Difference Between Production and Operations Management

Table of Contents:-

  • Difference Between Production and Operations Management
  • Concept of Production and Operations Management
  • Meaning of Production Management
  • Definition of Production Management
  • Meaning of Operations Management
  • Definition of Operations Management
  • Nature of Production Management
  • Scope of Production and Operations Management

Difference Between Production and Operations Management

The difference between production and operations management has been suggested by many to indicate the general applications of the management techniques of machines and materials.

Production Management Operations Management
1) It is concerned with the production or manufacturing of goods. It is concerned with providing services.
2) In this system, a make-to-stock system is followed. In this, a make-to-order system is followed
3) in this, the output is tangible. In this, the output is intangible.
4) There is less consumer contact There is more consumer contact.
5) In this, goods are consumed after a long duration. Services are consumed immediately at the same time.
6) In this, capacity is defined in terms of output. In this, quality control is difficult.
7) There is easiness in quality control. In this, capacity is defined in terms of input.
8) In this, we more focus on inventory control. In this, inventory does not arise in the case of operations management.
9) Capacity planning is easily possible. Capacity planning is difficult.
10) Ease of market access is one of the important factors. Ease of access to the market is the most important factor.

Concept of Production and Operations Management

Production management is a management branch associated with the production function. Production may be referred to as the process concerned with the conversion of inputs (raw materials, machinery, information, workforce, and other factors of production) into output (semi-finished and finished goods and services) with the help of specific processes (planningscheduling, and controlling, etc.). In contrast, management exploits these production factors to achieve the desired results.

In the 1970s, there were two distinct changes in our views. The most obvious of these reflected in the new name operations management’ was a change in the service and manufacturing sectors of the economy.

As the service sector became more prominent, the term ‘production and operations management’ is being increasingly replaced by simply operations management, as the production function relating to the manufacturing organizations has become a part of operations

Operations management is a broad term which includes manufacturing as well as service organizations. Operations management also highlights the increasing importance of the service industry in the overall business environment. It is defined as the design, operation, and improvement of the transformation process, which converts the various inputs into the desired outputs of products and services. There is a growing need for the application of the principles of operations management in the service industry.

Meaning of Production Management

Production management is a management branch associated with the production function. Production management is the management by which scientific planning and regulation sets into motion the part of an enterprise to which it has been entrusted the task of actual transformation of inputs into outputs.

It is concerned with the decision making regarding producing goods and services at a minimum cost according to the customers’ demands through the management process of planning, organising and controlling.

Definition of Production Management

According to E. F. L. Brech, “Production management then becomes the process of effectively planning and regulating the operations of that part of an enterprise which is responsible for actual transformation of materials into finished products”.

Elwood S. Buffa states, “Production management deals with decision making related to the production process so that the resulting goods or services are produced according to specifications in amounts and by the schedule demanded, and at a minimum cost”.

According to H.A. Harding, “Production management is concerned with those processes which convert the inputs into the outputs. The inputs are various resources like raw materials, men, machines, methods, etc, and the outputs are goods and services”.

Meaning of Operations Management

Operations management is a business area concerned with producing goods and services. It involves ensuring that business operations are efficient, using as few resources as necessary, and effectively meeting customer requirements. It is concerned with managing the process that converts inputs (in materials, labour and energy) into outputs (in the form of goods and services).

Definition of Operations Management

APICS, The Association for Operations Management, also defines operations management as “the field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the organization.”

More broadly, operations management aims to increase value-added activities within any process. These value-adding creative efforts should align with market opportunities for optimal enterprise performance.

Nature of Production Management

The nature of production management includes:

1) Results into Value Addition: In this, at every successive level some value is added to the previous one. For example, sand at the seashore does not add any value but sand used in construction adds to the value.

2) Exists for Certain Objective: First, there is an objective and to meet that particular objective a complete procedure is followed.

3) Transformational Process: The production management is concerned with the conversion of raw materials.

4) Interrelationship among the System: No system can ever work in isolation and depends on others for certain help. So, there exists an interrelationship among different systems.

5) System Itself: It is a complete step-wise process, i.e., a proper well-defined sequence is followed in production management.

6) Specialisation of Function: Different functions are performed separately, due to this they are repetitively performed by the same people and there is a specialisation of functions.

7) Carried-Out in Part of Organisation: Its meaning is that production is not alone in the organisation rather there are certain other acts also like finance, research and development, etc.

8) Increase in Productivity: As there is specialisation in functions the speed of doing a task increases as a result there is an increase in productivity.

9) Stratum Formulation: A production system comprises different strata of the corporate hierarchy, where each stratum plays a specific role based on the firm’s size. Each stratum derives particular benefits from its performance.

10) Increase in Entropy: It measures the degradation of matter and energy in the universe to an ultimate stage. Fresh blood must be infused into every production system to counteract this degradation process.

Scope of Production and Operations Management

Production management is mainly associated with factory management as the problems of production crept up with the development of the factory system. Before the evolution of the factory system, manufacturing activities were carried on by a single person who posed no problem or very insignificant problem of production and therefore the question of production management did not arise. With the inception of the factory system, the situation changed, and numerous production-related problems began to emerge. The necessity arose to address issues such as quality control, facility layout, facility location, meeting schedules, and organizing production activities. Thus, the scope of production management began to expand.

Since the production level has increased tremendously, many other problems have been added to its scope. In the present era of intense competition, the scope of production management is vast. The production department in an enterprise is concerned with the full exploitation of production facilities and the human factor that indirectly affects the production, utilization of the latest production techniques and the production of quality goods to the satisfaction of customers.

The various activities that form the scope of production and operations function can be studied in two broad areas:

1) Activities related to production system designing, and

2) Activities related to analyzing and controlling production operations.

1) Activities Related to Production System Designing

The decision relating to the production system design is the firm and foremost activity of production management. This activity concerns production engineering and includes problems regarding the design of tools and jigs. The design, development, and installation of equipment and the company’s optimum size selection. All these areas require technical expertise on the part of the production manager and his staff. The selection of an optimum plant location depends significantly on the decision made regarding production engineering. The next decision regarding production system design concerns the use of those techniques which are concerned with the work environment and work measurement and include problems like motion study process analysis, the layout of the plant, materials handling and time study.

Apart from these problems, the production system designer should pay full attention to two other important problems, viz.:

i) Human factor i.e., the impact of the production system on the workers operating it and

ii) Research and development activities. These two problems have a vital impact on production system design.

2) Activities related to the analysis and control of operations

The next problem after the designing of the production system is the control and analysis of the production system. It includes all decisions regarding production administration and therefore all functions of the management so far as they apply to the production system form the subject matter of the production management. These activities are:

i) Production Planning: The first step in this regard is production planning. It includes the preparation of short-term production schedules, a plan for maintaining the records of raw materials and finished and semi-finished stock, and specifying how the production resources of the concern are to be employed over some future time in response to the predicted demand for services and products.

ii) Production Control: After planning, the following managerial production function controls the production according to the plans. Production plans can only be activated if they are adequately guided and controlled. For this purpose, the production manager has to regulate work assignments, review work progress, and check to remove discrepancies, if any, in the actual and planned performances. The production manager has to look after the production control activities at three different levels:

a) Control of static inventor is such as raw materials, purchased parts, finished goods and supply through the inventory control technique;

b) Control of the flow of materials into the plants through the technique of judicious purchasing.

c) Control of work-in-progress through production control.

ii) Quality Control:  The other important decision made by the production manager concerns quality control. Product quality refers to the composite product characteristics of engineering and manufacturing that determine the degree to which the product will meet the customers’ expectations. Quality control can be ensured through inspection and statistical quality control.

Reference:-

  • https://egyankosh.ac.in/bitstream/123456789/84937/1/Unit-1.pdf
  • https://egyankosh.ac.in/bitstream/123456789/96359/1/Block-1.pdf

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