Production and Operations Management is the combination and transformation of resources into value-added products/services in a controlled manner adhering to organization policies. The management of manufacturing of certain products is termed Production Management while these management activities resulting in services management are termed Operations Management.
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Historical Perspective for Production and Operations Management
Production and Operations Management have been crucial factors in the economic growth of a country for over two centuries. In the 18th Century, when Adam Smith recognized the financial benefits of specialization of labor, he saw the seed of manufacturing management. He recommended managing the workers at work sights in an organized way to achieve maximum and efficient productivity. This concept of Adam Smith was the base for F W Taylor, scientific management theory in the early 20th century. There were many techniques developed since Adam Smith’s conception till 1930.
Adam Smith, in 1776, first proposed to be attentive toward managing labor in an organization to get efficient and effective productivity. He focused on the specialization of labor in manufacturing. From 1776 to the 1980s, many philosophers and researchers enhanced the relevancy of Operations Management in organizing the economy or businesses. In the early 1900s, F W Taylor considered the concept Adam Smith gave as the base of scientific management theory. Henry L. Gantt developed the operational concept of scheduling techniques for employees, and machine jobs in manufacturing in 1901 to conceptualize the specific operational activities within an organization.
P.M. Blacker and the team developed the applications of Operations Research in World War II in the 1940s. Later, this concept was highly accepted in the organization. For the time being, Linear Programming, Mathematical Programming, on-linear, and stochastic processes were developed in the late 1950s to carry the operations management in the commercial domain. In the commercial domain, W. Skinner, J. Orlicky, and G. Wright have developed the theories and concepts for a Computer application to manufacturing, Scheduling, and Control, and Material requirement planning (MRP). In the 1980s, Japan significantly contributed to developing the Quality and Productivity concepts in manufacturing products using Robotics.
Production Management was the term used by philosophers, socialists, scientists, and researchers during the 1930s to 1950s because the manufacturing sector was dominating the GDP of the largest economies of the world. Commercial business people were highly focused on the production of goods that were highly demanded by the market. However, by the 1970s, the service industry had emerged and was accepted by commercial business people due to higher demand from the customer side. Thus, to manage the service sector, the term Operations Management has come into existence.
Production
Production is the transformation of inputs into required outputs having the requisite quality. Production is defined as “the step-by-step conversion of one form of material into another form through a chemical or mechanical process to create or enhance the utility of the product to the user. The production is a value-addition process where at each stage the value is added.
Production System
Production System of an organisation produces products of an organisation. Resources are flowing within a defined system to combine and transform in a controlled manner for value addition according to policies communicated by management.
Characteristics of Production System
These are the major characteristics of the Production System
Production is systematic
Production is an organized activity focused on creating goods or services efficiently. This organization ensures the effective use of resources and follows a structured process involving planning, designing, sourcing, manufacturing, and quality control. Each production system operates with clear objectives, such as maximizing output, ensuring quality, minimizing costs, or meeting deadlines. These objectives align the efforts of everyone involved and facilitate better decision-making and performance measurement. Ultimately, production’s systematic and objective-driven nature ensures resource efficiency, process optimization, and high-quality outcomes.
The Transformation Process in Production Systems: From Inputs to Outputs
A production system transforms inputs such as raw materials, labor, energy, machinery, and information into useful outputs. This process starts with planning and designing, where detailed plans and blueprints are created, materials are selected, and the workforce is prepared. The sourcing stage ensures all necessary inputs are procured and ready. The manufacturing stage involves converting these inputs into finished products using various techniques and technologies, with ongoing monitoring for efficiency and consistency. Quality control inspects and tests outputs to meet required standards. In essence, a well-organized and controlled production system optimizes resources to produce high-quality goods or services.