Production and Operation Management: Generic Concept

This essay contains following topics:
- Introduction
- Present day corporate & industry situation
- Definition of production and operation management system
- Components of production and operation management systems
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Recently, while coming back from Tatanagar after a meeting with TATA Steel, I met a senior marketing professional Mr. S. K. Roy. Mr. Roy is a paint specialist and having ample knowledge about present day industries.During our 4 hours journey, we were discussing various issues, including the plant and production practices at different companies, like Tata Steel, Jindal Steel, Essar Steel, etc. In contrary, we had discussed different small scale industry practices, too. Also, we had touched different paint manufacturers like Asian Paints, Berger Paints, ICI paints, Shalimar Paints, etc.

Our discussion was focused on human resources and their change in behaviors with respect to different companies. Also, we were discussing about lack of appropriate personnel which today’s hardcore industry is facing.It is true that for last one decade a considerable amount of engineers and professionals have shifted their career towards software and service sector jobs. Definitely, software and service sector jobs are perfectly white colour profession with an attraction of foreign trips. Also in most of the cases these jobs require defined skills where challenges are more defined. So it automatically attracts a huge population. But this trend towards software and service sector has created a vacancy in the hardcore sector. This vacancy also has increased salary level of the hardcore sector enormously. But it is true that hardcore sector is starving with proper experienced man power and this scenario will be worse even in future. I can guess that, 80% of the students, who had passed engineering with me ten years ago, is presently working in software companies, like TCS, Wipro, Infosys, CTS, Capegemini, etc. Today after serving 10 years in the software industry and service sector they can not come back to their basic stream of mechanical, civil or electrical engineering. Because the knowledge base, operation and production management concepts, as well as the practices and culture in the software industry can never match with the hardcore industries. Industry wise, the software (including service sector) and hardcore sectors are definitely different and their production procedures are also different. But are the basic production and operation theories also differ for these two sectors?

What is production and operation management system in general?

Production and operation management is the art of managing man, machine, material, money and method to produce goods and services, effectively and efficiently. Production and operation are involved in converting inputs into output through transformation processes. Traditionally production implies the process which is involved in mass production of tangible goods. Later on services also began to “produced” or rendered. As the complexities increased and business grew, proper system of managing production became essential.
In the process of study of effective and efficient system, it may be observed that some principles can be applied for both goods and service sectors. These principles form the concept of production and operation management system.

The major components of production and operation management systems are as follows:
* Input
* Transformation process
* Output
*Quality

* Input:
Input includes man, machine, method, money, material and management. In hardcore industry, all the components of inputs are easily identifiable. But in service sector and software sector the “material” input is tough to distinguish. Here material can be found in the logical codes which are prepared based on customer requirements.

* Transformation process:
This is the process by which inputs are converted into output.
Major components of transformation system are as follows:
Alteration: This process involves in change of shape of inputs, i.e. change in physical and chemical state of input. In hardcore sector, for example in a steel plate manufacturing process, the complete process from raw material handling system to rolling mills via furnaces are involved in the alteration method. In software and service sector, programs can be identified as alteration methods.
Transportation: This process involves in physical movement of the goods. The goods can be input goods, in-process goods or output goods. In hardcore sector transportation process needs no explanation. In service sector and software system, transportation can be through email, FTP servers, and websites.
Storage: This process involves in preservation of goods, i.e. protection of goods from any adverse conditions. In hardcore sector storage process can easly be visualized. In software and service sector, storage placed at servers. Also storage is possible in CD, DVD, etc. For protection, various anti viruses are used.

* Output:
An output can be goods or services.

The major difference between goods and services are as follows:
i) Goods are tangible. For example, one can easily experience TATA NANO, because it is a tangible goods. Services are intangible. Management Information System (MIS) in any company can be one example.
ii) Goods are produced in the factory environment, which is away from customer. TATA NANO is produced in a factory at Gujrat Village. Services are produced in the market environment, in collaboration with the customer. For construct a MIS, the software and service team needs to be stationed in the respective company premises and prepare the whole program for the same there itself.
iii) Goods can be produced, stored and transported according to the demand. TATA NANO is one example for the same. Services produced only when it is required. A MIS is designed and “produced” when a company needs a MIS.
iv) Goods are normally standardized. TATA NANO is a standard product with standard features. Services are normally customized. MIS of different companies differs based on their requirements, practices and cultures.
v) Quality is the inherent part of the goods. TATA NANO’s quality is reflected in its car only. Quality is embedded in the process by which services are “produced” or rendered. When a MIS is “produced”, then the implementation process follow quality paths which ensures fault free MIS. Now a day, some goods manufacturing companies are also following the concept of service sector. One example can be DELL computers. DELL is delivering laptops based on customer’s requirements.

* Quality: Quality control is the most important aspect of modern production and operation management. As the competition is increasing, the concept of quality is becoming more and more important.
What is quality?
Quality is the characteristics of an entity which satisfy customer’s stated and unstated needs. Entity refers to goods or services, and customer refers to external customer of the organization, as well as internal customer within the organization. External customer is well understood term. But who are the internal customers for an organization? Internal customers means the employees within the organization. Every employee who is directly or indirectly related to the other employee is the internal customer of later employee.
Concept of quality is so important that, quality of the product from input to output via transformation process must satisfy all related parties, internal and external. Naturally, this unique concept of definition stress on the inherent quality. That means only raw material or finished good quality is not important, also the quality of the whole transformation process should be assured. Concept of quality control is equally applicable for hardcore sector and service sector.

In modern business environment, both the sectors are giving equal importance on the quality improvement of transformation processes, as well as quality of the input and output entities. To ensure quality of input, in-process and output entities, as well as quality of whole transformation process, both the sectors are now stressing on quality improvement of its man power also. So in modern day, the whole industry is trying to follow a concept of production and operation management system, which is principally same but the implementation is customized based on the company and its sector.



Nirjhar Chakravorti