PRODUCTION AND

OPERATION MANAGEMENT
OPERATION MANAGEMENT
 Operation Management deals with processes
that produce goods and services that people
use every day.
 PROCESS: its an activity or groups of
activities that takes one or more inputs,
transforms and adds value to them, and
provides one or more output for its customers.
PROCESS AND OPERATIONS

Internal and
External customers
INPUTS
•Workers
•Managers Process and Operations Outputs
•Equipment
•Facilities
1 3 •Services
•Materials
•Services 5 •Goods
•Land 2 4
•Energy

Information on
Performance
 DIFFERENCES BETWEEN
MANUFACTURING AND SERTVICES

More Like a More Like a

manufacturing Service
organization organization

•Physical durable product

•Intangible perishable product
•Output that can be stored
•Output cannot be stored
•Low customer contact
•High customer contact
•Long response time
•Short response time
•Regional, national or
•Local markets.
International markets.
•Small facilities
•Large facilities
•Labor intensive
•Capital intensive
•Quality not easily measured
•Quality easily measured
 SIMILARITIES BETWEEN MANUFACTURING
AND SERTVICES
• Both manufacturing and service organizations offer a
complete package, not just only either product or
services.
• Both organizations inventory their inputs.
• Both types have inside or outside customers.
PRODUCTIVITY
• Productivity is the value of outputs (goods and services)
produced divided by the values of input resources
(wages, cost of equipment) used

Productivity = Output
Input
OPERATIONS STRATEGY
Corporate Strategy
•Goals
•Core competencies
•New product / services
•Global strategies

Market Analysis
•Segmentation
•Need assessment

Competitive Priorities
Operations Marketing Capabilities
•Cost •Current
•Quality Finance •Needed
•Time •planned
•Flexibility Others

Functional Area Strategies

•Finance Operations
•Marketing Others