Friday 21 December 2018

What is Operations Management? - function and Scope

Operations Management

Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.

Production management is one of the areas of management concerned with the function of starting operations to control the production process in the redesign to maximize business profits on goods or services as a company management strategy in eliminating non-value added activities.

Introduction to Operations Management

One to improve the profitability of the company is to maximize the production and operation system. Production management, also called operations management aims to ensure that all moves smoothly at the required level. The current management techniques are not only useful in the factory but in other company services.

For example in manufacturing operations, the scope of operations management includes responsibility for product design, planning and control; involving capacity, quality, organization and examples of labor inspection.

Production and operation management is about transforming production and operational inputs into output when distributed, meeting customer needs. Many experts give their opinions on production management and operations. to better understand about production and operation, following the discussion.

In the process diagram below, generally called the conversion process.

Understanding Production Management According to Experts

Management consists of interrelated functions to create company policy and organize, plan, control, and direct the organization's resources. To achieve the policy objectives. Some experts explain the notion of production management in different views such as:

  • Understanding the management of production and operation according. The optimal management efforts of the use of resources, manpower, machinery, equipment, raw materials etc. In the process of transforming raw materials and labor into various production and services.

  • Meanwhile, the notion of production and operation management is a process of continuous and effective. Use of management functions to integrate various resources efficiently in order to achieve goals.

  • production management is a science that discusses comprehensively. How the company's production management uses scientific methodology by directing and managing the resources to achieve a desire production.

From the definitions of the experts above can be conclude that the term management. Includes all activities and activities that produce goods or services. As well as supporting activities or support from operations in generating output. So that the creation of increased productivity, protection of employees from physical dangers, etc ..

Of course, production and operation management can be apply and useful to almost all organizations. Such as industrial processing plants, manufacturing, hotels, workshops, banks, hospitals, plantations, schools, government, services to services.

Operations Management Functions

Seen from the notion of production management and operation itself, it can generally be said that economic output is not an input function (mathematically), because any given input can be used to produce a series of outputs. To satisfy a mathematical definition of a function, a production function is usually assumed when determining the maximum output that can be obtained from a given set of inputs.

In broad outline, there are four most important functions in the production function if seen from the opinion:

    • Processing.

Processes in this processing include processing from beginning to end. Processing consists of operations carried out from the beginning and continues until it becomes a product / service. It also includes methods and techniques when used during processing in the form of input / input.

    • Supporting Services.

Indispensable support in a process, where the supporting services is a means of organizing in determining also the way to be executed so that the processing process so that processing is carried out effectively and efficiently.

    • Planning.

Planning is a lot of linkage and organizing of production activities to be performed within a certain time or period.

    • Control or supervision.

Control and supervision takes the function to ensure the implementation of activities in accordance with the planned, so the purpose is also the purpose when the use and processing input / input in accordance with the planning.

From the previous description when viewed the role of production management within the company, then the role includes the functions, systems and decisions. If this role does not work well it will allow the flow of production to find obstacles. By maximizing the role of management in this case operational; increased business productivity will be achieved and even allow the creation of value activity (Value Added).

Scope of Operations Management

The scope of operational management is also the production of its application by looking at market segmentation in terms of product, price and volume supplied to the production department, based on production planning. The scope of production and operation management, such as:

Human resources.

The human resources are an integral part of the production process and are also an important input. A Human resource planning by the human resources department plays a major role in recruiting, selecting, training, evaluating and empowering the workforce.

It will also distinguish between production management and operational management, where such differences will be evident from resource development strategies.

Operation Strategy.

The diversity of products and services available on the market should be considered before determining the operating strategy. These operating strategies include;

Decisions and policies relate to design. For this decision shall include to the long-term decision in determining the design of the product to be made, the location or layout of the plant, etc.

Policies and decisions on transformation. In contrast to design decisions, these are generally of a short-term nature, related to tactical and operational decisions.

Decision or policy on improvement. Of course this is where the important role of lean manufacturing in the company, where lean manufacturing is a way to eliminate waste (waste). as well as the design to achieve the specific needs of consumers without causing harm.

Examples of Production and Operations Management

To get maximum benefit from production management and operation in factory or other services. As an example of implementation in production operations in manufacturing companies as well as factories, in detail the planning and control of production covers the following areas:

Material (raw material)

Planning the procurement of raw materials, components and parts in quantities and specifications in a timely and fast manner, starting from the right source and at the right price. Purchase, storage, inventory control, standardization, reduction of variety, value analysis and inspection are other activity activities related to the material.


Determine and choose the best processing method from several alternatives. It also includes determining the best operating sequence in the process plan and equipment planning, etc.

Machinery and equipment

The manufacturing method is related to the production facilities available in the production system. This should involve facilities such as planning, capacity planning, allocation and utilization of plant and equipment, machinery, etc. Not only that, but it also involves equipment replacement policy, maintenance policy and maintenance schedule, tool making and tool maintenance etc.


Planning workforce ranging from team members, supervisors and managerial who have the skills and expertise to suit the needs.

Production Flow * Operations Management

Determine the workflow, material handling at the plant and the sequence of operations or processing steps. In the case of VSM example. When performing steps to create value stream mapping (VSM) by considering. The layout of production area, storage location for raw materials, components to semi-finished goods also material handling system. The case example in VSM aims to determine the flow that can eliminate. This waste to be part of an important scope.

The location and the layout of the plant determine how the production operational strategy runs. Because neither the location nor the improper layout will cause waste. In the application of lean manufacturing in the company. Repairing the layout can be start with steps to create a VSM. Which is then made changes based on the identification of an improper layout.

This will greatly benefit the above case value steam mapping for operational management activities in relation to production and operational processes.

Conclusion Definition of Production Management, Function, Scope, and Examples

Although production management is commonly refer to as operations management because operations and production have a very close relationship. However, that does not mean that the relationship between operations and production has no difference.

The scope of inventory management be it manufacturing, agribusiness, will have different tasks. This adjusts to the field of services or services in the company.

Differences in production and operation can be see from some differences. In activities to organize and coordinate the use of resources in production operations. Differences in operations are more about innovation and new technologies apply in business practices.

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