Production V/s Operations Management

Anupam Kumar 1

Production V/s Operations

Management

Presented By:

Anupam Kumar

Reader

SMS Varanasi

Definitions

• Operations Management transforms inputs, such

as people, material, and money, to Outputs which

may be goods and / or services.

• Production Management is concerned with the

production of goods and services.

– It deals with the management of resources (inputs:

machines, raw materials, human skills, etc),

– AND the distribution of finished goods and services

(outputs) to the customers.

Goods V/s Services

Goods (Products)

• Tangible product

• These Product can be

inventoried

• Low customer contact

• Longer response time

• Capital intensive

Services

• Intangible product

• These Products cannot

be inventoried

• High customer contact

• Short response time

• Labor intensive

Operations Function

• Operations function is much broader than the

Production function or the activities which

occur in a factory.

– Products must be developed,

– Materials must be purchased,

– Facilities must be maintained,

– Products must be distributed, and so on.

Evolution of Operations Management

• Until the 19th century, the world was mostly rural and agricultural.

• Most of the products were made by highly skilled people called artisans.

• Under the apprenticeship system, an artisan supervised the work of several apprentices during long training period.

Evolution of Operations Management

• In the 18th century, most manufacturing was performed by rural families in their own homes under the domestic or cottage industry system.

• Merchants supplied families in small towns with raw materials and later found markets for the finished products.

• The development of steam power and the introduction of labor-saving equipment (or automation) early in the 18th century led to the development of the factory system.

Production V/s Operations Management

Anupam Kumar 2

Evolution of Operations Management

• The principle of the factory systems was simple:

• Assign workers a small set of tasks that they repeat over and over.

• This reduces the time spent by workers in switching tasks and they become specialized.

• The result is improved labor productivity and lower production costs.

• Technological developments in 1850s transformed factory system into mass-production.

• Factories became larger. They produced huge volumes of identical products.

Evolution of Operations Management

• Manufacturing costs were reduced because no time was needed for setting machines and people to produce other types of products.

• As the sizes of the factories increased, management of these operations became a major problem.

• Frederick Taylor introduced systematic approaches to operations management at the turn of 19th century.

• His intent was to eliminate waste, especially the wasted effort, in order to minimize costs.

Evolution of Operations Management

• Henry Ford combined the teachings of Taylor with the

concepts of labor specialization and interchangeable parts to

design the first moving assembly line in 1913.

• In 1920s and 1930s, a series of studies were conducted at the

Hawthorne Works of Western Electric by Elton Mayo.

• The results showed that psychological factors were as

important as scientific job design.

Evolution of Operations Management

• The Hawthorne Studies stimulated the development of human relations movement.

– By demonstrating that worker motivation is a crucial element in improving productivity.

• As the complexity of operations increased, sophisticated decision-making tools were needed.

• This gave rise to the use of quantitative techniques and statistical tools in Operations Management.

Quantitative Models & Statistical

Techniques

• Statistical Quality Control– Uses statistics in the control of product quality by

controlling the processes by which products are made.

• Economic Order Quantity– Used for finding the least cost inventory ordering

• Gantt charts – For sequencing operations

• Critical Path Method – For finding optimum completion time of operations.

• Linear programming– A management tool for optimum resource allocation given

some restrictions of the resources.

Evolution of Operations Management

• The 1950s was the beginning of the information technology era.

• The discovery of transistor by Shockley led to the ability process data and information at continuously decreasing costs.

• Monitoring inventories of hundreds of units or managing a large project without a computerized system is now unimaginable.

Production V/s Operations Management

Anupam Kumar 3

Evolution of Operations Management

• In the late 1950s and early 1960s scholars

began to write books dealing specifically with

the problems faced by operations managers.

• These books also contained information

regarding the application of quantitative

models to operations management.

To Types of Production

Processes…