Production Management - Introduction_1

PRODUCTION MANAGEMENT - INTRODUCTION Joanna Oleśków-Szłapka Institute of Management Engineering Poznan University of Technology October 8th , 2009

OBJECTIVES among others:..  

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Understand basic production management and its function Obtain knowledge of basic methodology in order to apply these in a working field and find a way to improve productivity and eliminate waste Understand higher level of production management Gain ability of forecasting demand, planning a production schedule and fulfilling capacity of production and reform of an organization

CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Production management – background Decision- making process of production Improvement of productivity Forecasting demand of production Design of goods and services Process strategy Material requirements planning and capacity requirements planning Inventory control Specialization and outsourcing Location and layout strategies Planning and scheduling production – information systems Basic case studies and exercices

BOOKS    

T. Hill, Production/Operations Management, Prentice Hall 1991 Heizer, J. Render, B. Operations Management, Prentice Hall 2005 S.N. Chapman, The fundamentals of production planning and control; Prentice Hall 2006 K.N. McKay, V.C.S. Wiers, Practical production control. A survival guide for planners and schedulers,, APICS, J.Ross Publishing 2004 And others from the field of production/operations management…

PRODUCTION MANAGEMENT   

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30 h Lectures, Exercices and cases solved by yourself An oral exam – December 10th, 2009

PRODUCTION MANAGEMENT – THEORETICAL BACKGROUND 1. 2. 3. 4. 5.

DEFINITION OBJECTIVES FUNCTIONS PRODUCT DESIGN, TYPES OF PRODUCTION SYSTEMS PLANNING AND CONTROL PRODUCTION MANAGEMENT ETC.

INTRODUCTION TO PRODUCTION MANAGEMENT 

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Planning and control of production of goods and services are essential for efficient and effective operations. It is definitely not enough (though necessary) for every worker to “know” his/her job. There has to be a planned, coordinated and monitored system of approach to the operations and productions of the organization. This is the reason for production management.

DEFINITIONS - PRODUCTION MANAGEMENT (i)

In short production management is the Art of Managing the Production. It basically concerns itself with the conversion of inputs into outputs.

(ii)

Production management can be also defined as “The job of coordinating and controlling all the activities required in making a product”.This concept is not restricted to only industrial or manufacturing sectors; it is also applicable to service industries.

(iii)

The performance of management activities with regards to selecting, designing, operating, controlling and updating production system

PRODUCTION MANAGEMENT – OPERATIONS MANAGEMENT Production management and operations management are treated as being synonymous. Operations management is the conversion of inputs into outputs, using physical resources, so as to provide the desired utility/utilities of form, place, possession or state or a combination there – of to the customer while meeting the other organizational objectives of effectiveness, efficiency and adaptability.

PRODUCTION MANAGEMENT – OPERATIONS MANAGEMENT

Transformation process

INPUTS People Energy materials information fixed assets

• Method(s) of conversion. • Support function to provide controls and feedback and to improve the process

OUTPUTS Goods services

Figure 1. The operations function, T. Hill, Production/Operations Management. Text and cases, p.57

PRODUCTION MANAGEMENT FOCUSES on… 

Production management focuses on two significant functions: responsibilities and planning and control. The production management’s responsibility sees to the following areas; men (labor), machines, methods, materials and money.

The production management’s responsibility 

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Men: this refers to the labor force. This responsibility is often referred to as people management. This is to build a workforce that can easily adapt to new equipment and schedules in production. Machines and Method: This involves choosing the machine and technology used in production of goods and services. The production manager must also choose the methods in using these machines to achieve efficiency. He/She must decide on the technology that best suits the operation.

The production management’s responsibility 

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Material: Material here includes both raw materials for production and the information needed in production. production The production manager must manage the flow processes; that is, the smoothness of resource and data movement. Money: This deals with the financial matters involved in the day to day running of production. The production manager manages the inventory and production level and quantity with the returns on investment, on focus.

CRITERIA OF PERFORMANCE

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3 aims of performance of the Production and Operations Management Systems: Effectiveness – productive utilization of resources Customer satisfaction Efficiency

According to William K. Holstein[1], production planning and controlling functions can summarily put thus: PRODUCTION – CONTROL SUMMARY PROCESSES

INVENTORY

INSPECTION

COSTS

OBSERVATION

measuring rate of output, recording idle time or downtime

recording stock levels

inspecting materials and parts

collecting cost data

ANALYSIS

comparing progress analyzing demand estimating with the plan for stocks in process different uses and capabilities at different times

computing costs in relation to estimates

CORRECTIVE ACTION

expediting

adjusting selling price of products

EVALUATION

estimating drawing up production capacities replacement and maintenance policies and inventory systems schedules

Issuing production Initiating full and procurement inspection; orders adjusting processes reassessing specifications; improving processes and procedures

evaluating production economics; improving data

PRODUCTION FUNCTION

PRACTICES IN FIELD OF PRODUCTION MANAGEMENT 

There have been several practices developed by many experts in the field of production management and aimed at ensuring efficient and effective production – lean production, agile production etc. –

PRODUCT DESIGN 

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Product design is a strategic decision as the image and profit earning capacity of a small firm depends largely on product design. Once the product to be produced is decided by the entrepreneur the next step is to prepare its design. The form designing includes decisions regarding its shape, size, color and appearance of the product. The functional design involves the working conditions of the product

PRODUCT DESIGN Various factors are to be considered before designing product. These factors are listed below: (a) Standardization (b) Reliability (c) Maintainability (d) Servicing (e) Reproducibility (f) Sustainability (g) Product simplification (h) Quality Commensuration with cost (i) Product value (j) Consumer quality (k) Needs and tastes of consumers.

PRODUCT DESIGN The product design should be dictated by the market demand. It is an important decision and therefore the entrepreneur should pay due effort, time, energy and attention in order to get the best results.

DESIGN OF PRODUCTION SYSTEM An appropriate designing of production system ensures the coordination of various production operations. There is no single pattern of production system which is universally applicable to all types of production system varies from one enterprise to another.

TYPES OF PRODUCTION SYSTEM Broadly one can think of three types of production systems which are mentioned here under: (a) Continuous production - It is also known as mass flow production or assembly line production. The system is suitable in plants involving large volume and small variety of output e.g. oil refineries reform cement manufacturing etc. (b) Job or unit production - The system requires comparatively smaller investment in machines and equipment. It is flexible and can be adapted to changes in product design and order size without much inconvenience. This system is most suitable where heterogeneous products are produced against specific orders. (c) Intermittent production - Under this system the goods are produced partly for inventory and partly for customer's orders. E.g. components are made for inventory but they are combined differently for different customers. . Automobile plants, printing presses, electrical goods plant are examples of this type of manufacturing.

TYPES OF PRODUCTION SYSTEMS Three types of production system can be identified certain features of which influence the actions of production managers:  small batch and unit production  Large batch and mass production  Continuous process production

TYPES OF PRODUCTION SYSTEMS Three main types of production: A) • • •

B) • • •

C) • •

JOB PRODUCTION The job produced only once, The job produced at irregular intervals The jopb produced periodically at regular intervals. BATCH PRODUCTION A batch produced only once A batch produced at irregular intervals as per Customer or when the need arises A batch produced periodically at known intervals CONTINUOUS PRODUCTION. Mass production Flow production

PRODUCTION AND OPERATIONS SYSTEM

Examples?

FACTORS AFFECTING THE CHOICE OF MANUFACTURING PROCESS Following factors need to be considered before making a choice of manufacturing process: 1. 2. 3. 4.

Effect of volume/variety Capacity of the plant Lead time Flexibility and efficiency

PLANNING AND CONTROL IN PRODUCTION MANAGEMENT 

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Production management can also be viewed from the planning and control perspective. The production manager must plan and control the process of production in a cost effective way at the same time meeting all quality specifications. Things that are being controlled in production management are the inventories and labor cost.

INVENTORY CONTROL Inventories include the raw materials needed in production, component parts, finished goods, packing and packaging materials, and general supplies. Computer programs and software have been further developed to increase efficiency and effectiveness in inventory controlling.

LABOR COST CONTROL 

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This involves measuring the amount and type of work required to produce and design an efficient method for accomplishing the set production objective. The measurement here also includes time required to produce a particular production task.

PRODUCTION PLANING AND CONTROL PROCESS

ROUTING Routing procedure involves following different activities. (1) An analysis of the article to determine what to make and what to buy. (2) To determine the quality and type of material (3) Determining the manufacturing operations and their sequence. (4) A determination of lot sizes (5) Determination of scrap factors (6) An analysis of cost of the article (7) Organization of production control forms.

SCHEDULING The pattern of scheduling differs from one job to another which is explained as below: Production schedule Master schedule Manufacturing schedule Scheduling of job order manufacturing

LOADING Loading determines who will do the work as routing determines where and scheduling determines when it shall be done. Gantt Charts are most commonly used in small industries in order to determine the existing load and also to foresee how fast a job can be done.

PRODUCTION CONTROL Production control is the process of:  planning production in advance of operations,  establishing the extract route of each individual item part or assembly,  setting, starting and finishing for each important item, assembly or the finishing production and  releasing the necessary orders as well as initiating the necessary follow-up to have the smooth function of the enterprise.

DISPATCHING Dispatching involves issue of production orders for starting the operations. Necessary authority and conformation is given for: 1. Movement of materials to different workstations. 2. Movement of tools and fixtures necessary for each operation. 3. Beginning of work on each operation. 4. Recording of time and cost involved in each operation. 5. Movement of work from one operation to another in accordance with the route sheet. 6. Inspecting or supervision of work

FOLLOW UP 

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Every production programme involves determination of the progress of work, removing bottlenecks in the flow of work and ensuring that the productive operations are taking place in accordance with the plans. All problems or deviations are nvestigated and remedial measurer are undertaken to ensure the completion of work by the planned date.

INSPECTION 

This is mainly to ensure the quality of goods. It can be required as effective agency of production control.

CORRECTIVE MEASURES Corrective action may involve any of those activities of:  adjusting the route,  rescheduling of work changing the workloads,  repairs and maintenance of machinery or equipment,  control over inventories of the cause of deviation is the poor performance of the employees.  Certain personnel decisions like training, transfer, demotion etc. may have to be taken.

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