Production Planning and Control

Chapter I
Production Planning and Control

Learning Objectives:
Reading this chapter would enable you to understand:
• The impact of the industrial revolution on production management
• The meaning of scientific management
• The influence of the human resource movement on production management
• The modern usage of computers and the advances in the production
technology

Contents
1.1 Introduction
1.2 Impact of Industrial Revolution on Production Process
1.3 Role of Scientific Management in Production Process
1.4 Role of the Human Relations Movement in Production
1.5 Role of Computers and Advances in Production Technology
1.6 Definitions of Production Management and Production Planning
Summing Up
Self-assessment

1.1 Introduction

Production is the core activity of the industrial organization and all other
activities revolve around this activity. Manufacturing or production is a process
of converting raw materials into finished products to satisfy the needs of the
members of the society. The history of productive activities of human beings
is as old as human civilization. The Egyptians Pyramids, the Great Wall of
China, huge temples and forts in India, etc. are the well-known examples of
human efforts relating to production. However, the production activities were
included small-scale productions with the help of other human beings or
animals. Most of the production activities aimed at serving the needs of the
local population. However, during 1760 to 1840, a series of inventions took
place. Initially in textile industry and later on, they spread rapidly to cover
other industries. These developments were known as the Industrial Revolution,
which led to the substitution of machines for human or animal power and the
establishment of factory system. These developments completely transformed
the whole process of production through division of labour or specialisation.
There are several benefits in studying the production planning and control.

1.2 Impact of Industrial Revolution on Production Process

As a result of Industrial Revolution, the factory system came into existence;

mass production and specialization became quite common to all. Adam Smith
was the first person to apply the concept of production economics to the
factory system in his book “The Wealth of Nations” (in 1776). Gradually people
came to know the advantages of large-scale production; the role of division of
labour in improving quantity and quality of goods and services produced. Adam

1/MITSDE
Production Planning and Control

Smith emphasised that division of labour generates the following benefits:

i) As a worker works continuously on the same job, he attains higher
skill and dexterity
ii) Saves time required for changing from one job to another.
iii) Workmen specialized in certain tasks may suggest improvement in
existing production methods.

The concept of division of labour led to the development of several other

productions related concepts.

1.3 Role of Scientific Management in Production Process

F.W. Taylor, ‘The Father of Scientific Management’, developed the concept of

functional management (1911). He also proposed the use of scientific
techniques to develop more efficient methods of production and evaluation of
production costs. His work and method study technique resulted into
significant changes in productivity. His principles of scientific management
include the following:
i) Development of a science for each element of the person’s work to replace
the old “Rule of Thumb” method.
ii) Selection of workers scientifically for training and developing them.
iii) Harmony between workers and management with an aim to maximize
production and providing better wages for workers.
iv) Division of work between workers and management and each group to
carry out the job for which it is better fit to do so.

Taylor not only insisted on functional organization but also emphasized

financial incentives for more efficient workers through differential piece- rate
system.

Taylor developed the time study, Gilbreth developed motion studies on specific
lines, and Henry Ford emphasized mass production and arranged workstation
into an assembly line with a conveyor belt. In 1913 Henry Gantt studied
production scheduling. Gantt charts are popular even today. Emerson (1913)
suggested staff functionaries for improving the efficiency of the organization.
Wilson (1928) developed the concept of Economic Order Quantity (EOQ) to
control inventory. Dodge, Roming and Shewart (1931) developed the technique
of statistical quality control, control charts, sampling inspection and prepared
statistical sampling tables.

Tipett (1937) developed work-sampling technique to establish work standards.

During the second world- war a new technique called “Operations Research”
was developed to influence operations management. Since then the
mathematical models of optimization and systems approach become very
popular for the purpose of applying them for resource allocation, inventory
control, scheduling, location and layout etc. problems.

At the same time a new concept of value engineering was developed as a cost
reduction technique which aimed at identifying unnecessary costs not related
to the production of goods.

2/MITSDE
 Production Planning and Control

1.4 Role of the Human Relations Movement in Production

During the Great Depression of 1930’s Elton Mayo, Roethlisberger, Whitehead,

Dickson, etc. carried out Hawthorne experiments in a plant of the Western
Electric company. These studies were undertaken to study the relationship
between physical environment and worker productivity. It was then realized
that human factors affect productivity. Later on Chester Bernard, Maslow,
Herzberg, Douglas Mcgregor, Peter Drucker and others emphasized the role
of the workers and their attitude towards work and insisted upon maintaining
motivated labour force, so that capabilities and energies of the workers can
be utilized for the purpose of production.

1.5 Role of Computers and Advances in Production Technology

Since 1954, the application of computer technology in the field of business

increased rapidly. Initially computers were to carry out clerical work such as
preparing payrolls, bills, inventory transaction, cost reports etc. But now
computer simulation, computer-aided design and manufacturing (CAD/CAM),
group technology, cellular manufacturing system, decision support systems
experts systems and artificial intelligence have become quite common in use.
Now managers are using computers to analyze complex problems and to find
out solutions. Recently several Japanese management techniques such as
Kanban systems, just in time, quality circles, etc. have become popular and
useful. Now cellular manufacturing systems (CMS), Flexible Manufacturing
Systems (FMS) etc are widely used in the process of production. The Japanese
technique of lean production has attracted the attention of business world
because of its focus on core competencies, flexibility, speed, integration of
design and operations and the right type of people.

1.6 Production Management and Production Planning

Some Definitions

1. Harding H. A.: Production is concerned with those processes which

convert the inputs into outputs. The inputs are various resources like
raw materials, men, machines, methods etc. and the outputs are goods
and services.

2. Brech E. L.: Production is a process of effective planning and regulating

the operations of that section of an enterprise which is responsible for
the actual transformation of materials into finished products.

3. Harr y MJS: The word of production is often used the mean the same
as manufacture. In order to go through the process of manufacturing
itself, we need basically three things: i) Someone to do the job ii) his
equipment and iii) the necessary materials. To run production we need
service activities which make sure that the manufacturing activity can
go on and control to make sure that it goes in the right direction.”

4. Buf fa E.S.: “Production deals with decision making related to

production processes so that the resulting goods or ser vices are
produced according to specifications, in amounts and by the schedule
demanded at minimum cost”

3/MITSDE
Production Planning and Control

5. “Production refers to the application of management principles to the

production function in the factory. In other words, Production involves
application of planning, organizing, directing and controlling to the
production process.

Thus Production is the process of bringing together men, materials and

machines for producing goods and services desired by the society to satisfy
the wants of the people.

There are three teams in use now. These are production, manufacturing and
operations management. Although these terms may be used synonymously
still some authors make distinction between them. The term production is
used to refer to the process of producing goods and services or tangible and
intangible outputs. The term manufacturing refers to the process of producing
only goods or tangible products. The term operational management is used
to a system or process where only intangible services are provided. Hence
operations management cover such service organisations like banks, utilities,
transport, educational services, super markets etc.

Alford and Beaty defined it as: “Production planning and control comprise the
planning, routing, scheduling dispatching and follow up function in the
productive process, as organized, that the movement of the materials,
performance of machines and operations of labour, however subdivided, are
directed and coordinated as to quantity, quality, time and place. It is adopting
as business principle the old saying “Plan your work and work your plan”

According to Gordon ‘Production planning and control involves generally the

organization and planning of the manufacturing process. Specifically it consists
of planning of routing, scheduling, dispatching and inspection coordination
and control of materials, methods, machines, tooling and operating times”

Ray Wild defines it as ‘Production planning is the determination, acquisition

and arrangement of all facilities necessary for future production of items. In
other words production planning is essentially a pre-production activity
associated with the design of the production system. The production system
is considered to incorporate an organizational element in addition to physical
facilities and production planning is concerned with organizing the production
of an item prior to the commencement of production”

Production control is concerned with the implementation of production

schedules. Production control goes on during production and consists of:
1. Initiating production
2. Dispatching of items or establishing priorities between items competing
for time on the same facility
3. Progressing
4. Reporting back to production planning

Thus planning is forward thinking while control is a mechanism for execution.

Planning and control are the two important wheels of the management
process. Planning includes the consideration of all input variables to achieve
defined output goals. Control includes the corrective actions taken when actual
performance varies form the desired one by way of bringing actual output in
line with planned output.

4/MITSDE
 Production Planning and Control

Summing Up

The chapter describes the meaning of the term production, planning and
control. It traces the need for production to be planned and controlled in order
to ensure successful business. The impact of industrial revolution, scientific
management and the HR revolution has been emphasized.

Self-assessment

1. The purpose of production is

a) Converting raw materials, into finished products.
b) To satisfy the needs of the members of the society
c) To create profits for the organization
d) All of the above

2. Principles of scientific management were established by-

a) Gilbreth
b) Whitehead
c) F. W. Taylor
d) Gordon

3. Division of labour generates the following benefits-

a) As a worker works continuously on the same job he attains higher
skill and dexterity
b) Saves time required for changing from one job to another includes
certain information that is essential for analysis
c) Both the above
d) None of the above

4. Studies were undertaken to study the relationship between physical

environment and worker productivity were done by-
a) Elton Mayo
b) Chester Bernard
c) McGregor
d) All of the above

5. Role of Computers in Production Technology includes

a) Computer simulation, and manufacturing (CAD/CAM)
b) Computer-aided design
c) Both of the above
d) None of the above

5/MITSDE