Importance of production function in operational management


It needs no exaggeration to say that production makes significant contribution to society’s well being. The standard of living of people depends on production of goods and services. More the production, higher the standard of living of the people. Alexander Solzhenitsyn in hi novel August 1914 beautifully sums up the importance of production. One of the characters in the work in Suyataslav Iakintovich Obodovsky,a former anarchist, who maintains the following position :As for industry, anyone who has created something with his owns hands knows that production is neither capitalist nor socialists but one thing only, it is what creates national wealth ,the common national basis without which no country can exist.

Having reached that conclusion ,Obodovovsky went on to say :Before ,I was most concerned with how to distribute everything that other people had created without help. Now, my main preoccupation is how to create. the best brains and hands in the country should concentrate on doing that : we can safely leave distribution to the second-raters. When enough has been built and made, then even if distribution is less than perfect ,no one will be left completely without his share.

Competitive advantage of companies is highly talked about these days. It is believed ,that a firm, strong in competitive advantage, is well poised to succeed whatever may be the constraints or restraints Firms look to production function to achieve competitive advantage.

Production function can offer competitive advantage to a firm in the following areas :

1. Shorter new-product lead time.
2. More inventory turns.
3. Shorter manufacturing lead time.
4. Higher quality.
5. Greater flexibility.
6. Better customer service.
7. Reduced wastage.

Many causes that deny competitive advantages to any firm can be attributed to manufacturing function—specifically to poor quality and reliability, delayed deliveries ,high production costs and lack of adequate inventory at the right time.

It has long been recognized that, high productivity is one of the keys to high standard of living and is the backbone of a nation’s economic progress. Japan’s economic prosperity and a greater standard of living of Japanese may be attributed to high productivity. It may be stated that the production function offers vast scope for achieving productivity with effective management of materials and lead time, and with better control of cost, a firm will be able to bring out more output from a given input at reasonable cost.

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