Production is the process of getting a good or a service to the customer; it is a series of related activities, with value being added at each stage. Companies are in business to provide a service or a good to consumers. The more efficiently a company can produce and deliver the product or the service, the greater the profit it will generate.

Although the U.S. manufacturing industry has been declining over the years, it still generates a major portion of the U.S. GDP. Moreover, manufacturing uses services and commodities as inputs, so manufacturing is actually responsible for a bigger share of total output.

The service industry is important to the U.S. economy and accounts for nearly 75 percent of the U.S. GDP and about 80 percent of jobs. Service businesses range from small start-ups and home-based businesses to large corporations that are represented on the DJIA.

Despite the push to outsource and offshore jobs and manufacturing to low-cost locations, the U.S. manufacturing industry is still globally important. The United States is still the leading industrial power in the world. Even though the nation does not manufacture as many low-dollar products as it used to, the nation continues to manufacture a lot of high-dollar products and is the world’s third-largest exporter of goods and services.

Production management refers to the planning, implementation, and control measures used to convert resources into finished products. These activities are similar to those in operations management but are more focused on the product.

When starting the production process, one of the first decisions that operations managers make is what needs to be manufactured and what needs to be purchased from outside suppliers. This is commonly called a make-or-buy decision.

Mass production is the method of producing large quantities of goods at a low cost. The benefits of mass production include low cost, decreased production time, and virtually no human error as a result of the reliance on machinery. A major disadvantage is that mass production is inflexible, making it difficult to alter the process if an unexpected problem occurs.

Mass customization is the production of goods or services tailored to cost effectively meet customers’ individual needs. Mass customization is achieved with a flexible manufacturing system (FMS), a system in which machines are programmed to process different part types simultaneously—allowing a manufacturer to mass-produce customized products. The primary benefit of an FMS is that it provides the flexibility to make products with many slight variations. A challenge of an FMS is that it is not well suited for goods that are in high demand.

Lean production is a set of principles concerned with reducing waste and improving flow. The basic tenet of lean production is to do more with less through the elimination of wasteful overproduction, unnecessary wait time, needless transportation, excess inventory, superfluous motion, redundant overprocessing, and careless defective units.

Operations management consists of managing the activities and processes to produce and distribute products and services. Operations management includes how the facility should be organized, what supplies to purchase, what materials and inventory to keep on hand, and how quality is measured and controlled.

When determining a location for a facility, companies consider their proximity to market, the cost of transporting raw materials, the presence of highways and other transportation systems, and utilities, hazardous waste disposal, labor availability, living conditions, and laws and regulations.

Facility layout refers to the physical arrangement of resources and people in the production process and how they interact. The design of a facility’s layout is important to maximize efficiency and satisfy employees’ needs.

Although operations management has been traditionally associated with manufacturing goods, many of the concepts also apply to the service industry.

Robots offer consistency in reducing production costs, raising productivity, and producing high-quality products.

Computer-aided design (CAD), computer-aided manufacturing (CAM), and computer-integrated manufacturing (CIM) have dramatically improved the process of producing goods by reducing the time between design and manufacturing, thus making a significant impact on productivity. These systems have also increased the scope of automated machinery in the production process.

The social networking structure of the Internet, along with hardware and software tools, has created a ready-made distribution system for more creative consumers who want to “have it their way.” Beyond design, social media capabilities enable consumers to directly influence what companies develop and produce as well as to give instant feedback on whether their initiatives are worthwhile.

Effective scheduling can help managers control the production process. Gantt and PERT charts are scheduling tools to ensure that all the right tools are working on the right jobs at the right times.

Purchasing is the task of acquiring the materials and services needed in the production process. In doing so, production managers must find reliable suppliers who can provide high-quality resources at the best price.

Inventory control includes the receiving, storing, handling, and tracking of everything in a company’s stock, from raw materials to finished products. A just-in-time (JIT) inventory control system keeps the smallest amount of inventory on hand as possible, and everything else that is needed is ordered so that it arrives when it is needed.

Quality control is the use of techniques, activities, and processes to guarantee that a certain good or service meets a specified level of quality.

Total quality management (TQM) involves every factor in producing high-quality goods—management, customers, employees, and suppliers. At any point, employees and leaders are aiming to produce high quality.

The ISO has created worldwide standards of quality for goods and services. ISO standards apply not to the products themselves but to the production methods and systems used to manufacture them as well as to other areas, such as communication within a company and leadership.

Supply chain management is the management of activities from all organizations involved in the production process. The goal of supply chain management is to maximize value and achieve a sustainable competitive advantage. Supply chain management is important to improve efficiencies not only within the organization but also among all the components of the production and distribution process.

A supply chain is made up of information and communication systems that work together to coordinate the path of the product and its components from raw material to finished product delivered to the consumer.