Production V/s Operations Management

Definitions
Production V/s Operations
Management
Presented By:
Anupam Kumar
Reader
SMS Varanasi

Goods V/s Services

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.

Operations Function

Services
Intangible product
These Products cannot
be inventoried
High customer contact
Short response time
Labor intensive

Operations function is much broader than the

Production function or the activities which
occur in a factory.

Evolution of Operations Management

Evolution of Operations Management

Goods (Products)
Tangible product
These Product can be
inventoried
Low customer contact
Longer response time
Capital intensive

Products must be developed,

Materials must be purchased,
Facilities must be maintained,
Products must be distributed, and so on.

Until the 19th century, the world was mostly

rural and agricultural.

In the 18th century, most manufacturing was

performed by rural families in their own homes
under the domestic or cottage industry system.

Most of the products were made by highly

skilled people called artisans.

Merchants supplied families in small towns with raw

materials and later found markets for the finished
products.

Under the apprenticeship system, an artisan

supervised the work of several apprentices
during long training period.

Anupam Kumar

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

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

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.

The Hawthorne Studies stimulated the development

of human relations movement.

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.

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

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.

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.

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.

Anupam Kumar

Monitoring inventories of hundreds of units or

managing a large project without a computerized
system is now unimaginable.

Production V/s Operations Management

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.

To Types of Production
Processes

These books also contained information

regarding the application of quantitative
models to operations management.

Anupam Kumar