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Lesson 1. PRODUCTION MANAGEMENT, DEFINITION, FUNCTION AND STRUCTURE OF PRODUCTION MANAGEMENT
Module 1. Production management
PRODUCTION MANAGEMENT, DEFINITION, FUNCTION AND STRUCTURE OF PRODUCTION MANAGEMENT
Management is a multipurpose organ that manages business i.e managers,workers and work. It is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.
1.2 Functions of Management
In every organisation, the managers perform certain basic management functions depends on the position. These are broadly divided into six categories viz., planning, organizing, staffing, directing, coordinating and controlling.
Planning is deciding in advance what is to be done, when it is to be done, how it is to be done. It is basically concerned with the selection of goals to be achieved and determining the effective course of action from among the various alternatives. This involves forecasting, establishing targets, developing the policies and programming and scheduling the action, procedure, etc., Thus, planning requires decisions to be made on what should be done, how it should be done, who will do it, where it will be done, and why it is to be done. The essential part of planning consists of setting goals and programmes of activities.
After the plans have been drawn, management has to organize the activities, and physical resources of the firm to carry out the selected programmes successfully. It also involves determining the authority and responsibility relationships among functions, departments and personnel at various levels to ensure smooth and effective function together in accomplishing the objective. Thus, the organising function of management is primarily concerned with identifying the tasks involved and grouping them into units and departments, and defining the duties and responsibilities of people in different positions within each department for well coordinated and cooperative effort in the organisation.
Staffing is concerned with employing people for the various activities to be performed. The objective of staffing is to ensure that suitable people have been appointed for different positions. It includes the functions of recruitment, training and development, placement and remuneration, and performance appraisal of the employees.
The directing function of management includes guiding the subordinates, supervising their performance, communicating effectively and motivating them. A manager should be a good leader. He should be able to command and issue instruction without arousing any resentment among the subordinates. He should keep a watch on the performance of his subordinates and help them out whenever they come across any difficulty. The communication system, i.e., exchange of information should take place regularly for building common understanding and clarity. The managers should also understand the needs of subordinates and inspire them to do their best and encourage initiative and creativity.
Management has to ensure that all the activities contribute to the achievement of the objectives of the business as a whole. This requires integration of activities and synchronization of efforts. The heads of different departments should not treat each other as competitors but should work as organs of one body. As the proper functioning of every organ of a human body is important for a healthy body, the work of every department is important for the organization as a whole. Managers should, therefore, see that everybody in the organization understands its objectives and works in co-operation with others to achieve these objectives. This function of management is called co-ordination. It consists of harmonizing group effort so as to achieve common objectives.
This function of management consists of the steps taken to ensure that the performance of work is in accordance with the plans. It involves establishing performance standards and measuring the actual performance with the standards set. If differences are noticed, corrective steps are taken which may include revision of standards, regulate operations, remove deficiencies and improve performance.
Therefore, production management is also very important, as it is a process of effective planning, coordinating and controlling the production that is the operation of that part of an enterprise. It means to say that production and operations management is responsible for the actual transformation of raw materials into finished products. The performance of the management activities is with regards to selecting, designing, operating, controlling and updating production system.
1.3 Definition of Production Management
The production management is defined as
- Production management is a function of management, related to planning, coordinating and controlling the resources required for production to produce specified product by specified methods, by optimal utilization of resources.
- Production management is defined as management function which plans, organizes, coordinates, directs and controls the material supply and processing activities of an enterprise, so that specified products are produced by specified methods to meet an approved sales programme. These activities are being carried out in such a manner that labor, plant and capital available are used to the best advantage of the organization.
The objective of Production Management is to:
- Produce the desired product or specified product by specified methods so that the optimal utilization of available resources is met with.
- To produce goods that has marketability at the cheapest price by proper planning of the manpower, material and processes.
- To deliver right goods of right quantity at right place and at right price.
When the above objective is achieved, we say that we have effective Production Management system.
1.5 Types of Production Process
There are four different types of production process that are distinct and require different conditions for their working. Selection of production process is also a strategic decision. Therefore the production / manufacturing process is selected at the stage of planning for any industry. It should meet the basic two objectives i.e. to meet the specification of the final product and should be cost effective.
The manufacturing process is classified into four types.
- Job production
- Batch production
- Mass or flow production
- Process Production
Herein one or few units of the products are produced as per the requirement and specification of the customer. Production is to meet the delivery schedule and costs are fixed prior to the contract.
1.5.2 Batch production
In this, limited quantities of each of the different types of products are manufactured on same set of machines. Different products are produced separately one after the other.
1.5.3 Mass or flow production
Under this, the production is conducted on a set of machines arranged according to the sequence of operations. A huge quantity of same product is manufactured at a time and is stocked for sale. Different product will require different manufacturing lines.
1.5.4 Process production
Under this, the production is conducted for an indefinite period for constant market demand.
1.6 Scope of Production Management
We plan our activities; we coordinate available resources and control our activities to achieve certain goals. Any organization must follow the principles of management for its survival and growth. The same is applicable to production management also.
Reading and learning production management will enable one to be capable of solving the problems of the organization, may be an Educational Institution, Production Shop, Hospital, Departmental shop or even a barber shop. The problems a manager face in various organizations are more or less similar to that of Production department but smaller in magnitude. Hence the knowledge of Production Management will help any professional Manager to tackle the problems of any business easily, including dairy industry.
Manufacturing system often produces standardized products in large volumes. The plant and machinery have a finite capacity. The facilities constitute fixed costs, which are allocated to the products produced. Variable costs are labor cost and materials costs. While manufacturing the product use value and economic values are added to the product. Hence the product is a store of values added during manufacture. Because the input costs and output costs are measurable, the productivity can be measured with certain degree of accuracy. Product can be transported to the markets and stored physically until it is sold.
Service system present more uncertainty with respect to capacity and costs. Services are produced and consumed in the presence of the customer. We cannot store the service physically. Because of this the service organizations, such as Hotels, Hospitals, Transport Organizations and many other service organizations the capacity must be sufficiently or consciously managed to accommodate a highly variable demand. Sometimes services like legal practice and medical practice involve Professional or intellectual judgments, which cannot be easily standardized. Because of this the calculation of cost and productivity is difficult.
Project system does not produce standardized products. The Plant, Machinery, Men and Materials are often brought to project site and the project is completed. The project is of big size and remains in the site itself after completion. As the costs can be calculated and allocated to the project with considerable accuracy, productivity can be measured. Once the project is completed, all the resources are removed from site.
1.7 Benefits Derived Form Efficient Production Management
The efficient Production Management will give benefits to the various sections of the society. They are:
- Consumer benefits from improved industrial productivity, increased use value in the product. Products are available to him at right place, at right price, at right time, in desired quantity and of desired quality.
- Investors: They get increased security for their investments, adequate market returns, and creditability and good image in the society
- Employee : They get adequate wages, job security, improved working conditions and increased personal and job satisfaction.
- Suppliers: They will get confidence in management and their bills can be realized with out any delay.
- Community: Community enjoys benefits from economic and social stability.
- The Nation will achieve prospects and security because of increased productivity and healthy industrial atmosphere.
The functions of Production Management depend upon the size of the firm. In small firms the production manager may have to look after production planning and control along with personnel, marketing, finance and purchase functions. In medium sized firms, there may be separate managers for Personnel, marketing and Finance functions. But the production “planning & control” and “Purchase and stores” may be under the control of production management department. In large sized firms the activities of Production Management is confined to the management of production activities only. As such, there is no hard and fast rule or guidelines to specify the function of production management, but in the academic interest we can mention some of the functions, which are looked after by the Production Management department. They are:
The selection of materials for the product. Production manager must have sound knowledge of materials and their properties, so that he can select appropriate materials for his product. In a dairy plant, basic raw material is milk, which is highly perishable in nature. So special knowledge and care should be needed to transform in to various dairy products.
Finding the best method for the process, to search for the methods to suit the available resources, identifying the sequence of process are some of the activities of Production Management.
1.8.3 Machines and equipment
Selection of suitable machinery for the process desired, designing the maintenance policy and design of layout of machines are taken care of by the production management department.
To fix up the production targets and delivery dates and to keep the production costs at minimum, production management department does a thorough estimation of production times and production costs. In competitive situation this will help the management to decide what should be done in arresting the costs at desired level.
1.8.5 Loading and scheduling
The production management department has to draw the time table for various production activities, specifying when to start and when to finish the process required. It also has to draw the timings of materials movement and plan the activities of manpower. The scheduling is to be done keeping in mind the loads on hand and capacities of facilities available.
This is the most important function of production management department. The Routing consists of fixing the flow lines for various raw materials, components etc., from the stores to the packing of finished product, so that all concerned know what exactly is happening on the shop floor.
The Production Management department has to prepare various documents such as Job Cards, Route sheets, Move Cards, Inspection Cards for each and every component of the product. These are prepared in a set of five copies. These documents are to be released from Production Management department to give green signal for starting the production. The activities of the shop floor will follow the instructions given in these documents. Activity of releasing the document is known as dispatching.
1.8.8 Expediting or follow up
Once the documents are dispatched, the management wants to know whether the activities are being carried out as per the plans or not. Dairy Technologist go round the production floor along with the plans, compare the actual with the plan and feed back the progress of the work to the management. This will help the management to evaluate the plans.
Here inspection is generally concerned with the inspection activities during production, but a separate quality control department does the quality inspection, which is not under the control of Production Management. This is true because, if the quality inspection is given to production Management, then there is a chance of qualifying the defective products also.
The Production department must evaluate itself and its contribution in fulfilling the corporate objectives and the departmental objectives. This is necessary for setting up the standards for future. What ever may be the size of the firm, production management department alone must do routing, scheduling, loading, dispatching and expediting. This is because the department knows very well regarding materials, methods, and available resources etc. If the firms are small, all the above-mentioned functions are to be carried out by Production Management Department. In medium sized firms in addition to routing, scheduling and loading, dispatching and expediting, some more functions like methods, machines may be under the control of production management department. In large firms, there will be separate departments for methods, machines, materials and others but routing, loading and scheduling are the sole functions of Production Management.
Last modified: Friday, 5 October 2012, 5:39 AM