Production and operations management concerns itself with the conversion of inputs into outputs, using physical resources, so as to provide the desired utility /utilizes – of form, place possession or state or a combination thereof to the customer while meeting the other organizational objectives of effectiveness, efficiency and adaptability. It distinguishes itself from the other functions such as personnel marketing etc by its primary concern for ‘conversion by using physical resources’. Of course there may be and would be a number of situations in either marketing or personnel or other functions which can be classier sub-classified under production and operations management. For example, (1) the physical distribution of items to the customers, (2) the arrangement of collection of marketing information, (3) the actual selection and recruitment process, (4) the paper flow and conversion of the accounting information in an accounts office, (5) the paper flow and conversion of data into information usable by the judge in a court of law, etc can all be under the banner of production and operations management. The conversion here is subtle unlike manufacturing which is obvious. While in case (1) and (2) it is the conversion of place and possession characteristics of the products, in (4) and (5) it is the conversion of the state characteristics. And this conversion is effected by using physical resources. This is not to deny the use of other resources such as information in production and operations management. The input and/or output could also be non-physical such as ‘information’, but the conversion process uses physical resources in addition to other non-physical. The management of the use of physical resources for the conversion process is what distinguishes production and operations management from other functional disciplines.
Often production and operations management systems are described as providing physical goods or services. Perhaps a sharper distinction such as the four customer utilities and physical/non-physical nature of inputs and/or outputs would be more appropriate. When we say that to Central Government Health Services provides service and the Indian railways provides service these are two entirely different classes of utilities, therefore criteria for reference will have to be entirely different for these two cases. To take another example the postal service and the telephones service are different because the major inputs and major outputs are totally different with different criteria for their efficiency and effectiveness.
Also, a clear demarcation is not always possible between operations systems that provide physical goods and those that provide service as and activity deemed to be providing physical goods may also be providing service and vice versa. For example one might say that the food in the Southern Railways is quite good however food is not the main business of the Railways. To take another example: A manufacturing firm can provide good service by delivering goods on time. Or, XYZ Refrigerator Company not only makes good refrigerators but also provides good after sales service. The concepts of physical goods production and service provision are not mutually exclusive; in fact in most cases these are mixed one being more predominant than the other.
Similarly we may also say that the actual production management systems are quite complex involving multiple utilities to be provided to the customer with a mix of physical non-physical inputs and outputs and perhaps with a multiplicity of customers. Today, our customers need not only be outsiders but also our own inside staff. In spite of these variations in (1) input type (2) output type (3) customers serviced, and (4) type of utility provided to the customers, production and operations management distinguishes itself in terms of conversion effected by the use of physical resources such as men, materials and machinery.