Introduction

to Production
Management

Dr Avni Patel
Production

• Production is the process

by which raw materials

and other inputs are

converted into finished

products.
 Production Management

➢ Production management refers to

the application of management
principles to the production
function in a factory.

➢ In other words, production

management involves application
of planning, organizing, directing
and controlling to the production
process.
Difference b/w Production & Operations

Production Operations
• Conversion of inputs into outputs • Implementation of various methods in
• This term can be used for products the process of conversion
only • This term can be used for products
• It is simply concerned with targeted and services both
output • It adds value to the product
• Uses various statistical tools
(operation research tools)
Operations as an organizational
function
Finance/Accounting

Production and
Budgets
Inventory data
Cost analysis
Capital budgeting requests
Capital investments
Capacity expansion and
Stockholder
Technology plans
requirements Product/Service
Availability
Orders for materials
Lead-time estimates
Production and delivery
Status of order
Schedules Quality
Delivery schedules
Requirements Design/
Suppliers

Marketing
Operations
Material availability
Sales forecasts
Quality data
Customer orders
Delivery schedules
Customer feedback
Designs
Promotions
Recruitment and Hiring/firing
selection Training
Performance evaluations Personnel needs
Job design/work Skill sets
measurement

Human Resources
History of Production Management
Evolution of Production Management
Interchangeable
Craft production Division of labor
parts
• process of • dividing a job • standardization
handcrafting into a series of of parts initially
products or small tasks each as replacement
services for performed by a parts; enabled
individual different worker mass production
customers
Evolution of Production Management
Scientific
Mass production Lean production
management
• systematic • high-volume • adaptation of
analysis of work production of a mass
methods standardized production that
product for a prizes quality
mass market and flexibility
 History of Production and
Operations Management
The successful creation of the steam engine
by James Watt (1736–1819), a Scottish
inventor and mechanical engineer, served
as a harbinger of the industrial revolution in
Great Britain and the rest of the world.
History of Production and
Operations Management
Charles Babbage (1772–1871), a British inventor,
was a firm believer of the merits of division of
labour. He promoted the idea of profit sharing with
workers based on their productivity and encouraged
the use of employee suggestion schemes. He gave
1st Programmable Computer to the world.
History of Production and
Operations Management
Robert Owen (1771–1858), a British social
reformer, is remembered for his reforms
regarding child labour in factories, providing
meals in the factories to on-the-job workers,
and creating suitable housing facilities for the
workers.
History of Production and
Operations Management

Thomas Alva Edison (1847–1931), an American

inventor and businessman, made several significant

inventions and had set up the world’s first industrial

research laboratory. Some of his prominent

inventions are the long-lasting electric bulb, motion

picture camera, and the phonograph.

History of Production and
Operations Management
Frederick Winslow Taylor (1856–1915), an American
mechanical engineer, is aptly hailed as the father of
scientific management. His book The Principles of
Scientific Management was published in 1911 and is
regarded a cornerstone of management thought.

He is famous for his stop watch time studies, in which

he measured the time taken by workers in performing
various parts of a task.
History of Production and
Operations Management
Henry Ford (1863–1947), an American entrepreneur,
engineer and innovator, is best known for his invention
of the modern assembly line.

In his factory, Ford implemented several concepts of

Frederick Taylor, including standardized and
interchangeable parts, precision manufacturing, and
division of labour.
Transformation
Process
Transformation
Process

A transformation process is defined as a user

of resources to transform inputs into some

desired outputs
 Quality of Inputs Quality of Outputs
Monitored Monitored

Transformation
Inputs Outputs
Processes

Feedback Mechanisms
 The Transformation Process
For a Service Organization (An MBA Institute)

Random disturbances
• Strikes of students, Quality of
Quality of teachers or staff
Class rooms outputs
inputs • Undue interference of monitored
Teachers monitored the government in the
Raw minds working of institutions
(students) Enlightened students with:
Compute Transformation • Good communication
rLibrar
lab Process skills
• Pleasant personalities
y
Projectors • Leadership qualities
(OHP, LCD etc) • Good analytical ability
Administra • Team spirit
tive staff Feedback Mechanisms • Decision making abilities
• Success at placement interviews • Computer skills
INPUTS • Grades obtained in examinations
OUTPUTS
• Rising career graph of alumni in the industry
• Number of applications for admission
in the institute
• Ratings of surveys
 The Transformation Process For a Hybrid Service &
Manufacturing Organization
(A Restaurant)
Random disturbances
• High turnover of chefs, Quality of
Employee Quality of waiters, etc. outputs
s
Building inputs • Inflation monitored
Chef monitored • Government’s taxation
Vegetables policy
Furniture
. Customers satisfied with:
Transformation • Good preparation of the
Process food
Cooking oil, • Pleasant behavior and
Spices, etc. personality of the waiter
Waiters • Genuine prices charged

Manager
Feedback Mechanisms
• Rising Revenues OUTPUTS
INPUTS • Repeat Customers
• Appreciation of customers
The Product/Process Continuum

Automobil
Photocopier e retailers Banks Consultancies
Automobile manufacturers &
manufacturers service providers Restaurant Airline Undertakers
s s

Product Process
orientatio orientation
n

Organizations on a
Product/Process Continuum
PRODUCT DESIGN
 Research and Development
• In R&D, fundamental research is the advancement of the state of
knowledge in a subject, though it may not be practically converted into
commercial applications.

• Applied research has the objective of developing commercial

applications. Most of the corporate houses have a R&D department
devoted for this purpose.

• Development is the process of converting the results of applied research

into useful commercial applications
Reverse Engineering

• Reverse Engineering is the process of carefully dismantling an

existing product (for a competitor) step by step in order to understand
the unique underlying concepts. If helps in designing new products,
which are better than those of the competitors.
Manufacturability

• Manufacturability implies designing a product in such a way that its

manufacturing assembling can be done easily. While designing a new
product, the manufacturing capabilities (such as existing machines,
equipment, skills of workers, etc.) of the organization have to be kept
in mind.
Standardization

• Standardization refers to less variety in the design of products, i.e.,

new products are designed such that there is no major variation from
the existing products.

• For example, all computers and typewriters have the same

arrangement of keys in the keyboard because it has become a standard
consumers are used to.
Modular Design

• Modular Design is another type of standardization, which means

designing a product in pars of modules. The modules are sub-
assemblies of different components and parts.

• For e.g., in Personal Computers there are separate modules (small

boxes inside which there are various integrated components) for the
motherboard, the hard disk, power supply CD drive, floppy drive, etc.
 Robust Design
• Robust Design means designing a product that is operational in varying
environmental conditions.

• For eg., if you compare a car with a jeep, the jeep is more robust in design as
it can even be used efficiently on hilly areas with poor road conditions.

• The Japanese engineer Genichi Taguchi emphasized that it is easier to create

a product with robust design rather than making changes in the environment
to suit the product.
 Concurrent Engineering
• Concurrent engineering is the product design approach in which the design team
includes personnel from the marketing department (to specify the customer
requirements), engineering department (to look at the feasibility of the design),
production department (to suggest if production capability exists for the design),
materials department (to give inputs material availability according to design
specifications), and finance department (to suggest financial feasibility of the design)
in addition to the design department.
Computer-aided Design

• CAD is a software which helps the designer to make the three

dimensional design of a product on the computer and visualize the
design form various angles.
 Life Cycle of a Product

• The product life cycle has five stages spread throughout the life of a
product. These are incubation, growth, maturity, saturation, and decline.

• The incubation stage witnesses a low demand of the product owing to

the customer not being aware of the new product. As the awareness
increases and new features are added to the product over a period of
time., the demand starts growing and this phase is called the growth
phase.
Life Cycle of a Product

• Next follows the maturity stage, when the demand tends to become
stable and even new features do not appeal much to the masses,
leading to the saturation phase and eventually the decline phase.
PROCESS DESIGN
 Process Design

Types of Processes

Continuous Semi-continuous Intermittent Project

Process (Repetitive/Assembly Process
) Process

Batch Process Job Shop

Types of Processes
 Continuous Process
• The continuous process as the name suggests is continuous
in nature. The set-up time for starting such processes is
usually very long, and once started, they continue for a
long duration.

• The products produced by such a process are highly

standardized with almost no variety, and are measured on a
continuous basis (tonnes per day, meter lengths per day,
etc.) rather than in terms of discreet units.

• Ex: Chemicals, steel, plastic, textiles, sugar, urea etc.

 Semi-continuous
Process
• Semi-continuous processes are
assembly processes, which are
repetitive in nature. They produce
high volume of output and the
products produced have little
variety.
• For example, automobiles,
electronic items, white goods,
etc. These processes require
highly specialized machines,
semi-skilled workers, and result
in low cost per unit.
Intermittent Process

• Intermittent processes stop at regular intervals of time because the

product requires processing on a variety of machines. The products
produced are of different varieties, thus making the production process
slow in comparison to the continuous/semi-continuous process.

• They are of two types: Batch process and Job shop

Batch process
• This process is adopted when
batches or lots of items are to
be produced using the same set
of machines in the same
sequence.
Ex. Bakery
Cleaning and adjustments are
required after each production
run.
Job Shop

• This process can handle a larger variety

of products than the batch process. The
products may be so different from each
other that their processing requirements
may be varied processes, on different
machines, in different sequences, and
with different processing times.
• The batches of items produced in job
shop may vary in size from large,
comprising many units, to very small,
comprising a single unit.
• Ex. Restaurant
Projects

• Projects are processes that handle

very complex and unique sets of
activities or tasks, which have to
be completed in a limited span of
time.
• Ex. Construction of Building, R
& D Project, construction of
Plant, implementation of
specialized software in an
organization.
 DUTIES
AND
RESPONSIBILITIES
OF
PRODUCTION MANAGER
Planning the geographical location of the factory

Purchasing production equipment

Layout of equipment within the factory

Designing production processes and equipment

Product design

Designing production work and establishing work standards.

Capacity planning

Production planning and scheduling

Production control

Inventory Management
Emerging Role of the Production &
Operations Manager in India Today

To act as internal To take part in

quality auditors in To implement total
strategic decision productive
certification
making of the maintenance (TPM)
programmes like organization
ISO 9000 programme

Increased attention
to technology To take part in the
management in view implementation &
of JVs of MNCs with use of ERP software
domestic companies in the organization
New
To act as supply Responsibilities To automate the
chain managers of Operations processes according
in forging long- Managers to the requirements
term strategic of the organization
relationships with
suppliers To enhance the R & D
effort of the
To act as a organization for
member of the becoming self-reliant
concurrent in developing new
engineering team technologies
in new product
design To implement the To oversee timely
To take care of
environmental and implementation of projects
To take decisions issues relating to
pollution norms (like commissioning of services operations
regarding established by the facilities, launching of new
outsourcing/ off- management
government from products/ services, etc.) in
shoring of business time to time view of the increased
processes competition
Productivity and Employee

• One of the key ways we judge

our operational performance is

by using a simple measure,
which is productivity.

• Productivity= Output/Input
 Labor Productivity= Output/Labor Hours

Machine Productivity= Output/Machine Hours

Multifactor Productivity= Output/(Labor cost+ Machine

Cost+ Material Cost+ Energy Cost)
Billco Windows and Doors is preparing their monthly productivity
report. Their monthly costs are shown below. Calculate the
a) labour productivity (output / labour hours)
b) machine productivity (output / machine hours) and
c) the multifactor productivity output / (labour cost + material cost +
energy cost) of dollars spent on labour, materials, and energy. Average
labour rate is $18.00.

• Units produced: 1800

• Labour hours: 1975
• Machine hours: 425
• Materials cost: $81000
• Energy cost: $21600
a) Labour productivity (output / labour hours)
= 1800 / 1975
= .91 units per labour hour

b) Machine productivity (output / machine hours)

= 1800 / 425
= 4.23 units per machine hour

c) Multifactor productivity output / (labour cost + material

cost + energy cost)
= 1800 / (1975 x $18 + $81000 + $21600)
= .013 units per dollar spent
• A company makes seasonal jams and jellies. Yesterday they produced
420 jars of jam with five workers who each worked an 8-hour day.
What was the labour productivity?
• Solution

= 420 / (5 workers x 8 hours)

= 10.5 jars per worker hour
• A greeting card company manufactured 3500 cards in one day. Labour
cost was $1200, material cost was $90, and overhead was $450. What
is the multifactor productivity?
Solution

= 3500 / ($1200 + $90 + $450)

= 2.01 cards per dollar of input
 Trends in Production
Management
• JIT and TQC
• Service Quality and Productivity
• Total Quality Management and Quality Certification
• Business Process Reengineering
• Supply Chain Management
• Electronic Commerce
 Current Issues in OM
• Coordinate the relationships between mutually supportive but separate organizations

• Optimizing global supplier, production, and distribution networks

• Increased co-production of goods and services

• Managing the customers experience during the service encounter

• Raising the awareness of operations as a significant competitive weapon

Artificial Intelligence in
Production Management
• AI which stands for artificial intelligence refers to
systems or machines that mimic human intelligence to
perform tasks and can iteratively improve themselves
based on the information they collect. AI manifests in a
number of forms.

examples :

• Chatbots use AI to understand customer problems

faster and provide more efficient answers

• Recommendation engines can provide automated

recommendations for TV shows based on users’
viewing habits
 Alphabet – Google

Companies Amazon
using AI Apple

Tesla
• Although AI brings up images of high-

functioning, human-like robots taking over

the world, AI isn’t intended to replace

humans.

• It’s intended to significantly enhance

human capabilities and contributions. That

makes it a very valuable business asset.