Manufacturing companies perform four basic functions: finance, production or operations, marketing and personnel management. Finance raises the capital to buy the equipment to start the business, production or operations makes the product, marketing sells and distributes it and personnel management recruits people participating in the manufacturing process.
The main objective of any manufacturing company and its production department is certainly to produce a specific product, on schedule, at minimum cost. But there are other objectives, such as improving product quality and reliability, producing the maximum possible volume of output, fully utilising the plant or the work force, reducing lead time and costs, and ensuring flexibility for product changes. Some of these objectives are clearly incompatible, and most companies have to choose between price, quality and flexibility. There is an elementary trade-off between low cost and quality, or between low cost and the flexibility.
Production is defined as the transformation of organisational resources into products. Production and operations process involves three basic phases: inputs, transformation process and outputs. The inputs are the organisational resources (people, money, materials and equipment) used in creating goods and services. The transformation process uses machinery, tools and techniques and involves all steps and activities to convert the inputs into outputs. The outputs are the finished goods or services that will be sold to the customer or used to create still other goods and services.
To achieve the production objectives this process needs to be managed. The specialists use the term ‘production and operations management(P/OM)’. It is the process of planning, coordinating and controlling a production system. Production and operations management obviously involves production plants and factories and the equipment in them, raw materials or supplies, processes (the steps by which production of goods is carried out), and planning and control systems (the procedures used by management to operate and monitor the system). But it also involves people – the personnel or human resources, their training and motivation. People are particularly important in organisations which offer a service rather than make a product.
