Nature & Scope of Production Management

Nature & Function of Production Management

Brijesh Grover
 Production Management
Production management is the process of planning, organizing, directing, and controlling the
activities of the production system to produce desired goods and services efficiently and effectively.
Production Management plays a vital role in:
• Creating Value
• Meeting Customer needs
• Driving Economic growth

% of GDP
• The manufacturing sector in India is expected to contribute
17.70%
around 13-14% to the GDP in 2024-25, with initiatives like the
Production-Linked Incentives (PLI) scheme aiming to boost the
Agriculture
Industry
manufacturing share in the economy.
Services • In 2023, India's manufacturing sector contributed about 13% to
27.60%
the country's GDP. This is down from 17% in 2010.
54.70%
• Grew by 9.9% in 2023-24, compared to -2.2% in 2022-23
 Nature of Production Management
• Integrative Function: It integrates various functions like engineering, finance, marketing,
and human resources.
• Continuous Process: It's an ongoing process involving continuous improvement and
adaptation.
• Multi-Disciplinary: Diverse skill sets required, from various fields like Engineering,
Management, Economics, and Behavioral Sciences.
• Dynamic Function: Need to adapt to changing technologies (5G), market demands, and
global competition.
• Optimization-Oriented: Focus on optimizing resource utilization (materials, machines,
manpower) to achieve efficiency and cost-effectiveness.

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Scope of Production Management
(Pre-Production)
Product Design & Development: Process of creating new products and improving
existing ones, considering factors like customer needs, functionality, aesthetics, and cost.

Forecasting: Predicting future demand to plan production accordingly.

(Using Qualitative Methods, like Expert Opinion, Delphi, Market Research or
Quantitative methods like Time Series Analysis or Machine Learning Techniques)

Capacity Planning: Determine the production capacity needed to meet demand,

considering factors like equipment, labor, and space.
Scope of Production Management (Production)
Process Planning & Design: Selection of the most efficient and effective way to produce
the product
• The sequence of operations
• Equipment selection
• Layout design Include a flow chart or diagram of a production process.
Inventory Management: Control of raw materials, work-in-progress, and finished goods
to minimize costs and ensure availability. Techniques like ABC analysis, Just-In-Time (JIT)
inventory, Kanban, etc
Quality Control: Process of ensuring that products meet the desired quality standards
through inspection, testing, and process improvement.

Production Scheduling: Planning and sequencing of production activities to meet

deadlines and optimize resource utilization e.g., Gantt charts.
 Scope of Production Management
(Post-Production)
Maintenance Management: Maintaining equipment and facilities to prevent breakdowns and
ensure smooth production. [Preventive and Corrective maintenance]
Supply Chain Management: Management of the flow of goods and services from suppliers to
customers, including procurement, transportation, and logistics.
Distribution & Logistics: The process of getting finished goods to the end customers, including
warehousing, transportation, and order fulfillment.
 Production Management - Objectives
• Producing Right Quality Goods: Meeting customer expectations regarding product quality.
• Producing Right Quantity of Goods: Matching supply with demand to avoid shortages or
excess inventory.
• Producing Goods at the Right Time: Delivering products on schedule to meet customer
deadlines.
• Producing Goods at Minimum Cost: Optimizing resource utilization and minimizing waste to
reduce production costs.
 Importance of Production Management
• Increased Efficiency: Streamlining processes and optimizing resource utilization.
• Reduced Costs: Minimizing waste, improving productivity, and optimizing inventory.
• Improved Quality: Implementing quality control measures and continuous
improvement.
• Enhanced Competitiveness: Meeting customer needs, offering competitive prices,
and delivering products on time.
• Economic Growth: Contributing to job creation, increased productivity, and overall
economic development.
Challenges in Production Management
• Globalization: Managing complex global supply chains and competition.
• Technological Advancements: Adapting to new technologies and automation.
• Changing Customer Demands: Meeting evolving customer preferences and
customization requirements.
• Sustainability: Minimizing environmental impact and adopting sustainable practices.
• Workforce Management: Managing a diverse workforce and addressing skill gaps.
Where are we Heading?
• Lean Manufacturing • Agile Production • Industry 4.0
Industry Evolution
Industry 1.0
• The first industrial revolution began in the 1760s in England
• Used water and steam power to mechanize production
• Goods became more affordable and accessible
Industry 2.0
• The second industrial revolution began in the 1870s
• Used electricity to power machines and make production faster
• Led to better standards of housing, food, and education
Industry 3.0
• The third industrial revolution began in the 1970s
• Used computers and information technology to automate
production
• Improved working conditions through reduced manual labor
Industry 4.0
• The fourth industrial revolution is the digital revolution
• Uses smart technologies like IoT, AI, and big data analytics
• Aims to make factories smarter and more connected
• Improves supply chain management and customization
Production and Operations Management
• The process of planning, organizing, and controlling the activities that transform resources
(materials, labor, energy, information) into goods and services.
• Focuses on efficiency, effectiveness, and customer satisfaction.

Why is POM important?

• Drives productivity and economic growth.
• Enhances competitiveness.
• Improves living standards.

Thanks
Key Functions of POM
Product Design:
• Conceptualizing and developing new products or improving existing ones.
• Considering customer needs, functionality, aesthetics, and cost.
• Involves market research, prototyping, and testing.
Process Design:
• Determining the sequence of operations and the technology required to manufacture a
product or deliver a service.
• Selecting equipment, layout, and workflow.
• Aiming for efficiency, flexibility, and scalability.
Planning and Scheduling
Forecasting
• Predicting future demand for products or services.
• Using historical data, market trends, and other factors.
• Essential for production planning and inventory management.

Capacity Planning
• Determining the optimal level of production to meet demand.
• Balancing resource availability and customer needs.

Scheduling
• Creating a detailed timetable for production activities.
• Allocating resources and setting deadlines.
• Techniques include Gantt charts and Critical Path Method (CPM).
Inventory Management
What is Inventory? Toyota Inventory
• Raw materials, work-in-progress, and finished goods. Management – A case
study in Efficiency
Why is Inventory Management important?
• Balancing inventory costs (holding costs, ordering Group Presentation
costs) with customer service levels. Exercise
• Minimizing stockouts and excess inventory.
Techniques:
• Economic Order Quantity (EOQ)
• Just-in-Time (JIT) Inventory
Quality Management
What is Quality?
Meeting or exceeding customer expectations.

Why is Quality Management important?

Reduces defects, improves customer satisfaction, and enhances brand reputation.

Techniques:
• Statistical Process Control (SPC)
• Six Sigma
• Total Quality Management (TQM)
Supply Chain Management
What is Supply Chain?
The network of organizations involved in the flow of goods and services from suppliers to
customers.

Why is Supply Chain Management important?

• Ensures timely delivery of materials and products.
• Optimizes costs and improves responsiveness to changes in demand.

Key aspects
• Supplier selection
• Logistics
• Distribution
Maintenance Management
What is Maintenance?
Activities to keep equipment and facilities in good working condition.

Why is Maintenance Management important?

Prevents breakdowns, minimizes downtime, and extends the life of assets.

Types of Maintenance:
• Preventive maintenance
• Corrective maintenance
Production Systems
• A production system is a set of processes and resources that transform inputs (raw materials,
labor, energy, information) into outputs (goods or services) for consumption or further
processing.
• A system of Value Addition. It creates value by converting inputs into desired outputs efficiently
and effectively.
• Key Components of Production system Inputs
Transformation
process

Control
Mechanism Output
(Feedback loop)

Types of Production Systems: Based on Nature of Product

• Continuous/Process: High Volume, Standardized products viz Oil refineries and Chemical
plants
• Intermittent / Batch Production: Production in Batches, varying product types, e.g., Bakeries,
printing presses
• Job Shop / Project: Customized, One-of-a-kind products (Ship building, construction)
Types of Production System
Based on Production Flow
• Line/Flow Production: Sequential arrangement of workstations for standardized
products (e.g., assembly lines).
• Process Layout: Grouping of similar equipment for flexible production (e.g., machine
shops).
• Fixed Position Layout: Product remains stationary, resources are brought to it (e.g.,
shipbuilding).
Key Elements of a Production System
• Facilities: Physical resources like buildings, equipment, and machinery.
• Technology: Processes, methods, and knowledge used in the transformation process.
• Materials: Raw materials, components, and supplies.
• Human Resources: Labor, skills, and expertise involved in production.
• Information: Data and knowledge used for planning, control, and decision-making.
Objectives of a Production System
• Efficiency: Minimizing waste and maximizing resource utilization.
• Effectiveness: Producing high-quality outputs that meet customer needs.
• Flexibility: Adapting to changes in demand and product requirements.
• Responsiveness: Responding quickly to customer orders and market changes.
• Sustainability: Minimizing environmental impact and promoting ethical practices.

Production Planning & Control

• Forecasting: Predicting future demand for products/services.
• Capacity Planning: Determining the resources required to meet demand.
• Scheduling: Sequencing and timing production activities.
• Inventory Management: Managing the flow of materials and finished goods.
• Quality Control: Ensuring that products meet quality standards.
Modern Trends in Production Systems
• Automation: Use of technology to automate production processes.
• Lean Manufacturing: Eliminating waste and improving efficiency.
• Agile Manufacturing: Adapting quickly to changing customer needs.
• Mass Customization: Producing customized products on a large scale.
• Industry 4.0: Integration of digital technologies in manufacturing.
Case Study – Leading Sustainability in Textile Manufacturing

Company Overview: Patagonia, a prominent clothing label (California Based), is celebrated for its
commitment to ethical manufacturing and sustainable practices.

Patagonia is widely recognized for its strong commitment to environmental activism and
sustainability. This is reflected in their mission statement: "We're in business to save our home planet."

Some key aspects of the Patagonia brand:

• Focus on quality: Patagonia is known for producing durable and high-quality products designed for
outdoor enthusiasts.
• Environmental responsibility: The company prioritizes sustainable materials and ethical
manufacturing practices, aiming to minimize its environmental footprint.
• Activism: Patagonia actively supports environmental causes and encourages its customers to take
action to protect the planet.
• Transparency: The brand is open about its supply chain and environmental impact, fostering trust
with its customers.
Case Study – Leading Sustainability in Textile Manufacturing

Challenges:
• High environmental impact of traditional textile production processes.
• Need to reduce waste and conserve resources.

Solutions Implemented: Patagonia has implemented various sustainable practices, including:

• Using recycled materials.
• Reducing water and energy consumption.
• Implementing fair labor practices.
Results:
• Reduced environmental footprint.
• Enhanced brand reputation for sustainability.
• Increased customer loyalty.
Conclusion
• Production systems are essential for creating value and driving economic growth.
• Continuous improvement and adaptation are crucial for success in the modern
manufacturing environment.
• Understanding the various types, elements, and challenges of production systems is vital
for managers and engineers.