The Importance Of Production Function And Production Management Business Essay


Production is a scientific process which involves transformation of raw material input into desired product or service output by adding economic value. Production can broadly categorize into following based on technique:

Production through separation: It involves desired output is achieved through separation or extraction from raw materials. A classic example of separation or extraction is Oil into various fuel products.

Production by modification or improvement: It involves change in chemical and mechanical parameters of the raw material without altering physical attributes of the raw material. Annealing process (heating at high temperatures and then cooling), is example of production by modification or improvement.

Production by assembly: Car production and computer are example of production by assembly.

Production and Operations Management

Importance of Production Function and Production Management

Successful organizations have well defined and efficient line function and support function. Production comes under the category of line function which directly affects customer experience and there by future of organization itself.

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Aim of production function is to add value to product or service which will create a strong and long lasting customer relationship or association. And this can be achieved by healthy and productive association between Marketing and Production people. Marketing function people are frontline representative of the company and provide insights to real product needs of customers.

An effective planning and control on production parameters to achieve or create value for customers is called production management.

Production management refers to the application of management principles to the production function in a factory . in other words , production management involves application of planning , organising , directing and controlling to the production process .

Th application of the management to the field of the production has been the result of at least three development . first is the development of factory system of production . until the emergence of the concept of the manufacturing , there was no such things as management as we know it .it is true that people operated business of one type or another , but for the most part , these people were owners of business and did not regard themselves as manager as well.

The very essence of any business is to cater needs of customer by providing services and goods, and in process create value for customers and solve their problems. Production and operations management talks about applying business organization and management concepts in creation of goods and services.

Operations Management

As to deliver value for customers in products and services, it is essential for the company to do the following:

Identify the customer needs and convert that into a specific product or service (numbers of products required for specific period of time)

Based on product requirement do back-ward working to identify raw material requirements

Engage internal and external vendors to create supply chain for raw material and finished goods between vendor → production facility → customers.

Operations management captures above identified 3 points.

Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be done on following characteristics:

Output: Production management deals with manufacturing of products like (computer, car, etc) while operations management cover both products and services.

Usage of Output: Products like computer/car are utilized over a period of time whereas services need to be consumed immediately

Classification of work: To produce products like computer/car more of capital equipment and less labour are required while services require more labour and lesser capital equipment.

Customer Contact: There is no participation of customer during production whereas for services a constant contact with customer is required.

Production management and operations management both are very essential in meeting objective of an organization.


Recent trends in production and operation management relate to global competition and the impact it has on the manufacturing firms . some of the recent trends are:

Global market place: Globalisation of business has compelled many manufacturing firms to have operations in many countries where they have certain economic advantage this has resulted in a level of competition among the manufacturing firms throughout the world.

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Production /operation strategy: more and more firms are recognizing the importance of production /operation strategy for the overall success of their business and the necessity for relating it to their overall business strategy.

Total quality management: TQM approach has been adopted by many firms to achieve customer satisfaction by never ending quest for improving the quality of goods and services.

Time reduction : Reduction of manufacturing cycle time and speed to market to a new product provide competitive edge to a firm over other firms when companies can provide products at the same price and quality, quicker delivery provide one firm competitive edge over the other.

Supply chain management: Management of supply chain from suppliers to final customer reduces the cost of transportation , warehousing ,and distribution throughout the supply chain.

Lean production: Production system have become lean production system which use minimal amount of resources to produce a high volume of high quality goodswith some variety.


Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the otherorganizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for 'conversion by using physical resources.' Following are the activities which are listed under production and operations management functions:

1. Location of facilities

2. Plant layouts and material handling

3. Product design

4. Process design

5. Production and planning control

6. Quality control

7. Materials management

8. Maintenance management.


Location of facilities for operations is a long-term capacity decision which involves a long term

commitment about the geographically static factors that affect a business organization. It is an

important strategic level decision-making for an organization.


Plant layout refers to the physical arrangement of facilities. It is the configuration of departments, work centres and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.

'Material Handling' refers to the 'moving of materials from the store room to the machine and from one machine to the next during the process of manufacture'. It is also defined as the 'art and science of moving, packing and storing of products in any form'.


Product design deals with conversion of ideas into reality. Every business organization have to .design, develop and introduce new products as a survival and growth strategy. Developing the new products and launching them in the market is the biggest challenge faced by the organizations. The entire process of need identification to physical manufactures of product involves three functions: marketing, product development, manufacturing.


Process design is a macroscopic decision-making of an overall process route for converting the raw material into finished goods. These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities.


Production planning and control can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders.


Quality Control (QC) may be defined as 'a system that is used to maintain a desired level of quality in a product or service'. It is a systematic control of various factors that affect the quality of the product. Quality control aims at prevention of defects at the source, relies on effective feed back system and corrective action procedure.


Materials management is that aspect of management function which is primarily concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view. The main objectives of materials management are:

To minimise material cost.

To purchase, receive, transport and store materials efficiently and to reduce the related cost.

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To cut down costs through simplification, standardisation, value analysis, import substitution, etc.


In modern industry, equipment and machinery are a very important part of the total productive effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very important that the plant machinery should be properly maintained.

The main objectives of maintenance management are:

To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost.

To keep the machines and other facilities in such a condition that permits them to be used at their optimal capacity without interruption