Meaning and concept of production and operation management
Meaning and concept of production and Operation Management
Production and operations management concerns itself with the conversion of inputs into outputs, using physical resources, so as to provide the desired utility/utilities—of form, place, possession or state or a combination thereof—to the customer while meeting the other organisational objectives of effectiveness, efficiency and adaptability. It distinguishes itself from the other such functions such as personnel, marketing, etc. by its primary concern for ‘conversion by using physical resources’. Of course, there may be and would be a number of situations in either marketing or personnel or other functions which can be classified or subclassified under production and operations management. For example, (i) the physical distribution of items to the customers, (ii) the arrangement of collection of marketing information, (iii) the actual selection and recruitment process, (iv) the paper flow and conversion of the accounting information usable by the judge in a court of law, etc. can all be put under the banner of production and operations management. The ‘conversion’ here is subtle, unlike manufacturing which is obvious. While in case (i) and (ii) it is the conversion of ‘place’ and ‘possession’ characteristics of the product, in (iv) and (v) it is the conversion of the ‘state’ characteristics. And this ‘conversion’ is effected by using physical resources. This is not to deny the use of other resources such as ‘information’ in production and operations management. The input and/or output could also be non-physical such as ‘information’, but the conversion process uses physical resources for the conversion process is what distinguishes production and operations management from other functional disciplines.
Often production and operations management systems are described as providing physical goods or services. Perhaps, a sharper distinction such as the four customer utilities and physical/non-physical nature of inputs and/or outputs would be more appropriate.
A clear demarcation is not always possible between operations systems that provide ‘physical goods’ and those that provide ‘service’, as an activity deemed to be providing ‘physical goods’ may also be providing ‘service’, and vice versa. We may also say that the actual production and operations management systems are quite complex involving multiple utilities to be provided to the customer, with a mix of physical and non-physical inputs and outputs and perhaps with a multiplicity of customers. Today, our ‘customers’ need not only be outsiders but also our own ‘inside staff’. In spite of these variations in (i) input type (ii) output type, (iii) customers serviced, and (iv) type of utility provided to the customers, production and operations management distinguishes itself in terms of ‘conversion effected by the use of physical resources such as men, materials, and machinery.’
Concept of Production
The production function is that part of an organisation, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level. Production is defined as “the step-by-step conversion of one form of material into another form through the chemical or mechanical process to create or enhance the utility of the product to the user.” Thus production is a value addition process. At each stage of processing, there will be a value addition.
Edward Buffa defines production as ‘a process by which goods and services are created ’. Some examples of production are manufacturing custom-made products like boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardised products like, car, bus, motorcycle, radio, television, etc.