production n operations introduction

PRODUCTION &

OPERATIONS

MANAGEMENT

Module I

Introduction

Among all the areas of management, production is

considered to be crucial in any industrial organization.

Production in simple words is referred to as

Manufacturing.

But there is difference between the two terms.

Manufacturing is the process of producing only

tangible goods, whereas production includes creation

of both tangible goods as well as intangible services.

Vrushali Pakhannavar

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Production

Production is the process by which raw materials

and other inputs are converted into finished goods.

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Raw Materials

Finished Goods

Production Process

Nature of production

The nature of production can be understood under

three simple steps.

a.Production as a system:

b.Production as an organizational function

c. Decision making in production

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Contd…

The Production as a system: involves three main

categories of activities:

a. Production system: whose function is to convert a set of

inputs into desired output.

b.Conversion sub-system: it is a sub-system of the larger

production system where inputs are converted into

outputs.

c. Control sub-system: also a sub-system where a portion of

the output is monitored for feedback signals to provide

corrective actions.

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Contd…

Production as an organizational function: the system

of production (i.e. conversion of inputs into outputs)

exists in every organization whether manufacturing

or service industry.

This system involves workers, machines and

materials for their conversion process.

Thus managing departments and personnel play a

key role in achieving the objectives of the

organization.

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Contd…

Decision Making in Production: to take care of the

production function in any organization the managers are

required to make a series of decisions.

The decisions made by the operation managers under the

production system basically involve three categories:

a. Strategic Decisions (Relate to Products, processes, facilities,

etc.)

b.Operating Decisions: (Relate to planning production

activities)

c. Control Decisions (day to day activities of production)

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Megafactories Frito Lay


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QUESTIONS???

Production Management

Production Management refers to the application of

management principles to the production function in a

factory.

It involves applications of planning, organizing,

directing and controlling functions to the production

process.

It relates to the decision making of the production

process so that the resulting goods & services are

produced according to specified standards.

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Operations Management

Operations refer to the decided actions done

methodically as part of a plan of work by a process that

is designed to achieve the pre-defined aims.

Operations management is the process in which

resources or inputs are converted into more useful

products.

It involves tactics of scheduling work, assigning

resources (Manpower, Machines, inventories, etc.),

assessing quality standards, etc. Vrushali Pakhannavar

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Differences between Production and Operations Management

Though both the terms seem similar in nature, there

are certain differences between the two:

a.Tangible/Intangible nature of output: The term

production management is more used for a system

where tangible goods are produced. Whereas

operations management is more frequently is used

where various inputs are transformed into intangible

services.

b.The evolution: of production is historical but,

operations management is recently developed.Vrushali Pakhannavar

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Contd…

c. Consumption of output: Production deals with outputs

that customers consume overtime. But under Operations

the outputs are consumed by the customers immediately.

d. Nature of work (job): Jobs that use less labour and more

equipment come under production. And under operations

there are jobs that use more labour and less equipment.

e. Degree of customer contact: Production involves little

customer contact . And operations require direct

consumer contact.


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Contd…

f. Customer participation in conversion: No customer

participation in the conversion process is necessary

in production. But frequent customer participation

in the conversion process is required for

operations.

g. Measurement of performance: Production involves

Sophisticated methods for measuring production

activities. And elementary methods for measuring

conversion activities is required for operations. Vrushali Pakhannavar

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Scope of Production ands Operations Management

The scope of the subject is very vast. It involves a lot of

activities involving:

Selection of location

Acquisition of land and constructing buildings

Procuring and installing machinery

Purchasing and storing raw materials

Conversion of raw materials into desired products

Quality management, maintenance management, PPC,

etc.Vrushali Pakhannavar

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Features of Production and Operations Management

1) Manufacturing as Competitive Advantage

2) Services Orientation

3) Disappearance of Smokestacks (pollution generating

plants)

4) Small has become Beautiful


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Duties & Responsibilities of Production Managers

(in manufacturing organizations)

Planning the geographical location of the factory

Purchasing production equipments

Layout of equipments within the factory

Designing production processes and equipments

Product design

Capacity planning

Production planning and scheduling


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Contd…

Production control

Inventory management

Supply chain management

Quality control

Production equipment maintenance and repair

Industrial relations

Health and safety


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Duties & Responsibilities of Production & Operations Managers

Take part in strategic decision making of the company

Take part in the implementation and use of Enterprise

Resource Planning in the company

Automate processes as per the requirements of the

company

Enhance the R & D effort in developing self-relevant new

technologies

Reduce time lag in implementation of projects

Protection of the environment


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Contd…

Act as a member of the concurrent engineering

teams in new product design and old product

development.

Give more attention to technology management

Internal quality auditing in quality certification

programming such as ISO 900 series and ISO 14000

series.


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Historical Evolution of POM

For over two centuries production and operations

management has been recognized as an important

factor in a country’s economic growth.

The traditional view of manufacturing

management began in eighteenth century when

Adam Smith recognized the economic benefits of

specialization of labour.


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Contd…

He recommended breaking of jobs down into subtasks

and recognizes workers to specialized tasks in which

they would become highly skilled and efficient.

In the early twentieth century, F.W. Taylor

implemented Smith’s theories and developed scientific

management.

From then till 1930, many techniques were developed

prevailing the traditional view.


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1776 -Specialization of labor in manufacturing -Adam

Smith

1799 -Interchangeable parts, cost accounting -Eli

Viihitney and others

1832 -Division of labor by skill; assignment of jobs by skill;

basics of time study -Charles Babbage

1900- Scientific management time study and work study

developed; dividing planning and doing of work -

Frederick W. Taylor

1900- Motion of study of jobs -Frank B. Gilbreth

Contd…

Contd…

1901- Scheduling techniques for employees, machines jobs

in manufacturing -Henry L. Gantt

1915 -Economic lot sizes for inventory control -F.W. Harris

1927 -Human relations; the Hawthorne studies -Elton Mayo

1931 -Statistical inference applied to product quality:

quality control charts -W.A. Shewart

1935 -Statistical sampling applied to quality control;

inspection sampling plans -H.F. Dodge &H.G. Roming

Contd….

1940- Operations research applications in World War ll -P.M.

Blacker and others.

1946- Digital computer -John Mauchlly and J.P. Eckert

1947-Linear programming -GB. Dantzig, Williams & others

1950- Mathematical programming, on-Iinear and stochastic

processes –A. Charnes, W.W. Cooper & others

1951- Commercial digital computer; large scale

computations available. -Sperry Univac

Contd….

1960- Organizational behavior; continued study of

people at work -L. Cummings, L. Porter

1970- Integrating operations into overall strategy

and policy. Computer applications to manufacturing.

Scheduling and control. Material requirement

planning (MRP)-W. Skinner J. Orlicky and G. Wright

1980-Quality and productivity applications from

Japan robotics. CAD-CAM -W.E. Deming and J. Juran.

Contd…

As we can clearly see, Production management

became the acceptable term from 1930s to 1950s.

As F.W. Taylor’s works become more widely known,

managers developed techniques that focussed on

economic efficiency in manufacturing.

They began to study people and human behaviour in

the working environment. Even economists,

mathematicians, and computer socialists contributed

newer, more sophisticated analytical approaches.Vrushali Pakhannavar

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With the 1970s emerging two distinct changes took place.

The first reflected in the new name operations

management which was a shift in the service and

manufacturing sectors .

As service sector became more prominent, the change

from ‘production’ to ‘operations’ emphasized the

broadening of our field to service organizations.

The second, more suitable change was the beginning of

an emphasis on synthesis, rather than just analysis, in

management practices. Vrushali Pakhannavar

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Contd…

Recent Trends in POM

Global Market Place

Production/Operations Strategy

Total Quality Management (TQM)

Flexibility

Time Reduction

Technology

Worker Involvement


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Contd…

Re-engineering

Environmental Issues

Corporate Downsizing (or Right Sizing)

Supply-Chain Management

Lean Production


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QUESTIONS???

Classification of Production System

The production system of an organization is that

part, which produces products of an organization.

It is that activity whereby resources, flowing within

a defined system, are combined and transformed in

a controlled manner to add value in accordance

with the policies communicated by management.

Production systems can be classified as Job Shop,

Batch, Mass and Continuous Production systems.


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Continuous Production

Contd…


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Output or product variety

Mass Production

Batch Production

Job Shop Production

Job shop production

Job shop production are characterised by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost.

The distinguishing feature of this is low volume and high variety of products.

A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence.


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Batch production

Batch production is defined by American Production

and Inventory Control Society (APICS) “as a form of

manufacturing in which the job passes through the

functional departments in lots or batches and each lot

may have a different routing.”

It is characterised by the manufacture of limited

number of products produced at regular intervals and

stocked awaiting sales.


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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 standardisation exists and all outputs follow the same path.


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Continuous Production

Production facilities are arranged as per the

sequence of production operations from the first

operations to the finished product.

The items are made to flow through the sequence

of operations through material handling devices

such as conveyors, transfer devices, etc.


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Productivity

The terms “Production” and “Productivity” may

seem similar. But they are different.

Production as we know, refers to the total output

produced.

Productivity refers to the amount of goods and

services produced with the resources used.

It is known as the output relative to the inputs. (or

ratio of output to input).


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Contd…

Output may refer to the sales made, products

produced, customers served, meals delivered, or

calls answered

Inputs may refer to labor hours, investment in

equipment, material usage, or machineries used.


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Measures of Productivity

Productivity = Quantity of goods & services

produced

Amount of resources used

The equation makes it clear that the two variables

in measuring productivity are: the amount of

production and the amount of resources used.

All the organizations always aim at achieving

maximum productivity.


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Contd…

The steps to increase the productivity of an organization

are:

a)Increase production using the same or a smaller amount of

resources

b)Reduce the amount of resources used while keeping the

same production or increasing it.

c)Allow the amount of resources used to increase as long as

production increases more.

d)Allow production to decrease as long as the amount of

resources used decreases more.Vrushali Pakhannavar

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Production Processes

Process refers to the facilities, skills and

technologies used to produce products and services.

Production processes basically concentrate on the

conversion or transformation processes used to

produce products.


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INPUTSINPUTS OUTPUTSOUTPUTSConversion

Process

Manufacturing & Service Operations

Manufacturing Operations

Convert inputs like materials, labour and capital into

tangible outputs.

These manufacturing processes can be grouped under three

broad categories:

a)Forming Processes (include casting, forging, embossing, etc.)

b)Machining Processes (include turning, drilling, grinding, etc.)

c)Assembly Processes (welding, brazing, soldering, riveting, etc.)


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Characteristics of Manufacturing

Specialisation

Mechanisation

Use of Technology of Industrial Engineering

Increasing use of Computers and Data Processing

Equipments

Use of Scientific Method


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Contd…

Non-Manufacturing or Service Operations

Transforms a set of inputs into a set of outputs that

are intangible in nature.

Service operations can be classified into the following

types based on the degree of standardization of their

outputs and they processes they perform.

a)Standard Services

b)Custom Services


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Characteristics of Services

Intangibility

Perishability

Inseparability

Variability


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Differences between Goods & Services

Goods (Tangible Products) Services (Intangible Products)

Goods can be resold Reselling services is unusual

Goods can be stored Services cannot be stored

Quality is measurable Quality is difficult to measure

Selling is distinct from production of

goods

Selling is often a part of the

production of service

Goods are transportable Service provider, not the service

itself is often transportable

Location of facility is important for

cost

Location of facility is not

important

It is easy to automate production of

goods

Service is difficult to automateVrushali Pakhannavar

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Differences Between Manufacturing and Service Operations

Manufacturing Operations Service Operations

Productivity can be easily

measured since tangible

products are produced

Productivity cannot be easily

measured since the outputs are

intangible

Establishing Quality Standards

& Product Quality is easy

Quality establishing in service

operations is difficult

Little customer contact Extensive customer contact

Proportion of expenses required

for material handling is more

Proportion of expenses required for

material handling is less

Products can be inventoried (can

be Stored)

Outputs cannot be inventoried

(cannot be Stored)Vrushali Pakhannavar

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Contd…

Manufacturing Operations Service Operations

Investments in assets such as

equipments and inventory are

higher

Investments in assets are lower

Long lead times Short lead times

Capital intensive Labour intensive

Product quality is easily

determined

Service quality is determined with

difficulty

Operations depend more heavily

on maintenance and repair work

Operations do not depend much on

maintenance and repair work


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Challenges Facing Operations Managers

Managing Multiple Customers

Understanding the Service Concept

Managing the Outcome and Experience

Managing in Real-Time

Knowing, Implementing and Influencing Strategy

Continually Improving Operations

Encouraging Innovations

Managing Short-term and Long-term Issues

SimultaneouslyVrushali Pakhannavar

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QUESTIONS???

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production n operations introduction

Documents

system of production

production function

larger production system

day activities of production

conversion subsystem

control subsystem

conversion process

conversion of inputs