What is Operations Management and Why is it Important? Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level. Management is the process, which combines and transforms various resources used in the operations subsystem of the organization into value added services in a controlled manner as per the policies of the organization. The set of inter-related management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management.   What is Production?  Production is defined as ‘the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user’. Thus production is a value addition process. At each stage of processing, there will be value addition.     Pic Courtesy: Minds.com   Edwood Buffa defines production as ‘a process by which goods and services are created’. Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.   Characteristics of a Production System 1. Production is an SYSTEMATIZED activity, so every production system has an objective. 2. The system transforms the various inputs to useful outputs. 3. It WORKS IN TANDEM with the other organisation systems. 4. There exists a feedback about the activities, which is essential to control and improve system performance.   Evolution of Production Management Why Operations Management is Important? Increases productivity of every organization Leads to economic growth and development Helps employees to receive high wages Earns profit for a company Also plays a strategic role in a firm’s competitive success Want to Learn Some Interesting Operations Management Terms? Capacity planning—The process of determining the production capacity needed by an organization to meet changing demands for its products. Different types of capacity exist. For example, design capacity is the maximum amount of work that an organization is capable of completing in a given period; effective capacity is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, and material management. Efficiency—Performing activities at the lowest possible cost. Enterprise resource planning (ERP)—Large, sophisticated software systems used for identifying and planning the enterprise-wide resources needed to coordinate all activities involved in producing and delivering products. Forecasting—The process of predicting future events, including product demand. Just-in-time—A philosophy designed to achieve high-volume production through elimination of waste and continuous improvement. Lean systems—Sometimes synonymous with just-in-time, it is a philosophy that takes a total system approach to creating efficient operations through the elimination of waste. Location analysis—Identifying the best location for facilities. Mass customization—The ability of a firm to highly customize its goods and services at high volumes through its operations management function. Product design—The process of deciding on the unique and specific features of a product. Process selection—The process of identifying the unique features of the production process that will give the product its unique characteristics. Process selection typically goes hand in hand with product design, as we need to create a process that gives rise to the particular product design desired. An excellent product design is worthless if a process for its creation cannot be developed. Productivity—A measure of how efficiently an organization converts inputs into outputs. It is usually measured by a ratio of output divided by input. Productivity is essentially a scorecard of how efficiently resources are used and a measure of...

It all began with ADAM SMITH (1776), the Scottish economist when he lashed out against the abuses of monopoly and mercantilism. He highlighted that productivity was a result of specialization, division of work and exchange. We witness the evidence of managerial practices right from the Sumerian age as early as 5000 B.C., from their written records to administer the governmental  and commercial activities. Koutilys’a ARTHASASTHRA and Thiruvalluvar’s THIRUKKURAL  have spelt out management principles in a coherent way that suits any time period. MILESTONES IN THE DEVELOPMENT OF MANAGEMENT THOUGHT: 5000 B.C SUMERIANS RECORD KEEPING 4000 B.C EGYPTIANS PLANNING,ORGANISING AND CONTROLLING 500 B.C GREEKS SPECIALISATION 1800 ELI WHITNEY MASS PRODUCTION MADE POSSIBLE 1822 CHARLES BABBAGE PRODUCED DIFFERENCE MACHINE,A FORERUNNER OF TODAY’S COMPUTER 1911 F.W.TAYLOR SCIENTIFIC MANAGEMENT 1916 HENRI FAYOL MANAGEMENT FUNCTIONS 1943 ABRAHAM MASLOW MOTIVATION MODEL 1954 PETER DRUCKER POPULARISED MBO-MANAGEMENT BY OBJECTIVES 1961 RENSIS LIKERT CONTINGENCY LEADERSHIP PRE-SCIENTIFIC MANAGEMENT SCHOOL Management is as old as civilization and it is a separate entity by itself. The full boom of management was witnessed  with the advent of INDUSTRIAL REVOLUTION in Europe in the late 18th century. There was mass exodus of people to urban cities in search of jobs due to mechanisation and there arose a necessity to manage people. Initially they were treated as slaves by the owners but later the link factor called “Managers” came into the picture to negotiate and solve issues between the union and management. Important contributors to the management theories Robert Owen:     He introduced a system of open rating for workers’ work on a daily basis. He insisted that improving the lives of the working individuals through labor welfare measures was the only way to increase productivity. Charles Babbage: He was a visionary who could foresee scientific management. His difference engine or the modern day computer has made people’s lives easy and has replaced manual operations with machines. Captain Henry Metcalfe: He formed the Bureau of Personal Administration in New York Introduced time cards and material cards Fredrick Winslow Taylor: Founder of scientific management and is called the “Father of scientific management.” He emphasized on the need for management planning and standardization of tools and materials, the former to gauge the capability of men and machine and the latter to save time  and increase productivity. He was one of the founders of “Time  and Motion study.” His theory was based on the following assumptions: · Production planning and control is the main function of an organization · Insisted on functional foremanship · Time study as the basis for arriving standard time · Standardisation of all tools and parts · The use of ‘slide-rules’ and similar time saving implements · Inroduced ‘time-cards’ for workmen · The ‘differential rate system of wages Henry Gantt: He proposed the Gantt Chart, a visual method to compare production output with time it took to complete a task. This is considered to be a forerunner of today’s PERT-PROGRAMME EVALUATION and REVIEW TECHNIQUE). He also developed · Work quota systems · Bonus systems for workers or managers  Objectives of Scientific Management · To ensure continuous employment opportunities for the work force · To gauge market tendencies · To render workers a high standard of living; this motivates them to contribute more · To increase the income of the workers · To assure a socially agreeable condition of working environment · Proper selection, training, assignment, transfer and promotion of workers · To develop self-confidence and self-respect among workers through opportunity and participation · To promote justice through elimination of discrimination in wage-rates · To eliminate causes of friction and to promote understanding, tolerance and the spirit of team-work-Espirit de...