PRODUCTION MANAGEMENT

PRODUCTION AND PRODUCTION MANAGEMENTProduction 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 economists define production as an activity by which form utility is created or enhanced. For example, the iron ore exists in the nature. It will be converted into steel by a chemical process, which is put to various uses like, making bars, pipes, angles, channels etc. Thus production is a value addition process. At each stage of processing, there will be a value addition.Edward Buffa defines production as ”a process by which goods and services are created”Edward Buffa defines production management as follows:Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specification, in the amounts and by the schedule demanded and at minimum cost.

OPERATION MANAGEMENTOperation is often defined as a transformation process. The transformation process itself can be viewed as a series of activities along the value chain extending from supplier to customer. Operation management may be defined as a process which combines and transforms various resources used in the production operations subsystem of the organization into value added products/services in a controlled manner as per the policies of the organization.A set of various activities which are involved in manufacturing certain products is named as ‘Production Management’ if the same concept is extended to service management, then the set of various management activities are called “Operation Management” In general the concept of manufacturing products/offering services is called Production/Operation Management.The activities of Production/Operation management include organizing work, selecting processes, arranging lay out, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory and planning production.Production management is more used sor systems where tangible goods are produced. Operation management is more used where various inputs are transformed in to intangible services. Viewed from this perspective, operation management will cover such service organizations as banks, airlines, utilities, pollution control agencies, super bazaars, educational services etc in addition to manufacturing enterprises.

PRODUCTION as a SYSTEMThere are three systems 1) Production system 2) Conversion sub system 3) Control sub system1 Production System A system whose function is to convert a set of inputs into a set of

desired outputs2 Conversion sub system A sub system of the larger production system where inputs are

converted into outputs3 Control sub system A subsystem of the larger production system where a portion of the

output is monitored for feed back signals to provide corrective action, if required

The production system is a part of a larger system- the business firm..The production system can be viewed as a frame work of activities within which the creation of value can occur. Briefly the difference between the value of inputs and the value of output represents the value created through production activitiesAt one end of the production system .are the inputs and the other end-outputs. connecting the inputs and outputs are a series of operations or processes, storage and inspections.

(1)INPUTSMENMATERIALSMACHINESMONEY

INFORMATIONENERGY

(2)CONVERSION PROCESS PROVIDED NEEDED ADJUSTMENTS OUTPUT IS MONITORED ACTUAL VS DESIRED IS COMPARED

(3) OUTPUT GOODS

OR SERVICES

The production system of an organization is that part which produces the organization’s products. Production is the basic activity of all organizations and all other activities revolve round production activity. The output of production is the creation of goods and services which satisfy the needs of the customer.

PRODUCTION FUNCTIONA function is the relationship among a number of variables. The value of one variable depends upon the value of the otherProduction function is concerned with the creation of a product. It establishes the relationship between the quantity of output furnished or given out by a productive process and quantities of different inputs used in the process A product function that involve a wide range of activities like plant location, production planning and control. Research, development etc. The function of production personnel are

Forecasting the demand for the products and using the forecast to determine the requirements of various factors of production

Arranging the procurement of required factors of production Arranging for the services such as maintenance, storekeeping, material handling, inspection and

quality control etc that would be required to attain the targeted level of production. Utilizing effectively the factors of production and service facilities available to produce the required

product. Reducing rejection rate, minimizing re-work, maintaining delivery schedules, controlling idle machine

and man hours Controlling overtime, eliminating accidents, good house keeping Controlling absenteeism, effective grievance handling, effective training, enhancing customer

satisfaction, Total Quality Management Automation

NEED OF PRODUCTION FUNCTION

Competitive advantages of companies is highly talked about these days. It is believed, that a firm, strong in competitive advantages, is well poised to succeed whatever may be the constraints or restraints, firms look to production to achieve competitive advantage.

Production function can offer competitive advantage to a firm in the following areas.Shorter new -product lead time.Inventory controlShorter manufacturing lead time.Higher qualityGreater flexibilityBetter customer serviceReduced wastage

Many causes that deny competitive advantages to any firm can be attributed manufacturing function-specially to poor quality and reliability, delayed deliveries, high production costs and lack of adequate inventory at the

right time. It may be stated that that the production function offers vast scope for achieving productivity with effective management of materials and lead time and better control on cost

OBJECTIVES OF PRODUCTION MANAGEMENTProduction is an organized activity and the objective is stated asTo [produce goods and services of right quantity and quality at predetermined time and pre established costThus objective of production management are reflected in

Right quality Right quantity Predetermined time Pre established cost

To achieve the above objective, the production departments have to make the optimum utilization of various inputs like men, material and machine. These objectives are called intermediate.objectives.Production management aims at satisfying the needs of the customers through offering organizations products/services

TYPES OF PRODUCTION

Basically the production system can be categorized as Make to stock production Make to order Assemble to order

MAKE TO STOCK- The manufacturer stocks the finished goods in inventory for immediate shipment. This system ensures immediate delivery of goods. Examples are bearings, ready to wear garments, television, motors etc etc . in this system, customer will not accept delay in delivery and the management required to keep adequate stock of finished products. Operation management focuses entirely on replenishment of inventory. The main advantage of this system is short delivery time. Situations required for this system are

Fairly constant and predictable demand Products are few and they are standardized. Shorter delivery time expected by customers Products having higher shelf life

Make the stock items are generally mass consumed and proper details or foretasted demand, requirements, opening inventory are required

MAKE TO ORDER- Some companies make products after the receipt of firm order from customer. Make to order is a demand responsive strategy and examples are custom tailored cloths special machinery and product made to customers specification. Situations are,

Products are made to customer specifications Customer can wait till the material is ready Product is expensive and non standard to store

ASSEMBLE TO ORDER- Here the customer is not ready to wait until product is made. Manufacturers produce and stock the standard component parts, when customers place order the customer does the assembly from the selected components. Only assembly time is required here. Examples are computers and consumer electronics.

Based on volume of production, production system is further classified asJob workBatch or intermittent productionContinuous productionMass productionCellular production

JOB ORDER- job order type production applies to situations where products are to be manufactured against

specific requirements of the customer. The production shop usually has all facilities needed for that category of jobs It should have skilled workmen High varieties of products and low volume Jobs are mostly of similar in nature. Eg. Sheet metal job shop does only sheet metal work.

ADVANTAGES. Investment is comparatively less Manpower requirement is less Overhead expenses are less Operators will become more skilled and competent that each job gives him learning opportunity and

therefore utilization of full potential of operators

LIMITATIONS High dependence on the skill of workmen Need close supervision and management Some machines will be under utilized Delayed payment from customers will affect the business

BATCH PRODUCTIONIn batch production, the job pass through the functional departments in lots or batches and each lot may have a different routing. Batch production aims at satisfying the continuous customer demand for an item.. however, the plant is capable of production rate that exceeds demand rate.

Characteristics Shorter production runs Plant and machinery set up is used for the production of items in a batch and set up required to be

changed for processing next batch of items

ADVANTAGES Amount of supervision required is less compared to job order Lower investment in plant and machinery Batch size can be increased for larger orders increasing profit. Better utilization of plant and machinery Job satisfaction exists for operators Promotes functional specializationLIMITATIONS Material handling is complex because of irregular flows Production planning and control will be more complex Work in process inventory is higher compared to continuous production Longer production times Higher set up costs due to frequent changes in set upCONTINUOUS PRODUCTIONThe production is a continuous process Eg Cement, refinery, fertilizers etc. investment will be very high and specified machinery and equipments are required. The throughput capacity of the line decides the production capacity of the plant. The production process cannot be normally stopped. Once stopped, it is expensive and time consuming to restart the process. Preventive maintenance is very important and a breakdown of any one of the equipment will stop the entire production. Operator skill requirement is less. Product quality is built into production process, high investment is required to increase the capacity even marginallyADVANTAGES

Cost of production per unit is low. Production and quality control are automatic Manpower requirement is less

DISADVANTAGES Require large investment

Production cannot normally be stopped or reduced if market off take is low Restarting will be expensive and time consuming Preventive maintenance is very important. Breakdown of one equipment lead to temporary disruption of the process Production volume cannot be increased

characteristics Job order Batch production Mass productionVolume/quantity One or few jobs Limited number jobs Large quantityProduct variety Large variety Few variety One or few productsLay out Process or functional lay

outProcess or functional lay out

Product or line lay out

Set up time high high lowEquipment& machinery General purpose General purpose Special purpose and

dedicatedflexibility high high Very low & routineProd. planning complex complex Simple routineWork in process inventory

high medium low

Cost/unit high medium lowSkill of labor Highly skilled skilled Semi/unskilledinvestment low medium highMaterial handling mannual Manual/semi auto automaticPlant utilization low medium high