The goods, services, and ideas that result from the conversion of inputs are called

Introduction

The very essence of any business is to cater needs of customer by providing services and goods, and in process create value for customers and solve their problems. Production and operations management talks about applying business organization and management concepts in creation of goods and services.

Inhaltsverzeichnis Show

Introduction
Importance of Production Function and Production Management
Operations Management
Production Management v/s Operations Management
Related Articles
2. What types of production processes do manufacturers and service firms use?
One for All: Mass Production
Just for You: Customizing Goods
Converting Inputs to Outputs
Production Timing
CONCEPT CHECK
What is the transformation process that results in useful goods and services?
Which three items are considered inputs to the transformation process?
Is the transformation of resources into goods or services that people need or want?
What is the production or transformation process?

Production

Production is a scientific process which involves transformation of raw material (input) into desired product or service (output) by adding economic value. Production can broadly categorize into following based on technique:

Production through separation: It involves desired output is achieved through separation or extraction from raw materials. A classic example of separation or extraction is Oil into various fuel products.

Production by modification or improvement: It involves change in chemical and mechanical parameters of the raw material without altering physical attributes of the raw material. Annealing process (heating at high temperatures and then cooling), is example of production by modification or improvement.

Production by assembly: Car production and computer are example of production by assembly.

Importance of Production Function and Production Management

Successful organizations have well defined and efficient line function and support function. Production comes under the category of line function which directly affects customer experience and there by future of organization itself.

Aim of production function is to add value to product or service which will create a strong and long lasting customer relationship or association. And this can be achieved by healthy and productive association between Marketing and Production people. Marketing function people are frontline representative of the company and provide insights to real product needs of customers.

An effective planning and control on production parameters to achieve or create value for customers is called production management.

Operations Management

As to deliver value for customers in products and services, it is essential for the company to do the following:

Identify the customer needs and convert that into a specific product or service (numbers of products required for specific period of time)
Based on product requirement do back-ward working to identify raw material requirements
Engage internal and external vendors to create supply chain for raw material and finished goods between vendor → production facility → customers.

Operations management captures above identified 3 points.

Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be done on following characteristics:

Production management and operations management both are very essential in meeting objective of an organization.

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2. What types of production processes do manufacturers and service firms use?

In production planning, the first decision involves which type of production process—the way a good or service is created—best fits with company goals and customer demand. An important consideration is the type of good or service being produced, because different goods may require different production processes. In general, there are three types of production: mass production, mass customization, and customization. In addition to production type, operations managers also classify production processes in two ways: (1) how inputs are converted into outputs and (2) the timing of the process.

One for All: Mass Production

Mass production, manufacturing many identical goods at once, was a product of the Industrial Revolution. Henry Ford’s Model-T automobile is a good example of early mass production. Each car turned out by Ford’s factory was identical, right down to its color. If you wanted a car in any color except black, you were out of luck. Canned goods, over-the-counter drugs, and household appliances are other examples of goods that are mass-produced. The emphasis in mass production is on keeping manufacturing costs low by producing uniform products using repetitive and standardized processes. As products became more complicated to produce, mass production also became more complex. Automobile manufacturers, for example, must now incorporate more sophisticated electronics into their car designs. As a result, the number of assembly stations in most automobile manufacturing plants has increased.

Just for You: Customizing Goods

In mass customization, goods are produced using mass-production techniques, but only up to a point. At that point, the product or service is custom-tailored to the needs or desires of individual customers. For example, American Leather, a Dallas-based furniture manufacturer, uses mass customization to produce couches and chairs to customer specifications within 30 days. The basic frames in the furniture are the same, but automated cutting machinery precuts the color and type of leather ordered by each customer. Using mass-production techniques, they are then added to each frame.

Customization is the opposite of mass production. In customization, the firm produces goods or services one at a time according to the specific needs or wants of individual customers. Unlike mass customization, each product or service produced is unique. For example, a print shop may handle a variety of projects, including newsletters, brochures, stationery, and reports. Each print job varies in quantity, type of printing process, binding, color of ink, and type of paper. A manufacturing firm that produces goods in response to customer orders is called a job shop.

Exhibit 10.5 Classification of Production Types (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)

Mass Production	Mass Customization	Customization
Highly uniform products or services Many products made sequentially	Uniform standardized production to a point, then unique features added to each product	Each product or service produced according to individual customer requirements
Examples: Breakfast cereals, soft drinks, and computer keyboards	Examples: Dell Computers, tract homes, and Taylor Made golf clubs	Examples: Custom homes, legal services, and haircuts

Some types of service businesses also deliver customized services. Doctors, for instance, must consider the illnesses and circumstances of each individual patient before developing a customized treatment plan. Real estate agents may develop a customized service plan for each customer based on the type of house the person is selling or wants to buy. The differences between mass production, mass customization, and customization are summarized in Exhibit 10.5.

Converting Inputs to Outputs

As previously stated, production involves converting inputs (natural resources, raw materials, human resources, capital) into outputs(products or services). In a manufacturing company, the inputs, the production process, and the final outputs are usually obvious. Harley-Davidson, for instance, converts steel, rubber, paint, and other inputs into motorcycles. But the production process in a service company involves a less obvious conversion. For example, a hospital converts the knowledge and skills of its medical personnel, along with equipment and supplies from a variety of sources, into health care services for patients. Table 10.1 provides examples of the inputs and outputs used by various other businesses.

There are two basic processes for converting inputs into outputs. In process manufacturing, the basic inputs (natural resources, raw materials) are broken down into one or more outputs (products). For instance, bauxite (the input) is processed to extract aluminum (the output). The assembly process is just the opposite. The basic inputs, like natural resources, raw materials, or human resources, are either combined to create the output or transformed into the output. An airplane, for example, is created by assembling thousands of parts, which are its raw material inputs. Steel manufacturers use heat to transform iron and other materials into steel. In services, customers may play a role in the transformation process. For example, a tax preparation service combines the knowledge of the tax preparer with the client’s information about personal finances in order to complete the tax return.

Production Timing

A second consideration in choosing a production process is timing. A continuous process uses long production runs that may last days, weeks, or months without equipment shutdowns. This is best for high-volume, low-variety products with standardized parts, such as nails, glass, and paper. Some services also use a continuous process. Your local electric company is an example. Per-unit costs are low, and production is easy to schedule.

Converting Inputs to Outputs
Type of Organization	Input	Output
Airline	Pilots, flight attendants, reservations system, ticketing agents, customers, airplanes, maintenance crews, ground facilities	Movement of customers and freight
Grocery store	Merchandise, building, clerks, supervisors, store fixtures, shopping carts, customers	Groceries for customers
High school	Faculty, curriculum, buildings, classrooms, library, auditorium, gymnasium, students, staff, supplies	Graduates, public service
Manufacturer	Machinery, raw materials, plant, workers, managers	Finished products for consumers and other firms
Restaurant	Food, cooking equipment, servers, chefs, dishwashers, host, patrons, furniture, fixtures	Meals for patrons

Table10.1

In an intermittent process, short production runs are used to make batches of different products. Machines are shut down to change them to make different products at different times. This process is best for low-volume, high-variety products such as those produced by mass customization or customization. Job shops are examples of firms using an intermittent process.

Although some service companies use continuous processes, most service firms rely on intermittent processes. For instance, a restaurant preparing gourmet meals, a physician performing surgical procedures, and an advertising agency developing ad campaigns for business clients all customize their services to suit each customer. They use the intermittent process. Note that their “production runs” may be very short—one grilled salmon or one physical exam at a time.

CONCEPT CHECK

Describe the different types of production processes.
How are inputs transformed into outputs in a variety of industries?

What is the transformation process that results in useful goods and services?

Operations management transforms inputs (labor, capital, equipment, land, buildings, materials, and information) into outputs (goods and services) that provide added value to customers.

Which three items are considered inputs to the transformation process?

Often all three types of input – materials, information and customers – are transformed by the same organisation.

Is the transformation of resources into goods or services that people need or want?

Production means the transformation of the input into output in form of goods and services to give the desired utility to satisfy human needs. In very simple words, it is the conversion of raw materials into finished goods.

What is the production or transformation process?

A transformation process is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients.