Key differentiators between Operations Management and Production Management Both Operations Management and Production Management have

a big impact on our industries. While Operations Management is about the administration and planning of the business operations in the production as well as the service of goods, Product Management is the organizational life cycle procedure inside a company that is concerned with the prediction, planning and marketing goods at all phases of the life cycle of that particular product or products.

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industrial management - the branch of engineering that deals with the creation and management of systems that integrate people and materials and energy in productive ways. industrial management, term applied to highly organized modern methods of carrying on industrial, especially manufacturing, operations. Industrial management is that deals with people in industry, material and energy leading towards production growth. Our country is fast growing in industrial sector. Due to its economic policies many companies are coming forward to develop factories and production facilities in our country. Every company is in need of an industrial management person. They have much career opportunities now days. Some industries they give training to the qualified persons, and some they appoint experiences, skilled person. The Rise of Factories Before the Industrial Revolution people worked with hand tools, manufacturing articles in their own homes or in small shops. In the third quarter of the 18th cent. steam power was applied to machinery, and people and machines were brought together under one roof in factories, where the manufacturing process could be supervised. This was the beginning of shop management. In the next hundred years factories grew rapidly in size, in degree of mechanization, and in complexity of operation. The growth, however, was accompanied by much waste and inefficiency. In the United States many engineers, spurred by the increased competition of the postCivil War era, began to seek ways of improving plant efficiency. The Development of Industrial Management Studies of Worker Performance The first sustained effort in the direction of improved efficiency was made by Frederick Winslow Taylor

, an assistant foreman in the Midvale Steel Company, who in the 1880s undertook a series of studies to determine whether workers used unnecessary motions and hence too much time in performing operations at a machine. Each operation required to turn out an article or part was analyzed and studied minutely, and superfluous motions were eliminated. Records were kept of the performance of workers and standards were adopted for each operation. The early studies resulted in a faster pace of work and the introduction of rest periods. Management of the Machine Industrial management also involves studying the performance of machines as well as people. Specialists are employed to keep machines in good working condition and to ensure the quality of their production. The flow of materials through the plant is supervised to ensure that neither workers nor machines are idle. Constant inspection is made to keep output up to standard. Charts are used for recording the accomplishment of both workers and machines and for comparing them with established standards. Careful accounts are kept of the cost of each operation. When a new article is to be manufactured it is given a design that will make it suitable for machine production, and each step in its manufacture is planned, including the machines and materials to be used. Other Aspects of Industrial Management The principles of scientific management have been gradually extended to every department of industry, including office work, financing, and marketing. Soon after 1910 American firms established the first personnel departments, and eventually some of the larger companies took the lead in creating environments conducive to worker efficiency. Safety devices, better sanitation, plant cafeterias, and facilities for rest and recreation were provided, thus adding to the welfare of employees and enhancing morale. Many such improvements were made at the insistence of employee groups, especially labor unions. Over the years, workers and their unions also sought and often won higher wages and increased benefits, including group health and life insurance and liberal retirement pensions. During the 1980s and 1990s, however, cutbacks and downsizing in many American businesses substantially reduced many of these benefits. Some corporations permit employees to buy stock; others make provision for employee representation on the board of directors or on the shop grievance committee. Many corporations provide special opportunities for training and promotion for workers who desire advancement, and some have made efforts to solve such difficult problems as job security and a guaranteed annual wage. Modern Trends Modern technological devices, particularly in the areas of computers, electronics, thermodynamics, and mechanics, have made automatic and semiautomatic machines a reality. The development of such automation is bringing about a second industrial revolution and is causing vast changes in commerce as well as the way work is organized. Such technological changes and the need to improve productivity and quality of products in traditional factory systems also changed industrial management practices. In the 1960s Swedish automobile companies discovered that they could improve productivity with a system of group assembly. In a contrast to older manufacturing techniques where a worker was responsible for assembling only one part of the car, group assembly gave a group of workers the responsibility for assembling an entire car.

The system was also applied in Japan, where managers developed a number of other innovative systems to lower costs and improve the quality of products. One Japanese innovation, known as quality circles, allowed workers to offer management suggestions on how to make production more efficient and to solve problems. Workers were also given the right to stop the assembly line if something went wrong, a sharp departure from U.S. factories. By carefully controlling the manufacturing process, Japanese managers were able to cut waste, improve productivity, and reduce inventory, thus significantly reducing costs and improving quality. By the early 1980s, Japanese companies, which had once been criticized for producing for producing low-quality goods, had established a reputation for efficiently producing high-quality, high-tech products. In the 1980s and early 90s many U.S. companies looked to increase their competitiveness by adapting Japanese methods for improving manufacturing quality. Functions of Industrial Management Planning Planning is deciding in advance what to do and how to do.It is one of the basic managerial functions. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen. Directing Directing means giving instructions, guiding, counselling, motivating and leading the staff in an organisation in doing work to achieve Organisational goals. Organizing Organisation is the process of identifying and grouping of the works to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most efficiently. Staffing Staffing is the function by which managers build an organisation through the recruitment, selection, and development of individuals as capable employees. Controlling Controlling always maximise the use of scarce resources to achieve the purposeful behaviour of employees in an organisation. See Controlling Definition, Features of Controlling and Importance of Controlling. Supply chain management (SCM) Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together

Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer. Supply chain management (SCM) is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.[2] Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." Problems addressed Supply chain management must address the following problems: Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers. Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL). Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy.

Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. Inventory Management: Quantity and location of inventory, including raw materials, work-in-process (WIP) and finished goods. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain. Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional. Activities/functions Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels. The CSCMP has adopted The American Productivity & Quality Center (APQC) Process Classification FrameworkSM a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint.[9] Strategic level Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. Information technology chain operations. Where-to-make and make-buy decisions. Aligning overall organizational strategy with supply strategy. It is for long term and needs resource commitment. Tactical level Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments. Focus on customer demand and Habits. Operational level Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company. Managing non-moving, short-dated inventory and avoiding more products to go short-dated. Importance Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.[10] In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. During the past decades, globalization, outsourcing and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities (Scott, 1993). This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance impacts different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms (Zhang and Dilts, 2004).

Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal management control structure is known to impact local firm performance (Mintzberg, 1979). In the 21st century, changes in the business environment have contributed to the development of supply chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances and business partnerships, significant success factors were identified, complementing the earlier "Just-In-Time", "Lean Manufacturing" and "Agile Manufacturing" practices.[11] Second, technological changes, particularly the dramatic fall in information communication costs, which are a significant component of transaction costs, have led to changes in coordination among the members of the supply chain network (Coase, 1998). Many researchers have recognized these kinds of supply network structures as a new organization form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation", "Global Production Network", and "Next Generation Manufacturing System".[12] In general, such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans, 2001). The security management system for supply chains is described in ISO/IEC 28000 and ISO/IEC 28001 and related standards published jointly by ISO and IEC

Material management is an approach for planning, organizing, and controlling all those activities principally concerned with the flow of materials into an organisation.

The scope of Materials Management varies greatly from company to company and may include material planning and control, production planning, Purchasing, inventory control, in-plant materials movement, and waste management. It is a business function for planning, purchasing, moving, storing material in a optimum way which help organisation to minimise the various costs like inventory, purchasing, material handling and distribution costs. The fundamental objectives of the Materials Management function ,often called the famous 5 Rs of Materials Management, are acquisition of materials and services :

of the right quality in the right quantity at the right time from the right source at the right time

From the management point of view , the key objectives of MM are :

To buy at the lowest price , consistent with desired quality and service To maintain a high inventory turnover , by reducing excess storage , carrying costs and inventory losses occurring due to deteriorations , obsolescence and pilferage To maintain continuity of supply , preventing interruption of the flow of materials and services to users To maintain the specified material quality level and a consistency of quality which permits efficient and effective operation To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and pricing To minimize the overall cost of acquisition by improving the efficiency of operations and procedures To hire, develop, motivate and train personnel and to provide a reservoir of talent To develop and maintain good supplier relationships in order to create a supplier attitude and desire furnish the organisation with new ideas , products, and better prices and service To achieve a high degree of cooperation and coordination with user departments To maintain good records and controls that provide an audit trail and ensure efficiency and honesty To participate in Make or Buy decisions

Materials Management thus can be defined as that function of business that is responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide service to the customer, at a pre-decided level at a minimum cost.

The broad Materials function has the following as identified and interlinked sub functions: Materials planning and control: Materials required for any operation are based on the sales forecasts and production plans. Planning and control is done for the materials taking into account the materials not available for the operation and those in hand or in pipe line. This involves estimating the individual requirements of parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and monitoring the performance in relation to production and sales.

Purchasing: Basically, the job of a materials manager is to provide , to the user departments right material at the right time in right quantity of right quality at right price from the right source. To meet these objectives the activities undertaken include selection of sources of supply, finalisation of terms of purchase, placement of purchase orders, follow up, maintenance of relations with vendors, approval of payments to vendors, evaluating, rating and developing vendors. Stores : Once the material is delivered , its physical control , preservation , minimisation of obsolescence and damage through timely disposal and efficient handling, maintenance of records, proper locations and stocking is done in Stores.

Inventory control : One of the powerful ways of controlling the materials is through Inventory control. It covers aspects such as setting inventory levels, doing various analyses such as ABC , XYZ etc ,fixing economic order quantities (EOQ), setting safety stock levels, lead time analysis and reporting. Materials Management's scope: The scope is vast. Its sub functions include Materials planning and control, Purchasing, Stores and Inventory Management besides others. Basically, under its scope are :

emphasis on the acquisition aspect inventory control and stores management material logistics, movement control and handling aspect purchasing, supply , transportation , materials handling etc supply management or logistics management all the interrelated activities concerned with materials

Materials management can thus also be defined as a joint action of various materials activities directed towards a common goal and that is to achieve an integrated management approach to planning, acquiring, processing and distributing production materials from the raw material state to the finished product state. In its process of managing , materials management has such sub fields as inventory management , value analysis, receiving, stores and management of obsolete , slow moving and non moving items. The various activities represent these four functions:

Planning and control Purchasing Value analysis and Physical distribution

One of the raging controversies now a days going on is the scope of materials management in the wake of rising opportunities in and the popularity of supply chain management. Many believe that Materials Management is a part of Supply Chain and that without Materials Management one can not think of Supply Chain for a manufacturing industry. Materials Management is thus applicable for only Manufacturing Industry. However, this too is debatable as where ever there is need of materials , Materials Management can always be done , though in a modified manner. World over Manufacturing is shrinking and outsourcing and contract manufacturing is being done to reduce cost and make delivery possible in the fastest and strategic way. So, Supply Chain Management encompasses a pull mechanism for the delivery of a Product, thus underlying the importance of Materials Management. Materials Management continues to enjoy the importance and significance , but the service levels for any delivery i.e. purchase or sales is becoming important , with the result Logistics & Supply patterns and positioning are taking prime importance, hence Supply Chain is seen to be taking a lead. Materials Management , however, has not lost its importance , rather its scope has widened and has been coined as supply chain management, as some experts believe. Supply Chain Management is looking the business for supply of product, service or information, from a customer point of view with primary focus being on delivery as required by the customer. The service levels , delivery schedules are becoming important in today's industry and business environment. On the other hand, Materials management is the planning , scheduling and making the materials available in the right quantity, in the right quality at the right time in the right place and of course at the right price , very popularly known as 5 R's. Many experts say that materials management is included in the supply chain management function and an effective materials management only can drive an efficient and cost effective supply chain solution or process. So, the scope for materials management and the success of materials management is very much relevant and important and is evergreen , and is rather becoming very challenging in today's situation. Supply Chain simply is the Supplier to you (your company) and to the end customer with a lot of details in between, like logistics, quality etc. It is a wide scope of activities. Materials Management in Distribution / Manufacturing typically means Purchasing-Production Control (or Buyer/Planners)-Warehousing and Master Scheduling (Forecasting/SIOP) / MRP output for the operation / production facility itself. Supply Chain is the process which encompasses many facet of materials

managements like forecasting, planning , procuring and movement till end user. Supply Chain is team activity assisted by statistical / management tools. Still, in the production plant the core activity of materials planning in line of production schedule is to be carried out, which requires technical collaboration with shop-floor, and this is one area where old-time, conventional materials management has advantage and thus the scope too. Inventory management or control refers to the management of idle resources which have future economic value. Alternatively, Inventory may be defined as usable but idle resources that have economic value.

Inventory management is one important aspect of the total management of an enterprise. It is ultimately the responsibility of the top management to achieve trade offs among marketing, finance, production and other functions so as to obtain, as far as possible, an optimized and relatively balanced trade off so as to maximize the overall performance of the enterprise. This has to be not only in the short-run but also keeping the long run interests of the Company in view. Inventory Management refers to maintaining , for a given financial investment, an adequate supply of something to meet an expected demand pattern. It thus deals with determination of optimal

policies and procedures for procurement. In business management, inventory consists of a list of goods and materials held or available in stock. Management of inventory or Inventory management is all about handling functions related to the tracking and management of material. Inventory management is very important in the case of Production Oriented Enterprises. However, it is also relevant for the Service Sector. In India, the emphasis in the early years was on production and on acquiring the skills and capability to manufacture a host of items required to meet the vast need of the country which had just achieved independence and had embarked on a program of industrialization. Therefore, attention got focused on marketing and on profitability. However, now there is a gradual appreciation of the need to keep our enterprises profitable. R&D, Corporate Planning, Productivity, etc., are tightly

getting their due importance. In simple terms, productivity is the positive relationship of output viz-a-viz inputs. Inventory management can be considered an important facet of output & input management. This includes the monitoring of material moved into and out of stockroom locations and reconciling the inventory balances, setting targets, providing replenishment techniques, reporting actual and projected inventory status. The task of ABC analysis, lot tracking, cycle counting support etc. can even be a part of inventory management. Inventory control is concerned with minimizing the total cost of inventory. The three main factors in inventory control decision making process are:

The cost of holding the stock (e.g., based on the interest rate). The cost of placing an order (e.g., for row material stocks) or the set-up cost of production. The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand.

The third element is the most difficult to measure and is often handled by establishing a "service level" policy, e. g, certain percentage of demand will be met from stock without delay. Terminology used in Inventory management / control : Maximum Limit : When devising a suitable Inventory model ,the Maximum limit establishes the upper limit to which the stock of an inventory item shall be allowed. Minimum Limit : It is the lower limit to which the stock can be allowed to fall in course of replenishment of the stock of an item. Normally, this is taken to be the safety stock also. Safety Stock : This is the stock that is maintained to counter the variation in demand of an item during the replenishment lead time. Demand or Usage: Replenishment of stock and usage of an item is an ongoing phenomenon in inventory control. Demand thus is the rate of usage of an item. Over a period of time demand is considered to be stable. However , demand can be seasonal or cyclical in nature depending upon an item's nature.

As inventory accounts for significant cost within an organization it is unsurprising that many companies have departments whose primary objective is the management

and optimization of materials while this is a wide raging activity which may vary from company to company there are a number of common objectives that are often encompassed by the function. This includes: 1. Their delivery of service levels to customers by ensuring inventory is available in accordance with need. 2. Forecast future stock requirements 3. Optimize stock levels ensuring a correct mix of stock type and quantity to meet budgetary and service level requirements. 4. Provide visibility of inventory throughout the organization and supply chain A number of factors can influence the focus of inventory management notably industrial sector, customer, organizational structure (decentralized for example) and influence of external factors such as globalization. Key Performance Indicators for Inventory

Inventory is one of the most significant costs for many businesses so ensuring its optimization is often a key company objective. Luckily there are a variety of key performance indicators (KPIs) that can be used to assess inventory performance, whether focusing on the economics or performance of stock. Below we are listing 5 commonly used KPIs for you to understand it all :

1. Inventory Turn over Inventory Turn tells you how many times inventory has been sold and replaced in a given period calculated as Sales divided by average inventory value whilst mileage may vary depending on the industry a low inventory turn can be indicative of holding too much stock (or stock of the wrong type). 2. Stockouts Stockouts indicate where a demand cannot be met due to the absence of the required inventory monitoring these will tell you if you have the right mix of stock type and quantity. 3. Service Level Service levels can be calculated per individual customer and is calculated by reviewing the number of times an item has been issued divided by the number of times it has been demanded a low service level will indicate that customers invariably have to wait for parts and that inventory held could be of the wrong type. 4. Lead Time Lead time is the length of time it takes to obtain inventory from suppliers Long lead times can result in holding excess inventory (impacting cost and service level)

5. Stock Cover Stock cover is the length of time that inventory will last if current usage continues this is an important indicator as it helps appraise the impact of changes in lead time or the potential for running out of stock.

What is Operations Management? Operations Management deals with the design and management of products, processes, services and supply chains. It considers the acquisition, development, and utilization of resources that firms need to deliver the goods and services their clients want. The purvey of OM ranges from strategic to tactical and operational levels. Representative strategic issues include determining the size and location of manufacturing plants, deciding the structure of service or telecommunications networks, and designing technology supply chains. Tactical issues include plant layout and structure, project management methods, and equipment selection and replacement. Operational issues include production scheduling and control, inventory management, quality control and inspection, traffic and materials handling, and equipment maintenance policies.

Operations management is an area of management concerned with overseeing, designing, controlling the process of production and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed, and effective in terms of meeting customer requirements. It is concerned with managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services). The relationship of operations management to senior management in commercial contexts can be

compared to the relationship of line officers to highest-level senior officers in military science. The highest-level officers shape the strategy and revise it over time, while the line officers make tactical decisions in support of carrying out the strategy. In business as in military affairs, the boundaries between levels are not always distinct; tactical information dynamically informs strategy, and individual people often move between roles over time. According to the U.S. Department of Education, operations management is the field concerned with managing and directing the physical and/or technical functions of a firm or organization, particularly those relating to development, production, and manufacturing. Operations management programs typically include instruction in principles of general management, manufacturing and production systems, plant management, equipment maintenance management, production control, industrial labor relations and skilled trades supervision, strategic manufacturing policy, systems analysis, productivity analysis and cost control, and materials planning.[1][2] Management, including operations management, is like engineering in that it blends art with applied science. People skills, creativity, rational analysis, and knowledge of technology are all required for success. Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way

A production system is defined as a user of resources to transform inputs into some desired outputs Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications