PRODUCTION AND OPERATION MANAGEMENT

LECTURER: MASHAL TARIQ

MS(MARKETING)
GOLD MEDALIST
 DEFINITION OF OM

• Operations management (OM) is the administration of business practices to create

the highest level of efficiency possible within an organization. It is concerned with
converting materials and labor into goods and services as efficiently as possible to
maximize the profit of an organization.

Operations management teams attempt to balance costs with revenue to achieve

the highest net operating profit possible.

Operations are purposeful actions (or activities) methodically done as part of a

plan of work by a process that is designed to achieve practical ends and concrete
objectives.
 UNDERSTANDING OM
• Operations management involves utilizing resources from staff, materials, equipment,
and technology. Operations managers acquire, develop, and deliver goods to clients
based on client needs and the abilities of the company.

• Operations management handles various strategic issues, including determining the

size of manufacturing plants and project management methods and implementing the
structure of information technology networks. Other operational issues include the
management of inventory levels, including work-in-process levels and raw materials
acquisition, quality control, materials handling, and maintenance policies.

• Operations management entails studying the use of raw materials and ensuring that
minimal waste occurs. Operations managers use numerous formulas, such as the
economic order quantity formula, to determine when and how large an inventory order
to process and how much inventory to hold on hand.
 UNDERSTANDING OM

• An operations management professional understands local and global

trends, customer demand, and available resources for production.
Operations management approaches the acquisition of materials and
the use of labor in a timely, cost-effective manner to deliver customer
expectations. Inventory levels are monitored to ensure that excessive
quantities are on hand. Operations management is responsible for
finding vendors that supply the appropriate goods at reasonable prices
and have the ability to deliver the product when needed.
 UNDERSTANDING OM

• Another large facet of operations management involves the delivery of

goods to customers. This includes ensuring that products are delivered
within the agreed time commitment. Operations management also
typically follows up with customers to ensure that the products meet
quality and functionality needs. Finally, operations management takes
the feedback received and distributes the relevant information to each
department to use in process improvement.
 WHAT OPERATION MANAGERS DO?

• Operations managers are involved in coordinating and developing new processes

while reevaluating current structures. Organization and productivity are two key
drivers of being an operations manager, and the work often requires versatility and
innovation. As part of their daily responsibilities, operations managers must
possess a variety of skill sets, including:

• Technical expertise in areas such as production automation, data entry, budget

tracking, and design.
•
Organizational ability and attention to detail to include keeping track of project
files, employee reports, budgets, schedules, and other details related to company
processes.
 WHAT OPERATION MANAGERS DO?

• Motivational prowess in the form of strong leadership skills that provide the expertise
to motivate others, inspire ideas, and foster a supportive and diverse team.

• Analytical aptitude, including skill in risk analysis and mitigation when initiating new
projects. Operations managers also must analyze processes to identify challenges and
offer solutions in the event that negative situations develop.

• Decision-making proficiency, especially under stress when there is very little time to
assess all factors.

• Ability to maintain quality standards, including as they relate to raw materials,

machinery, manufacturing procedures, packaging, delivery processes, and the finished
product.
 Scope of operation management

• Operation management has been gaining increased recognition in recent years

because of the following reasons:
• (i) The application of operations management concepts in service operations.

• (ii) The growing importance of quality.

• (iii) The introduction of operation management concepts to other areas such as

marketing and human resources and

• (iv) The realization that the operations management function can add value to the
end product.
 APPLICATION OF OM

• Initially, operations management concepts focused mostly on manufacturing. But

as countries become more developed, services grow and represent a larger
percentage of the economies of developed countries. This led to the expansion of
application of operations management from manufacturing/production systems to
service systems also in order to improve the productivity of service organisations.
This is quite obvious because majority of the production systems have outputs
consisting of both tangible goods and intangible services.
 IMPORTANCE OF QUALITY

• Quality is a key component of operations management. Quality is no longer limited

to manufacturing function but important in all functional areas throughout the
organisation. With the integration of manufacturing and services operations,
quality is no longer limited to technical requirement of tangible goods but also
equally important for service. Improvement in quality in all areas of the business
improves customer satisfaction and increases customer loyalty.

• Expansion of operations management concepts to

other functions:
• In addition to quality, concepts of operations functions such as product design and
process analysis are applied in other functional areas such as marketing, software
development, finance and accounting, human resources.
 PURPOSE OF OM

• Operations management (OM) is concerned with controlling the production

process and business operations in the most efficient manner possible. OM
professionals attempt to balance operating costs with revenue to maximize net
operating profit.

SYSTEMS OF OM
• Modern operations management revolves around four theories:

Business process redesign (BPR), which is focused on analyzing and designing

workflow and business processes within a company. The goal of BPR is to help
companies dramatically restructure the organization by designing the business
process from the ground up.
 SYSTEMS OF OM

• Reconfigurable manufacturing systems, designed to incorporate accelerated change in

structure, hardware, and software components. This allows systems to adjust rapidly to the
capacity to which they can continue production and how efficiently they function in response
to market or intrinsic system changes.

• Six Sigma, an approach that focuses on quality. The word “six” references the control limits,
which are placed at six standard deviations from the normal distribution mean. Tools used
within the Six Sigma process include trending charts, potential defect calculations, and other
ratios.

• Lean manufacturing, which is the systematic elimination of waste within the manufacturing
process. This theory sees resource use for any reason other than value creation for customers
as wasteful and seeks to eliminate wasteful resource expenditures as much as possible.
 Manufacturing Operations

• Manufacturing operations transform materials into desired goods and products.

• Products such as automobiles, airplanes, televisions, furniture suites, computers,
refrigerators, and light bulbs are made in factories. On the other hand, fast-food
chains such as McDonald’s and Burger King view the assembly of sandwiches from
meat, buns, and condiments as a manufacturing application. Goods also include
processed items such as paint, milk, cheese, chemicals, etc.
 Service Operations

• Service operations in the office environment are quite familiar, that is, filing
documents, typing input for the word processor, and answering the phone. There
are similar lists of verbs and objects that apply to jobs done in banks, hospitals,
and schools: granting loans, taking X-rays, and teaching classes are a few examples.
Movies are one of the biggest export products of the United States. Operations
management applies directly to entertainment, film-making, and sports.
 PRODUCTION AND OPERATION MANAGEMENT

• P/OM is the systematic planning, execution, and control of operations. This

definition implies that management is needed to ensure that actions are
purposeful—designed to achieve practical goals and targets. P/OM makes sure that
the work is done methodically, that is, characterized by method and order. The fact
that a process is used suggests the presence of management to install a procedure
for working systematically

• Operations management is responsible for a plan of work—a thoughtful

progression from one step to another. Plans require details for accomplishing
work. These details are often called the tactics of the plan. Practical ends are not
realized without operations management that is able to provide strategies and
tactics for public service objectives, which can include the ability to gain market
share on a bus route or participation in a recycling plan. Everyone wants to be able
to gain market share. Strangely, the same does not apply to profit. Non-profit
organizations pay salaries and provide services which are profits transformed—
always labeled as expenditures
 PRODUCTION AND OPERATION MANAGEMENT

• In brief, operations management consists of tactics such as scheduling work,

assigning resources including people and equipment, managing inventories,
assuring quality standards, process-type decisions that include capacity decisions,
maintenance policies, equipment selection, worker-training options, and the
sequence for making individual items in a product-mix set.
 DEFINITION OF PRODUCTION MGT

• It is the function of management related to planning, coordinating and controlling

the resources required for the production to produce specified products by
specified methods by optimal utilization of resources.
• production management is defined as the management function which plan,
organizes, coordinates directs and controls the material supply and processing
activities of an enterprise.