The last century, particularly the latter half of it, has seen an upsurge in industrial activity. Industries are producing a variety of products. Consumerism has been on a steep rise. People, all over the world have been demanding more and better products. The developments in technology, particularly in the areas of telecommunication, Internet, mass media and transport have made it possible for products and ideas to travel across the globe with minimal effort. A Chinese girl sitting in Shanghai can see on the television what girls of her age wear in distant USA or Europe. A housewife from Delhi, while visiting her son in San Jose in the Silicon Valley, is able to check out on the interiors and furniture available in that part of the world. A middle class newly married couple from Bangalore thinks of Malaysia or Mauritius as a honeymoon destination. The world has shrunk. Despite the political boundaries, nations are getting closer in trade and commerce. Pro-duct are a plenty. Communications are quicker. Consumers are the kings.
It is obvious that a lot is being demanded of the production and operations management function. The responsibility of that function is to see that the required products are of a good quality, with an acceptable price and delivered at a time and place the customer desires. Quality, productivity (and hence price) and delivery have become the basic minimums that a firm must offer in order to stay in competition. There is competition amongst firms even at the level of these basic offerings. In order to have differentiation and a unique selling proposition (USP), a firm and its production function have to make continuous efforts. The USP that exists today may be copied by another firm tomorrow, thus nullifying the competitive advantage. New products or variants of products have to be continuously designed, manufactured and delivered â€“ all profitably. Manufacturing has to very actively support the marketing function. Engineering has to listen to customer needs. Materials and Logistics people have to react swiftly to the needs of the manufacturing system. The HR function has to ensure that people within the firm not only have the needed skills but also the essential attitudes. The production function has to interact with the HR function on this count. Each function needs to be attuned to the other function within the firm. The modern business world has necessitated a high level of integration within organizations. It is not that integration was not needed earlier and it is needed now. It is not the quality of products was not a concern earlier and it is so only now. The basic roles and requirement remain, but the intensity of application has increased. The role of production which is central to the industrial organization has become much more intense.
In the competition to seek differentiation, manufacturing firms are finding ways of attaching â€˜serviceâ€™ components to the physical product. Services are no longer â€˜frillsâ€™ that some firms offered earlier. Services have become intertwined with the output of the production process. It is combination that the customer buys today. No manufacturing company is purely into manufacturing. It is also, in part, a service providing company. Therefore, the special characteristics of services are getting incorporated into the design of the production system. For one, there is a lot more interaction and interfacing of the production function with the customers today than it was earlier. Customer, so to say, has come closer to, and sometimes within the company. This ramification for the production function is no longer an aloof outfit.
The service sector is increasing at a tremendous rate. For instance, there are more banks in one town now than they were in an entire district earlier. More and more banks from the developed world are doing business in the developing countries. Money is more easily available to the consumers. Hence, more leisure activities are being pursued.
A supply chain is one such manifestation. Outsourcing is increasingly being used to gain maximum advantage from the â€˜core competenceâ€™ of other firms in the family. Such relationship could spread over several continents: distance or political boundary is not necessarily a constraint. Production and operations have become global factors.
If efficiency was the all important factor yesterday, and if today â€˜serviceâ€™ and â€˜relationshipsâ€™ are the buzz words of production and operations management, what will be in store for tomorrow? The concept of a product has changed over the past few decades to include â€˜serviceâ€™ in it. The production and operations function will remain in the future, even in a post industrial society. Utilities of form, state, possession and place have to be provided and operations cannot be wished away. What perhaps change would be the nature of the product and the service.