What is Operations management

• The term productions management was earlier used

to refer to the management of an organizations
productive resources or its production system which
converts inputs into outputs needed by the
customers of the organization.
• Since the importance of services is gaining around,
the term production management has been
changed to “production and operations
management” as many organizations produce both
goods and services as their outputs.
 Meaning of production
• Production or operation is used to refer to the
process of creating both goods as well as services.
• Any process which involves conversion of raw
materials and bought – out components into finished
products for sale is known as production.
• Such conversion of inputs adds value or utility to the
products produced by the transformation process.
• The value addition to inputs is brought by alteration,
transportation, storage or preservation and quality
assurance.
 Nature of production
• Production as a system :
• This view is also known as “ systems concept of
production”.
• Production is viewed as a system which converts a
set of inputs into a set of desired outputs.
• A production system has the following elements :
inputs, conversion process, outputs ,
transportation subsystem, communication
subsystem, control or decision making subsystem.
 Production as an organizational function

• To create goods and services, all organisations

whether manufacturing goods or services perform
four basic functions. They are
• Production / operations
• Marketing
• Human resources
• Finance
• Production function plays a vital role in achieving
the objectives of any business organisation
Production as a conversion / transformation
process
• The conversion / transformation subsystem is
the core of a production system because it
consists of processes or activities wherein
workers, materials, machines and equipments
are used to convert inputs into outputs.
• The conversion process may include
manufacturing process such as cutting,
drilling, machining, welding, painting etc .
 Operations in the organisation
• The operations function is central to the
organization because it produces the goods and
services which are its reason for existing, but it is
not the only function. It is, however, one of the
three core functions of any organization. These are:
• the marketing (including sales) function – which is
responsible for communicating the organization’s
products and services to its markets in order to
generate customer requests for service;
• the product /service development function – which is responsible for
creating new and modified products and services in order to generate
future customer requests for service;

• the operations function – which is responsible for fulfilling customer

requests for service through the production and delivery of products and
services.
• In addition, there are the support functions which enable the core
functions to operate effectively. These include, for example:

• the accounting and finance function – which provides the information to

help economic decision-making and manages the financial resources of
the organization;

• the human resources function – which recruits and develops the

organization’s staff as well as looking after their welfare