INTRODUCTION TO POM
What is production Management?
Production management comes from the two terms “production" and “management”.
Production can be considered to be a value creating activity that involves the conversion of
raw inputs into consumable outputs. The production function in an organization falls under
the control of an operations manager. This manager is responsible for “getting the job done”
in an organization.
The production function falls under what is generally described as operations management.
Operations management is the process that deals with the management of the conversion
process, which converts land, labour, capital and entrepreneurship into desired outputs of
goods and services.
Therefore, production an operations management deals with the management of resources
which are devoted to the production and delivery of goods and services.
This is a function that is central to the organization because it produces that which is the
reason of existence of the business. Production is one of the core functions of any business.
In a nutshell, operations management involves the design, operation and improvement of the
systems that create and deliver the firm’s primary products and services.
Operations management is therefore:
i. About the way organizations produce goods and services
ii. The term that is used for the activities, decisions and responsibilities of operations
managers.
NB: The operations function can be categorized according to the nature of operations and output.
Hence operations can be:
i. Manufacturing operations- a manufacturing process is also called a production process
and it yields a tangible output called a product.
ii. Service operations- a service conversion process yields intangible output which can be a
deed, a performance or an effort.
Approaches to Operations management:
There are two distinct approaches to the understanding of operations management. These
include:
i. The roles approach
ii. The life cycle approach
The Life Cycle Approach
Organizations are assumed to have life cycles. Different organizations evolve through similar
stages at various times in their life cycles. These stages will demand different production
management frameworks.
1
, Start
Design the system
Operate the system
Optimal?
Improve
Obsolete?
Terminate
There are three phases in implementing an operations system. These include:
i. Designing the system- this involves making various system design decisions which
include:
Product design
Capacity and location planning
Work systems design
Facilities layout
ii. Operating the system- the operative decisions to be made by an operations manager
include:
Demand forecasting
Production planning and control
Inventories and materials management
Quality assurance
maintenance
iii. Continuously improving the system for better performance-the system should
continuously be updated to incorporate the emerging best practices in operations
management.
2
,The Roles Approach
This approach to operations management puts emphasis on the following aspects of
operations:
a) Production effectiveness
The organization should strive to produce the right quantities of output at the right
time. It should be effective in meeting production expectations.
Accordingly, production planning and control is an important component of
operations management.
There is need for market forecasting to link the market demand with the
organizational resources.
b) Production cost efficiency
The emphasis on designing systems that will enhance production efficiency.
Efficiency is enhanced when best production practices are put in place, when the
work methods are not resource wasting and when the best workflow methods are
followed.
c) The need to realize customers’ quality expectations
Customers are viewed as very sensitive to prices and quality. The company must
pursue an agenda related to the customer. There is need for quality assurance by
the management of the company.
Definition of important terminologies:
i. Operations system: - this is the part of an organization that produces the organizations
goods and services. Examples include:
The production facility and function in a manufacturing set up
Service facility- all processes, procedures, facilities and personnel that enable
service delivery to consumers.
Inputs
Land Outputs
Conversion Goods
Labour process
Capital services
mgt
Feedback
ii. The conversion process: - this is the process that helps to change inputs into useable
outputs. The inputs of an organization include land, labour, capital and entrepreneurship.
3
, Useable outputs are the goods and services that emerge out of the conversion process. The
inputs and outputs of a conversion process vary from one facility to another. However, all of
them can be considered to be systems and can be illustrated as above.
iii. Value added: - it is the difference between the values of the inputs to the system and the
corresponding outputs from the system.
iv. Random fluctuations: - the unplanned and/or uncontrollable environmental influences
(strikes, floods, etc), that cause planned and actual output to differ.
v. Technology: - the level of scientific sophistication in plant, equipment and skills in the
conversion process.
NB: any conversion process requires a control mechanism. This is usually in form of feedback
information which helps managers in deciding on the adjustments to be made in the process.
Historical evolution of POM
The emergence of POM as an organizational management function has been as a result of
various historical milestones that are described in the chronology below:
1776: Adam Smith recognized the importance of the specialization of labour in the
manufacturing process. According to him, division of labour leads to specialization. When
workers are assigned specialized tasks, they become highly skilled and efficient.
1799:- Eli Whitney and others recognized cost accounting as an important component in the art
and science of operations management. Today cost accounting is an important function of
operations management that is used to enhance production planning, pricing of output, enhancing
efficiency and cost control.
1832:- Charles Babbage of the classical management school of thought introduced the concepts
of division of labour by skill, assignment of jobs by skill and the concepts of time study. These
are used to boost production efficiency and effectiveness.
1900:- Fredrick Taylor (often considered to be the father of scientific management) undertook
time and work studies. He was thus able to divide work into the planning phase and the
implementation phase. During the same period, Frank B Gilbreth developed the concept of the
motion study of jobs. Other contributors to scientific management are Henri Fayol and his 14
principles of management and Max Webber with the principles of bureaucracy.
1901:- the Gantt chart technique of scheduling jobs for employees and machines was introduced
by Henry L Gantt.
4
What is production Management?
Production management comes from the two terms “production" and “management”.
Production can be considered to be a value creating activity that involves the conversion of
raw inputs into consumable outputs. The production function in an organization falls under
the control of an operations manager. This manager is responsible for “getting the job done”
in an organization.
The production function falls under what is generally described as operations management.
Operations management is the process that deals with the management of the conversion
process, which converts land, labour, capital and entrepreneurship into desired outputs of
goods and services.
Therefore, production an operations management deals with the management of resources
which are devoted to the production and delivery of goods and services.
This is a function that is central to the organization because it produces that which is the
reason of existence of the business. Production is one of the core functions of any business.
In a nutshell, operations management involves the design, operation and improvement of the
systems that create and deliver the firm’s primary products and services.
Operations management is therefore:
i. About the way organizations produce goods and services
ii. The term that is used for the activities, decisions and responsibilities of operations
managers.
NB: The operations function can be categorized according to the nature of operations and output.
Hence operations can be:
i. Manufacturing operations- a manufacturing process is also called a production process
and it yields a tangible output called a product.
ii. Service operations- a service conversion process yields intangible output which can be a
deed, a performance or an effort.
Approaches to Operations management:
There are two distinct approaches to the understanding of operations management. These
include:
i. The roles approach
ii. The life cycle approach
The Life Cycle Approach
Organizations are assumed to have life cycles. Different organizations evolve through similar
stages at various times in their life cycles. These stages will demand different production
management frameworks.
1
, Start
Design the system
Operate the system
Optimal?
Improve
Obsolete?
Terminate
There are three phases in implementing an operations system. These include:
i. Designing the system- this involves making various system design decisions which
include:
Product design
Capacity and location planning
Work systems design
Facilities layout
ii. Operating the system- the operative decisions to be made by an operations manager
include:
Demand forecasting
Production planning and control
Inventories and materials management
Quality assurance
maintenance
iii. Continuously improving the system for better performance-the system should
continuously be updated to incorporate the emerging best practices in operations
management.
2
,The Roles Approach
This approach to operations management puts emphasis on the following aspects of
operations:
a) Production effectiveness
The organization should strive to produce the right quantities of output at the right
time. It should be effective in meeting production expectations.
Accordingly, production planning and control is an important component of
operations management.
There is need for market forecasting to link the market demand with the
organizational resources.
b) Production cost efficiency
The emphasis on designing systems that will enhance production efficiency.
Efficiency is enhanced when best production practices are put in place, when the
work methods are not resource wasting and when the best workflow methods are
followed.
c) The need to realize customers’ quality expectations
Customers are viewed as very sensitive to prices and quality. The company must
pursue an agenda related to the customer. There is need for quality assurance by
the management of the company.
Definition of important terminologies:
i. Operations system: - this is the part of an organization that produces the organizations
goods and services. Examples include:
The production facility and function in a manufacturing set up
Service facility- all processes, procedures, facilities and personnel that enable
service delivery to consumers.
Inputs
Land Outputs
Conversion Goods
Labour process
Capital services
mgt
Feedback
ii. The conversion process: - this is the process that helps to change inputs into useable
outputs. The inputs of an organization include land, labour, capital and entrepreneurship.
3
, Useable outputs are the goods and services that emerge out of the conversion process. The
inputs and outputs of a conversion process vary from one facility to another. However, all of
them can be considered to be systems and can be illustrated as above.
iii. Value added: - it is the difference between the values of the inputs to the system and the
corresponding outputs from the system.
iv. Random fluctuations: - the unplanned and/or uncontrollable environmental influences
(strikes, floods, etc), that cause planned and actual output to differ.
v. Technology: - the level of scientific sophistication in plant, equipment and skills in the
conversion process.
NB: any conversion process requires a control mechanism. This is usually in form of feedback
information which helps managers in deciding on the adjustments to be made in the process.
Historical evolution of POM
The emergence of POM as an organizational management function has been as a result of
various historical milestones that are described in the chronology below:
1776: Adam Smith recognized the importance of the specialization of labour in the
manufacturing process. According to him, division of labour leads to specialization. When
workers are assigned specialized tasks, they become highly skilled and efficient.
1799:- Eli Whitney and others recognized cost accounting as an important component in the art
and science of operations management. Today cost accounting is an important function of
operations management that is used to enhance production planning, pricing of output, enhancing
efficiency and cost control.
1832:- Charles Babbage of the classical management school of thought introduced the concepts
of division of labour by skill, assignment of jobs by skill and the concepts of time study. These
are used to boost production efficiency and effectiveness.
1900:- Fredrick Taylor (often considered to be the father of scientific management) undertook
time and work studies. He was thus able to divide work into the planning phase and the
implementation phase. During the same period, Frank B Gilbreth developed the concept of the
motion study of jobs. Other contributors to scientific management are Henri Fayol and his 14
principles of management and Max Webber with the principles of bureaucracy.
1901:- the Gantt chart technique of scheduling jobs for employees and machines was introduced
by Henry L Gantt.
4
