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PRODUCTION MANAGEMENT

Chapter 1: Nature & Scope of Production Management

What is Production ? Product : It is a bundle of tangible

and intangible attributes which along with the service is meant to satisfy consumer wants.

Production : It is a process by which raw materials and other inputs are converted into finished goods.

It is also 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. At each stage of processing, there will be value addition.

• In general defines production as ‘a process by which goods and services are created

Management Management can be defined as the art and science of getting things done by the people , by planning coordinating , organizing, directing and controlling the activities to meet specified goals within the frame work of agreed policies .

Production management

• Production Management refers to the application of management principles to the production function in a factory .It is also defined as a management function which plans, organizes , coordinates ,directs and controls the material supply and processing activities of an enterprises so that specified products are produced by specified methods to meet an approved sales programme. These activities are being carried out in such a manner that labor, plant and capital available are used to the best advantage of the organization .

• If the same concept is extended to services management, then the corresponding set of management activities is called as operations management.

• Production management is used for a system where tangible goods are produced whereas operations management is used when inputs are transformed into intangible services. like banks, airlines, supermarkets etc.

Application of management in production

• Development of factory system of production : owners and people operating business are different

• Development of large corporation : many owners of business which lead to a necessity to hire people to operate business

• Work of many pioneers of scientific management.

Objective of Production Management

• Produce the desired/specified product (wanted

by consumers ) • With specified method so that there is an optimal

utilization of available resources • Produce goods which have marketability at cheapest price

( by proper planning of material , manpower & processes)to deliver right goods, of right quantity at right place and right price.

Objective of Production Management

• RIGHT QUALITY: The quality of product is established based upon the customers needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements.

• RIGHT QUANTITY : 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.

Objective of Production Management

• RIGHT TIME :

Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective.

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.

Nature of production

Production as a system ( set of detailed methods ,

procedures and routines established or formulated to carry out a specific activity , perform a duty

or solve a problem)

i. Production system,

ii.Conversion sub-system and

iii.Control sub-system.

PRODUCTION SYSTEM CONCEPTS

• PRODUCTION SYSTEM• A system whose function is to convert a set of input into a set of

desired output • CONVERSION SYSTEM• A sub-system of the large production system where inputs are

converted into outputs • CONTROL SYSTEM• A sub-system of the large production system where a portion of the

output is monitored for a feedback signals to provide corrective action if required

Nature of production

• Production as organization function:

Every organization irrespective of its purpose has a

production function where departments and personnel play a

central role in achieving the objectives of the organization

Decision making In production

• Strategic Decision : related to products , processes & ,manufacturing facilities. Major decisions, with strategic importance & have long term significance

• Operating Decisions :related to planning production to meet demand and provide reasonable profits for the organization

• Control decisions: planning and controlling- activities of workers ,quality of products and services

PM Decisions and their Applications

Functions of Production Management Department

1. Materials : selection of materials , should have sound knowledge of materials and their properties ,so that appropriate materials are selected. Research on materials to find alternatives to satisfy the changing needs .

2. Methods: finding the best method for the process which suits the available resources,& identifying the sequence of processes

3. Estimating : fix up the production targets and delivery dates , to keep production costs at minimum

4. Loading & Scheduling : draw time –table for various production activities , specifying when to start and when to finish the process required

Functions of Production Management Department

4. Loading & Scheduling : It has to draw the timings of material movement and plan activities of manpower. Avoid long queues or idle time

5. Routing : consists of fixing the flow lines for various raw materials , components from the stores to the packing of finished product.

Functions of Production Management Department

6. Machines & equipment: Selection of suitable machinery for the process desired , designing the maintenance policy and design of layout of machines are to be taken care .

7.Dispatching : they have to prepare various documents such as job cards, route sheets move cards inspection cards for each & every component of the product for starting production . The activities of the shop floor will follow the instruction given in the documents . Activity of releasing the document is called dispatching.

Functions of Production Management Department

8. Expediting (follow up): Expediting engineer go round the production floor along with the plans and feedback the progress of the work to the management. This will help to evaluate the plan followed by inspection .

9.Evaluation: evaluates its self whether its contribution in fulfilling the corporate & departmental objectives

Importance of Production Function

• Shorter new-product-lead time• More inventory turns• Shorter manufacturing lead time• Higher quality• Greater flexibility• Better customer service• Reduced wastage

Classification of Production System( according to volume of

production)

JOB SHOP PRODUCTION

• Job shop production are characterized by manufacturing of One or Few quantity of products designed and produced as per the specification of customers within prefixed time and cost. Eg construction of building

• The distinguishing feature of this is Method is • Low volume and High variety of products.• Each job demands unique technological requirements,

demands processing on machines in a certain sequence

JOB SHOP PRODUCTION- CHARACTERISTICS

• The Job-shop production system is followed when there is:

1. High variety of products and low volume.

2. High customization , high flexibility of equipment

3. Highly skilled operators who can take up each job as a challenge because of uniqueness.

4. Large inventory of materials, tools, parts.

5. Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities.

Limitations

1. Higher cost due to frequent set up changes.

2. Higher level of inventory at all levels and hence higher inventory cost.

3. Production planning is complicated.

4. Larger space requirements.

Advantages-Job shop production

1. Operators will become more skilled and competent, as each job gives them learning opportunities.

2. Full potential of operators can be utilized.

3. Opportunity exists for creative methods and innovative ideas.

Batch production

Batch production is defined “as• A form of manufacturing in which the job passes through

the functional departments in lots or batches • It is characterized by the manufacture of limited number

of products produced at regular intervals and stocked awaiting sales.

Batch production differs from job shop production with respect to volume & variety. Here volumes are higher as same or similar products are repeatedly provided. Eg – paints, icecream , books ,magazine etc

Characteristics

• Batch production system is used under the following circumstances:

• 1. When there is shorter production runs.• 2. When plant and machinery are flexible.• 3. When plant and machinery set up is used for the

production of item in a batch and change of set up is required for processing the next batch.

• 4. When manufacturing lead time and cost are lower as compared to job order production.

Advantages

1. Better utilization of plant and machinery.

2. Promotes functional specialization.

3. Cost per unit is lower as compared to job order production.

4. Lower investment in plant and machinery.

5. Flexibility to accommodate and process number of products.

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.eg automobiles,tv ,computers etc

Characteristics• 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.• Production planning and control is easy.• Material handling can be completely automatic.

Advantages-Mass production

• 1. Higher rate of production with reduced cycle time.

• 2. Higher capacity(equipment) utilization • 3. Less skilled operators are required.• 4. Low process inventory.• 5. Manufacturing cost per unit is low.

Limitation

• Breakdown 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

CONTINUOUS PRODUCTION

• Used when highly standardized product is desired in high volumes.

• These systems have almost no variety in output and hence there is no need for equipment flexibility. A continous process is the extreme end of high volume standardised production with rigid line flows eg – cement, steel , flour, sugar , fertilizers etc

•

Characteristics

• 1.Dedicated plant and equipment with zero flexibility.

• 2. Material handling is fully automated.• 3. Process follows a predetermined

sequence of operations.

Advantages1. Standardization of product and process sequence.

2. Higher rate of production with reduced cycle time.

3. Higher capacity utilization

4. Manpower is not required for material handling as it is completely automatic.

5. Person with limited skills can be used on the production