Nature of Production • In an industrial organization, production is the most important functional area • Production is the process by which inputs are converted into output • Usually, the term production and manufacturing is used interchangeably, but both the terms are different in management. • Manufacturing is used in the case of tangible goods and production includes both tangible gods as well as services. • Production can be easily understood if we view the manufacturing function from three angles: • Production as a system • Production as an organizational function • Production as a decision making function
PRODUCTION AS A SYSTEM • A system is understood as a whole that functions with the help of various sub-components. From this angel, production comprises of three sytems: • PRODUCTION SYSTEM • CONVERSION SUB-SYSTEM • CONTROL SUB-SYSTEM
PRODUCTION AS AN ORGANIZATIONAL FUNCTION • The core of production system is its conversion sub-system , wherein workers , materials and machines are used to convert inputs into products and services. • This process of conversion is the heart of production function in an organization where manufacturing is the key process.
PRODUCTION AS DECISION MAKING SYSTEM • The operations manager in an organization need to take various decisions related to production function. • They plan , organize, staff, direct and control all the activities in the process of production. • The decisions taken by operations manager related to production falls into three general level of categories. They are:
PRODUCTION AS DECISION MAKING SYSTEM • STRATEGIC DECISIONS • These decisions are major ones have strategic importance in production • OPERATING DECISIONS • These decisions are related to planning production to meet demand • CONTROL DECISIONS • These decisions relates to planning and controlling operations
DISTINCTION BETWEEN PRODUCTION & OPERATIONS MANAGEMENT • Even though both the terms are used frequently together, there exists at least two distinctions between the two terms. They are: • The term production management is used for a system where tangible goods are produced whereas operations management is more frequently used where various inputs are transformed into intangible services. • Viewed from this perspective, operations management will cover services such as banks, airlines, utilities, pollution control agencies, super bazaars, educational institutions, libraries etc. in addition to the manufacturing enterprises 2. The second difference is the evolution of the term as operations management is a term used nowadays. Production management precedes operations management in the historical perspective of the growth of the subject.
RECENT TRENDS IN PRODUCTIONS AND OPERATIONS MANAGEMENT • Global market place • Production/operations strategy • TQM • Flexibility • Time Reduction • Technology • Worker involvement • Re-engineering • Environmental issues • Corporate downsizing • Supply chain management • Lean production
Product A Product B Feature 1 Feature 2 Feature 3 • Feature 1 • Feature 2 • Feature 3