Production vs operations management

Class notes for PGDM Second Semester students. Difference between Production & Operations Management

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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.

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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.

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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…