PRODUCTION MANAGEMENT

Definitions
Production is defined as the activity of transferring raw
materials or components into finished products.
Production management is the process of the effective
planning and control of the operations of that section of an
enterprise devoted to transferring materials into finished
products.
Modern manufacturing processes are complex and costly
machines, printers, material of all kind and labour all have to
be blended together to enable the production system to carry
out its operation in a cost effective way. Thus production
processes require careful planning and controlling.

BASIC ELEMENTS OF PRODUCTION PLANNING

AND CONTROL SYSTEMS

Production planning refers to the process of formulating a

resource transformation system to meet forecasted demand.
The basic elements of a typical production planning and
control system can be summarised as follows:
(a) Translate the customer’s requirements, as
defined by the final pre-production design and
preliminary sales forecasts, into production
instructions (work orders).

(b) Prepare production schedules and programmes.

(c) (plan the supply of materials, parts&

components .

(d) Plan availability of machines, specify signs&

tools .

(e) Ensure labour requirements

(f)Set production targets

(g) Maintain stock and purchasing records

(h) Progress orders through the factory

(i) Liaise with the marketing department

 (j) Liaise final production documents (delivery notes,
invoices etc)

Several points arise from the above lists

(i) Plans referred to are short-term plans for periods of

from one week to one month. At the start of a new
production process these plans may be altered at
frequent intervals.
(ii) Production schedules are basically timetables. They
are usually of detailed nature specified in the
timetables as requirements in the precise operations
and jobs and invariably set sequence of priorities. The
major aims of scheduling are to ensure, so far as
possible that work is completed on time and within
budgeted costs. Wide use is made of Gait chart in
production scheduling of relatively straightforward
routine projects.
(iii) Plans for materials etc involve stock control and
purchasing.
(iv) Plans for machines include the availability, capacity
and loading of machines. Capacity and loading may
vary considerably between different types and models
of machines, and these facts have to be taken into
account in planning the overall production effort.
Carefully planned loading can reduce material waiting
time even out loads between machines and processes;
reduce idle time and high tight machine utilization.
(v) Labour requirements are a vital part of production
processes. As well as detailing the number and types
of employees required. There are questions of pay and
incentives to be agreed before production commences.
If new machines or new processes are to be employed,
it will be necessary to organize training in machine
operations and safety.
(vi) All plans should set targets. In this case targets, based
on sales forecasts will be set in collaboration with
marketing or sales staff, as representatives of
customers and will take into account considerations
such as planned maintenance, product quality control
and machine breakdowns.
 (vii) The progressing of orders through the production
process involves some ‘chasing-up’ of progress in
situations where orders have fallen behind schedule.
(viii) Liaising with the marketing departments is
important to ensure that the productive effort is
meeting the customers’ needs or where there are
difficulties in production ensuring that the customers
are informed and/or is prepared to accept a slightly
different standard or quality of product.
Finally, the outputs of the production system need to be
accounted for invoiced and delivered (to the customers or
into stock). Thus the final step is to ensure that the
appropriate paper work is available and correctly
completed

Types of Production
(i) Job Production (Unit Production)
This occurs when a customer requires a single product made
to his specification, e.g. a ship or a suit. Demand can be only
broadly forecasted and generally production schedules can be
prepared only when the customer’s order arrives. There is no
production for stock and there are only limited stocks of
materials kept. There must be a wider variety of machines
and equipment available to do all types of work and lobour
must have varied skills, this may not be too easy to achieve.

Key Features of Job Production

(i) A wide variety of different operations to be performed
under varying circumstances i.e. No Standardisation
(ii) Varying sequences of operations, also subject to
subject to varying circumstances.
(iii) General purpose machinery and equipment
(iv) Varied work layouts, depending on process and/ or
operation
(v) Unpredictable demands on stores
(vi) Workforce skilled in wide range of skills
(vii) Adaptable and equally skilled supervision
Because of the unique or individual nature of each article or,
item to be produced, planning is not easy in job production,
neither is control. Efficiency of operations has to give way to
inventiveness and creativity. It is difficult to avoid idle time
for both men and machines. Thus the entire manufacturing
process tends to be relatively expensive compared with other
forms of production.
(ii) Batch Production

This occurs where a quantity of products or components are

made at the same time. There is repetition but not continuous
production. Production often is for stock, but if a batch is
required to fulfill a special order the items are usually
completed in one run. These are usually standardized units
mostly found in the light engineering industry.

On of the major problems associated with batch production is

to determine the optimum size of batches, particularly where a
generalized, rather than specific, demand for a product exists.
Key Features
 (i) Standardised set of operations, carried out
intermittently (happening in intervals) as each batch
moves from one operation to the next.
(ii) General-purpose machinery and plant, but group in
batteries of the same type.
(iii) Heavy shop floor stores requirement.
(iv) Narrower range of skills required.
(v) Emphasis on production planning and progressing.
(vi) Relatively short production runs

These characteristics lead to a generally well-controlled and

efficient method of production, whose main disadvantage is
the time-delay caused by the queuing effect of individual units
waiting for the batch to be completed before moving on to
next operation.

(iii) Flow Production

This occurs where there is a continuous production of
products of a more or less identical nature. There is very little
waiting between the execution of one operation and another
and each machine is continually used for one product and
these are often specialized single purpose machines. This
type of production requires careful and lengthy planning of
plant and processes. The capital cost is high an account of the
specialized nature of the machines required for the production
line. The supply of raw materials has to be planned to the
highest standards in order to avoid complete plant shutdown
owing to unforeseen shortages.

Its greatest drawback is that it requires human beings to adapt

themselves to the production process, and in most Western
countries, there has been a reaction against this requirement.

Key Features

(i) Product specifications, previously tested

(ii) Specialised machines and equipment, set out in a line
formation
(iii) Highly-standardised methods, tools and materials
(iv) Long production runs for individual products

(iv) Narrow range of skills and specified range of

operations required by workforce at any one point in
the line.

Mass Production
This is the production of a large quantity of similar products.
The products are highly standardised, e.g. motor vehicles.

Site Selection And Factory Planning

The selection of a site may be dependent upon;

(a) Availability of Land.

Land of the right nature and price must be available. There

must be provision for expansion. In this connection there are
government development aids which provide facilities for
easy land purchase, and give other benefits.

(b) Availability of labour.

The availability of labour of the right type is a strong
locational factor.

(c) Availability of raw materials:

This is closely linked up with transport facilities, with regard

to obtaining the raw material and later in disposing of the
product. Proximity to sea, river, road or rail is usually
important and essential.

(d) Climate

For some industries climate may be a very important

consideration in the choice of a site.

(e) Local regulations or by-law

These may be an important consideration as they may place

restrictions on the industry.
 (f)Social Facilities:

Availability of cultural and recreational activities, for

example, and the suitability of housing accommodation may
be important.

Selection of Type of Building

(i) Single-storey buildings can make better use of

natural lighting. Heavy machinery can be placed
with fewer restrictions compared with multi-
storey buildings. Transport and movement of
materials is quicker and easier and there is a
lower cost of building and maintenance.
(ii) Multi-storey buildings make better use of scarce
land. Gravity can be used for moving materials
and there is economy of cabling and heating.
 (iii) There are of course many others factors to be
considered by the architect, e.g. position of
workshops, canteen, offices etc. Whatever type
of building is considered, factory Act regulations
must be noted, especially regarding heating,
lighting, ventilation and safety.
Production Planning and Control
Because of the complexity of modern production process
(machines, computers, materials of all kinds, and labour all
having to be blended together to enable the production system
to carry out its operations in a cost-effective way). Production
processes require careful planning and controlling.

Production planning refers to the process of formulating a

resource transformation system to meet forecasted demand.
The basic elements of a typical production planning and
control system can be summarised as follows:
 Translate the customer’s requirements, as defined by the
final pre-production design and preliminary sales
forecast, into production instructions (workers orders).
  Prepare production schedules (timetables) e.g. Master
production schedule, this is an authoritative statement of
how many end items are to be produced and when. It
includes the procurement of raw materials and
subcomponents, fabrications and subassembly
production. The master production schedule is the prime
source document for activities such as purchasing,
inventory control, and quality control.
 Plan the supply of materials, specify jobs, tools e.t.c
 Plan availability of machines, specify jobs, tools e.t.c
 Allocate people/work-teams
 Set production and quality targets
 Maintain stock and purchasing records
 Progress orders throughout the factory
 Liaise with the marketing department
 Raise final production documents (delivery notes,
invoices e.t.c)

Points to note
 Plans for machines include the availability, capacity and
loading of machines. Carefully planned loading can
reduce idle time and highlight machine utilisation.
 Labour requirements are vital part of the production
process. As well as detailing the numbers and types of
employees required, there are questions of pay and
incentives to be agreed before production commences.
 All plans should set targets. In this case targets, based on
sales forecasts, will be set in collaboration with
marketing or sales staff, as representatives of the
company, and will take into account consideration such
as planned maintenance, product quality control and
machine breakdowns.
 The progressing of orders through the production process
is essentially a monitoring and reporting task, which also
involves some ‘chasing-up’ of progress in situations
where orders have fallen behind schedule. The main job
of a progress chaser is to watch out for, and report, any
deviations from schedule, and provide help in sorting out
delays in production.
  Liaison with the marketing department is important to
ensure that the productive effort is meeting the
customer’s needs, or where there are difficulties in
production, ensuring that the customer is informed and/or
is prepared to accept a slightly different standard or
quality of product, for example.
 Finally, the output of the production system need to be
accounted for, invoiced and delivered (to the customer or
into stock)

Purchasing
This is an important aspect of production management. The
primary responsibility of the purchasing/procurement
department is to secure sufficient and suitable raw materials,
for if this doesn’t happen; machine and people may be
standing idle, delivery of finished goods to customers may be
delayed, causing loss of good will, and there may de
additional cost of obtaining emergency supplies from other
sources.

If a decision is made to proceed with a purchase, then the

sequence of events could follow these lines;
 1. Purchasing receives a requisition from an appropriate
authority.
2. The buyer invites quotations from different suppliers
3. The buyer studies the different and chooses one which
according to him is a balance between cost and quality.
4. Purchasing approaches a selected supplier to negotiate
quality, quality, price and delivery of goods.
5. The next stage will be to seek an alternative supplier if a
satisfactory agreement cannot be reached, or to place an
order with the supplier.
6. Purchasing maintains records of orders made, orders
fulfilled, delivery dates, invoices e.t.c.
7. Purchasing arranges for the originating requisition to be
met, either directly from the supplier of via stores, and
amends its stock or delivery records as appropriate.

Purchasing Mix- quantity

The quality of goods to be ordered, and the time at which the
need to be ordered, are major considerations. Insufficient
quantity cause costly delays in production. On the other hand,
larger quantity will have to go into stock as temporarily ideal
resources, also a costly business. The ideal to be aimed at is to
find the optimum way of balancing the costs of insufficient
stock against the costs of holding stock (e.g. tied-up capital,
storage space, insurance costs, damage, and deterioration e.t.c.
research scientist have come up with the Economic Order
Quantity.

Purchasing Mix – quality

The quality of the goods purchased needs to be suitable (a) for
the manufacturing process, and (b) for the customer’s wants.
In seeking decision about quality, the purchasing department
have to work closely with both production and marketing staff
to arrive at a suitable compromise.

Purchasing Mix – price

Purchasing should ideally aim for a price which gives the bet
value to the organisation taking quality, delivery and relative
urgency into account. This may not always be the lowest price
available, but the one which represents the best value over a
period of time.

Purchasing Mix – Delivery

One of the factors which needs to be considered by the
purchasing department in the appraisal and selection of
suppliers is the reliability of deliveries.

Inventory or stock control

This is the process of establishing and making appropriate
levels of reserve stock of goods. There are four categories of
inventory (stock) (1) raw materials and purchased
components, (2) work-in-progress (3) Supplies and (4)
Published goods
 Lead Time

Stock
Level

Reorder
Point

Safety (Buffer Stock)

Time

The diagram indicates how reduces stocks over a period of

time, and invariably absorb some of the buffers stock unless
planned decisions are made on time. The lead time, shown is
the time taken before the order being made and delivered
taking place.

Store Procedure
 Purchase Requisition; on nearing the minimum stock
limit for any item, the store keeper issues a purchase
requisition to the purchasing department and that
departments sends an official order to the suppliers.
  Receipt of materials; purchased materials are
subsequently received from the suppliers and checked by
the receiving department
 Stock Records; on receiving materials the store keeper
will examine them from quantity and quality and record
them on the necessary bin cards.
 Stock Issues; a department needing stock will send a
materials requisition to the stock keeper.
 Surplus materials are sent back to stock and entered in
the bin card

Material Requirements Planning (MRP)

This is an internal production process designed to ensure that
materials (i.e. raw materials, components, sub – assemblies
and parts) are available when required. The process is linked
both to production and purchasing. The starting point for
MRP is the Master Schedule for deliveries and an optimum
quantity of the required materials. By adopting MRP
manufacturing plants hope to achieve a relatively low level of
stock (inventory) a reduction in warehousing and associated
costs, and a faster turnaround time for finished goods. Once
set up, the process lends itself to computerisation, which in
turn enables other functions such as ordering and purchasing
to be linked into the system.

Just – In – Time (JIT) Systems

This system represent a good step forward from MRP, since,
unlike the latter, they aim to co-ordinate the supply of
materials so that they arrive just when the are needed – not
before, not afterwards but just in time. This approach is used
by the Japanese. In theory the system should lead to no stocks
(buffer stocks/ reserves) being held: in practice, it minimise
them (in contrast to MRP which aims to optimise stock
levels). For a JIT system to work it requires total commitment
from the workforce and its suppliers – there is no room for
errors such as faulty components, delays in delivery e.t.c. It
works best in a stable production environment.
Benefits
 Reduced scrap and wastage
 Simplified planning and scheduling
 Increased equipment utilisation
 Improved quality
 Challenges to consider why buffer stocks are thought to
be needed and thus to analyse the production process
with a view to making improvements (a total quality
management approach).
Quality Control
This control begins with inspection of the raw materials and
other items purchased from suppliers, and continues with
inspection during production, and ends with a final inspection
before delivery to the customer. Standards are set which the
inspection department check for. The responsibility for
inspection is usually at the shop floor. The standards are
normally set with several objectives in mind.
1. to produce products which are satisfactory to the
customer (quality, reliability, variety e.t.c)
2. to produce products that are consistent with the
organisation responsibility to its workforce, shareholders
and other stakeholders, (safety in the production area,
ethnically acceptable products e.t.c.)
3. to attain the above with agreed levels of inspection cost

In inspection there are basically three main reasons for

inspecting work;
 to accept or reject items
 to control the process of producing the items
 to improve the process itself, if necessary.

Methods of quality control

 1. Process control: checking items as the progress through
the production process, comparing them with the relevant
standards, and taking any immediate corrective action to
prevent further faults.
2. Acceptance sampling: the customer samples a batch of
newly delivered goods, and either rejects or accepts the
batch on the basis of an acceptable quality level, usually
a small percentage of rejects for batch. If the number of
rejects in the sample is in excess of the agreed
percentage, the whole batch is returned to the supplier.

Aids to Production
Works study according to British Standard (B.S. 3138) is a
generic term for those techniques, particularly method study
and work measurement, which are used in the examination of
human work in all its contexts, and which lead systematically
to the investigation of all the factors which affect the
efficiency and economy of the situation being reviewed, in-
order to effect improvement. The two basic techniques;
method study and work measurement, are complementary to
each other. The usual practice is for a method study of some
kind to precede a work measurement activity.