Difference between Production and Operations Management

There are a lot of differences between production management and operations management. On a macro-level, one is a subset of the other. On a deeper level, the differences lay in their purpose. One is omni-present in every organisation, whereas another is case-specific. Read the blog and know the differences, relations between the two terms and try to find out suitable system that can manage production and operations both.

The primary motive of production management and operations management is to utilize the resources of an organisation to the fullest and manage them to produce goods and services in minimum time and cost.

The production management majorly deals with the steps involved in production whereas operations management majorly deals with managing business operations that are involved in facilitating seamless production and daily functions. ?Keeping in view the above explanation we can say that production management is a subset of operations management.

Production Management Vs Operations Management:

Understanding the concept:

Production Management - Production management is that field where concepts of management are applied to production. It involves various processes – planning, supervision, scheduling, procurement, and activities related to the production of products. It involves efficient use of resources to convert raw materials into value-added products.

Production management contains decisions related to raw materials, quantity, design, packaging, pricing etc. These decisions are generally taken by Product Manager who ensures that the produced product is as per the company’s guidelines and quality standards.

Production management is required for the success of an organisation. It ensures that the product is produced at right time, in the right quantity, right price and with the right quality standard so that it can satisfy customers’ expectations. This, in turn, helps to build the brand image.

Some important functions of production management are:

• It has entire control over production, and a production manager is responsible to make plan for it.
• Production management involves scheduling to manage production efficiently.
• It ensures production of quality product at minimum cost.
• It takes care of the health of machinery and makes sure that the production is not hampered.

Operations Management – It involves managing routine business activities so that an organisation can run smoothly and effectively. It involves planning, scheduling, budgeting etc. It is directed towards getting the optimum utilization of resources with minimum wastage and maximum output. It ensures that the production and other day-to-day working follows company policies and works towards the betterment of company culture, and company values. It always works towards improving performance of an organisation by maintaining cohesive working of various departments. ?

Below are the essential functions of operations management:

• Developing a strategy to maximise its resources, improving output, and increasing its share in the market.
• Developing an efficient financial strategy of company to improve its financial standing.
• Helping company to develop product according to market trend and customer’s requirement.
• Developing strategy for future by taking trends, market conditions, customer expectation into consideration.

Let us try to find out differences between the two based on various factors:

Definition - Production management is part of operations management. Production management is concerned about the factors affecting production of a product.

When we talk about operations management, we generally refer to both production management and overall administration. Operation management ensures that all departments work in cohesion, and produce products which are cost effective, having good quality and timely reach the market in a consumer-friendly way.

Scope of operation -??Scope of operations is point of differentiation between the two. Scope of production management is limited to production only. With production management, a production manager creates a strategy that aids in maximising production.?

Operation management has wider scope of operation as it relates to all the departments of an organisation. An operation manager strategizes in a way that ensures optimum utilization of company resources. It makes sure that the product reaches to the consumer in a budget friendly way.?Beyond product, it encapsulates waste management, logistics, human resources also.

Objective- The difference of objectivity of both terms makes a crucial demarcation between the two. Objective of production management is to produce best quality products in minimum time and cost, whereas objective of operations management is to ensure the best use of company resources.

Existential area- Production management exists only where company produces goods. It is related to a production unit.?

Operations management exists in each industry, whether production or not. As operation management deals with effective use of resources, it exists in all organisations, be it banking, shipping, manufacturing, logistics, hospital or any other.

Different starting requirement- Production management needs extra capital thrust and less labour to make product at the starting. Conversely, operation management needs less capital push but seek extra works as folks need immediate outcome.

Comparison chart

ERP as production and operation management system-

ERP helps to minimize the efforts involved in running a business. It supports easy flow of information among various departments of an organisation. An ERP can serve as an effective production management system and operations management system.

Capabilities of an ERP help perform various tasks to manage both production and operations of an organisation. As production management is required only where production takes place whereas operations management comes into play in every organisation, an ERP is an ideal solution in both the cases.

Let us discuss ERP as production management system and operations management system:

Production control – The production manager must know that the right production plan is being followed. ERP helps to identify how much raw material is required to produce desired output and sends alerts for critical/insufficient materials. ???

Scheduling- This controls production process from start to end. ERP can schedule complete production.

Machinery maintenance – It ensures that the machinery and equipment used in production are working fine and they are not damaged. ?ERP can define which machine to be used for which production. Going forward ERPs can incorporate PHM (as Prognostics and Health Management) which will predict health of a machine used by manufacturers. This way, an ERP manages effective working of machines and ensures that machines are timely serviced.?

Finance- Ensuring that the company utilizes its resources fully while producing goods. Finance module of ERP helps to void and reverse incorrect transactions, reconcile bank statement, generate invoices and receipts.

Product design – Creating??a product design that fulfils the requirement of customer in the market and is in trend with the current market demands.

Forecasting- Predict how the product will perform in future and predicting the future demands of customers.??

Final words-

From above discussion, we can easily make out that an ERP can be very helpful as a production and operations management system. For process manufacturing organisations, BatchMaster ERP offers industry-specific capabilities which enhance the effectiveness of the system. ?If you are also looking for an ERP, which can perfectly serve as production and operations management system for your process manufacturing organisation, contact BatchMaster.