Definition of Production and Operations Management and its Scope – The essence of every business is to meet customer needs by providing goods or services. Therefore, we often hear the grouping of companies or industries into the Manufacturing and Service Industry industries.
In manufacturing companies, their production activities can be clearly seen in the form of tangible goods such as cars, cellphones, TVs, fans, computers, chairs, tables, food, or drinks.
Whereas service companies do not produce physical products and their production activities are also not clearly visible. Examples of service companies such as laundry services, banking services, insurance services, transportation companies, or legal aid companies.
To operate these Manufacturing and Service companies, knowledge is needed about how to process resources (inputs) into results (Output) in the form of goods or services needed by consumers. This knowledge is generally referred to as Production and Operations Management Science.
Production is a process of creating goods and services. Whereas Operation has a broader meaning of production, which includes production, administration, trade, banking, and other service activities. However, production and operations both provide added value.
So basically, what is meant by Production and Operations Management is a series of activities that process the factors of production to provide added value to goods or services through a process of transformation or transformation.
Understanding Production Management according to several experts including:
- Production management is a series of activities that produce value in the form of goods and services by converting inputs into outputs (Heizer and Render, 2011: 4).
- Production management is a science that comprehensively discusses how the company’s production management uses the knowledge and art they have by directing and regulating people to achieve the desired production outcome (Irham Fahmi, 2012: 3).
Based on the above understanding it can be said that production management has a close relationship with the production process which has the aim to add value to the goods and services produced. To produce products that have good quality in accordance with specified standards, the company is required to further improve its production process.
Scope of Production Management
Production management is one part of the management field which has a role in coordinating various activities to achieve goals. Production management can be applied in various types of organizations or companies such as manufacturing, plantations, agriculture, SMEs as well as in services.
Production management is also needed in the arrangement of buildings or rooms, machinery and equipment, processes in production, labor management, and various other operational activities. These production activities can be divided into two main groups, namely manufacturing organizations and service organizations.
The scope of production management has three main decision or policy categories included in it, which are as follows:
- Decisions or policies regarding design. Design, in this case, is classified as a type of a long-term decision, and in the broadest sense includes determining the design of the product to be produced, design or location and layout of the plant, design of the procurement activities required, design of processing methods and technology, design of the organization company, and design of job description and job specification.
- Decisions or policies regarding the transformation process ( operations ). This operational decision is short-term, related to tactical decisions, and operations. In it related to the production schedule, shift work (Shift) from factory personnel, the production budget, the schedule of submission of inputs to the processing subsystem, and the schedule of delivery of output to customers or product completion. (Please to also read what is Scheduling in the production process).
- Decisions or policies of continuous improvement of the operating system. Because it is continuous, therefore the policy is routine. The activities that are covered mainly include the continuous improvement of the quality of outputs, the effectiveness and efficiency of the system, the capacity and competence of workers, the maintenance of work facilities or machinery, and the continuous improvement of methods for finishing or working the product.
Based on this, therefore in determining the amount of inventory is part of the decisions and policies of transformation (operational) that are short-term. Inventory control is a very important company activity because inventory determination can minimize inventory costs by finding the optimal amount of inventory so as to reduce inventory costs.
Production Management Function
In general, the production function is related to accountability in the processing and transformation of inputs into outputs in the form of goods or services that will provide the results of opinions for the company (Sofjan Assauri, 2004: 22).
The implementation of these functions requires a series of activities that are interconnected and integrated as a whole as a system. Various activities related to this production function are carried out by several parts within a company, be it a large company or a small company.
The four most important functions in the production function According to Sofjan Assauri (2004: 22) are:
- The processing process is a method or technique used for processing input.
- Supporting services are facilities in the form of organizing that need to be determined and methods to be carried out so that the processing can be carried out effectively and efficiently.
- Planning is the association and organization of production activities that will be carried out in a certain time or period.
- Control or supervision is a function to ensure the implementation of activities in accordance with the planned so that the purpose and objectives for the use and processing of inputs (input) in fact can be implemented.
Scope of Production and Operations Management
Production and Operations Management is related to the conversion of Inputs into Outputs, which is to use Resources (Inputs) efficiently and effectively to obtain goods or services that are useful and needed by customers (Outputs).
In the conversion process, it requires various activities that constitute the scope of work of Production and Operations Management. The following are the activities included in Production and Operations Management.
- Facility Location, which is an activity in selecting the right location for production.
- Plant Layout and Material Handling, which is planning and deciding the layout or configuration of equipment, machinery, and equipment used for production activities. Layout preparation must also pay attention to the way materials are handled so as to avoid waste in material transportation.
- Product Design, which is a product design that must also pay attention to the ease and efficiency of production.
- Process Design, i.e. the design and determination of the production process efficiently.
- Production and Planning Control, namely production planning and its aspects such as production schedules, production sites and the amount to be produced.
- Quality Control, namely supervision and quality control so that the goods and services produced are in accordance with the specified standards and specifications.
- Material Management, which is the management of the inventory of raw materials, semi-finished goods, and finished goods.
- Maintenance Management ( Formulation Management), Formulate and carry out maintenance of all production facilities such as buildings, equipment, and production machinery and ensure that the production facilities work optimally.