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An Overview of Production/Operations Management


  1. Meaning of operations management
  2. Significance of operations management
  3. Process of operations management

a. Meaning of operations management:

Operations management may be defined as follows.

Operations management is the designing, operating and controlling of production systems; whereby, products / services are produced / delivered, through a process of conversion from inputs to output.

According to Johnson, Newell and Vergin, “Operations Management is the design and operations of systems”.

Point of comments:

Production of goods and services is a system; since the organizational components interact with each other as well as with outside environment. Production management is an open-adaptive system.

b. Significance of operations management

Introduction of operations management improves organizational efficiency. According to studies conducted, the surgical unit of a hospital showed considerable improvement in operational efficiency, when the concept of operations management was introduced. The hospital under observation had surgical unit with a capacity of 5 patients and a recovery room with a capacity of 12 patients. The hospital had been using a random input policy of scheduling patients for surgery, without any order of priority. On the basis of computer simulation, the scheduling policy was changed; so that patients requiring the longest surgery were scheduled first. This resulted in higher utilization rates for operation rooms and recovery rooms and more timely completion of surgical and recovery schedule. Similarly, banks can use operations management techniques in expediting services to customers. Be it an industrial organizations or a service organization; operations management techniques lead to efficient utilization of space, technology etc, and consequently better service to society and more profitability for the organization itself.

c. Process of operations management

Operations management is an open-adaptive system; and in constant interaction with external environment. The basic working of the operations management is depicted, through the following chart:






1. Information

2. Technology

3. Raw-materials

4. Main Power

5. Management

6. Physical factors,

like land, buildings

machines etc.

7. Other necessary

inputs etc.





External Environment




Transformation or

conversion process



Planning, operating

and controlling the

production system




















External Environment


The above chart shows that the production system obtains its inputs (as described in the input box) from the external environment i.e. the society which is the supra system. These inputs are transformed into output, through the conversion process which consists of planning, operating and controlling the production system. The output (goods, services) are transferred to external environment from where the management gets a feedback i.e. response or reaction. On the basis of this feedback, necessary modifications, corrections and adjustments are made in the inputs and the transformation process – to better operate the production system and to better serve the society. 

Steps involved in operations management

Steps involved in operations management are described below under three categories;

(a). Planning the system

(b). Operation the system

(c). Controlling the system 

a. Planning the system:

The sub-steps of operations management in this category are as follows: – 

(i) Search for and selection of the product or service:

This step requires exploration. Exploration is the search for new ideas which may come from many sources like,

  • Research and development section
  • Salespersons, who are constantly in touch with consumers?
  • Competitors, who may be in the process of developing some substitutes

All the ideas the tested for feasibility and profitability. The selected ideas must be consistent with the objectives, strategies, programmes of the organization.

(ii) Production design

The production design, the following steps may be recommended:

  1. Prepare a preliminary design by evaluating various alternatives, taking into account reliability, quality and maintenance requirements.
  2. Reach a final decision by developing, testing and simulating the processes, to see if they work.
  3. Select the process for producing the product; considering the technology and methods available. 

 (iii) Determination of production layout

There are several kinds of production layouts

  1. Arrange the layout, in the order in which the product is produced / assembled.
  2. Lay out he production system, according to process employed.
  3. In the fixed position layout, the product stands in one place for assembly (e.g. layout for printing press, ships)
  4. Lay out the production system, according to nature of project (e.g. layout for  building a bridge or tunnel to fit specific geographic requirements)
  5. Lay out the production process to facilitate sale of products
  6. Lay out the production process to facilitate storage or movement of goods. 

(b) Operating the system: 

Operating the production systems required

  • Setting up an organizational structure
  • Staffing positions and training people
  • Supervising workers, so that they product desired goods/ services
  • Motivating and leading people, to get best performance out of them.

Operating involves scheduling work operations and allocating work in such a manner as to meet short-term as well as long-term levels of output, which are consistent with forecasted demand. The operational decisions require use of operational research tools to ensure optimum smooth output.

Point of comment:

Operating the system also involves updating, which means continuous revision of operating methods and system to meet the ever changing and dynamic social and technological environment. This revision is necessary in response to changes in customer demand and preferences

  • changes in technology
  • changing competition scenario
  • changes in organisation objectives
  • changes in personnel etc.

(c) Controlling the system

The controlling mechanism is to be developed at the same time as the designing of operating systems and most be integrated with the system.

Controlling process ensures that the operating systems are attaining the desired results. These controls are in areas of – quantity and quality of output, utilization of raw – materials and wastage, price and quality of raw – materials purchased, inventory levels of raw- materials and finished goods etc.

Controlling operations are done with emphasis of information systems. With the development of computer hardware and software, it is now possible for virtually any measurable data to be reported as events occur. Systems are available for quick collection of data; keeping data readily available and reporting without delay, the status of any project, at any instant.