Functions of Production Management

3. Right Time:
Timeliness of delivery of the product to the consumer or wholesaler is one of the critical parameters to
judge the effectiveness of the production department. So, the production department has to make the
optimal utilization of input resources to achieve its desired objectives. (Just in time management)
4. Right Manufacturing Cost:
Manufacturing costs are incurred before the product is manufactured and released into the market.
(Zero defect)
Production management can essentially be seen as an optimization problem.
Its aim is to ensure the business produces quality products that can satisfy the needs
of customers on a regular basis.
Below are the functions of production management.
Production Control:
Here the manager supervises and directs the production process. He or she also must find out and
ensure the right production plan is followed during the production process. If there are deviations, the
production manager has to take the right steps to correct them. (Who, What, Where, When, How)
Scheduling:
This function is critical in every organization. It has to do with planning when the actual production would
begin and ends. (Analysis needed: Time/Motion study)

Production and Operation Mgmt.
Introduction
Cost and Quality Control
Every company knows how essential quality control and price are. Customers are not just looking for the
best products. But they also want to have them at the lowest possible price. Quality control is an
essential duty the production manager has to perform. It entails multiple checks performed on the
product to ensure quality is intact. (Good quality but cheap)
Maintenance of Machines
Production management also entails making sure that instruments used are in good working condition.
And that means replacing the ones that are under par forming or changing damaged parts to enable the
machine to function optimally. (Parts availability)
Production and Operation Mgmt.
Introduction
2. Boost Business Reputation and Goodwill
A satisfied customer will undoubtedly want to repeat patronage. That’s why businesses
should ensure that quality products are delivered continuously. Making sure that your
customers are always happy can also boost business reputation.
3. Reduces the Cost of Production
Production management ensures that resources are used wisely, without
compromising on quality. In other words, the business will continue to deliver quality
products and sell at a convenient price to customers. But this can only be possible in a
situation where the input and output are maximized.
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Production and Operation Mgmt.
Introduction
Why Production Management is so Important
Production management is relevant to the firm’s success in many ways. Used
efficiently, it can lead to numerous accomplishments which will take the business to a
great height. Below is the importance of production management.
1. Helps the Firm to Accomplish its Objectives
Production management helps the firm to achieve its sales and business objectives by
producing goods and services that meet the need of consumers. Sales and profit will
increase if the product produced satisfies the customers’ needs.
Production and Operation Mgmt.
Introduction
Operations Management
This implies the management of day to day business activities, so as to ensure
smoothness and effectiveness of operations in the organization.
It involves administration of production, manufacturing and provision of goods and/or
services in an organization.
Operations Management 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 organization.
Operations Management is all about the optimum utilization of company’s resources, i.e. the
resources must be utilized as much as possible, by minimizing the loss, wastage and
underutilization.
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Introduction Introduction
Operation Management The Function of Operations Management

Operation Management is in charge of managing the conversion process. Finance

This unit handles the day-to-day running of the business to ensure operations within the organization
are carried out smoothly.
In short, everything regarding production processes such as designing,
implementation, and control is the duty of operation management.
And the sole aim is to deliver the desired products and services to clients while also
ensuring that all parties involved are adhering to the policies presented by the
management of the company.
The focus is also to make sure that there is little or no wastage before, during and after
the production process, through the effective use of the firm’s resources.
Operation management’s responsibility is to make sure that the company’s resources
are used in the right manner to generate goods that satisfy its customers.
Strategy
Operations managers also help in the development of plans or tactics that could lead
to the maximization of resources and production of products that gives the company a
competitive edge over its competitors.
Product Design
It is the operations manager’s responsibility to come up with product design that not
only caters to the needs of customers but follows the market trend.

Production and Operation Mgmt. Production and Operation Mgmt.

Introduction Introduction
Forecasting Objective of Operation Management
Operation management also predicts the performance of products or services in the
future. In other words, he critically analyses what customers’ demand for certain The objectives of operations management are a lot more extensive and take a couple
products would be in the future. 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 role of the operation manager the customer. Customer satisfaction is a barometer of things moving in the right
 The role of the operation manager is to ensure that products or services are direction.
always available and reaches customers promptly.
 He also makes sure that raw materials are transformed successfully into finished Resource utilization is equally imperative — the process of obtaining the output from
products. input through the path of least resistance, i.e. through least waste and maximum
utilization of resources.
Importance of operation management
 To improve the overall productivity of the business.
 Resources are also used properly in other to eliminate wastage and boost profit.
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Introduction
Difference between Production and Operations Management:
Production and operations management are more similar than different:
Key Differences Between Production and Operation Management
Production Management: Defined as the administration of the set of activities
concerning the creation of goods or transformation of raw material into finished goods.

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.
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.
Operations Management: Branch of management which deals with the administration
both production of goods and provision of services to the customers.
Production management: The manager has to make decisions regarding the design,
quality, quantity and cost of the product manufactured by the department.
Operations management: 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.

Production vs Operation Mgmt. Production vs Operation Mgmt.

Key Differences Between Production and Operation Management

Production Management: Can only be found in the firms where production of goods is
undertaken.

Operations management: Can be in every organization, i.e. manufacturing concerns,

service-oriented firms, banks, hospitals, agencies, etc.

Production management: The basic objective is to provide the right quality goods in the
right quantity at right time and best price.

Operations management: Aims at making the best possible use of organization’s

resources, in order to fulfil the customer’s wants.
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Introduction Introduction
Difference between Production and Operations Management.

Production and Operation Mgmt.

Introduction
References
MBA Crystal Ball
https://www.vssut.ac.in/lecture_notes/lecture1429900757.pdf mbacrystalball.com

Definition, Objectives, Scope and Functions of Production & Difference Box

Operation Management
differencebox.com
https://theintactone.com/2019/06/16/pom-u1-topic-1-
definition-objectives-scope-and-functions-of-production-
operation-management/ wallstreetmojo.com

http://industrylearners.com/

MSG Management Study Guide keydifferences.com

managementstudyguide.com