Operation Mgmt,production Systems

PRO DU CTION MANAGEMENT PRODUCTION AND PRODUCTION MAN AGEM ENT Production is defined as the step by step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user. Thus economists define production as an activity by which form utility is created or enhanced. For example, the iron ore exists in the nature. It will be converted into steel by a chemical process, which is put to various uses like, making bars, pipes, angles, channels etc. Thus production is a value addition process. At each stage of processing, there will be a value addition. Edward Buffa defines production as ”a process by which goods and services are created” Edward Buffa defines production management as follows: Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specification, in the amounts and by the schedule demanded and at minimum cost. OP ERA TION MAN AGEM ENT Operation is often defined as a transformation process. The transformation process itself can be viewed as a series of activities along the value chain extending from supplier to customer. Operation management may be defined as a process which combines and transforms various resources used in the production operations subsystem of the organization into value added products/services in a controlled manner as per the policies of the organization. A set of various activities which are involved in manufacturing certain products is named as ‘Production Management’ if the same concept is extended to service management, then the set of various management activities are called “Operation Management” In general the concept of manufacturing products/offering services is called Production/Operation Management. The activities of Production/Operation management include organizing work, selecting processes, arranging lay out, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory and planning production. Production management is more used sor systems where tangible goods are produced. Operation management is more used where various inputs are transformed in to intangible services. Viewed from this perspective, operation management will cover such service organizations as banks, airlines, utilities, pollution control agencies, super bazaars, educational services etc in addition to manufacturing enterprises. PRODUCTION as a SYST EM There are three systems 1) Production system 2) Conversion sub system 3) Control sub system 1 Production System A system whose function is to convert a set of inputs into a set of desired outputs 2 Conversion sub system A sub system of the larger production system where inputs are converted into outputs 3 Control sub system A subsystem of the larger production system where a portion of the output is monitored for feed back signals to provide corrective action, if required The production system is a part of a larger system- the business firm.. The production system can be viewed as a frame work of activities within which the creation of value can occur. Briefly the difference between the value of inputs and the value of output represents the value created through production activities At one end of the production system .are the inputs and the other end-outputs. connecting the inputs and outputs are a series of operations or processes, storage and inspections.

(1)INPUTS

MEN MATERIALS MACHINES MONEY INFORMATION ENERGY

(2)CONV ERSION PR OCES S • PROVIDED NEEDED ADJUSTMENTS • OUTPUT IS MONITORED • ACTUAL VS DESIRED IS COMPARED (3) OUTPUT • GOODS OR • SERVICES

The production system of an organization is that part which produces the organization’s products. Production is the basic activity of all organizations and all other activities revolve round production activity. The output of production is the creation of goods and services which satisfy the needs of the customer. PRODUCTION FUNCTION A function is the relationship among a number of variables. The value of one variable depends upon the value of the other Production function is concerned with the creation of a product. It establishes the relationship between the quantity of output furnished or given out by a productive process and quantities of different inputs used in the process A product function that involve a wide range of activities like plant location, production planning and control. Research, development etc. The function of production personnel are • Forecasting the demand for the products and using the forecast to determine the requirements of various factors of production • Arranging the procurement of required factors of production • Arranging for the services such as maintenance, storekeeping, material handling, inspection and quality control etc that would be required to attain the targeted level of production. • Utilizing effectively the factors of production and service facilities available to produce the required product. • Reducing rejection rate, minimizing re-work, maintaining delivery schedules, controlling idle machine and man hours • Controlling overtime, eliminating accidents, good house keeping

• •

Controlling absenteeism, effective grievance handling, effective training, enhancing customer satisfaction, Total Quality Management Automation

NEED OF PR ODUCTION FUNCTION Competitive advantages of companies is highly talked about these days. It is believed, that a firm, strong in competitive advantages, is well poised to succeed whatever may be the constraints or restraints, firms look to production to achieve competitive advantage.

Production function can offer competitive advantage to a firm in the following areas. Shorter new -product lead time. Inventory control Shorter manufacturing lead time. Higher quality Greater flexibility Better customer service Reduced wastage Many causes that deny competitive advantages to any firm can be attributed manufacturing function-specially to poor quality and reliability, delayed deliveries, high production costs and lack of adequate inventory at the right time. It may be stated that that the production function offers vast scope for achieving productivity with effective management of materials and lead time and better control on cost OBJ ECTIVES OF PR ODUCTION MANAG EMENT Production is an organized activity and the objective is stated as To [produce goods and services of right quantity and quality at predetermined time and pre established cost Thus objective of prod uc tio n manag ement are reflected in • Right qua lity • Right qua ntit y • Pr edetermi ned time • Pr e estab lished cost To achieve the above objective, the production departments have to make the optimum utilization of various inputs like men, material and machine. These objectives are called intermediate.objectives.Production management aims at satisfying the needs of the customers through offering organizations products/services TY PES OF PR ODUCTION Basically the production system can be categorized as • Make to stock production • Make to order • Assemble to order MAK E TO ST OCK The manufacturer stocks the finished goods in inventory for immediate shipment. This system ensures immediate delivery of goods. Examples are bearings, ready to wear garments, television, motors etc etc . in this system, customer will not accept delay in delivery and the management required to keep adequate stock of finished products. Operation management focuses entirely on replenishment of inventory. The main advantage of this system is short delivery time. Situations required for this system are • Fairly constant and predictable demand • Products are few and they are standardized. • Shorter delivery time expected by customers • Products having higher shelf life Make the stock items are generally mass consumed and proper details or foretasted demand, requirements, opening inventory are required MAK E TO ORDER Some companies make products after the receipt of firm order from customer. Make to order is a demand responsive strategy and examples are custom tailored cloths special machinery and product made to

customers specification. Situations are, • Products are made to customer specifications • Customer can wait till the material is ready • Product is expensive and non standard to store AS SEMB LE TO ORD ERHere the customer is not ready to wait until product is made. Manufacturers produce and stock the standard component parts, when customers place order the customer does the assembly from the selected components. Only assembly time is required here. Examples are computers and consumer electronics. Base d on vo lume of prod uc tio n, pr oduction sys Job work Batch or interm it tent pro duction Contin uous prod uction Mass p roduction Cell ular pr oduction

tem is fu rther classified

as

JOB ORD ER• job order type production applies to situations where products are to be manufactured against specific requirements of the customer. • The production shop usually has all facilities needed for that category of jobs • It should have skilled workmen • High varieties of products and low volume • Jobs are mostly of similar in nature. Eg. Sheet metal job shop does only sheet metal work. AD VANT AGES. • Investment is comparatively less • Manpower requirement is less • Overhead expenses are less • Operators will become more skilled and competent that each job gives him learning opportunity and therefore utilization of full potential of operators LIMIT • • • •

ATIONS High dependence on the skill of workmen Need close supervision and management Some machines will be under utilized Delayed payment from customers will affect the business

BA TCH PR ODUCTION In batch production, the job pass through the functional departments in lots or batches and each lot may have a different routing. Batch production aims at satisfying the continuous customer demand for an item.. however, the plant is capable of production rate that exceeds demand rate. Characteristics • Shorter production runs • Plant and machinery set up is used for the production of items in a batch and set up required to be changed for processing next batch of items AD VANT AGES • Amount of supervision required is less compared to job order • Lower investment in plant and machinery

• Batch size can be increased for larger orders increasing profit. • Better utilization of plant and machinery • Job satisfaction exists for operators • Promotes functional specialization LIMIT ATIONS • Material handling is complex because of irregular flows • Production planning and control will be more complex • Work in process inventory is higher compared to continuous production • Longer production times • Higher set up costs due to frequent changes in set up CONTINUOUS PR ODUCTION The production is a continuous process Eg Cement, refinery, fertilizers etc. investment will be very high and specified machinery and equipments are required. The throughput capacity of the line decides the production capacity of the plant. The production process cannot be normally stopped. Once stopped, it is expensive and time consuming to restart the process. Preventive maintenance is very important and a breakdown of any one of the equipment will stop the entire production. Operator skill requirement is less. Product quality is built into production process, high investment is required to increase the capacity even marginally AD VANT AGES • Cost of production per unit is low. • Production and quality control are automatic • Manpower requirement is less DISAD VANT AGES • Require large investment • Production cannot normally be stopped or reduced if market off take is low • Restarting will be expensive and time consuming • Preventive maintenance is very important. • Breakdown of one equipment lead to temporary disruption of the process • Production volume cannot be increased characteristics Job order Batch production Mass production Volume/quantity One or few jobs Limited number jobs Large quantity Product variety Large variety Few variety One or few products Lay out Process or functional lay Process or functional lay Product or line lay out out out Set up time high high low Equipment& machinery General purpose General purpose Special purpose and dedicated flexibility high high Very low & routine Prod. planning complex complex Simple routine Work in process high medium low inventory Cost/unit high medium low Skill of labor Highly skilled skilled Semi/unskilled investment low medium high Material handling mannual Manual/semi auto automatic Plant utilization low medium high