Production management and operations management talk about applying business organization and management concepts in the creation of products and services. Production management refers to the management of activities related to the production of goods.
On the opposite side, operations management may be a step ahead of production management, or it will be said that the production manager may be a part of the operations management. Operations Management, as the name suggests is the administration of business operations, by the managers of the organization. Production management is also considered as a subset of operations management. The definition of the 2 terms is discussed below, followed by the differences between them.
Definition of Production Management –
Production is a scientific process which involves the transformation of raw material (input) into the desired product or service (output) by adding economic value. When the principles of management are applied to the production function of the company or organization, it is known as production management. It is a process of planning, scheduling, supervising, and controlling the activities involved in the production of goods and services, i.e. the transformation of various resources into the value-added product, in an efficient manner. The main purpose of product management is to produce the right quality at the right time and cheaply.
Production management plays an important part in the success of a business. It enables companies to realize 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. Additionally, it ensures efficient use of resources, without deteriorating the quality of the final product. This decreases the production cost, because of which customers can obtain the merchandise at a reasonable cost.
Definition of Operations Management –
Operational management provides insurance for the smoothness and efficiency of operations within the company. Basically, it refers to the design, implementation, and control of management. It involves the administration of production, manufacturing, and provision of services within the company or an organization. Its objective is to ensure that there is an 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 within the production process are working in accordance with the policies determined by the management of the company or organization.
Operations Management is all about the optimum utilization of the companies or organization’s resources, i.e. the resources must be utilized the maximum amount much as possible, by minimizing the loss, wastage, and underutilization. It is important for any business as it makes certain that customers always have access to products and services. It ensures that there is an effective conversion of raw materials into final products. It brings about an improvement within the overall efficiency of the organization by ensuring optimal use of resources.
Key Differences between Production and Operation Management –
The main difference between production and operational management is that production management focuses on the production of goods and services. Operational management, on the other hand, involves activities such as supervision, planning, and designing business activities. Production management is also part of operational management.
Production Management:
- Production Management can be defined as the administration of the set of activities concerning the creation of goods or the transformation of raw material into finished goods.
- The objective of production management is to produce the best goods or services that are of the right quality, right quantity at the right time.
- Production management occurs on outputs after manufacturing raised in the market.
- Production management involves taking decisions with respect to the quality, quantity, design, and pricing of the product being created by the company or organization, i.e. its scope is limited to the production of goods.
- Production Management can only be found in firms where the production of goods is undertaken.
- Production management requires extra capital to make the capital in the beginning and needless labor because it offers with the unit.
Operation Management:
- Operations management aims at making the best possible use of companies or the organization’s resources, in order to fulfill the customer’s wants.
- Operations Management refers to the part of management concerned with the production and delivery of goods and services.
- Operations management occurs on input during manufacturing.
- 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.
- 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.
- Operations management is found in Banks, Hospitals, Companies including production companies, Agencies, etc.
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. Production management covers administer all the activities which are involved within the process of production. On the other hand, operations management entails all the activities involved within the production of goods and delivery of services such as material management, quality management, maintenance management, process management, process design, and product design, and so on. Hence, organizations or companies should focus on both management practices if they wish to satisfy their customers and grow their business.