CHAPTER 1

INTRODUCTION TO PRODUCTION AND

OPERATIONS MANAGEMENT

Intended Learning Outcomes

By the end of this topic/chapter, you must be able to:
1. Understand the meaning of production and operations management;
2. Describe the historical evolution of operations management;
3. Explain the interrelationship of operations management with different functions;
4. Discuss the objectives of production and operations management;
5. Understand the scope of production and operations management;
6. Explain the production concept, production system and its classifications;
7. Discuss the objectives of operations management; and
8. Understand the recent trends in operations management.

Defining Production and Operations Management

Production/operations management is the process, which combines and
transforms various resources used in the production/operations subsystem of the
organization into value added product/services in a controlled manner as per the policies
of the organization. Therefore, it is that part of an organization, which is concerned with
the transformation of a range of inputs into the required (products/services) having the
requisite quality level (Kumar & Suresh, 2009; Stevenson, 2012).
The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management. If the same
concept is extended to services management, then the corresponding set of
management activities is called as operations management. In the process of
managing various subsystems of the organization executives at different levels of the
organization need to track several management decisions. The management decisions
are strategic, tactical and operational.

Strategic (Top Level)

Defining goals Making policies

Tactical (Middle Level)

Plant location New product establishment

Operational (Bottom Level)

Effective and efficient utilization of resources

Figure 1.1. Schematic Management Process – Adapted from Kumar and Suresh (2009)
 In the Agribusiness sector, the following example frames the broiler production’s
management decisions:
Table 1.1 Agribusiness example: broiler production.
BROILER PRODUCTION IN KABACAN, COTABATO
Strategic (Top Level) Tactical (Middle Level) Operational (Bottom
Level)
1. Expansion plans 1. Feed formulation 1. Daily feeding
Deciding whether to strategy schedules
increase production by Adjusting rations in Ensuring that broilers
building new poultry order to balance cost receive the right feed
houses or integrating and growth mix at the right time.
feed milling. performance over a
production cycle.
2. Market positioning 2. Breeding and 2. Health monitoring
Choosing to supply stocking plans Checking for any
large fast-food chains Determining flock signs of disease and
versus focusing on sizes and schedules applying vaccinations
local wet markets. to meet demand or treatments.
forecasts.
3. Technology adoption 3. Marketing 3. Temperature and
Investing in automated campaigns ventilation control
climate control Promoting “farm-to- Adjusting fans,
systems or genetic table” branding or heaters, or draperies
improvements for halal certification to to maintain optimal
higher yield. attract niche markets. conditions.
4. Sustainability goals 4. Supplier contracts 4. Harvesting and
Committing to Negotiating with corn logistics
antibiotic-free and soybean Scheduling the
production or suppliers for stable catching, dressing,
renewable energy use feed input costs. and delivery of
in farms. broilers to processors
or markets.

Objectives of Operations Management

The objective of the production management is ‘to produce goods services of right
quality and quantity at the right time and right manufacturing cost’ (Kumar & Suresh,
2009).
1. Right Quality: The quality of product is established based upon the customer’s
needs. It is determined by the cost of the product and the technical characteristics
as suited to the specific requirements.
Agribusiness examples:
• Quality of broiler meat is based on the needs of consumers such as
 households, restaurants, and institutions.
• Broiler products meet desirable product costs and technical characteristics
such as freshness, taste, weight, and absence of antibiotics.
• Operational activities employ quality standards in terms of feed formulation,
humane or cruelty free handling of animals, and biosecurity.
2. Right Quantity: The manufacturing organization should produce the products in
right number. If they are produced in excess of demand the capital will block up in
the form of inventory and if the quantity is produced in short of demand, leads to
shortage of products.
Agribusiness examples:
• Overproduction ties up capital in unsold chicken or frozen products.
• Underproduction leads to shortages, missed sales, and dissatisfied
customers.
• Operations must forecast demand during town fiestas, holidays, and peak
market days.
3. Right Time: Timeliness of delivery is one of the important parameters to judge the
effectiveness of production department. So, the production department has to make
the optimal utilization of input resources to achieve its objective.
Agribusiness examples:
• Broilers must be harvested at the right age or weight to maximize efficiency.
• Coordination with logistics ensures fresh chicken arrives on time.
4. Right Manufacturing Cost: Manufacturing costs are established before the
product is actually manufactured. Hence, all attempts should be made to produce
the products at pre-established cost, so as to reduce the variation between actual
and the standard (pre-established) cost.

Agribusiness example:
• Broiler production manufacturing costs include all direct expenses required
to raise a day-old chick (DOC) to a market-ready broiler (typically a 30 to 42-
day cycle) such as feeds, chicks, and utilities, among others.

Scope of Production and Operations Management

Production and operations management concerns with the conversion of inputs

into outputs, using physical resources, so as to provide the desired utilities to the
customer while meeting the other organizational objectives of effectiveness, efficiency
and adoptability (Kumar & Suresh, 2009; Lovely Professional University, 2012).
It distinguishes itself from other functions such as personnel, marketing, finance,
etc., by its primary concern for ‘conversion by using physical resources.’ Following are
the activities which are listed under production and operations management functions:

1. Location of Facilities: Location of facilities for operations is a long-term capacity

decision which involves a long-term commitment about the geographically static
factors that affect a business organization (Kumar & Suresh, 2009). It deals with
 the questions such as ‘where our main operations should be based?’ The
selection of location is a key-decision as large investment is made in building plant
and machinery. An improper location of plant may lead to waste of all the
investments made in plant and machinery equipment. The purpose of the location
study is to find the optimal locations that will results in the greatest advantage to
the organization.
Agribusiness examples:
• A poultry cooperative sets up its houses near the town’s main market and
highway, ensuring easy delivery of fresh chicken to households and food
courts.
• Another farmer chooses a remote site with poor road access which made
transport costs rise, and chickens arrive late that reduce profitability.

2. Plant Layouts and Material Handling: Plant layout refers to the physical
arrangement of facilities. It is the configuration of departments, work centers and
equipment in the conversion process (Kumar & Suresh, 2009). The overall
objective of the plant layout is to design a physical arrangement that meets the
required output quality and quantity most economically.
According to James Moore, “Plant layout is a plan of an optimum
arrangement of facilities including personnel, operating equipment, storage
space, material handling equipment and all other supporting services along with
the design of best structure to contain all these facilities”. ‘Material Handling’ refers
to the ‘moving of materials from the store room to the machine and from one
machine to the next during the process of manufacture’. Material handling devices
increases the output, improves quality, speeds up the deliveries and decreases
the cost of production. Hence, material handling is a prime consideration in the
designing new plant and several existing plants.

Agribusiness examples:
• The enterprise arranges poultry houses close to the feed mill and cold
storage, so feed flows smoothly to the birds and processed chicken moves
quickly to storage.
• In a poorly designed layout, workers carry feed across long distances,
slowing operations and increasing labor costs.

3. Product Design: Product design deals with conversion of ideas into reality. Every
business organization has to design, develop and introduce new products as a
survival and growth strategy (Slack et al., 2013). The entire process of need
identification to physical manufactures of product involves three functions:
marketing, product development, and manufacturing. Product development
translates the needs of customers given by marketing into technical specifications
and designing the various features into the product to these specifications. Product
design and development provides link between marketing, customer needs and
expectations and the activities required to manufacture the product.

Agribusiness examples:
 • Local customers requested marinated, ready-to-cook packs for
convenience. Marketing identifies this demand, and operations designs a
feasible product line.
• Without aligning design and operations, the enterprise launches a product
that requires equipment they do not own, leading to delays and wasted
investment.

4. Process Design: Process design is a macroscopic decision-making of an overall

process route for converting the raw material into finished goods. These
decisions encompass the selection of a process, choice of technology, process
flow analysis and layout of the facilities (Kumar & Suresh, 2009). Hence, the
important decisions in process design are to analyze the workflow for converting
raw material into finished product and to select the work station for each included
in the workflow.

Agribusiness examples:
• The farm adopts automated feeders and climate control to ensure chicks
would grow uniformly before harvesting and processing.
• A competitor relies on manual feeding and poor workflow, causing uneven
growth and higher mortality.

5. Production and Planning Control: Production planning and control can be

defined as the process of planning the production in advance, setting the exact
route of each item, fixing the starting and finishing dates for each item, to give
production orders to shops and to follow up the progress of products according to
orders. The principle of production planning and control lies in the statement ‘First
Plan Your Work and then Work on Your Plan’. Main functions of production
planning and control includes planning, routing, scheduling, dispatching and
follow-up (Kumar & Suresh, 2009).
• Planning: Is deciding in advance what to do, how to do it, when to do it
and who is to do it. 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.
• Routing: May be defined as the selection of path which each part of the
product will follow, which being transformed from raw material to finished
products. Routing determines the most advantageous path to be followed
from department to department and machine to machine till raw material
gets its final shape.
• Scheduling: Determines the program of the operations. Scheduling may
be defined as ‘the fixation of time and date for each operation’ as well as
it determines the sequence of operations to be followed.
• Dispatching: Is concerned with the starting the processes. It gives
necessary authority so as to start a particular work, which has already
been planned under ‘Routing’ and ‘Scheduling’. Therefore, dispatching is
‘release of orders and instruction for the starting of production for any item
 in acceptance with the route sheet and schedule charts’.

Agribusiness examples:
• The manager plans flock sizes based on upcoming town fiestas,
schedules feed deliveries, and authorizes processing runs to meet peak
demand.
• Without proper routing and scheduling, chickens are harvested late,
missing the market window.

6. Quality Control: Quality Control (QC) may be defined as ‘a system that is used
to maintain a desired level of quality in a product or service’ (Kumar & Suresh,
2009). It is a systematic control of various factors that affect the quality of the
product. Quality control aims at prevention of defects at the source, relies on
effective feedback system and corrective action procedure. Quality control can
also be defined as ‘that industrial management technique by means of which
product of uniform acceptable quality is manufactured’. It is the entire collection
of activities which ensures that the operation will produce the optimum quality
products at minimum cost. The main objectives of quality control are:
• To improve the companies’ income by making the production more
acceptable to the customers i.e., by providing long life, greater usefulness,
maintain ability, etc.
• To reduce companies cost through reduction of losses due to defects.
• To achieve inter change ability of manufacture in large scale production.
• To produce optimal quality at reduced price.
• To ensure satisfaction of customers with productions or services or high-
quality level, to build customer good will, confidence and reputation of
manufacturer.
• To make inspection prompt to ensure quality control.
• To check the variation during manufacturing.

Agribusiness examples:
• Inspectors check dressed chicken for weight and hygiene before selling.
Customers trust the brand and keep buying.
• A farm neglects biosecurity, leading to disease outbreaks and spoiled
meat which damages its reputation in the town.

7. Materials Management: Materials management is that aspect of management

function which is primarily concerned with the acquisition, control and use of
materials needed and flow of goods and services connected with the production
process having some predetermined objectives in view (Kumar & Suresh, 2009).
The main objectives of materials management are:
• To minimize material cost.
• To purchase, receive, transport and store materials efficiently and to
reduce the related cost.
• To cut down costs through simplification, standardization, value analysis,
import substitution.
 • To trace new sources of supply and to develop cordial relations with them in
order to ensure continuous supply at reasonable rates.
• To reduce investment tied in the inventories for use in other productive
purposes and to develop high inventory turnover ratios.

Agribusiness examples:
• An enterprise builds strong supplier ties, ensuring continuous feed and
medicine supply at lower cost.
• Another farm over-invests in feed inventory which tied up capital and
risking spoilage.

8. Maintenance Management: In modern industry, equipment and machinery are

a very important part of the total productive effort. Therefore, their idleness or
downtime becomes are very expensive. Hence, it is very important that the plant
machinery should be properly maintained (Kumar & Suresh, 2009). The main
objectives of maintenance management are:
• To achieve minimum breakdown and to keep the plant in good working
condition at the lowest possible cost.
• To keep the machines and other facilities in such a condition that permits
them to be used at their optimal capacity without interruption.
• To ensure the availability of the machines, buildings and services required
by other sections of the factory for the performance of their functions at
optimal return.

Agribusiness examples:
• Regular servicing of feeders, water systems, and cold storage prevents
breakdowns, ensuring uninterrupted supply to food courts and
restaurants.
• A farm ignores maintenance, cold storage fails during peak season which
caused massive losses.
Figure 1.2. Scope of production and operations management - Adapted from Kumar and
Suresh (2009)

Concept of Production and Production System

Production function is that part of an organization, which is concerned with the
transformation of arrange of inputs into the required outputs (products) having the
requisite quality level. Production is defined as “the step-by-step conversion of one form
of material into another form through chemical or mechanical process to create or
enhance the utility of the product to the user.” Thus, production is a value addition
process.
Edwood Buffa defines production as ‘a process by which goods and services are
created’ (as cited in Kumar & Suresh, 2009). Some examples of production are:
manufacturing custom-made products like, boilers with a specific capacity, constructing
flats, some structural fabrication works for selected customers, etc., and manufacturing
standardized products like, car, bus, motor cycle, radio, television, etc.
The production system of an organization is that part, which produces products of
an organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the
policies communicated by management. A simplified production system is shown above.
The production system has the following characteristics:
1. Production is an organized activity, so every production system has an
objective.
2. The system transforms the various inputs to useful outputs.
3. It does not operate in isolation from the other organization system.
4. There exists feedback about the activities, which is essential to control and
improve system performance.
 Figure 1.3. Schematic production system - Adapted from Kumar and Suresh
(2009)

Classification of Production System

1. Job Shop Production: Job shop productions are characterized by
manufacturing of one or few quantities of products designed and produced as per
the specification of customers within prefixed time and cost. A job shop
comprises of general-purpose machines arranged into different departments.
Each job demands unique technological requirements, demands processing on
machines in a certain sequence (Kumar & Suresh, 2009).
Characteristics
The Job-shop production system is followed when there is:
• High variety of products and low volume.
• Use of general-purpose machines and facilities.
• Highly skilled operators who can take up each job as a
challenge because of uniqueness.
• Large inventory of materials, tools, parts.
• Detailed planning is essential for sequencing the requirements of
each product, capacities for each work center and order priorities.
Advantages
Following are the advantages of job shop production:
• Because of general purpose machines and facilities variety of
products can be produced.
• Operators will become more skilled and competent.
• Full potential of operators can be utilized.
• Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
• Higher cost due to frequent setup changes.
• Higher level of inventory at all levels and hence higher inventory cost.
• Production planning is complicated.
• Larger space requirements.

2. Batch Production: Batch production is defined by American Production and

Inventory Control Society (APICS) “as a form of manufacturing in which the job
passes through the functional departments in lots or batches and each lot may
have a different routing.” (Kumar & Suresh, 2009). It is characterized by the
manufacture of limited number of products produced at regular intervals and
stocked awaiting sales.
Characteristics
Batch production system is used under the following circumstances:
• When there are shorter production runs.
• When plant and machinery are flexible.
• When plant and machinery set up is used for the production of item
 in a batch and change of setup is required for processing the next
batch.
• Whenmanufacturingleadtimeandcostarelowerascomparedtojoborderprodu
ction.
Advantages
Following are the advantages of batch production:
• Better utilization of plant and machinery.
• Promotes functional specialization.
• Cost per unit is lower as compared to job order production.
• Lower investment in plant and machinery.
• Flexibility to accommodate and process number of products.
• Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:
• Material handling is complex because of irregular and longer flows.
• Production planning and control is complex.
• Work in process inventory is higher compared to continuous production.
• Higher setup costs due to frequent changes in setup.
3. Mass Production: Manufacture of discrete parts or assemblies using a continuous
process are called mass production. This production system is justified by very
large volume of production. The machines are arranged in a line or product layout.
Product and process standardization exists and all outputs follow the same path
(Kumar & Suresh, 2009).
Characteristics
Mass production is used under the following circumstances:
• Standardization of product and process sequence.
• Dedicated special purpose machines having higher production
capacities and output rates.
• Large volume of products.
• Shorter cycle time of production.
• Lower in process inventory.
• Perfectly balanced production lines.
• Flow of materials, components and parts is continuous and without any
backtracking.
• Production planning and control is easy.
• Material handling can be completely automatic.
Advantages
Following are the advantages of mass production:
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Less skilled operators are required.
• Low process inventory.
• Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
 • Break down of one machine will stop an entire production line.
• Line layout needs major change with the changes in the product design.
• High investment in production facilities.
• The cycle time is determined by the slowest operation.

4. Continuous Production: Production facilities are arranged as per the sequence

of production operations from the first operations to the finished product (Kumar
& Suresh, 2009). The items are made to flow through the sequence of operations
through material handling devices such as conveyors, transfer devices, etc.
Characteristics
Continuous production is used under the following circumstances:
• Dedicated plant and equipment with zero flexibility.
• Material handling is fully automated.
• Process follows a predetermined sequence of operations.
• Component materials cannot be readily identified with final product.
• Planning and scheduling is a routine action.

Advantages
Following are the advantages of continuous production:
• Standardization of product and process sequence.
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Manpower is not required for material handling as it is completely
automatic.
• Person with limited skills can be used on the production line.
• Unit cost is lower due to high volume of production.
Limitations
Following are the limitations of continuous production:
• Flexibility to accommodate and process number of products does not
exist.
• Very high investment for setting flow lines.
• Product differentiation is limited.
 Figure 1.4. Classification of Production Systems - Adapted from Kumar and
Suresh (2009)

Table 1.7 Agribusiness example: broiler production.

Production Broiler Production in Key Traits
System Kabacan
1. Job Shop 1. Custom fabrication of 1. High product
Production poultry cages, feed variety, low volume;
troughs, or milling skilled operators;
equipment; specialized complex planning;
feed formulation for higher costs due to
specific farms frequent setup
changes

2. Batch 2. Rice milling cooperatives 2. Limited quantities,

Production producing milled rice in produced at
batches; broiler farms intervals; flexible
dressing chickens in machinery; lower
lots; feed mills producing cost per unit than
starter/grower/finisher job shop; higher
feeds work-in-process
inventory

3. Mass 3. Commercial broiler 3. Large volume,

Production integrators supplying standardized
standardized dressed products; dedicated
chicken; corn drying and machines with high
processing plants; ice capacity; shorter
plants for poultry/fish cycle times; lower
preservation unit cost
4. Continuous 4. Large-scale automated 4. Nonstop flow, fully
Production feed mills; coconut/corn automated
oil extraction plants; predetermined
integrated poultry sequence of
processing lines with operations; very
conveyors high efficiency;
limited flexibility,
high investment
required

Interface of Operations Management with Other Functions

Well-designed manufacturing and service operations exploit a company’s
distinctive competencies – the strengths unique to that company – to meet these needs.
Such strengths might be a particularly skilled or creative workforce, strong distribution
networks, or the ability to rapidly develop new products or quickly change production-
output rates (Slack et al., 2013; Stevenson, 2012).
A good operations manager will interface with other functions in order to exploit
the competencies of the organization. Some of the interfaces with other functional areas
in the organization are described below:
1. Operations Management-Marketing Interface. Marketing is responsible for
understanding customer needs, generating and maintaining demand for the
firm’s products, ensuring customer satisfaction, and developing new markets
and product potential. The firm’s strategic positioning and its market
segmentation decisions to a large extent determine the manufacturing and
operations strategy. In addition, marketing is the key information gatekeeper
between operations and the product markets. Marketing determines the kind of
product customer’s value. This starts prior to product development, positioning,
pricing, forecasting and promotions both before and after product launch.
Interdisciplinary co-operation involving operations and marketing decisions go
back over many decades (Slack et al., 2013).

Agribusiness example: Broiler Production (continuation…)

In Kabacan, chicken is the top food choice of on-the-go individuals, usually
sold fried or roasted. This is where marketing seeks to understand the needs
of consumers (local, households, restaurants, schools, hospitals and other
institutions because they would generate demand for fresh and affordable
chicken meat, to ensure customer satisfaction, and to explore new market
segments like processed chicken products or value-added cuts.

With this, the broiler farmers or owners shall consider the following marketing
aspects:
 Table 1.2 Agribusiness example: broiler production.
Strategic Positioning Information Interdisciplinary
Gatekeeping Cooperation
• Emphasize whether • Determine what • Ensure that
to focus on low-cost kind of chicken production aligns
production for mass products with market realities
consumption or customers value (forecasting demand
premium organic most (whole- especially during
chicken for health- dressed chicken, fiestas to assure
conscious cut-ups, or ready- timely logistics
consumers. to-cook packs). coordination, and
anticipating possible
disease outbreak to
adjust customer
communication and
expectations, and
product offering).

2. Operations Management-Finance Interface. Capital equipment, cost-control

policies, price- volume decisions and inventories constitute the interface with
financial decision making. As acquisition and management of assets is an
important part of decision making, finance and operations need to work
together to understand the nature of technology used in operations and the
practice-performance gap in their organization. Tracking performance requires
that the organization develops common, objective platforms for performance
evaluation. Finance provides data on product and service costs that help
managers evaluate operational performance. Operations managers should
have knowledge of financial procedures, limits, and capabilities. The
effectiveness of operational planning and budgeting is often driven by the level
of co-operation between these two areas (Slack et al., 2013).

Table 1.3 Agribusiness example: broiler production.

Capital Cost-control Product Performance
Investments Policies Costing Evaluation
• Fixed capital • Feed • Price-volume • Evaluation
such as efficiency decisions of cost
poultry and balance data on
houses, mortality operation feeds,
feeders, cold reduction capacity with electricity,
storage, etc. (biosecurity financial veterinary
• Working and sustainability. services,
capital such as preventive and labor
health is vital for
 chicks, feeds, mandate), continuous
vaccines, etc. procurement operation.
and input
sourcing,
etc.

3. Operations Management-Design Interface. Shrinking product lifecycles

have been adding to the demands on the product development process. This
is especially true for industries that have a high clock-speed. Launching more
new products faster requires tight integration between the design and
Operations Management functions. Initiatives such as simultaneous
engineering and early supplier involvement in the product design process not
only add to the role of operations but also improve the perception of value
provided in the product and service concept design process (Slack et al.,
2013).

Table 1.4 Agribusiness example: broiler production.

Shrinking Customer Integration Simultaneou Tight
Product Preferences of Design & s Linkage
Lifecycles Operations Engineering
& Supplier
Involvement
• Demand • Town • Ensures • Aligns • Improves
faster customer feasibility product speed of
product s may of new design with product
developmen prefer cut- products available launches
t to keep up ups or within resources and
with ready-to- productio and enhances
changing cook n technology. customer
customer /ready-to- capacity. perceptio
preferences. eat n of value.
chicken.

4. Operations Management-Human Resource Interface. No plant manager

anywhere would ignore the role of good people management in running an
efficient operation. The human resource function includes operation’s
approaches such as continuous improvement and total quality that rely mainly
on human inputs. Decisions about people and the organization of the
operations function interact significantly with both structural and infrastructural
decisions. Such issues are not unique to the operations function, however;
they impact other functions and are dealt with more effectively through the
human resource management function (Slack et al., 2013).

Table 1.5 Agribusiness example: broiler production.

 People Training Continuou Structural Total HR
Managem s and Quality Policies
ent Improveme Infrastruct Manage
nt ural ment
Decisions
• HR • Workers • Programs • Worker • HR • Ensure
ensures trained rely on allocation instills operati
effective in discipline , training account onal
workforc biosecuri d human programs ability goals
e ty, feed inputs for , and and such as
manage manage consistent incentive teamwo low
ment in ment, progress. s are rk mortalit
broiler and shaped across y, high
productio humane by HR. staff. feed
n. handling efficien
improve cy, and
efficienc consist
y. ent
product
quality.

5. Operations Management-Information Systems. Information systems

provide, analyze, and co-ordinate the information needs of operations. The
distributed processing environment and the growth and evolution of Enterprise
Resource Planning (ERP) systems for the organization have a direct impact
on operations. It allows organizations to generate relevant information and
make appropriate information available when needed. The operational plans
become the driver of all business planning including recruiting, cash flows, and
marketing promotions. With Computer Integrated Manufacturing (CIM)
systems IT plays a very important role (Slack et al., 2013; Stevenson, 2012).

Table 1.6 Agribusiness example: broiler production.

ERP Real-time CIM Systems System Digital Tools
Systems Data Integration
• Track • Support • Automate • Links finance • Apps and
feed decision- processing (cash flows), cloud-based
inventory, making and lines for HR farm
flock demand consistent (scheduling), management
growth, forecasting. dressing and software
mortality, and marketing enhance
and sales packaging. (promotions). efficiency
orders. and
transparency.
Recent Trends in Operations Management
Many recent trends in production/operations management relate to global
competition impacting manufacturing firms (Slack et al., 2013; Stevenson, 2012). Some
of the recent trends are:
1. Global Market Place: Globalization of business has compelled many
manufacturing firms to have operations in many countries where they have certain
economic advantage. This has resulted in a steep increase in the level of
competition among manufacturing firms throughout the world.

Agribusiness example:
• San Miguel Foods exporting processed chicken and feed products to
neighboring ASEAN countries. Global competition pushes Philippine firms
to meet international standards in food safety and packaging.

2. Operations Strategy: More and more firms are recognizing the importance of
operations strategy for the overall success of their business and the necessity for
relating it to their overall business strategy.

Agribusiness example:
• Universal Robina Corporation (URC) aligning its operations strategy with
global expansion in snack foods and beverages.

3. Total Quality Management: TQM approach has been adopted by many firms to
achieve customer satisfaction by a never-ending quest for improving the quality of
goods and services.

Agribusiness example:
• Vegetable farmers (Triple-P Farm) and poultry integrators are adopting
ISO-certified quality systems.

4. Flexibility: The ability to adapt quickly to changes on volume of demand, in the

product mix demanded, and in product design or in delivery schedules, has become
a major competitive strategy and a competitive advantage to the firms. This is
sometimes called Agile Manufacturing.

Agribusiness example:
• Local broiler farmers in Cotabato are adjusting production volumes during
Christmas season.

5. Time Reduction: Reduction in manufacturing cycle time and speed to market for
a new product provides products at the same price and quality. Quicker delivery
provides one firm competitive edge over the other.
 Agribusiness example:
• Jollibee Foods Corporations reduces cycle time in its supply chain to deliver
fresh chicken products faster.

6. Technology: Automation, computerization, information and communication

technologies have revolutionized the way companies operate. Technological
changes in products and processes can have great impact on competitiveness
and quality, if the advanced technology is carefully integrated into the existing
system.

Agribusiness example:
• Bounty Fresh Chicken using automated climate-controlled poultry houses
and ERP systems (Bounty Fresh Food, Inc., 2024). Integration of ICT and
automation improves efficiency and competitiveness against global poultry
producers.

7. Worker Involvement: The recent trend is to assign responsibility for decision

making and problem solving to the lower levels in the organization. This is known
employee involvement and empowerment.

Agribusiness example:
• Cooperatives in Kabacan, Cotabato empower farmers to make decisions
on feed formulation and marketing strategies.

8. Re-Engineering: This involves drastic measures or break-through

improvements to improve the performance of a firm. It involves the concept of
clean-slate approach or starting from scratch in redesigning the business
processes. i.e., BPR Business Process Re-engineering.

Agribusiness example:
• Philippine Airlines (PAL) re-engineer its cargo operations to handle
agribusiness exports more efficiently.

9. Environmental Issues: Today’s production managers are concerned more and

more with pollution control and waste disposal which are key issues in protection
of environment and social responsibility. There is increasing emphasis on reducing
waste, using less toxic chemicals and using biodegradable materials for
packaging.
Agribusiness example:
• Nestlé Philippines and San Miguel Brewery are adopting waste reduction
and biodegradable packaging.
• Poultry farms in Mindanao implement waste-to-energy systems using
chicken manure.

10. Corporate Downsizing: Downsizing or right sizing has been forced on firms to
 shed their obesity. This has become necessary due to competition, lowering cost,
productivity, need for improved profit and for higher dividend payment to
shareholders.

Agribusiness example:
• Sugar mills in Negros downsize operations to remain competitive against
imported sugar.

11. Supply Chain Management: Management of supply chain, form suppliers to final
customers reduces the cost of transportation, warehousing and distribution
throughout the supply chain.

Agribusiness example:
• Del Monte Philippines manages its pineapple supply chain from Bukidnon
plantations to global markets.

12. Lean Production: Production system has become lean production system which
uses minimal amounts of resources to produce a high volume of high-quality
goods with workforce to have advantages of both mass production and job
production.

Agribusiness example:
• Feed mills adopt lean system to minimize waste and maximize output by
milling feed strictly based on real-time farm demand cycles, and eradicating
idle time during lab testing and quality assurance validation.
References:

Bounty Fresh Food, Inc. (2024). Bounty’s best practices for biosecurity in poultry.
[Link]

Kumar, S. & Suresh N. (2009). Operations Management. New Age International (P) Ltd.,
Publishers. New Delhi. Retrieved from
[Link]
ment%2 0-%20Kumar%20A%20A%20and%20Suresh%[Link]?sequence=1

Lovely Professional University. (2012). Production and Operations Management.

Retrieved from
[Link]
[Link]

Slack, N., Brandon-Jones, A. & Johnston, R.2013. Operations Management. 7th Edition.
Pearson Education Limited. Retrieved at
[Link]
nt_by_slack_nigel_7th.pdf

Stevenson, W. J. (2012). Operations management (11th ed.). McGraw-Hill/Irwin.

[Link]
edition-shuvo--5cf6d512051d3