Production &

Operation Management
Meaning, Nature and Scope Of Production And Operations Management

SIMPLE MEANING: Production / Operations Management is defined as the process which transforms the inputs/resources
of an organization into final goods (or services) through a set of defined, controlled and repeatable policies.
Difference between Production and Operations Management
Production and operations management are more similar than different: if manufacturing products is a prime concern
then it is called production management, whereas management of services is somewhat broader in scope and called
operations management.
• It is best envisioned as a piece-wise process (think about a typical production line with every worker doing one and
only one task at a frenetic speed), and this piece-wise production enabled better quality, higher throughput, lower
individual dependency and lesser labour costs.
The production systems are frequently classified into the following buckets:
• Mass Production: Utilizes standardized discrete assemblies in a continuous process, suitable for very large volumes
of production—all outputs following the same path. Generally associated with mind-numbing repetition, very specific
machinery and a labour force low on skill/creativity.
• Continuous Production: Non-flexible mode of production in which the whole sequence of operations is pre-arranged
in a definite set-up.
• Batch production: American Production and Inventory Control define batch production as “a form of manufacturing
in which the job passes through the functional departments in lots or batches, and each lot may have a different
routing.” Enough said.
• Job Shop Production: Characterized by custom specifications by customers for a limited quantity of products, use of
general purpose machines and comparatively more creative/skilled labour
A few decision areas are of utmost importance in POM, such as design, quality, location selection, human
resource allocation, supply chain management and maintenance.
• The decisions arising from a POM perspective often decide the core priorities of an organization: What makes
us better than the competitors? Will we compete on cost, quality, delivery time, design/form factor, ease of use,
or something else?
• There are some pre-defined objectives of production management, which can be broken down into:
o Right quality,
o Right quantity,
o Right time and
o Right cost
• Production management can essentially be seen as an optimization problem: the goal is to make the process as
predictable as possible (as all of us do not share the same enthusiasm for surprises).
• The objectives of operations management are a tad more extensive and take a couple of things more into the
fold: customer service and resource utilization. o Almost all the things in operation management converge
towards a single focal point: the customer.
Customer satisfaction is a barometer of things moving in the right direction.
What is productivity?
Productivity is a measure of economic performance that compares the number of goods and services produced (output)
with the number of inputs used to produce : 

Factors affecting productivity :

The 6 important factors which are affecting productivity are
1) Government Policy 
2) Quality of Human Resources
3) Availability of Finance
4) Technological Development
5) Natural Factors
6) Managerial Talent.

How is productivity measured :

Productivity is typically measured by comparing an aggregate output with a single input or an aggregate input
with an aggregate output over time.
Productivity is a measure of how efficiently a person completes a task.
What is work-study? :
A system of assessing working methods to achieve maximum output and efficiency.
What is method study :
Method study is the process that specifies the methods and activities considered in a job through an operations chart and
eliminates unnecessary elements of operations to obtain the fastest and the best method of performing a specific job.
What are the steps in the method study? :
The method study procedure is an organized approach, and its investigation rests on the following steps: 
Select the work to be analyzed. 
Record all facts relating to the existing method.
Examine the recorded facts critically but impartially.
Develop the most economical method commensurate with plant requirements.
What is work measurement? :
Work measurement is establishing the time a given task would take when performed by a qualified worker working at a
defined level of performance.
Production Technology :
What is production technology?
Production technology refers to all measures and facilities for the industrial production of goods.
The basis is transferring scientific knowledge into technologically controllable and economically usable production systems.
The five types of manufacturing processes :
•Repetitive manufacturing:
Repetitive manufacturing (REM) is the means of production planning and control used to produce goods and materials in a
repetitive manner.
•Discrete Manufacturing:
Discrete manufacturing is an industry term for manufacturing finished products that are distinct items capable of being easily
counted, 
• Shop Manufacturing:
Separated workstations perform different tasks during a product's manufacturing process. The final products are produced in
small batches
Process manufacturing (continuous) :
It means that a product is made nonstop, without any interruptions or pauses between batches
•Process manufacturing (batch) :
This basically means that the raw materials move through the production line in batches, so that there is a pause between each
step as a batch moves through his basically means that the raw materials move through the production line in batches so that
there is a pause between each step as a batch moves through
What is plant location?
Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory. But the
choice is made only after considering the cost and benefits of different alternative sites. It is a strategic decision that cannot
be changed once taken.

Types of plant layout :

1.Product or line layout :

Advantages offered by Product Layout:

(i) Lowers total material handling cost.

(ii) There is less work in processes.
(iii) Better utilization of men and machines,
(iv) Less floor area is occupied by material in transit and for temporary storage.
(v) Greater simplicity of production control.
(vi) Total production time is also minimized.

Limitations of Product Layout:

(i) No flexibility, which is generally required, is obtained in this layout.

(ii) The manufacturing cost increases with a fall in the volume of production.
(iii) If one or two lines are running light, there is considerable machine idleness.
(iv) A single-machine breakdown may shut down the whole production line.
(v) Specialized and strict supervision is essential.
2. Process or Functional Layout:
Advantages of Process Layout:

(i) There will be less duplication of machines. Thus, total investment in equipment purchases will be
reduced.
(ii) It offers better and more efficient supervision through specialisation at various levels.
(iii) There is greater flexibility in equipment and manpower thus, load distribution is easily controlled.
(iv) Better utilisation of equipment available is possible.
(v) Break down of equipment can be easily handled by transferring work to another machine/workstation.
(vi) There will be better control of complicated or precision processes, especially where much inspection is
required.

Limitations of Process Layout:

(i) There are long material flow lines, and hence expensive handling is required.
(ii) Total production cycle time is more owing to long distances and waiting at various points.
(iii) Since more work is in the queue and waiting for further operation, bottlenecks occur.
(iv) Generally, more floor area is required.
(v) Since work does not flow through definite lines, counting and scheduling are more tedious.
(vi) Specialization creates monotony, and there will be difficult for the laid workers to find jobs in other
industries.
3. Fixed Position Layout:
In this type of layout, the major component remains in a fixed location, and other materials, parts, tools,
machinery, manpower and other supporting equipment are brought to this location.
The major component or body of the product remains in a fixed position because it is too heavy or too big
and as such, it is economical and convenient to bring the necessary tools and equipment to the workplace
along with the manpower. This type of layout is used in the manufacture of boilers, hydraulic and steam
turbines and ships etc.

Advantages Offered by Fixed Position Layout:

(i) Material movement is reduced
(ii) Capital investment is minimised.
(iii) The task is usually done by a gang of operators. Hence continuity of operations is ensured
(iv) Production centres are independent of each other. Hence, effective planning and loading can be made.
Thus total production cost will be reduced.
(v) It offers greater flexibility and allows change in product design, product mix and production volume.

Limitations of Fixed Position Layout:

(i) Highly skilled manpower is required.
(ii) Movement of machines and equipment to the production centre may be time-consuming.
(iii) Complicated fixtures may be required for the positioning of jobs and tools. This may increase the cost of
production.
4. Combination Type of Layout:

Nowadays, in the pure state, any one form of layouts discussed above is rarely found. Therefore, generally,
the layouts used in industries are the compromise of the above-mentioned layouts. Every layout has got
certain advantages and limitations.
Therefore, industries would like to use any type of layout as such.
Flexibility is a very important factor, so the layout should be such it can be moulded according to the
requirements of the industry without much investment.
If the good features of all types of layouts are connected, a compromise solution can be obtained, which
will be more economical and flexible.
7 important characteristics of services
1. Perishability:
Service is highly perishable, and the time element has great significance in service marketing.
Service, if not used in time, is lost forever. Service cannot be stored.
2. Fluctuating Demand:
Service demand has a high degree of fluctuation. The changes in demand can be seasonal or by weeks,
days or even hours. Most of the services have peak demand in peak hours, normal demand and low demand
in off-period time.
3. Intangibility:
Unlike products, services cannot be touched or sensed, tested or felt before they are availed.
A service is an abstract phenomenon.
4. Inseparability:
Personal service cannot be separated from the individual; some are personalised.
Services are created and consumed simultaneously.
For example, a haircut is not possible without the presence of an individual. A doctor can only treat when his/her patient is present.
5. Heterogeneity:
The features of service by a provider cannot be uniform or standardised. A Doctor can charge much
the higher fee to a rich client and take much low from a poor patient.
6. Pricing of Services:
Pricing decisions about services are influenced by perishability, fluctuation in demand and inseparability. The quality of service cannot be carefully
standardised. Pricing of services is dependent on demand and competition, where variable pricing may be used.
7. Service quality is not statistically measurable:
It is defined in the form of reliability, responsiveness, empathy and assurance, all of which are in control of employees’ direction interacting with customers.
For service, customer satisfaction and delight are very important. Employees directly interacting with customers is to be very special and important.
People include internal marketing, external marketing and interactive marketing.
Classification of services :

Services are diversified into three groups; 

1. Business services,
2. Social services
3. Personal services.
• Business services are the services used by businesses to conduct their business
activities. This could be banking, insurance, transportation, etc.
• Social services consist of facilities and services such as public education, welfare,
infrastructure, mail, libraries, social work, food banks, universal health care, police, fire
services, public transportation and public housing.
• Personal services can be anything from housesitting to personal shopping; if you think
you have a particular talent for helping others manage their lives, then this could be a
business opportunity for you.
Services can also be classified in different ways:

1.By nature of the service: Services can be classified based on their nature, such as professional services (e.g., legal,
medical, and consulting services), personal services (e.g., hairdressing, catering, and fitness services), and technical
services (e.g., IT services, repair and maintenance services).

2.By level of tangibility: Services can also be classified based on their level of tangibility, such as intangible services
(e.g., education, consulting, and financial services) and tangible services (e.g., healthcare, transportation, and
hospitality services).

3.By duration: Services can also be classified based on their duration, such as short-term services (e.g., a haircut or a
taxi ride) and long-term services (e.g., an education program or a mortgage).

4.By level of customization: Services can also be classified based on their levels of customisation, such as standard
services (e.g., a standardized software product) and customized services (e.g., a tailor-made software solution).

5.By ownership: Services can also be classified based on their ownership, such as public services (e.g., government
services, public transportation) and private services (e.g., private healthcare, private education).
Difference between service design and product design
• Service design is the coordination and combination of people, communication,
and material components to create quality service.
• Product design is the combination of manufacturing capabilities with product and business
knowledge to convert ideas into physical and usable objects.

11 key factors to be taken into account while designing a service :

1. Customer contact:
How much contact will the customer have with the service, and what will the nature of that contact be?
2. Service mix:
What service will be provided in terms of breadth and depth? Breadth equals the number of items in each line; for
example, a local authority sports and leisure service may offer the following service lines (breadth): outdoor sports,
indoor sports, adventure sports and leisure activities. Within the last mentioned might be art galleries, theatres,
museums and parks (depth).
3. Location of service consumption:
Will the customer come to a service facility (Single or multi-site), or will the service come to the customer (at
home or mobile)?
4. Design of service facility and accessories:
a. What should the layout, furnishing, color, etc., of the facility be?
b. What design discussions need to be made in respect of staff (uniforms), vehicles (colour, logo), and non-
personal communication (letterheadings, signs, brochures etc.)?
5. Technology:

a. What will be the balance between technology and people, e.g. how will it apply to the employee’s
work and the customer’s usage of the service?
b. Will the technology be predominantly hard, e.g. automation or soft, e.g. pre-planned
systems – pre-packaged tours?
6. Employees:

a. How many will be required?

b. What will the ratio be between back-office employees and front-office employees?
c. How many supervisors will be required to control frontline employees?
d. What skills will be needed, and how will they be acquired?
e. How flexible will employees need to be?
7. Organization Structure:

a. How many layers in the organization are desirable?

b. How should the finance, operations, personnel and marketing functions be organized?
8. Information:

a. What information is desirable for running the organization, and how easily will it be acquired?
b. How will it be stored?
c. How accessible will it be, and who will have access?
9. Demand and supply management:

d. How much knowledge is there about demand patterns and levels?

e. What strategies are known for influencing demand?
f. How flexible is the capacity for meeting demand fluctuations, e.g. work schedules, sub-contracting, reservation
systems, stock control?

10. Procedures:

a. Will the service be mainly standardized or customized?

b. How complex will the service be?

11. Control:

What systems will be in place, and what techniques will be available for ensuring the smooth running of the
Operation and the provision of quality output, e.g. critical path analysis, forecasting methods, flow charts,
queueing theory application?
What is the service design process?
The service design process is the technique of research and analysis to understand users better
and offer them the best services in line with their needs. It also involves using observation and
experience to understand products and existing services better.

The iterative process of service design consists of four key insights:

Exploration : Analyze the information you've gathered from customers and the business so you
can understand the problem or opportunity you're dealing with
Creation :  Think about ways that might solve the problem
Reflection : Find the solution that works best for the people using the service and the people
delivering it
Implementation : Deliver it
What Is a Service Blueprint?

A service blueprint is a diagram that visualises the relationships between different service components —
people, props (physical or digital ), and processes — that are directly tied to touchpoints in a specific customer
journey.

Benefits of Service Blueprinting?

Service blueprints give an organisation a comprehensive understanding of its service and the underlying
resources and processes — seen and unseen to the user — that make it possible. Focusing on this larger
understanding provides strategic benefits for the business.
Blueprints are treasure maps that help businesses discover weaknesses. Poor user experiences are often due to
an internal organisational shortcoming — a weak link in the ecosystem.
In this same way, blueprints help identify opportunities for optimisation. The visualisation of relationships in
blueprints uncovers potential improvements and ways to eliminate redundancy.
Blueprinting is most useful when coordinating complex services because it bridges cross-department efforts.
Blueprinting forces businesses to capture what occurs internally throughout the totality of the customer journey
— giving them insight into overlaps and dependencies that departments alone could not see.
What is service capacity planning?
Capacity planning involves the following steps:

1.Forecasting demand: This involves estimating future demand for services based on historical data,
market trends, and other factors.
2.Analyzing current capacity: This involves assessing the organization’s current service capacity,
including the number of employees, equipment, and other resources available.
3.Identifying capacity constraints: This involves identifying potential bottlenecks or constraints that could
limit the organization's capacity to meet demand, such as limited space, equipment, or skilled labour.
4.Developing capacity strategies: This involves developing strategies to address any capacity constraints
and ensure that the organization has the necessary resources to meet demand. This may involve investing
in new equipment, hiring additional staff, or outsourcing certain tasks.
5.Monitoring and adjusting capacity: This involves monitoring demand and capacity over time and
making adjustments as needed to ensure that the organisation is able to meet changing customer needs.

Effective capacity planning can help organizations to optimize their service processes, improve efficiency,
and ensure that they are able to meet customer demand in a timely and cost-effective manner.
The service quality gap : It is the difference between customers' expectations for a service and their
perception of the actual service received. This gap can arise due to a variety of factors, including
miscommunication, inadequate training, or a lack of understanding of customer needs and expectations.

There are five main service quality gaps, as outlined by the SERVQUAL model:

1.Gap 1: The difference between customers' expectations for a service and the service provider’s
understanding of those expectations.
2.Gap 2: The difference between the service provider's understanding of customers' expectations and the
service standards that the provider sets.
3.Gap 3: The difference between the service standards that the provider sets and the actual service that is
delivered.
4.Gap 4: The difference between the actual service that is delivered and the service that is communicated
to customers.
5.Gap 5: The difference between customers' expectations for a service and their perception of the service
received.

Identifying and addressing these gaps is critical for improving service quality and customer satisfaction.
Service providers can use a variety of tools and techniques, such as customer feedback surveys, mystery
shopping, and employee training, to close these gaps and improve the overall quality of their services.
Dimensions of quality in service

There are several dimensions of quality in service, which are commonly referred to as the "SERVQUAL"
dimensions. These dimensions include:

1.Tangibles : This dimension refers to the physical evidence of the service, such as the appearance of
facilities, equipment, and personnel.
2.Reliability : This dimension refers to the ability of the service provider to perform the promised
service dependably and accurately.
3.Responsiveness: This dimension refers to the willingness of the service provider to help customers
promptly and to provide personalized attention.
4.Assurance : This dimension refers to the knowledge, competence, and courtesy of the service
provider, as well as their ability to convey trust and confidence.
5.Empathy : This dimension refers to the level of caring and individual attention that the service
provider gives to customers, including their ability to understand and meet their
unique needs.

By measuring these dimensions, service providers can better understand their customers' needs and expectations
and work to improve the quality of their services.