Operations Management vs. Production Management — What's the Difference?
By Tayyaba Rehman — Published on October 7, 2023
Controllable Costs can be influenced or altered by organizational actions, while Non Controllable Costs cannot be changed or affected by such endeavors.
Difference Between Operations Management and Production Management
Table of Contents
ADVERTISEMENT
Key Differences
Controllable Costs involve those expenditures over which an entity or manager has the authority and capacity to manage or manipulate. In contrast, Non Controllable Costs designate those expenditures over which an entity or manager does not possess the ability to exert influence or induce change. Controllable Costs have the distinct quality of being adjustable, and decisions can alter their magnitude or presence, providing a degree of flexibility in financial management. Non Controllable Costs, however, remain rigid in their application and magnitude, presenting them as a constant that must be accommodated in financial planning and management.
In a business scenario, Controllable Costs may encompass items like office supplies, which can be regulated by managing usage and purchasing. Conversely, Non Controllable Costs in a business scenario might include fixed lease payments, which stand immutable despite managerial strategies or decisions. Controllable Costs hence become a strategic tool, enabling managers to optimize and navigate towards financial efficiency. Non Controllable Costs become a consistent factor, mandating tactical planning to safeguard financial health while accommodating these inflexible expenditures.
Considering project management, Controllable Costs might comprise optional resource allocation or adjustable resource usage. Non Controllable Costs within project management might be regulatory fees or licensing costs that are mandatory and unalterable. Controllable Costs in projects allow managers to make tactical decisions regarding resource deployment, possibly enhancing economic efficacy. Non Controllable Costs necessitate stringent planning and budget adherence, ensuring the project can sustain these unalterable expenditures without jeopardizing financial stability.
In a manufacturing unit, Controllable Costs might be related to operational efficiency, like energy usage, which can be optimized with strategic decisions. Non Controllable Costs might pertain to mandatory compliances or certifications, which are non-negotiable and must be incurred. Controllable Costs in manufacturing facilitate the unit to augment profitability through meticulous resource management and decision-making. Non Controllable Costs impose a fixed expenditure, necessitating strategic budgeting to ensure these costs do not destabilize the unit’s financial standing.
In a retail context, Controllable Costs may pertain to inventory purchasing, which can be modified based on sales patterns and forecasts. Non Controllable Costs in a retail context could be municipal permits or licenses, fixed in nature and unaltered by retail decisions or strategies. Controllable Costs afford the retailer an ability to navigate through economic variations by adapting purchasing and operational strategies. Non Controllable Costs require an embedded strategy to ensure that their constant presence does not impede the retailer's financial fluidity or stability.
ADVERTISEMENT
Comparison Chart
Definition
Costs that can be altered or influenced
Costs that cannot be changed or influenced
Example
Advertising expenditure
Property taxes
Nature
Flexible and manageable
Rigid and consistent
Managerial Impact
Can be regulated through strategic decisions
Not influenced by managerial actions
In Business Planning
Act as a variable in budget planning
Considered as a fixed cost in budget planning
Compare with Definitions
Operations Management
Financial outflows adjustable through tactics.
Utilizing energy-efficient machines reduced controllable costs.
Production Management
Fixed costs not minimized by actions.
Property taxes remained a steadfast non controllable cost.
Operations Management
Expenses subject to managerial influence.
Efficient labor management optimized controllable costs.
Production Management
Expenditures impervious to managerial influence.
Licenses and permits constituted significant non controllable costs.
Operations Management
Costs altered by strategic actions.
Modifying suppliers lowered the controllable costs.
Production Management
Costs unaltered by strategic decisions.
Rent remained a constant non controllable cost.
Operations Management
Expenditures manageable by decisions.
Adjusting the advertising budget reduced the controllable costs.
Production Management
Financial obligations not subject to change.
Depreciation was considered a non controllable cost.
Operations Management
Costs that can be minimized by planning.
Bulk purchasing strategies minimized the controllable costs.
Production Management
Expenses that remain constant, unaffected by tactics.
Regulatory fees were consistent non controllable costs.
Common Curiosities
Can non controllable costs become controllable?
Typically no, non controllable costs are characteristically rigid and not influenced by organizational actions.
How do controllable costs affect profitability?
Efficient management of controllable costs can optimize profitability through strategic allocation and usage of resources.
What are controllable costs?
Controllable costs are expenses that can be managed, altered, or influenced by organizational actions or decisions.
Is rent a non controllable cost?
Typically, yes, as rent agreements fix the cost, making it not subject to organizational influence.
How can controllable costs be managed effectively?
Through strategic planning, budgeting, and operational adjustments, controllable costs can be effectively managed.
What are non controllable costs?
Non controllable costs are those costs that cannot be altered, reduced, or influenced by organizational decisions or actions.
Can controllable costs be converted to non controllable costs?
No, controllable costs inherently remain alterable through managerial actions.
Can non controllable costs be planned for?
Yes, non controllable costs should be planned for in budgeting due to their fixed and consistent nature.
How do non controllable costs impact financial planning?
Non controllable costs necessitate meticulous planning to accommodate their consistent presence without jeopardizing financial stability.
Are non controllable costs variable costs?
Not necessarily, non controllable costs can be fixed costs like rent or licenses which do not vary with production levels.
Are employee salaries controllable costs?
Yes, to an extent, as management can decide on levels, increments, and bonuses, making it a controllable cost.
Should controllable costs be closely monitored?
Yes, since controllable costs can be altered, they should be monitored to ensure optimal utilization and expenditure.
Are all variable costs controllable costs?
Not always, some variable costs may not be subject to organizational influence and thus not controllable.
Can controllable costs be avoided?
Some may be avoidable or minimized through strategic decisions and operational adjustments.
Are non controllable costs always operational?
No, non controllable costs can be operational or non-operational, like certain taxes or regulatory fees.
Share Your Discovery
Previous Comparison
Direct Labor Cost vs. Indirect Labor Cost
Next Comparison
Print Media vs. Electronic MediaAuthor Spotlight
Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
