PRODUCTION MANAGEMENT 4 CLASSIFICATION OF PRODUCTION

 is the process of coordinating, directing SYSTEMS:

and controlling the activities required to
make a product JOB SHOP PRODUCTION
 is characterized by manufacturing of one or
 involves the application of planning,
few quantities of products designed and
organizing, directing and controlling the
produced as per the specification of customers
activities of the production process. within prefixed time and cost.
 produces piece of goods in small batches
OPERATIONS MANAGEMENT
 comprises of general-purpose machines
 is concerned with overseeing, designing and
arranged into different departments
controlling the process of production,
redesigning business operations in the
BATCH PRODUCTION
production of goods or services with the
 characterized by the manufacture of limited
objective of balancing the supply with
number of products produced at regular
demand.
intervals and stocked awaiting sales
PRODUCTION AND OPERATIONS
MASS PRODUCTION
MANAGEMENT
 manufacture discrete parts or assemblies using
 is the process of converting the input into
a continuous process
output using physical resources and providing
 machines are arranged in a line or product
the desired utility to customers while meaning
layout
the organizations objectives.
CONTINUOUS PRODUCTION
PRODUCTION
 when facilities are arranged as per the
 is then defined as “the step-by-step conversion
sequence of production operations from the
of one form of material into another form
first operations to the finished product
through chemical or mechanical process to
create or enhance the utility of the product to
the user.”
Objectives of Production Management:
PRODUCTION SYSTEM  is ‘to produce goods services of right quality
and quantity at the right time and right
manufacturing cost’.

RIGHT QUALITY is when a product is established

based upon the customer's needs

RIGHT QUANTITY The manufacturing organization

should produce the products in right number

RIGHT TIME is the timeliness of delivery, one of the

important parameters to judge the effectiveness of
The production system has the following production department
characteristics:
RIGHT MANUFACTURING COST are established
1. Production is an organized activity, so every before the product is actually manufactured
production system has an objective.
2. The system transforms the various inputs to useful OPERATIONS SYSTEM
outputs.  An operation is defined in terms of the
3. It does not operate in isolation from the other mission it serves for the organization,
organization system. technology it employs and the human and
4. There exists some feedback about the activities, managerial processes it involves.
which is essential to control and improve system
performance.
  An operations system converts inputs in order An operations manager is a senior role which involves
to provide outputs that are in demand to overseeing the production of goods and/or the
customers. provision of services.

CONCEPT OF OPERATIONS:
MANUFACTURING OPERATIONS

 Produce tangible goods, which are physical

products that can be held and seen.
 Two branches: process and discrete
manufacturing. Process manufacturers produce
goods that typically use a formula and
ingredients.
 While, discrete manufacturers produce goods
from parts, such as electronics, appliances and
automobiles.
SERVICE OPERATIONS
Service operations can be classified into many
industries, such as banking, hospitality, advertising and PLANNING
consultancy.
The operations manager defines the objectives for the
STANDARDIZATION operations subsystem of the organization, and the
Manufacturers, goods are produced in masse in a policies, and procedures for achieving the objectives.
factory or warehouse-type environment. One finished ORGANIZING
product is generally the same as the next.
Operation managers establish a structure of roles and
CUSTOMIZATION the flow of information within the operations
Service operations, by contrast, have more subsystem
opportunities to customize the services they provide. CONTROLLING
PRODUCTION ENVIRONMENT To ensure that the plans for the operations subsystems
are accomplished, the operations manager must
 Manufacturing operations, for instance,
exercise control by measuring actual outputs and
consider the manufacturing layout.
comparing them to planned operations management.
 Service operations, by contrast, plan the
environment according to how it affects BEHAVIOUR
customers.
Operation managers are concerned with how their
OPERATIONS MANAGEMENT efforts to plan, organize, and control affect human
behavior
 In a manufacturing environment, operations
managers oversee the activities required to MODELS
produce goods from raw materials.
As operation managers plan, organize, and control the
 In a service operation, operations managers
conversion process, they encounter many problems
schedule workers to handle customer demand.
and must make many decisions.
The objectives of operations management:

 CUSTOMER SERVICE
The first objective of operating systems is the customer
service to the satisfaction of customer wants.

FRAMEWORK FOR MANAGING  RESOURCE UTILIZATION

OPERATIONS
Another major objective of operating systems is to ‘Material Handling’ refers to the ‘moving of materials
utilize resources for the satisfaction of customer wants from the store room to the machine and from one
effectively, i.e., customer service must be provided machine to the next during the process of
with the achievement of effective operations through manufacture’. It is also defined as the ‘art and science
efficient use of resources. of moving, packing and storing of products in any
form’.
The twin objectives of operations management
PRODUCT DESIGN
 MANAGING GLOBAL OPERATIONS
Product design deals with conversion of ideas into
The term ‘globalization’ describes businesses’ reality. The entire process of need identification to
deployment of facilities and operations around the physical manufactures of product involves three
world. functions: marketing, product development, and
There are four developments, which have spurred the manufacturing.
trend toward globalization. These are:
1. Improved transportation and communication PROCESS DESIGN
technologies;
Process design is a macroscopic decision-making of an
2. Opened financial systems; overall process route for converting the raw material
3. Increased demand for imports; into finished goods.

4. Reduced import quotas and other trade barriers.

Managing global operations would focus on the PRODUCTION PLANNING AND CONTROL
following key issues:
 Production planning and control can be
- To acquire and properly utilize the following defined as the process of planning the
concepts and those related to global production in advance, setting the exact route
operations, supply chain, logistics, etc. of each item, fixing the starting and finishing
- To associate global historical events to key dates for each item, to give production orders
drivers in global operations from different to shops and to follow up the progress of
perspectives. 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’.
SCOPE OF PRODUCTION AND
OPERATIONS MANAGEMENT Main functions of production planning and control:

Production and operations management concern with  PLANNING is deciding in advance what to
the conversion of inputs into outputs, using physical do, how to do it, when to do it and who is to
resources, so as to provide the desired utilities to the do it.
customer while meeting the other organizational  ROUTING may be defined as the selection
objectives of effectiveness, efficiency and adoptability. of path which each part of the product will
follow, which being transformed from raw
POM FUNCTIONS material to finished products.
1. Location of facilities  SCHEDULING determines the program for
the operations. Scheduling may be defined as
Location of facilities for operations is a long-term ‘the fixation of time and date for each
capacity decision which involves a long term operation’ as well as it determines the
commitment about the geographically static factors sequence of operations to be followed.
that affect a business organization. It deals with the  DISPATCHING is ‘release of orders and
questions such as ‘where our main operations should instruction for the starting of production for
be based? any item in acceptance with the route sheet
2. Plant layout and material handling and schedule chart’.
 FOLLOW-UP is to report daily the progress
Plant layout refers to the physical arrangement of of work in each shop in a prescribed format
facilities. It is the configuration of departments, work and to investigate the causes of deviations
centers and equipment in the conversion process. from the planned performance.
QUALITY CONTROL (QC) may be defined as ‘a perfect match between those wants and needs
system that is used to maintain a desired level of and the organization’s goods and/ or services.
quality in a product or service’. It is a systematic
2. Price and Quality are key factors in
control of various factors that affect the quality of the
consumer buying decisions. It is important to
product.
understand the trade-off decision consumers
MATERIALS MANAGEMENT make between price and quality.

Materials management is that aspect of management 3. Advertising and Promotion are ways
function, which is primarily concerned with the organizations can inform potential customers
acquisition, control and use of materials needed, and about features of their products or services,
flow of goods and services connected with the and attract buyers.
production process having some predetermined
objectives in view.
OPERATIONS INFLUENCES
1. Product and service design - special
MAINTENANCE MANAGEMENT
design characteristics or features.
In modern industry, equipment and machinery are a
2. Cost - lower operational costs, higher
very important part of the total productive effort.
productivity.
Therefore, their idleness or downtime becomes are
very expensive. Hence, it is very important that the 3. Location - distance to inputs, or distance to
plant machinery should be properly maintained. markets.
Productivity: the effectiveness of productive effort, 4. Quality - when consumers perceive high
especially in industry, as measured in terms of the rate quality, they are willing to pay more.
of output per unit of input.
5. Quick response - new and improved
Schematic: A representation of the elements of a offerings, quick good/service delivery, fast
system using abstract, graphic symbols rather than customer compaint feedback.
realistic pictures.
6. Flexibility - responses to changes,
Utilization: The action of making practical and alterations of design, actual demand.
effective use of something.
7. Inventory management - can be a
competitive advantage by effectively matching
supplies of goods with demand.
OPERATIONS STRATEGY, PRODUCTIVITY
AND COMPETITIVENESS 8. Supply chain management - coordinate
internal and external operations.
• Competitiveness refers to how effective an
organization meets the wants and needs of 9. Service - quality after sales, costumer
costumers in comparison to its competitors service.
that produce the same goods/services.
10. Managers / Workers - Competent and
• Strategy denotes a plan for achieving motivated.
organizational goals.

• Productivity is a measure of the effective use

of resources, usually expressed as the ratio
output to input. Productivity measures are
useful for tracking an operating unit’s
performance over time and judging the
performance of an entire industry or country. • MISSION is the reason for a business to
exist. An organization needs to know and
define its mission in order to have a path to
Marketing Influences follow. Such as what kind of business are they
going to pursue.
1. Identifying the consumer wants and
needs is a basic input in an organization’s • GOAL further explain this mission. They are
decision-making process, and central to like the marketing position, they express how
competitiveness. The idea is to achieve a
 organizations wants its self-image and position • Service- focus on various aspects of services
in people’s mind. like courteousness, reliability.

• STRATEGY is when an organization start • Sustainability- focus on environmental

planning how to reach its goals. It involves the friendly and energy efficient operations.
formulation and implementation of the major
STRATEGY FORMULATION
goals based on consideration of resources and
an assessment of the internal and external • FORMULATION of strategy involves
environments in which the organizations analyzing the environment in which the
compete. organization operates, then making a series of
strategic decision about how the organization
• TACTICS is how an organization
will compete. Formulation ends with a series
approaches a strategy. It tells us how to
of goals or objectives and measures for the
actually operate and process the organization
organization to pursue.
and its strategies specifically.
• STRATEGIC DESICIONS are based on
insight from the environmental assessment and
are responses to strategic questions about how
the organization will compete.
Effective strategy formulation requires taking into
Strategic management process for production and account:
operation
1. Distinctive Competencies - The special
Competition Analysis: In this step company evaluates attributes or abilities that gives an organization
and studies current competition in the market and a competitive edge.
practices that are followed in the industry for
operations and production vis-à-vis company policies. 2. Environmental Scanning

Goal Setting: Next step involves narrowing down the

objective towards which the organization wants to
move towards.
Strategy Formulation: the next step is breaking down
of organizational goals into operations and production
strategies.
Implementation: The final step is to convert operations
and production strategies into day to day activities like
production schedule, product design, quality
management etc.

ORGANIZATION STRATEGIES
• Low Cost- Outsourcing to lower the cost of
labor.
• Scale-based strategies- Use capital- intensive
methods to achieve high output volume and
low unit cost.
• Specialization- Focus on narrow product lines
or limited service to achieve higher quality.
Successful strategy formulation also requires taking
• Newness- Focus on innovation to create new into account:
products or services.
1. Order Qualifier - characteristics that
• Flexible Operations- focus on quick response costumers perceive as minimum standards of
and/or customization. acceptability to be considered as a potential
• High Quality- focus on achieving high quality purchase.
than competitors.
 2. Order Winner - characteristics of an • Time-based strategies- focuses on reduction
organizations goods or services that cause it to of time needed to accomplish tasks.
be perceived as better than competition.
PRODUCTIVITY
Index that measures ouput (goods and services)
External Factors relative to the input (labor, materials, energy and other
resource) used to produce it.
1. Economic conditions
Productivity ratios are used for; Planning workforce
2. Political conditions requirements, Scheduling equipment, and Financial
3. Legal environment Analysis.

4. Technology Productivity measurement can be classified in three

categories based on the inputs used for calculations:
5. Competitions
1. Partial productivity ration of output is
6. Markets compared to one of resource used for example,
labor productivity where outputs is compared
Internal Factors to the labor wages. Formula: output/ (single
1. Human Resources input)

2. Facilities and equipment 2. Total productivity measure takes into

consideration sum of all input factors which
3. Financial resources are used for the output. Formula: output/ (total
4. Customers input)

5. Products and services Productivity = Outputs/Inputs

6. Technology 3. Multi-factors measure: output/(multiple input).

In the modern age technology plays an
7. Suppliers important part in productivity.
8. Other

FACTORS THAT AFFECT PRODUCTIVITY

The eight main factors that affects productivity are:
1. Technical factors
2. Production factors
3. Organizational factor
4. Personnel factors
5. Finance factors
OPERATIONS STRATEGY
6. Management factors
• Dealing primarily with the operations aspects
of the organization. 7. Government factors

• Operational Strategy relates to products, 8. Locations factors

processes, methods, operating resources,
quality, costs, lead times and scheduling.

QUALITY AND TIME STRATEGIES

• Quality-based strategies - Focuses on
maintaining or improving the quality of an
organizations products or services.
 BENEFITS OF HIGH PRODUCTIVITY
Advantages/importance/benefits of
Higher productivity…
1. Higher profitability
2. Employee welfare
3. Higher return to shareholders
4. better relations
5. customer satisfaction
6. Higher credit rating
7. Corporate image
8. Better terms from suppliers
9. Less employee turnover and absentecism

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