Modern production and operations function


The production management of today presents certain characteristics which make it look totally different from what it was during the past. Specifically, today’s production system is characterized by basically four features:

1. Manufacturing as Competitive Advantage: In the past, production was considered to be like any other function in an organization. When demand was high and production capacities were inadequate , the concern was to somehow muster all inputs and use them to produce goods which would be grabbed by the potential market .But today’s scenario is contrasting. Plants have excess capacities, competition is mounting and firms look and gain competitive advantage to survive and succeed. Interestingly system offers vast scope to gain a competitive edge and firms intend to exploit the potential. Total Quality Management (TQM) , Time-Based Competition, Business Process Reengineering (BPRE) , Just in Time (JIT), Focused Factory (Revised ) , Flexible Manufacturing Systems(FMS) , Computer Integrated Manufacturing (CIM) and The Virtual Corporation are but only some techniques which the companies are employing to gain competitive advantage.

Characteristics of systems to produce products versus system to produce services.




Intangible and perishable; consumed in the

Process of their production

Can be produced to inventory for ‘off the

Shelf availability

Availability achieved by keeping the productive

System open for services.

Minimal contact with unltimate consumer

High contact with clients or customers.

Complex and interrelated processing

Simple processing

Demand on system variable on weekly, monthly an seasonal basis

Demand commonly variable on hourly , daily and weekly basis

Markets served by production system are regional, national and international

Markets served by production system are usually local.

Large units that can take advantage of economies of scale

Relatively small units to serve local markets

Location of system is in relation to regional, national and international

Location, dependent on location of local customers , clients and users.

2. Service Orientation : As stated earlier , the service sector is gaining greater relevance these days. The production system , therefore , needs to be organized , keeping in mind that peculiar requirements of the service component .As was shown in the above table, the entire manufacturing needs to be geared to serve

(i) intangible and perishable nature of the services
(ii) constant interaction with clients or customers,
(iii) small volumes of production to serve local markets and
(iv) need to locate facilities to serve local markets.

There is increased presence of professionals on the production side, instead of technicians and engineers.

3. Disappearance of Smokestacks: Commencing from the Industrial Revolution till the middle of the 20th century, production system was dominated by smokestacks .These smokestacks ( the term used by Alvin Toffler in his book Power Shift) represented industrial establishments which ejected thick smoke, polluting the environment around. Smokestacks not only disgorged reek, they produced nauseating smell, generated dust, created sound and in general , were resembling ghosts .Not that they have become extinct, but, they are disappearing gradually.

Protective labor legislation, environmental movement and gradual emergence of knowledge based organizations , have brought total transformation in the production system. Today’s factories are aesthetically designed and built , environment friendly- in fact, they are, a home away from home. Going to factory everyday is no more an excruciating experience , it is like enjoying work with a healthy perspective. A visit to ABB, L&T or Smith-Kline and Beecham should convince the reader about the transformation, that has taken place in the wealth creation system.

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