PRODUCTION AND

OPERATION
MANAGEMENT
OF ECONOMICS
.
 INTRODUCTION AND PRODUCTION
 Importance of Production Function and Production Management
 Operations Management
 Production Management v/s Operations Management
 Stock Management
 How can stock management be improved?
 How would you manage and control stock?
 What is the difference between inventory management and stock
management?

 BALANCED SCORECARD/CORPORATE STRATEGY DESIGN PROCESS

 FINANCIAL PERSPECTIVE
 CUSTOMERS PERSPECTIVE
 INTERNAL PERSPECTIVE
 LEARNING AND GROWTH PERSPECTIVE
 Introduction
The very essence of any business is to cater needs of customer by providing
services and goods, and in process create value for customers and solve their
problems. Production and operations management talks about applying business
organization and management concepts in creation of goods and services.
 Production
Production is a scientific process which involves transformation of raw
material (input) into desired product or service (output) by adding economic
value. Production can broadly categorize into following based on technique:
Importance of Production Function and Production
Management

Importance of Production Function and Production Management

 Successful organizations have well defined and efficient line function and
support function. Production comes under the category of line function which
directly affects customer experience and there by future of organization
itself.
 Aim of production function is to add value to product or service which will
create a strong and long lasting customer relationship or association. And this
can be achieved by healthy and productive association between Marketing
and Production people. Marketing function people are frontline
representative of the company and provide insights to real product needs of
customers.
Operations Management

As to deliver value for customers in products and services, it is essential for

the company to do the following:

 Identify the customer needs and convert that into a specific product or
service (numbers of products required for specific period of time)
 Based on product requirement do back-ward working to identify raw material
requirements
 Engage internal and external vendors to create supply chain for raw material
and finished goods between vendor → production facility → customers.
Production Management v/s Operations Management

A high level comparison which distinct production and operations management can
be done on following characteristics:
 Output: Production management deals with manufacturing of products like
(computer, car, etc) while operations management cover both products and services.
 Usage of Output: Products like computer/car are utilized over a period of time
whereas services need to be consumed immediately
 Classification of work: To produce products like computer/car more of capital
equipment and less labour are required while services require more labour and lesser
capital equipment.
 Customer Contact: There is no participation of customer during production whereas
for services a constant contact with customer is required.
Stock Management

Stock management is the process of

managing the goods your business plans
to sell. This involves acquiring, storing,
organizing and tracking those goods.
Stock management also involves keeping
records of changes in your inventory
over time.
Stock Management
(example)

Stock management is the practice of

ordering, storing, tracking, and controlling
inventory. Stock management applies to
every item a business uses to produce its
products or services – from raw materials to
finished goods. In other words, stock
management covers every aspect of a
business's inventory.
How can stock management be improved?

How to Improve Stock Control

 Accurate Forecasting. ...
 Highlight High Sellers. ...
 Educate Your Staff. ...
 Regularly Inspect Stock. ...
 Maintain a Relationship with Your Suppliers. ...
 Consider Inventory Optimization Tools. ...
 Make Smart Decisions about Slow Moving and Obsolete Items. ...
 Resolve Issues on Time.
How would you manage and control stock?

Set up a stock control policy

 Identify stock you always need and make sure you have sufficient supply.

 Tighten the process of buying stock – knowing the volume sales per stock item
will help you buy the right amount.

 Keep accurate stock records and match them to a regular physical count, at
least once a year.
What is the difference between inventory management
and stock management?

Inventory takes into account all the

assets used to manufacture the goods to
be sold and determines the selling price
of the inventory.
Stock determines the amount of revenue
a company generates. The more stock
you sell, the higher your earnings.
WHAT IS BALANCED SCORECARD?

A balanced scorecard is a strategic

management performance metric that
helps companies identify and improve
their internal operations to help their
external outcomes. It measures past
performance data and provides
organizations with feedback on how to
Benefits of a Balanced Scorecard (BSC)

There are many benefits to using a balanced

scorecard. For instance, the BSC allows businesses
to pool together information and data into a single
report rather than having to deal with multiple
tools. This allows management to save time,
money, and resources when they need to execute
reviews to improve procedures and operations.
What Are the Four Perspectives of the Balanced
Scorecard?

The four perspectives of a balanced scorecard are

learning and growth, business processes, customer
perspectives, and financial data. These four areas,
which are also called legs, make up a company's
vision and strategy. As such they require a firm's
key personnel, whether that's the executive and/or
its management team(s), to analyze the data
collected in the scorecard.
How Do You Use a Balanced Scorecard?

What Are the Balanced Scorecard

Benefits?

What Is a Balanced Scorecard Example?

1. FINANCIAL PERSPECTIVE

 Under the financial perspective, the goal of a

company is to ensure that it earns a return on
the investments made and manages key risks
involved in running the business. The goals can
be achieved by satisfying the needs of all players
involved with the business, such as the
shareholders, customers, and suppliers.
People who provide funds to companies,
such as financial institutions and
shareholders, rely heavily on financial
performance measures in deciding
whether to lend or invest funds. Properly
designed financial measures can provide an
aggregate view of an organisation's success.
2. CUSTOMRS PERSPECTIVE

Customer Perspective – Customer

perspective measures consider the
organization's performance through
the eyes of its customers, so that the
organization retains a careful focus
on customer needs and satisfaction.
What is an example of customer perspective?

An example of customer perspective in

balanced scorecard is customer
satisfaction and market share. A
balanced scorecard is a strategic
management performance metric used
to identify and improve various
internal business functions and their
3. INTERNAL PERSPECTIVE

An internal perspective

involves examining an individual's
thoughts, feelings, perspectives and
beliefs and their effect on the
individual's performance. An
external perspective takes into account
the effect of external events and
4. LEARNING AND GROWTH PERSPECTIVE

The learning and growth perspective is

the foundation of any strategy and
focuses on the intangible assets of an
organization, mainly on the internal
skills and capabilities that are required
to support the value-creating internal
processes.
How do you measure learning and growth perspective?

In the learning and growth perspective, there

are three main measurement,
 namely: retention of employee, employee
satisfaction and employee productivity.
 implemented in the object of research as
performance measurement tool.
 as well as policy fixed in IBS.
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 https://
www.yourarticlelibrary.com/accounting/performance-measurement/perspect
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 https://
www.yourarticlelibrary.com/accounting/performance-measurement/perspect
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 https://www.safeopedia.com/definition/719/organizational-behavior#:~:text
=An%20internal%20perspective%20involves%20examining,factors%20on%20an%2
0individual's%20performance
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 https://
www.shareweb.ch/site/Learning-and-Networking/sdc_km_tools/Documents/
Balanced%20Scorecard.pdf
THANK YOU!