Operations and Productivity Introduction

This unit introduces the basic concepts of the production and operation functions. Among different functions in any organization, production and operation function is a vital function which does the job of value addition to products / services respectively. Maximizing the value addition automatically results in productivity improvement.

An organization consists mainly of four functional subsystems, viz. marketing, production, finance and human resource management. The marketing function of an organization aims to promote its products among customers which help it to obtain sales orders. This, in turn, is communicated to the production subsystem which is concerned with the management of physical resources for production of an item or provision of services. This means that the available facilities also need to be managed to meet the current market requirements. To manufacture the product as per the specifications, the production function needs to organize its resources (raw material, equipments, labor and working capacity) according to predetermined production plans. The finance function provides authorization and to control to all other subsystems to utilize money more effectively through a well defined finance plan.

The human resource management function plans and provides manpower to all other subsystems of the organization by proper recruitment and training programs. It also monitors the performance of the employees by proper motivation for targeted results.

Thus we can see that all the subsystems of an organization are mutually interlinked. They cannot work in isolation. A complete integration of all the functions /subsystems of an organization are absolutely essential for the effective functioning and achievement of desired results.

The concern of any organization today is the pursuit of creating more value for the customer. This value end focus provides the competitive advantage that has become of necessity today. Production and operation management provides the means to explore and implement initiatives on how to avoid waste, how to create value and how the organization can differentiate itself from its competitors. This differentiation has become the means to survive in this brutal world of competition. In fact “Operations” greatly influences, directly or indirectly, the value creation logic of the organization. Production and operation management is the science-combination of techniques and systems – that guarantee production of goods and services of the right quality, in the right quantities and at right time with the minimum cost within shortest possible time. The essential features of a production and operation function is to bring together people, machines and materials to provide goods and services for satisfying customer needs. In our next paragraph we shall describe what is meant by ‘operation function’ in an organization.

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