An Introduction to Production and Operations Management

Much of modern business depends on Production and Operations Management to ensure quality, speed and efficiency in the manufacturing of goods or delivery of services.

We could say that it is a process of transforming the raw materials or resources into marketable products or services using certain well-defined, controlled and replicable practices.

What’s the Difference between Production & Operations Management?

At first look, production and operations may seem to be twin brothers. However, the main difference is that production management calls for ensuring that the largest amount of goods are made in the shortest period. Operations are more service-oriented having to get the goods to the customer with the maximum speed and efficiency besides attending to all their needs.

Take the case of the automobile industry. The production manager at the car plant wants to ensure that the maximum number of cars roll out of the assembly every day to meet the production target. The operations manager looks after the logistics involved in transporting the cars to the showrooms as per schedule. Both have also to ensure that the costs are kept to the minimum and the profit of the company is maximum at any point in time.

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Benefits of Production Management

Way back in 1913, Henry Ford sought the help of Frederick W Taylor, an engineer-inventor and proponent of scientific management, on ways to bring the assembly line concept to car manufacturing. Implementation of the assembly line enabled him to produce the Ford Model T at a faster, cheaper and more efficient manner.

With each worker in the assembly line given only a single task to be performed quickly, a single car could be assembled in 93 minutes from the 12-hour period earlier. Every component of the car was standardized to be interchangeable with another car resulting in further speeding up of the production line. The net result was an increase in labor efficiency, higher throughput, lower labor costs and less dependency on individual craftsmen.

Soon, industrialists and business captains realized that such techniques worked well with any form of production from jet planes to even hamburgers of international fast-food chains.

Production could be broadly classified into mass production, continuous production, batch production and job shop production.

Mass production, as the name suggests, involves very large volumes. It may require a large labor force who need not be highly skilled or creative and machinery specific to the task. Think of soap or toothpaste manufacturing.

Continuous production offers no flexibility and follows a pre-arranged operations sequence as in the case of oil refining, electricity generation, fertilizer manufacturing.

Batch production may range from bakery products to automobiles and jet engines. From time to time, we have instances of automobile manufacturers recalling certain models of a particular batch to fix faulty brake linings or clutch plates. Thus, one of the advantages is the quick rectification of issues before the brand value takes a hit in the market.

Job shop production involves a limited quantity custom made according to the customers’ specifications. Usually, it requires skilled or creative labor than that of assembly-line products.

Important Aspects of Production and Operations Management

Production and operations management could, depending on the size of the company, cover a large area from location, quality and quantity, allocation of the workforce, maintenance and supply chain management.

A lot of planning is needed to keep the firm ahead of competitors in terms of quality, design, cost and easy availability, to name a few. The entire process should also be as predictable as possible to ensure no last-minute hitches in the delivery of products or services.

Operations Management Objectives

Operations Management focuses on customer satisfaction and resource utilization with a minimum amount of wastage. It calls for a delicate balancing act in that cutting costs by putting in cheaper plastics in a car dashboard could make the automobile manufacturer lose customers.

On the other side, indulge the customer with bells and whistles like an expensive stereo system and premium leather seat covers for a budget car. It could lead to costs shooting through the roof with not much corresponding benefits to the company.

Career Profiles and Salaries in Production & Operations Management

In India, a fresh MBA graduate with Production & Operations Management specialisation will be able to choose from a variety of profiles including Operations Manager, Plant Manager, Procurement Manager, Quality Control Manager and Supply Chain Manager.

The Operations Manager looks after the various aspects of production in a factory or a manufacturing firm and all types of other businesses. The profile also involves ensuring the availability of adequate inputs in the form of raw materials, the plant and the personnel working at the maximum efficiency and speed to deliver the output within the prescribed time schedule.

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The Operations Manager is expected to interact and coordinate with various departments for the smooth functioning of the entire operations. The functions may also include setting the sales goals and making the operational budget, in large organizations. Operations Manager earns an average salary of Rs 7.2 lakh per annum. Incidentally, PayScale says it is a male-dominated profession.

The main recruiters include Amazon, IBM and TCS among the IT biggies besides  Tata Motors.

The Plant Manager ensures smooth functioning of the manufacturing plant including the timely maintenance of the machinery and ensures that the production schedule and output are met. You should also be able to get rid of any wasteful practices and also ensure that all safety requirements are in place including the necessary licenses and other documents. The starting salary is around Rs 4.5 lakh.

The Procurement Manager is expected to take care of all aspects of dealing with the suppliers of raw material, negotiate the best deal with them, maintain quality control and keep track of delivery and payment schedules. The starting salary is around Rs 3 lakh.

The Quality Control Manager is responsible for not only ensuring the quality of the company’s products or services but also look after the legal aspects of the transactions. The starting salary is around Rs 2 lakh.

Supply Chain Manager is in charge of everything from drawing up the business strategy, materials sourcing, manufacturing and the logistics connected with the delivery and return of products. The salary is around Rs 3 lakh.

 

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