Page 30 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes 1.9 Summary

Operations Management is the management of an organisation's productive resources or
its production system, which converts inputs into the organisation's products and services.

Production may be defined as the conversion of inputs – men, machines, materials, money,
methods and managemen (6 Ms) into output through a transformation process.
Production is a primary business function along with marketing and finance, other
management areas being HRD (Personnel & Industrial Relations) and Materials
Management, etc.
The major objective of production management is to produce quality goods and services.
Production management is viewed as a continuous process of planning, organising and
controlling.
Automation is the self-controlling operation of machinery that reduces or dispenses with
human communication or control when used in normal conditions.

Operations Management is fundamental to an organization's achievement of its mission
and competitive goals.
Products can be tangible or intangible. Tangible products are called 'goods' or
'manufacturing', while intangible products include 'services'.
Customer contact is a key characteristic of services. A high quality of customer contact is
characteristic of a good service organization.

"Productivity" relates output to the quantity of resources or inputs used to produce them.
It is basically concerned with how efficiently a certain output of goods and services is
produced, and the value created by the production process.
There are several concepts of productivity. In addition to the single factor measure of
productivity there are also multifactor productivity measures.
Productivity is also used at the national level. Productivity typically is measured as the
rupee value of output per unit of labour.

Productivity is linked to the competitive strategy of the organisation. Corporate strategy
and objectives have a major impact in determining the different operational parameters at
the corporate level.

There are two basic types of competitive advantage a firm can possess: low cost or
differentiation.
Effectiveness of production management is measured by the efficiency through which the
inputs are converted into outputs, i.e., effectiveness of outputs and inputs.

1.10 Keywords

Automation: Act of converting the controlling of a machine or device to a more automatic
system.
Cost Leadership: A firm attempts to gain competitive advantage by reducing its economic costs
below that of its competitors.
Differentiation: Firm seeks to be unique in its industry along some dimensions that are widely
valued by buyers.

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