Meaning, Nature and Scope of Production and Operation Management

E.S.Buffa defines production management as follows: ‘Production management deals with decision-making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost’.

Joseph G .Monks defines Operations Management as the process whereby resources, flowing with in a defined system, are combined and transformed by a controlled manner to add value in accordance with policies communicated by management.

Production Management

Production Management refers to the application of management principles to the production function in a factory. In other words, production management involves application of planning, organizing, directing and controlling the production process.

The application of management to the field of production has been the result of at least three developments:

(i) First is the development of factory system of production. Until the emergence of the concept of manufacturing, there was no such thing as management as we know it. It is true that people operated business of one type or another, but for the most part, these people were owners of business and did not regard themselves as managers as well,

(ii) Essentially stems from the first, namely, the development of the large corporation with many owners and the necessity to hire people to operate the business,

(iii) Stems from the work of many of the pioneers of scientific management who were able to demonstrate the value, from a performance and profit point of view, of some of the techniques they were developing.

Production Management

It is observed that one cannot demarcate the beginning and end points of Production Management in an establishment. The reason is that it is interrelated with many other functional areas of business, viz., marketing, finance, industrial relation policies etc.

Alternately, Production Management is not independent of marketing, financial and personnel management due to which it is very difficult to formulate some single appropriate definition of Production Management.

Nature of Production/Operations Management

The nature of production or operations can be better understood by viewing the manufacturing function as :

(i) Production/operations as a system

(ii) Production/operations as an organizational function

(iii) Production/operations as a conversion or transformation process

(iv) Production/operations as a means of creating utility

These four distinct views are discussed in the following section.

(a) Production/Operations as a System

This view is also known as “systems concept of production”. A system is defined as the collection of interrelated entities. The systems approach views any organization or entity as an arrangement of interrelated parts that interact in ways that can be specified and to some extent predicted. Production is viewed as a system which converts a set of inputs into a set of desired outputs. A production system has the following elements or parts :

• Inputs
• Conversion process or transformation process
• Outputs
• Transportation subsystem
• Communication subsystem and
• Control or decision making subsystem

(b) Production/Operations as a Conversion/Transformation Process

The conversion or transformation sub-system is the core of a production system because it consists of processes or activities wherein workers, materials, machines and equipment are used to convert inputs into outputs. The conversion process may include manufacturing processes such as cutting, drilling, machining, welding, painting, etc., and other processes such as packing, selling, etc. Any conversion process consists of several small activities referred to as “operations” which are some steps in the overall process of producing a product or service that leads to the final output.

(c) Production/Operations as a Means of Creating Utility

Production is defined as the process of adding to the value of outputs or the process of creating utility in outputs. “Utility” is the power of satisfying human needs. During the process of converting the raw materials into finished goods, various types of utilities are created while adding value to the outputs. These

Types of utilities are:

• Form utility: This is created by changing the size, shape, form, weight, colour, smell of inputs in order to make the outputs more useful to the customers. For example, iron ore is changed to steel, wood is changed to furniture, etc.
• Place utility: This is created by changing the places of inputs or transporting the inputs from the source of their availability to the place of their use to be converted into outputs. For example the iron ore and coal are transported from the mines to the steel plant to be used in the conversion process.
• Time utility: This is created by storage or preservation of raw materials or finished goods which are in abundance sometime, so that the same can be used at a later time when they become scarce due to higher demand exceeding the quantity available.
• Possession utility: This is created by transferring the possession or ownership of an item from one person to another person. For example, when a firm purchases materials from a supplier, the possession utility of the materials will increase when they are delivered to the buying firm.
• Service utility: Which is the utility created by rendering some service to the customer. For example, a doctor or a lawyer or an engineer creates service utility to a client/customer by rendering service directly to the client/customer.
• Knowledge utility: This is created by imparting knowledge to a person. For example, a sales presentation or an advertisement about some product communicates some information about the product to the customer, thereby imparting knowledge.

Scope of Production an Operation Management

Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adaptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for ‘conversion by using physical resources.’ Following are the activities which are listed under production and operations management functions:

Location of facilities

Plant layouts and material handling

Product design

Process design

Production and planning control

Quality control

Materials management

Maintenance management

1. Location of facilities

Location of facilities for operations is a long-term capacity decision which involves a long term commitment about the geographically static factors that affect a business organization. It is an important strategic level decision-making for an organization. It deals with the questions such as ‘where our main operations should be based?’

2. Plant layouts and material handling

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments, work centers and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.

According to James Moore, “Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment’s and all other supporting services along with the design of best structure to contain all these facilities”.

3. Product design

Product design deals with conversion of ideas into reality. Every business organization have to design, develop and introduce new products as a survival and growth strategy. Developing the new products and launching them in the market is the biggest challenge faced by the organizations.

4. Product design

Process design is a macroscopic decision-making of an overall process route for converting the raw material into finished goods. These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities.

5. Production planning and control

Production planning and control can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are, to where we want to go. Routing may be defined as the selection of path which each part of the product will follow, which being transformed from raw material to finished products. Scheduling determines the programmer for the operations. Scheduling may be defined as ‘the fixation of time and date for each operation’ as well as it determines the sequence of operations to be followed.

Dispatching is concerned with the starting the processes. It gives necessary authority so as to start a particular work, which has already been planned under ‘Routing’ and ‘Scheduling’.

6. Quality control

Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of quality in a product or service’. It is a systematic control of various factors that affect the quality of the product. Quality control aims at prevention of defects at the source, relies on effective feed back system and corrective action procedure. Quality control can also be defined as ‘that industrial management technique by means of which product of uniform acceptable quality is manufactured’. It is the entire collection of activities which ensures that the operation will produce the optimum quality products at minimum cost.

The main objectives of quality control are: To improve the companies income by making the production more acceptable to the customers i.e., by providing long life, greater usefulness, maintainability, etc. To reduce companies cost through reduction of losses due to defects. To achieve interchange ability of manufacture in large scale production. To produce optimal quality at reduced price. To ensure satisfaction of customers with productions or services or high quality level, to build customer goodwill, confidence and reputation of manufacturer. To make inspection prompt to ensure quality control. To check the variation during manufacturing.

7. Materials management

Materials management is that aspect of management function which is primarily concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view.

8. Maintenance management

Maintenance management is the process of maintaining a company’s assets and resources. The purpose is to ensure that production proceeds efficiently and that resources are used effectively.

Maintenance management involves keeping track of assets and parts. The purpose is to ensure that production proceeds efficiently and the minimum amount of resources are wasted. This is generally accomplished by a tailored combination of software, practices, and personnel that focus on achieving these goals.

Maintenance management is one of those aspects of managing a company that is usually not explored in depth. People outside of the maintenance industry may not realize how much time and effort go into making the flow of products through supply chains to the general world.