What is Production/Operations Management?

Production is a process by which goods and services are created. Managing 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 Operations Management. Activities in production/operations management include organizing work, selecting processes, arranging layouts, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory and planning production

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Objectives of Production Management

To produce goods/services of right quality and quantity at predetermined time and preestablished cost. Thus the objectives of production management are reflected in 1. Right Quality 2. Right Quantity 3. Predetermined Time 4. Pre established Cost (Manufacturing cost)

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Right Quality
The quality of the product is established based upon the customers needs. Customers needs are translated into product specifications by the design or engineering department. Manufacturing department then translates these specifications into product.

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Right Quantity
The manufacturing organization should produce the products at the right number.

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Predetermined Time
Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So the manufacturing department should organize its activities in such a way that the products will be manufactured as per schedule.

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Manufacturing Cost
Manufacturing costs are established before the product is actually manufactured. The manufacturing department has to manufacture the products at the pre-established cost. In any case, any variation between the actual cost and pre-established cost should be kept at minimum.
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Function and Scope of Production Department

The activities of production department of an organization are grouped into two broad categories 1. The activities that convert the available capital in to physical resources required for production. 2. The activities that converts the physical resources in to saleable goods and services.
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Function and Scope of Production Department

In carrying out these activities, the production department must perform the following activities--1. Production of goods at right time and in sufficient quantity to meet demand. 2. Production of goods at minimum possible cost. 3. Production of goods of acceptable quality. Thus the function of production personnel are: A. Forecasting the demand for the products and using the forecast to determine the requirement of various factors of production. B. Arranging for procurement of required factors of production. C. Arranging for the services such as maintenance, store keeping, material handling, inspection and quality control etc would be required to attain the targeted level of production. D. Utilizing effectively the factors of production and service facilities available to produce the product.

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Scope of Production Management

The scope of production Management can be considered from the point of view of both strategic decision influencing the production system at the operational level. Strategic decisions involve decisions, which have long term implications. The Strategic level decisions are--1. New product identification and design. 2. Process Design 3. Facility location and layout planning 4. Design of material handling system 5. Capacity Planning The operational level decision are short term decisions. The operational level decision--1. Production planning 2. Production control

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Process Design
This involves the appropriate technology for conversion of raw material it to products. The choice of technology depends upon several factors such as demand, investment capability, labor availability and degree of automation required. This is followed by the process of conversion and determining the work stations and the flow of work.

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Facility location & Layout planning

Facility location is a strategic decision and facilities once located will not be altered in near future.

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Design of material handling system

As per the principle of material handling, the handling be kept minimum though it is not possible to avoid handling.

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Capacity Planning
This decision is concerned with the procurement of fixed assets like plant and machineries. The decision regarding the size of the plant, output etc are decided at this stage. The capacity planning activity is again a function of volume of demand.

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Production Planning
It is concerned with determining future course of action regarding production to achieve organizational objectives. A decision of the future quantity to produce. This is based on orders from customers, production capacities, often a demand forecast, and the diverse inventory levels in the supply chain.
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Production Control
It is a management technique, which aims to see that activities are carried out as per the plan. Production control activity is concerned with comparing actual output with standard output and to take corrective actions if there exists a deviation between actual and standard.

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Production Interface with other Functional area of Business

Each organizational subsystems are independent at the same time they are interdependent. They are independent in the sense that each functional subsystem has its own objectives and goals and at the same time they are functionally related with the other subsystems of the organization.
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Production Interface with other Functional area of Business

The organizational system has an objective and various elements that constitute the organizational system are finance, production, marketing and personal.

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Interface between Production and Marketing

There is a strong interdependency between the two departments. The production department seeks the following information from marketing department--1. Needs of the customer with respect to companys products and services. 2. The demand of the products and the likely market trend for the future period. 3. The special features required by customer regarding the products, (Feedback regarding customer acceptability, performance, change in taste and preference etc.) 4. The delivery requirements of the products from production as per the customer requirements.

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Interface between Production and Marketing

The marketing department requires the following information from production department---1. Production status of the products 2. Performance characteristics of products 3. Delivery schedule as per the production plan based on forecasted demand. 4. Product features and specifications.
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Interface between Production and Finance

The finance is the blood line of business, which sets the wheel of production rolling. The production department has to invest in physical facilities, requires raw materials and component parts, have to pay wages and salaries. Finance department to make provisions for both long term and short term requirements of funds to make the smooth running of production. Production department has to furnish the detailed production budget to finance department so that the funds will be released as per the plan.

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Interface between Production and Personnel

The success of the production program depends upon the quality, attitude and skills of the people. The personnel department has its role throughout the organization. The responsibility of matching the job and the person lies with personnel department.

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Interface between Production and Sub Functional areas of Production

Production and Material Management Production and Maintenance Production and Research & Development

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Production and Material Management

The material function to a greater extent contributes to the success of the production function by making available the materials and tools at the quantity required and at the required time. The material function that influence production functions are---1. Selection of source of supply (Vendor selection) this directly affects the quality of materials. 2. Vendor rating. 3. Purchase procedure. 4. Inventory Control. Thus the failure on the part of materials department in supplying materials in right quantity and right time, will lead to production interruptions or delays which may results in non availability of finished goods at the time required by the customers resulting in loss of sales.

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Production and Maintenance

There is a direct relationship between production and maintenance function. This efficiency of a maintenance function enhance the production efficiency.

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Production and Research & Development

R&D department develops new products/services and improves the design of existing products in order to enhance their functional utility, customer appeal. Design departments output will be in the form of drawings. Actual manufacturing translates the design into physical products, which meets the customer requirements for which it is designed. A success of the product in the market depends upon the accuracy with which the product specifications are transformed into physical product. The designer can not sit in isolation and design the product. The interaction between the various function is a must for design to be fool proof. The manufacturing aspects of products will be considered at the design stage itself.

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Types of Production
Intermittent Production. Continuous Production Job Shop Production

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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 prefix time and cost. A Job Shop production typically comprises of general purpose machines arranged in different departments. Each job demands an unique technological requirements, demand processing in certain sequence. Because of high variety scheduling become difficult. Examples of products manufactured by job shop industry include space vehicle, fighter aircraft etc.
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Characteristics of Job Shop Production

High variety of products and low volume. Use of general purpose machines and facilities. Require highly skilled operators. Frequently changing setup. Large inventory of material, tools and parts. Required numerous job instructions. Detailed planning will evolve around sequencing requirement for each product, capacity for each centre and order priorities, because of this scheduling is relatively complicated. Material handling has to be modified and adjusted to suit different kinds of products.

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Advantages of Job Shop Production

Because of general purpose machine, variety of products can be manufactured. Operator become more skilled and competent that each job gives them learning opportunities. Utilization of full potential of operators Opportunity to use innovate ideas and creative methods.
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Limitation of Job Shop Production

Higher set up cost due to frequent set up changes. Higher inventory level of raw materials and in process hence higher inventory cost. Production planning is complicated. Highly skilled and competent manpower is demanded.

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Intermittent (Batch) Production

Intermittent is defined as a form of manufacturing in which the job pass through the functional department in lots or batches. Batch production is characterized by the manufacturing of limited number of products produced at regular intervals and stocked awaiting sales. Batch production aim at satisfying continuous customer demand for an item. However plant is capable of production rate that exceed demand rate. When the stock of first item becomes depleted, the production is repeated to build inventory again.

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Characteristics of batch production

Plan and machinery set up is used for the production items in batch and setup required to be changed for processing next batch of items. More number of set ups and hence higher set up cost. Amount of supervision required is less compared to Job Shop. Plant and machinery are flexible. Cost is lower in comparison to Job Shop Production.
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Advantages of Batch Production

Cost per unit is lower as compared to Job Shop Production. Better utilization of Plant and Machinery. Flexibility to accommodate and process number of products. Job satisfaction exists for operators.

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Limitation of Batch Production

Material Handling is complex. Production planning and control is complex. Work in process inventory is higher compared to continuous production. Higher set up cost due to frequent change in set up. Lower utilization of production facility compared to mass production.
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Continuous (Process) Production

Process industry manufacture highly standardized non discrete products in extremely large volume using a continuous process.

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Characteristics of Continuous Production

Dedicated plants and equipments with zero flexibility. Material handling is fully automatic. Shorter lead time. Component material cannot be readily identified with final product and the product cannot be disassembled. The end product is not naturally divisible and hence additional step such as bottling or canning is needed to get the products into saleable units. Larger investment and usually capital intensive units. Process follows predetermined sequence of operations. Maintenance is an important aspect. Unit cost is lower due to high volume. Planning and scheduling is easy. Person with limited skills can be used on the production line.

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Advantages of Continuous production

Higher rate of production with reduced cycle time. Higher capacity utilization. Less skilled operator can be manned. Low in process inventory. Production cost per unit will come down due to economy of scale.

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Limitation of Continuous Production

Breakdown of one machine will stop an entire production line. High investment. Work for operator is monotonous without much challenge.

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