Unit 1:- Production Management.

INTRODUCTION Production/operations management is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level. Operations vs. Production Management
Operations Management The study of set of activities comprising supervision, planning and designing of business operations in the field of manufacturing of goods and services is termed as operations management. The purpose of operations management is to make certain that the operations of a business are efficient and effective and result in minimum of wastage. Operations management tries to cut down resources involved in operations while at the same time making operations more effective and productive. In fact operations management is more concerned on processes than people or products. Operations management in a nutshell is using physical resources in an optimum manner, converting input into output, so as to supply to the market the desired and finished product. Production Management Production management on the other hand focuses specifically on the production of goods and services and is concentrated upon churning output from input. It is a broad sum of activities that go into turning raw material into final, finished product. One may feel that production management is a subset of operations management, but production management in itself is a broad subject that comprises production planning and control, inventory management, and operations control. Production management includes all management activities spanning selection. Designing, operating, controlling and updating production system.

In brief: Operations vs Production Management Both production management and operations management play an important role in an organization in increasing the efficiency and productivity. While operations management is focused upon administration, planning and execution of operations involved in production of goods and services and trying to minimize the resources at the same time increasing output, production management is more concerned with input/output and churning out products in the shape of desired finished product.

CONCEPT OF PRODUCTION A Production System is a system whose function is to transform an input into a desired output by means of a process (the production process) and of resources. Production function is that part of an organization, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level. Production 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 production is a value addition process. At each stage of processing, there will be value addition.

Examples:Production system Hospital Oil Refinery Fast Food University Automobile Factory Input Patients Crude Oil Buns, Potatoes students raw material Conversion Health Chemical Process Cutting, Frying educated individuals complete cars Output Cured Patients Gasoline oil Natural Gas Burgar imparting knowledge and skills fabrication, assembly

PRODUCTION SYSTEM

"The methods, procedure or arrangement which includes all functions required to accumulate (gather) the inputs, process or reprocess the inputs, and deliver the marketable output (goods)." 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. A simplified production system is shown above.

The production system has the following characteristics: 1. Production is an organized activity, so every production system has an objective. 2. The system transforms the various inputs to useful outputs. 3. It does not operate in isolation from the other organization system. 4. There exists a feedback about the activities, which is essential to control and improve system performance. OBJECTIVE OF PRODUCTION MANAGEMENT The objective of Production Management is to produce the desired product or specified product by specified methods so that the optimal utilization of available resources is met with. Hence the production management is responsible to produce the desired product, which has marketability at the cheapest price by proper planning, the manpower, material and processes. Production management must see that it will deliver right goods of right quantity at right place and at right price. When the above objective is achieved, we say that we have effective Production Management system. DECISION-MAKING IN PRODUCTION Operations managers are required to make a series of decisions in the production function they plan, organize, staff, direct and control all the activities in the process of converting all the inputs into finished products. At each level, operating managers are expected to make decisions and implement them too. The decisions made by operations managers about the activities of production systems tend to fall into three general categories viz.

Strategic decisions relating to products, processes and manufacturing facilities. These decisions are major ones, having strategic importance and long-term significance for the organization.

Operating decisions relating to planning production to meet demand. These decisions are necessary in order to ensure that, the ongoing production of goods and services meets the market demand and provides reasonable profits for the organization. Control decisions relating to planning and controlling operations. These decisions concern the day to day activities of workers, quality of products and services, production and overhead costs and maintenance of machines.

Importance of production function Production function is a basic function of an industrial organization around which all other functions of the organization, such as purchasing, financing, marketing, storing, personnel, research and development, revolve. It is, therefore, very essential that the production function is managed effectively and efficiently so as to achieve the organizations goals. The main aim of every production system is to produce the goods and services economically to the full satisfaction of the customer for which they are meant. In order to achieve this aim, it is essential to plan, organize, direct and control the production system. In fact, these functions of planning, organizing, directing and controlling comprise the production management. Competitive Advantage 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 Production systems can be classified as Job Shop, Batch, Mass and Continuous Production Systems.

1. 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. 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 certain sequence. In this system Products are manufactured to meet the requirements of a specific order. The quality involved is small and the manufacturing of the product will take place as per the specifications given by the customer.

Characteristics
The Job-shop production system is followed when there is: 1. High variety of products and low volume. 2. Use of general purpose machines and facilities. 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.

Advantages
Following are the advantages of job shop production: 1. Because of general purpose machines and facilities variety of products can be produced. 2. Operators will become more skilled and competent, as each job gives them learning Opportunities. 3. Full potential of operators can be utilized. 4. Opportunity exists for creative methods and innovative ideas.

Limitations
Following are the limitations of job shop production: 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.

2. 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 characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. Batch Production is the manufacture of number of identical products either to meet the specific order or to satisfy the demand. When the Production of plant and equipment is terminated, the plant and equipment can be used for producing similar products. 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 Following are the advantages of batch production: 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. 6. Job satisfaction exists for operators.

Limitations Following are the limitations of batch production: 1. Material handling is complex because of irregular and longer flows. 2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production. 4. Higher set up costs due to frequent changes in set up.

3. 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. Here same type of product is produced to meet the demand of an assembly line or the market. This system needs good planning for material, process, maintenance of machines and instruction to operators. Purchases of materials in bulk quantities are advisable. Characteristics Mass production is used under the following circumstances: 1. Standardization of product and process sequence. 2. Dedicated special purpose machines having higher production capacities and output rates. 3. Large volume of products. 4. Shorter cycle time of production. 5. Lower in process inventory. 6. Perfectly balanced production lines. 7. Flow of materials, components and parts is continuous and without any back tracking. 8. Production planning and control is easy. 9. Material handling can be completely automatic. Advantages Following are the advantages of mass production: 1. Higher rate of production with reduced cycle time. 2. Higher capacity utilization due to line balancing. 3. Less skilled operators are required. 4. Low process inventory. 5. Manufacturing cost per unit is low. Limitations Following are the limitations of mass production: 1. Breakdown of one machine will stop an entire production line. 2. Line layout needs major change with the changes in the product design. 3. High investment in production facilities. 4. The cycle time is determined by the slowest operation.

4. CONTINUOUS PRODUCTION
Continuous Production system is the specialized manufacture of identical products on which the machinery and equipment is fully engaged. The continuous production is normally associated with large quantities and with high rate of demand. Hence the advantage of automatic production is taken. 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. Characteristics Continuous production is used under the following circumstances: 1. Dedicated plant and equipment with zero flexibility. 2. Material handling is fully automated. 3. Process follows a predetermined sequence of operations. 4. Component materials cannot be readily identified with final product. 5. Planning and scheduling is a routine action. Advantages Following are the advantages of continuous production: 1. Standardisation of product and process sequence. 2. Higher rate of production with reduced cycle time. 3. Higher capacity utilisation due to line balancing. 4. Manpower is not required for material handling as it is completely automatic. 5. Person with limited skills can be used on the production line. 6. Unit cost is lower due to high volume of production. Limitations Following are the limitations of continuous production: 1. Flexibility to accommodate and process number of products does not exist. 2. Very high investment for setting flow lines. 3. Product differentiation is limited.
(i) Job Production Shop: Tailors shop; cycle and vehicles repair shops, Job typing shops, Small Workshops. (ii) Batch Production Shop: Tyre Production Shops, Readymade dress companies, Cosmetic manufacturing companies...etc. (iii) Mass Production Shops: Components of industrial products, (iv) Flow Production: Cement Factory, Sugar factory, Oil refineries...etc.,

SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT

Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from Other functions such as personnel, marketing, finance, etc., by its primary concern for conversion by using physical resources. Following are the activities which are listed under production and operations management functions:
1. Location of facilities 2. Plant layouts and material handling 3. Product design 4. Process design 5. Production and planning control 6. Quality control 7. Materials management 8. Maintenance management 1. LOCATION OF FACILITIES

Location of facilities for operations is a long-term capacity decision which involves a long term commitment about the geographically static factors that affect a business organization. It is an important strategic level decision-making for an organization. It deals with the questions such as where our main operations should be based? The selection of location is a key-decision as large investment is made in building plant and machinery. An improper location of plant may lead to waste of all the investments made in plant and machinery equipments. Hence, location of plant should be based on the companys expansion plan and policy, diversification plan for the products, changing sources of raw materials and many other factors. The purpose of the location study is to find the optimal location that will results in the greatest advantage to the organization.
2. PLANT LAYOUT AND MATERIAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments, Work centers and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically. Material Handling refers to the moving of materials from the store room to the machine and from one machine to the next during the process of manufacture. It is also defined as the art and science of moving, packing and storing of products in any form. It is a specialized activity for a modern manufacturing concern, with 50 to 75% of the cost of production. This cost can be reduced by proper section, operation and maintenance of material handling devices. Material handling devices increases the output, improves quality, speeds up the deliveries and decreases the cost of production. Hence, material handling is a prime consideration in the designing new plant and several existing plants.

3.

PRODUCT DESIGN

Product design deals with conversion of ideas into reality. Every business organization has to design, develop and introduce new products as a survival and growth strategy. Developing the new products and launching them in the market is the biggest challenge faced by the organizations. The entire process of need identification to physical manufactures of product involves three functions: marketing, product development, and manufacturing. Product development translates the needs of customers given by marketing into technical specifications and designing the various features into the product to these specifications. Manufacturing has the responsibility of selecting the processes by which the product can be manufactured. Product design and development provides link between marketing, customer needs and expectations and the activities required to manufacture the product.
4.

PROCESS DESIGN

Process design is a macroscopic decision-making of an overall process route for converting the raw material into finished goods. These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities. Hence, the important decisions in process design are to analyses the workflow for converting raw material into finished product and to select the workstation for each included in the workflow.
5. PRODUCTION PLANNING AND CONTROL Production planning and control can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders. The principle of production planning and control lies in the statement First Plan Your Work and then Work on Your Plan. Main functions of production planning and control includes planning, routing, scheduling, dispatching and follow-up. Planning is deciding in advance what to do, how to do it, when to do it and who is to do It. Planning bridges the gap from where we are, to where we want to go. It makes it possible for things to occur which would not otherwise happen. Routing may be defined as the selection of path which each part of the product will follow, which being transformed from raw material to finished products. Routing determines the most advantageous path to be followed from department to department and machine to machine till raw material gets its final shape. Scheduling determines the programmed for the operations. Scheduling may be defined as The fixation of time and date for each operation as well as it determines the sequence of Operations to be followed.

Dispatching is concerned with the starting the processes. It gives necessary authority so as to
start a particular work, which has already been planned under Routing and Scheduling.

Therefore, dispatching is release of orders and instruction for the starting of production for any item in acceptance with the route sheet and schedule charts. The function of follow-up is to report daily the progress of work in each shop in a prescribed preformed and to investigate the causes of deviations from the planned performance.
6.

QUALITY CONTROL

Quality Control (QC) may be defined as a system that is used to maintain a desired level of quality in a product or service. It is a systematic control of various factors that affect the quality of the product. Quality control aims at prevention of defects at the source, relies on effective feedback system and corrective action procedure. Quality control can also be defined as that industrial management technique by means of which product of uniform acceptable quality is manufactured. It is the entire collection of activities which ensures that the operation will produce the optimum quality products at minimum cost. The main objectives of quality control are: 1. To improve the companies income by making the production more acceptable to the customers i.e., by providing long life, greater usefulness, maintainability, etc. 2. To reduce companies cost through reduction of losses due to defects.To achieves interchangeability of manufacture in large scale production. 3. To produce optimal quality at reduced price. 4. To ensure satisfaction of customers with productions or services or high quality level, to build customer goodwill, confidence and reputation of manufacturer. 5. To make inspection prompt to ensure quality control. 6. To check the variation during manufacturing.

MATERIALS MANAGEMENT
Materials management is that aspect of management function which is primarily concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view. The main objectives of materials management are: 1. To minimise material cost. 2. To purchase, receive, transport and store materials efficiently and to reduce the related cost. 3. To cut down costs through simplification, standardisation, value analysis, import substitution, etc. 4. To trace new sources of supply and to develop cordial relations with them in order to ensure continuous supply at reasonable rates. 5. To reduce investment tied in the inventories for use in other productive purposes and to develop high inventory turnover ratios.

MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very important part of the total productive effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very important that the plant machinery should be properly maintained. The main objectives of maintenance management are: 1. To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost. 2. To keep the machines and other facilities in such a condition that permits them to be used at their optimal capacity without interruption. 3. To ensure the availability of the machines, buildings and services required by other sections of the factory for the performance of their functions at optimal return on investment.

Areas as functions of Industrial Organization Improving volume of production Reducing rejection rate Minimizing rework rate Maintaining delivery schedules Establishing/updating/improving/setting industrial engineering norms Updating process & procedure Maintaining accuracy & timeliness of MIS Decreasing machine set-up time Controlling overtime Good house-keeping Checking absenteeism ,theft/pilferage and misconduct Eliminating accidents Effective grievance handling Efficient training & team building Minimizing inventory and achieving better yields Enhancing customer satisfaction TQM BPRE Automation