Production and operations management mainly focus on the effective management and use of organizational resources that are needed for producing goods and services. In this regard, production management pertains to the management of those activities that are carried out while producing goods. Operations management, on the other hand, is actually a step further than productions management as it pertains to the administration of business operations carried out during the production of goods and services. Production management may be considered as a subset of operations management. The definition of the two terms is discussed below, followed by the differences between them.
Definitions and explanations
Production management is the field in which the principles of management are applied to the production function. It involves different tasks, such as planning, supervision, scheduling and regulating the activities related to the production of products. In other words, it is the efficient use of resources to convert raw materials into value-added products.
Production management involves decisions pertaining to raw materials, quality, quantity, design, packaging, pricing, etc. that are made by the production manager, who makes certain that the final product conforms to the required specifications.
Production management plays an important part in the success of a business. It enables companies to attain their objectives by creating products and services that fulfill customer requirements. It increases the reputation of the business by ensuring that high quality products are consistently produced. In addition, it ensures efficient use of resource, without deteriorating the quality of the final product.. This decreases the production cost, because of which customers can obtain the product at a reasonable cost.
Some of the key functions of production management are:
- Production control: The production manager needs to make sure that the correct production plan is being followed while goods are being produced.
- Scheduling: This process regulates the start and end of the production process.
- Cost and Quality control: The production manager is responsible for ensuring that high quality products are provided to customers, and at the lowest price.
- Machinery maintenance: This function ensures that the machinery and equipment used for the production process are in good condition and are not facing any damage or defects.
Operations management involves managing the routine business activities so as to make sure that the organization is able to operate in a smooth and effective manner. It includes the planning, designing and supervising activities carried out while developing goods and services of an organization. Its objective is to ensure that there is optimal use of resources in an organization, so as to decrease wastage during and following the production process. It seeks to provide the required products and services to the customers, while making sure that all those involved in the production process are working in accordance with the policies determined by the management of the organization.
Operations management is important for any business as it makes certain that customers always have access to products and services. It ensures that there is effective conversion of raw materials into final products. It brings about an improvement in the overall efficiency of the organization by ensuring optimal use of resources.
Operations management involves the following functions:
- Strategic plans: Developing strategies that enable companies to achieve maximal use of resources and allow them to gain a competitive advantages in the market in which they are operating.
- Finance: Ensuring that the company uses its resources efficiently while producing goods.
- Product design: create a product design that fulfills the requirements of customers in the market and is consistent with the current market trends.
- Forecasting: predict how the product or services will perform in the future, and how customer requirements would change as time progressed.
Differences between production management and operations management
The main differences between production management and operations management are discussed below:
Production management refers to the management of those activities of the business that are related to the production of goods, or to the conversion of raw materials into finished products. On the other hand, operations management refers managing the business activities of an organization that are carried out while producing goods or services.
Production management involves taking decisions with respect to the quality, quantity, design and pricing of the product being created by the organization, i.e. its scope is limited to the production of goods. Operations management, however, has a wider scope compared to production management in that it pertains to the management of routine business activities, such as product quality, design, quantity, location, process, workforce requirement, storage, maintenance, inventory management, logistics, waste disposal, etc.
Production management essentially focuses on offering the right quality of products at the right time, in the right quantity and at the right price. Operations management, however, focuses on using the organization’s resources in the most efficient and effective manner, so as to meet the requirements of customers.
4. Organizations where it is prevalent
Production management is prevalent in only those organizations where products are manufactured. On the other hand, operations management may be prevalent in all types of organizations, for example, banks, manufacturing firms, service-oriented firms, hospitals, etc.
Production management vs operations management – tabular comparison
A tabular comparison of production management and operations management is given below:
|Managing production-related activities of an organization
|Managing routine business activities of an organization related to creation of products as well as to the delivery of services
|Limited to the production of goods; taking decisions on quality, quantity, design and pricing of the product being developed
|Wider scope; management of routine business activities, such as product quality, design, quantity, storage, workforce requirement, etc.
|Offering the right quality of products at the right time, in the right quantity and at the right price.
|Efficient and effective use of organizational resources
|Organization where it is prevalent
|Organizations where products are created
|All types of organizations, such as service-oriented firms, banks, manufacturing companies, hospitals, etc.
Conclusion – production management vs operations management
Production management and operations management are both very important for organizations as they ensure that the products are generated in an efficient and effective manner, with optimal use of resources and minimal wastage. Hence, organizations should focus on both the management practices if they wish to satisfy their customers and grow their business.