Production Management

IntroductionProduct

For a Consumer : combination of or optimal mix of potential utilities.

For a Production Manager : combination of various surfaces and processes.

For a Financial Manager : mix of various cost elements.

For a Personnel Manager : product is a mix of various skills.

IntroductionProduct:

Often standardized in large volumes.

Plant and machinery have a finite capacity.

Involve fixed costs, variable costs and materials costs.

Product is a store of values added during manufacturing.

Productivity can be measured with certain degree of accuracy ascosts are measurable.

Product can be transported to the markets and stored physicallyuntil it is sold.

IntroductionService:

Produced and consumed in the presence of the customer.

Cannot store the service physically.

Capacity must be sufficiently or consciously managed to accommodate a highly variable demand.

Cannot be easily standardized.

Uncertainty with respect to capacity and costs.

Calculation of cost and productivity is difficult.

IntroductionProject:

Does not produce standardized products.

Plant, Machinery, Men and Materials are often brought to project site and the project is completed.

Costs can be calculated and allocated to the project with considerable accuracy

Productivity can be measured.

Introduction.Production

`production' has been associated only with a factory like situationwhere goods are produced in the physical sense. Factory has beendefined as any premises in which persons are employed for thepurpose of making, altering, repairing, ornamenting, finishing,cleaning, washing, breaking. demolishing or adopting for sale, anyarticle".

Thus production is a "process through which goods and services are created."

Introduction..In other words production is :

Making of both products and services

Includes both manufacturing and service organisations

Brings together people, machines any

Goods or services are made to satisfy the wants of the people

The process of changing inputs into outputs and thereby adding value to some entity; this constitutes the primary function of virtually every organisation"

IntroductionTypes of production

Production by Disintegration: By separating the contents of inputthe desired products are produced. e.g. crude oil

Production by Integration: Various Components of the productsare assembled together to get the desired product. e.g. chair

Production by Service: Properties of materials are improvedwithout any physical change. The example for this is Heat Treatmentof metals.

In real world, a combination of above methods is used.

ManagementManagement can be explained as an art or science, (in fact it is acombination of art and science) of getting things done by the people,by planning, coordinating, organizing, directing and controlling theactivities to meet specified goals, with in the frame work of agreedpolicies.

Operations ManagementConversion of inputs into outputs, using physical resources, so as toprovide the desired utility/utilities of form, place, possession or stateor a combination there-of to the customer while meeting the otherorganizational objectives of effectiveness, efficiency and adaptability.

Its primary concern is conversion by using physical resources which distinguishes it from other functions.

Value Added ProcessThere are four major ways:

Alter: change in the form or state of the inputs which could bephysical as in manufacturing, or sensual or psychological such as thefeeling of comfort or satisfaction after getting cured from an illness.

Transport: The entity gets value added through transport becauseit may have more value if located somewhere other than where itcurrently is. Entity may include people, goods or even garbage.

Value Added Process Store: The value is enhanced if the entity is kept in a protectedenvironment for some period of time, such as potatoes in coldstorage or food grains in warehouses.

Inspect: The value of an entity may be enriched through aninspection as we better understand its properties and can thereforetake more informed decisions regarding their purchase, use, repairetc.

Production ManagementProduction management is defined as management function whichplans, organizes, coordinates, directs and controls the materialsupply and Processing activities of an enterprise, so that specifiedproducts are produced by specified methods to meet an approvedsales programme. These activities are being carried out in such amanner that Labour, Plant and Capital available are used to the bestadvantage of the organization.

or

The performance of the management activities with regards toselecting, designing, operating, controlling and updating productionsystem.

Production Management.It is the processes of effectively planning, coordinating andcontrolling the production, that is the operations of that part of anenterprise, it means to say that production and operationsManagement is responsible for the actual transformation of rawmaterials into finished products.

or

Production management is a function of Management, related toplanning, coordinating and controlling the resources required forproduction to produce specified product by specified methods, byoptimal utilization of resources.

Objectives to produce the desired product or specified product by specified methods so that the optimal utilization of available resources is met with.

to produce the desired product, which has marketability at thecheapest price by proper planning, the manpower, material andprocesses

deliver right goods of right quantity at right place and at rightprice.

Criteria of PerformanceEffectiveness : optimality in the fulfillment of multiple objectiveswith a possible prioritization within the objectives. Refers to doingright things that is seven rights, they are:

Right operation Right Quantity

Right Quality Right Supplier

Right Time Right Place

Right Price

Criteria of PerformanceEfficiency : productive utilization of resources

Customer satisfaction : must necessarily satisfy many more customers

In short effectiveness and efficiency is measured by: Cost

Quality

Dependability

Reliability

Benefits of Efficient Production Management Consumer : better quality products at right place, at right price, atright time, in desired quantity and of desired quality.

Investors : Increased security for their investments, adequatemarket returns, creditability and good image in the society.

Employee : adequate Wages, Job security, improved workingconditions and increased Personal and Job satisfaction.

Suppliers : confidence in management

Community & Nation : economic and social stability because ofincreased productivity and healthy industrial atmosphere.

Functions of Production Management Materials: The selection of materials for the product based onknowledge of materials and their properties. Research on materialsis necessary to find alternatives to satisfy the changing needs of thedesign in the product and availability of material.

Methods: Finding the best method for the process, to search forthe methods to suit the available resources, identifying the sequenceof process.

Machines and Equipment: Selection of suitable machinery for theprocess desired, designing the maintenance policy and design oflayout of machines.

Functions of Production Management Estimating: To fix up the production targets and delivery dates andto keep the production costs at minimum.

Loading and Scheduling: Drawing the time table for variousproduction activities i.e. specifying when to start and when to finishthe process required. It also has to draw the timings of materialsmovement and plan the activities of manpower. The scheduling is tobe done keeping in mind the loads on hand and capacities offacilities available.

Routing: The Routing consists of fixing the flow lines for variousraw materials, components etc., from the stores to the packing offinished product.

Functions of Production Management Dispatching : The Production Management department has toprepare various documents such as Job Cards, Route sheets, MoveCards, Inspection Cards for each and every component of theproduct. These are prepared in a set of five copies. The activities ofthe shop floor will follow the instructions given in these documents.Activity of releasing the document is known as dispatching.

Expediting or Follow up : involves comparing actual productionprocess with planned and to get feedback on work progress. Thishelps the management to evaluate the plans.

Functions of Production Management Inspection : inspection is generally concerned with the inspectionactivities during production, but a separate quality controldepartment does the quality inspection.

Evaluation : it involves evaluating the work done by thedepartment and its contribution in fulfilling the departmental andcorporate objectives. This is necessary for setting up the standardsfor future.

Production Function

Types of Production SystemsThe organization of manufacturing systems, planning and control of production greatly depends on three main factors:

Type of production i.e., quantities of finished products and regularity of manufacture e.g. whether Job production or Batch Production or Continuous Production.

Size of the Plant i.e., Small Industry, Medium sized Industry or Large Industry.

Types of Production SystemsIn general there are three classifications in types of ProductionSystem.

Job Production: products are manufactured to meet therequirements of a specific order. The quality involved is small and themanufacturing of the product will take place as per the specificationsgiven by the customer. Example Tailor shop. This system may befurther classified as. Job produced only once: the order is prepared as per specifications of

the customer and the firm generally plan for material, process andmanpower only after receiving the order from the customer. The firmshave no scope for pre-planning the production of the product.

Types of Production Systems The job produced at irregular intervals: Though the order is repetitive

yet the timings of order is not fixed therefore the planning for materials,process and manpower will start only after taking the order from thecustomer.

The jobs produced periodically at regular intervals: In this system, theorders for the same type of product is placed at regular intervals.Therefore the firm can plan for materials, process and manpower. If thevolume of the order is considerably large and the number of regularlyvisiting customers are large in number, the Job Production systemslowly transform into Batch Production system.

Types of Production Systems Batch Production: Batch Production is the manufacture of numberof identical products to meet the specific order. Example Readymadedress production.This system also can be classified under threecategories. Batch produced only once: It is similar to job production with only

exception about the size of the order. The firm has to plan for theresources after taking the order from the customer.

Batch produced at irregular intervals as per customer order or whenthe need arises: As the frequency is irregular, the firm can maintain afile of its detailed plans and it can refer to its previous files and startproduction.

Types of Production Systems Batch Produced periodically at known Intervals: Here the firm either

receives order from the customer at regular intervals or it may producethe product to satisfy the demand. In such situation the firm can plan itsproduction well in advance. As the frequency of regular orders goes onincreasing the Batch Production system becomes Mass ProductionSystem. Here also, incase the demand for a particular product ceases,the plant and machinery can be used for producing other products withslight modification in layout or in machinery and equipment.

Types of Production Systems Continuous Production: Continuous Production system is thespecialized manufacture of identical products on which themachinery and equipment is fully engaged. The continuousproduction is normally associated with large quantities and with highrate of demand. Hence the advantage of automatic production istaken. Example industrial product & oil refinery. This system isclassified as Mass Production: same type of product is produced to meet the

demand of an assembly line or the market. This system needs goodplanning for material, process, maintenance of machines andinstruction to operators. Purchases of materials in bulk quantities isadvisable.

Types of Production Systems Flow Production: The difference between Mass and Flow Production is

the type of product and its relation to the plant. In Mass Productionidentical products are produced in large numbers. If the demand falls orceases, the machinery and equipment, after slight modification be usedfor manufacturing products of similar nature. In flow production, theplant and equipment is designed for a specified product. Hence if thedemand falls for the product or ceases, the plant cannot be used formanufacturing other products. It is to be scraped.

Characteristics of Intermittent and Continuous Manufacturing System

ParticularsIntermittent production system (job and batch

production)Continuous production system (mass and flow

production)

Type of plant layout

Process layout is most suitableProduct layout designed according to a processseparate line for each product is considered.

Type of machine

As it necessitate frequent changes in themachine set-up required by the specification ofeach order, general purpose machines are moresuitable. Also they have good flexibility. In batchproduction special purpose machines automaticand semi-automatic machines are used

As production flow is permanently in the form ofproduct line, automatic or special purposemachines are used. In flow productionspecialized machines are used.

Type of labour Pre-supposed frequent changes in productdesign and machine setups require highly skilledlabour. Repair and maintenance of machines areto be done by these labourers.

The manufacturing activity becomes a routinefunction and as the machines are designed tosuit the process required for product andautomatic in nature. Unskillful or semi-skilledlabour is required. A specialized team of plantmaintenance staff looks after the repair andmaintenance of machines

ParticularsIntermittent production system (job and batch

production)Continuous production system (mass and flow

production)

Number of products & product design

Wide range of products are manufactured insmall quantities. The product design changesfrom lot to lot as per the product specification.Each lot produced in small size.

Few/one standard products/product ismanufactured in large quantities. Usually theproduct line is designed to one or two productsof standard specification.

Changes in machine set-up

The machines are to set according to therequirements of each order, frequent changes inmachine setup is a common phenomenon.

The set up of machines remains unchanged for alonger period. The standard products aremanufactured in a continuous flow.

Nature and size of orders

Generally the size of orders is small and they arenot repeated. The orders are for nonstandardised products. The order may involvethe production of single product or products inlimited lot. Usually the production is doneaccording to first-in-first-out principle. Firstorders are received and then they are translatedinto production.

Generally the production is carried on for stock.The production of standardised products is thenature of this type of production. Products areproduced in anticipation of demand. The size ofthe order is large. Same type of product isproduced in every cycle to satisfy the demand.

Characteristics of Intermittent and Continuous Manufacturing System

ParticularsIntermittent production system (job and batch

production)Continuous production system (mass and flow

production)

Investment on machines & equipment

As the machines are arranged in process layoutand general purpose machines are required forJob production, the investment is comparativelyless. For batch production as automatic andsemi-automatic machines are involved theinvestment will be higher than job production.

The machines are arranged according to processlayout and because of this duplication ofmachines is fairly high. The machines are fullyautomatic, the cost is higher than intermittentproduction.

Investment on inventories

Since operating cycle takes more time and it isnecessary to have standard materials for longperiod hence inventory cost per product isconsiderably large.

Bulk purchase of materials is done at periodicintervals. Due to continuous process, less inprocess inventory exists hence material cost perproduct is less.

Material handling cost

Material handling per product is costlierbecause of long distance handling (manual) andbacktracking.

Due to mechanised material handling, materialhandling cost per product is less.

Plant maintenance

Separate department desirable Essential to have dedicated department to avoidstoppage of production.

Characteristics of Intermittent and Continuous Manufacturing System

ParticularsIntermittent production system (job and batch

production)Continuous production system (mass and flow

production)

Balancing of production capacity

Due to different products and different types ofmachines with different capacity blocks,possibility of imbalance in plant capacity occurs.

The chances of imbalance in plant capacity isvery much less.

Production planning &control

The functions of routing, scheduling and loadingbecomes relatively complicated due to odd sizeof order, non-repetitive nature of the order,different delivery dates, etc., productionplanning and control is complicated.

The function of routing, scheduling and loadingare carried on smoothly due to standardisedproducts, rated capacity. Here productionplanning and control is simpler.

Characteristics of Intermittent and Continuous Manufacturing System

Production and Operations System

Production CycleThe production cycle starts from Market Research. Market researchreveals consumer preferences and needs. The marketing departmentwill transfer this information to the design department. The designdepartment basing on the information received from marketingdepartment designs the product to fulfill consumer needs andsupplies design specifications and drawings to productiondepartment. The production department verifies whether theproduct can be manufactured with the technology and skill availablein the firm. If yes it will give the acceptance. Otherwise theProduction Manager, Design engineer and Marketing Manager,discuss together and make alterations in the product, withoutsacrificing the customer needs.

Production CycleOnce this is done the design department conduct the market surveyand analyze the demand and submits its sales programme to the topmanagement. The top management after going through theproposals sanctions the budget and gives green signal forproduction. Production department produces a trial run and salesdepartment release the product in the test markets to get consumeracceptance sells the products. Meanwhile, the productiondepartment prepares the detailed production plans and productionscheduling. After getting the acceptance from the marketingdepartment, actual production of product starts to meet themarketing programme

Production Cycle

Questions???