PRODUCTION MANAGEMENT

Meaning of 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 the production process.
The application of management to the field of production has been the result
of at least three developments:
(i) First is the development of factory system of production. Until the
emergence of the concept of manufacturing, there was no such thing as
management as we know it. It is true that people operated business of one
type or another, but for the most part, these people were owners of business
and did not regard themselves as managers as well,
(ii) Essentially stems from the first, namely, the development of the large
corporation with many owners and the necessity to hire people to operate
the business,
(iii) Stems from the work of many of the pioneers of scientific management
who were able to demonstrate the value, from a performance and profit
point of view, of some of the techniques they were developing.
Definition of Production Management:
It is observed that one cannot demarcate the beginning and end points of
Production Management in an establishment. The reason is that it is
interrelated with many other functional areas of business, viz., marketing,
finance, industrial relation policies etc.
Alternately, Production Management is not independent of marketing,
financial and personnel management due to which it is very difficult to
formulate some single appropriate definition of Production Management.
The following definitions try to explain main characteristics of production
management:
(i) In the words of Mr, E.L. Brech:
Production Management is the process of effective planning and regulating
the operations of that section of an enterprise which is responsible for the

actual transformation of materials into finished products. This definition

limits the scope of production management to those activities of an
enterprise which are associated with the transformation process of inputs
into outputs. & the definition does not include the human factors involved in
a production process. It lays stress on materialistic features only.
(ii) Production Management deals with decision-making related to production
process. So that the resulting goods and services are produced in accordance
with the quantitative specifications and demand schedule with minimum
cost.
According to this definition design and control of the production system are
two main functions of production management.
(iii) Production Management is a set of general principles for production
economies, facility design, job design, schedule design, quality control,
inventory control, work study and cost and budgetary control. This definition
explains the main areas of an enterprise where the principles of production
management can be applied. This definition clearly points out that
production management is not a set of techniques.
It is evident from above definitions that production planning and its control
are the main characteristics of production management. In the case of poor
planning and control of production activities the organization may not be
able to attain its objectives and may result in loss of customers confidence
and retardation in the progress of the establishment.
In short, the main activities of production management can be listed as:
(i) Specification and procurement of input resources namely management,
material, and land, labour, equipment and capital.
(ii) Product design and development to determine the production process for
transforming the input factors into output of goods and services.
(iii) Supervision and control of transformation process for efficient production
of goods and services.
Functions of Production Management:
The definitions discussed above clearly shows that the concept of production
management is related mainly to the organizations engaged in production of
goods and services. Earlier these organizations were mostly in the form of
one man shops having insignificant problems of managing the productions.

But with development and expansion of production organizations in the

shape of factories more complicated problems like location and lay out,
inventory control, quality control, routing and scheduling of the production
process etc. came into existence which required more detailed analysis and
study of the whole phenomenon.
This resulted in the development of production management in the area of
factory management. In the beginning the main function of production
management was to control labour costs which at that time constituted the
major proportion of costs associated with production.
But with development of factory system towards mechanization and
automation the indirect labour costs increased tremendously in comparison
to direct labour costs, e.g., designing and packing of the products, production
and inventory control, plant layout and location, transportation of raw
materials and finished products etc. The planning and control of all these
activities required more expertise and special techniques.
In modern times production management has to perform a variety of
functions, namely:
(i) Design and development of production process.
(ii) Production planning and control.
(iii) Implementation of the plan and related activities to produce the desired
output.
(iv) Administration and co-ordination of the activities of various components
and departments responsible for producing the necessary goods and
services.
However, the responsibility of determining the output characteristics and the
distribution strategy followed by an organization including pricing and selling
policies are normally outside the scope of Production Management.
Scope of Production Management:
The scope of production management is indeed vast. Commencing with the
selection of location, production management covers such activities as
acquisition of land, constructing building, procuring and installing machinery,
purchasing and storing raw materials and converting them into saleable
products. Added to the above are other related topics such as quality

management, maintenance management, production planning and control,

methods improvement and work simplification and other related areas.
Production management, also called operations management, planning and
control of industrial processes to ensure that they move smoothly at the
required level. Techniques of production management are employed in
service as well as in manufacturing industries. It is a responsibility similar in
level and scope to other specialties such as marketing or human resource
and financial management. In manufacturing operations, production
management includes responsibility for product and process design, planning
and control issues involving capacity and quality, and organization and
supervision of the workforce.
The five Ms
Production managements responsibilities are summarized by the five Ms:
men, machines, methods, materials, and money. Men refers to the human
element in operating systems. Since the vast majority of manufacturing
personnel work in the physical production of goods, people management is
one of the production managers most important responsibilities.
The production manager must also choose the machines and methods of the
company, first selecting the equipment and technology to be used in the
manufacture of the product or service and then planning and controlling the
methods and procedures for their use. The flexibility of the production
process and the ability of workers to adapt to equipment and schedules are
important issues in this phase of production management.
The production managers responsibility for materials includes the
management of flow processesboth physical (raw materials) and
information (paperwork). The smoothness of resource movement and data
flow is determined largely by the fundamental choices made in the design of
the product and in the process to be used.
The managers concern for money is explained by the importance of
financing and asset utilization to most manufacturing organizations. A
manager who allows excessive inventories to build up or who achieves level
production and steady operation by sacrificing good customer service and
timely delivery runs the risk that overinvestment or high current costs will
wipe out any temporary competitive advantage that might have been
obtained.

Planning and control

Although the five Ms capture the essence of the major tasks of production
management, control summarizes its single most important issue. The
production manager must plan and control the process of production so that
it moves smoothly at the required level of output while meeting cost and
quality objectives. Process control has two purposes: first, to ensure that
operations are performed according to plan, and second, to continuously
monitor and evaluate the production plan to see if modifications can be
devised to better meet cost, quality, delivery, flexibility, or other objectives.
For example, when demand for a product is high enough to justify continuous
production, the production level might need to be adjusted from time to time
to address fluctuating demand or changes in a companys market share. This
is called the production-smoothing problem. When more than one product
is involved, complex industrial engineering or operations research
procedures are required to analyze the many factors that impinge on the
problem.
Inventory control is another important phase of production management.
Inventories include raw materials, component parts, work in process, finished
goods, packing and packaging materials, and general supplies. Although the
effective use of financial resources is generally regarded as beyond the
responsibility of production management, many manufacturing firms with
large inventories (some accounting for more than 50 percent of total assets)
usually hold production managers responsible for inventories. Successful
inventory management, which involves the solution of the problem of which
items to carry in inventory in various locations, is critical to a companys
competitive success. Not carrying an item can result in delays in getting
needed parts or supplies, but carrying every item at every location can tie up
huge amounts of capital and result in an accumulation of obsolete, unusable
stock. Managers generally rely on mathematical models and computer
systems developed by industrial engineers and operations researchers to
handle the problems of inventory control.
To control labour costs, managers must first measure the amount and type of
work required to produce a product and then specify well-designed, efficient
methods for accomplishing the necessary manufacturing tasks. The concepts
of work measurement and time study introduced by Taylor and the Gilbreths,
as well as incentive systems to motivate and reward high levels of worker
output, are important tools in this area of management. In new operations
particularly, it is important to anticipate human resource requirements and to

translate them into recruiting and training programs so that a nucleus of

appropriately skilled operators is available as production machinery and
equipment are installed. Specialized groups responsible for support activities
(such as equipment maintenance, plant services and production scheduling,
and control activities) also need to be hired, trained, and properly equipped.
This type of careful personnel planning reduces the chance that expensive
capital equipment will stand idle and that effort, time, and materials will be
wasted during start-up and regular operations.
The effective use and control of materials often involves investigations of the
causes of scrap and waste; this, in turn, can lead to alternative materials and
handling methods to improve the production process. The effective control of
machinery and equipment depends on each machines suitability to its
specific task, the degree of its utilization, the extent to which it is kept in
optimum running condition, and the degree to which it can be mechanically
or electronically controlled.
The importance of models and methods
Because of the enormous complexity of typical production operations and
the almost infinite number of changes that can be made and the alternatives
that can be pursued, a productive body of quantitative methods has been
developed to solve production management problems. Most of these
techniques have emerged from the fields of industrial engineering,
operations research, and systems engineering. Specialists in these fields are
increasingly using computers and information processing to solve production
problems involving the masses of data associated with large numbers of
workers, massive inventories, and huge quantities of work in process that
characterize most of todays production operations. Indeed, many mass
production operations could not run without the support of these industrial
engineers and technical specialists.

Production manager (manufacturing)

Production managers oversee the manufacturing process and make sure that
production lines are running smoothly and efficiently. They work closely with
supervisors and maintenance staff to plan work, set targets and make sure
the finished products meet quality standards.

If youre well organised, a good leader and can make the right decisions
quickly while under pressure, then this could be the career for you.
You would normally get into this job after first gaining experience as a team
leader or shift supervisor, or by completing a management trainee scheme
or Advanced Apprenticeship.

Work activities
Production managers make sure that manufacturing processes run smoothly,
are cost-effective and deliver products on time. As a production manager,
you could work in all types of manufacturing, for example:

vehicle assembly

brewing

food products

textiles

pharmaceuticals

building materials.

Your work would cover the three main areas of the production process:

planning preparing orders, setting quality standards and estimating

timescales and costs

control monitoring production schedules and adjusting them if

problems occur

supervision managing supervisors, organising staff and making sure

targets are met.

You would also put together production reports for factory managers and
clients.
You would work closely with supervisors, maintenance technicians, company
buyers, suppliers, quality control, training departments, and health and
safety managers.
Role and Scope of Production Management
1. Finance and Production: Finance provide the necessary funds for the
maintenance of Production and Marketing activities. Funds not only comes
from the sale of goods and services but also acquired through loans from
banks and other financial institutions, sale of stock investment and income.
2. Marketing: The object of production activity is to provide inputs which
include raw materials men, machine, operating supplies, semi finished
products, water, power and place etc. the inputs are assembled and changed
to finished goods thereby creating value. The finished products and services
are available so that the marketing functions can be utilised to provide, sell
and distribute them. Thus production and marketing are separate yet interdependent functions in business.
3. Personnel and Production: The personnel function in any business
organisation is mainly concerned with all matters related to manpower as an
input system of business organisation. From the view point of the production
manager following are the various areas of mutual interest.
(i) Recruitment and selection
(ii) Training and development of employees
(iii) Labour relations
(iv) Safety
(v) Wage and salary administration including various incentive programmes.
(vi) Motivating employees to give their best.

4. Production and Industrial Engineering: This department isresponsible for

translating the ideas developed in research and development, marketing
research into realities. The main object is to search for the most efficient way
of producing products under certain constraints such as material, manpower,
machines, money etc.

1.Job Production: In Job Production the whole product is looked as one job
which is to be completed before going on to next. The most common
examples are building a ship or a large civil engineering construction job. Job
production is hot confined to large projects, it could be the making of a
special piece of equipment or a tool.
2. Batch Production: If qualities of more than one are being made, it is
sometimes convenient to split the production into a series of manufacturing
stages or operations. Each operation is completed as one of the single items
being made, before the next operation is started. In this way a group of
identical products, or a batch are made, which move through the production
process together.
3. Flow Production: When there is a continuous demand for a product, it is
sometimes worthwhile setting-up facilities to make that product and no other
product. In these circumstances flow production may be the best way of
operating. Here the manufacturing is broken down into operations, but each
unit moves, or flows, from one operation to the next individually, and not as
one of a batch examples are motor manufacturing, fertilizer, pharmaceutical
and urea manufacturing. Since only one product is being made there are no
problems about priorities, but it is necessary to balance the work load at all
stages of manufacture. Examples are motor car manufacturing.
Functions of Production and Operations Management:

1) Technology Selection and Management: This is pertaining to long term

decision withsome spillover into the intermediate region. Although it is not
immediately connected with the day to day short term decisions handled in
the facility plant, it is an important problem to be addressed particularly in a
manufacturing situation in an age of technological advances, so that an
appropriate choice is made by a particular organization to suit its objectives,
organizational preparedness and its microeconomic perspectives.
2) Capacity Management: The capacity management aspect once framed in
a long term perspective revolves around the matching of available capacity
to demand or making certain capacity available to meet the demand
variations. Capacity management is very important for achieving the
organizational objectives of efficiency, customer service and overall
effectiveness. While lower than needed capacity results in non-fulfillment of
some of the customer services and other objectives of the production /
operations system, a higher than necessary capacity results in lowered
utilization of resources. There could be a flexibility built into the capacity
availability but this depends upon the technology decision to some extent
and also on the nature of the production / operation system, a higher than
necessary capacity results in lowered utilization of resources.
As the product variety increases, the systems of production / operations
change in a system characterized by large volume low variety, one can have
capacities of machinery and men which are inflexible while taking advantage
of the repetitive nature of activities involved in the system.
3) Scheduling: Scheduling in another decision area of operations
management which deals with the timing of the various activities time
phasing of the filling of the demands or rather the time phasing of the
capacities to meet the demand as it keeps fluctuating, it is evident that as

the span of fluctuations in variety and volume gets wider the scheduling
problem assumes greater importance. Thus in jobshop (i.e. tailor made
physical output or service)type operations system, the scheduling decisions
are very important which determine the system effectiveness (eg. Customer
delivery), as well as the system efficiency (i.e the productive use of
machinery and labour).
4) System Maintenance: The fourth area of operations management is
regarding safeguards that only desired outputs will be produced in the
normal condition of the physical resources and that the condition will be
maintained
normal. This is an
important area
whereby vigilance
is maintained so
that all the good
work of capacity
creation, scheduling
etc. is not
negated. Technology
and / or process
selection and
management has
much to contribute
towards the
problem. A proper
selection and
management
procedure would
give rise to few
problems. Further the checks (quality checks, physical / non physical output)
on the system performance and corrective action (ex-repair of equipment)
would reduce the chances of the desired output being served. In a
manufacturing industry there may be physical defects. In service operations,
it could be a breach of confidence of the customers like the stealing of credit
and accounts of the customers.Functions of Production Manager:The
functions of Production Manager, like any other manager involvesthe
following six steps:

i.Organising: The first task in developing an effective production planning

and control group is to organise all the significant factors affecting the

departments activities. The production planning and control function must

have a solid framework which has purpose, direction and continuity in order
to help maintain the basic structure of the department as operation changes
take placeover the years. Without this framework, the department would not
be properly integrated with company objectives. The following, in brief,
enumerates the organizing activities:
(a)Obtain a statement of corporate objectives from top management.
(b)Prepare a statement of departmental objectives
(c)Develop a policy manual for the production planning and control
department.
(d)Draw up a department organisation chart.
(e)Evolve departmental job descriptions.
(f)Compile a system and procedures manual.
(g)Introduce a manpower rating and inventory system.
(h)Establish basic criteria for the management of developmental
performance.
ii. Planning: The role of planning is a multiple one. However, one of the basic
purpose that it serves to is relate the organisation to actual operations.
Effective direction, control, appraisal and improvement of operations cannot
be done, no matter how well the production department is organised, unless
the activities are first planned. To try to operate without continuous planning
on both-a short and a longrange basis will lead to results which are far less
than the optimum that is achievable. The following gives the elements or
steps that are part of the overall concept of production, planning and control;
hence they should be integrated with each other, as well as with the
elements of other managerial skills.
(a)Prepare a statement of long and short term planning requirements.
(b)Develop operating plans (short and long term).
iii. Direction: The production planning and control manager must direct the
activities ofhis people within the framework of the total organisation, the
manner in which it is done will determine the precision and effectiveness of

the plans themselves, as well as the quality and value of the organisational
planning.
Some of the basic elements that are essential to success in directing the
activities are:
(a) Effective decision making.
(b) Effective communication and delegation.
(c) Effective motivation and supervision
(d) Effective coordination and unification.

iv. Controlling: Control serves to ensure that the activities will be carried out
in accordance with the Plans. Without effective control of his operations, the
manager may find that his planning and organising are in vain. Basic steps
for control are:
(a) Measurement of progress and results.
(b) Comparison of results with plans
(c) Taking corrective action, if called for.
v. Appraising Performance: Appraisal is primarily aimed at evaluating the
results of operating plans on a continuous basis. In other words, the
performance measured in the control phase of management is reviewed,
then thoroughly analysed to establish the cause of any deviation, so that the
proper changes can be made in either plans orpractices. Appraisal and
control, are of course, very closely allied and are often considered to be the
part of thesame management.

The appraisal of result consists of:

(a) The analysis of variances
(b) Performance evaluation.
vi. Organisation of Production Department: The Production Department
Organisation varies from industry to industry. It depends on the type of
product, quantity of product, manufactured, quality of product, number of
people working etc.Factors of Production:The economics aspect of production
can be analysed by studying the factors of production. The inputs are
conventionally called factors of production:. Factors of production are
essential elements which co-operate with one another in the production
process. These are divided into four categories viz: Land, Labour, capital and
entrepreneurship.
(i) Land: It refers to all natural resources which are free gifts of nature and
includes soil, rivers, waters, forests, mountains, mines seas, climate, air, sun
etc.
(ii) Labour: Human efforts or work done mentally or physically with the aim
of earning income is known as labour. The compensation given by labourers
in return for their work is called wages. The Land and Labour are the primary
factors of production as their supplies are determined more or less outside
the economic system.
(iii) Capital:See the inputs or man made goods which are used for further
production of wealth are included in capital. An increase in the capital of an
economy means an increase in the productive capacity of the economy.
(iv) Entrepreneur: An entrepreneur is a person who organises the other
factors and undertakes the risks along with uncertainties involved in the
production. The entrepreneur hires the other three factors, brings them
together, organises and co-ordinates them so as to earn maximum profit. An
entrepreneur acts as a boss and decides how the business shall run. The
entrepreneur hires and organises other factors for producing goods and
services, he pays them compensation in the form of wages to labour; rent to
landlord and interest to the owner of capital. The balance goes to
entrepreneur in the form of profit which he gets for rendering entrepreneurial
services. Production is the result of combined and joint efforts of the four
inputs and production as output. Similarly services rendered by the factors of
production are known as factors services and compensation received by
them in return as factor income. Factor income is also known as factor

payment from enterprise point of view because the same is paid by the
enterprise or production unit.
Types of Production: There are three types of production depending on the
quantity of articles produced and the nature of their manufacture the types
of production can be classified into three categories viz.,piece meal system
lot system and mass production system.
(i) Piece Meal Production System: It is characterised by the output of small
quantities of articles of diverse nomenclature. On the piece production
system each article is made by consecutive operations specified in the flow
process charts.
(ii) Lot Production System: It is characterised by the output of recurrent
batches of articles. It is sub-divided into small lot and large lot production.
The lot production process is based on the principles of parallel consecutive
operations, sub-divided into separate elements. Lot production is recorded in
operating process charts.
(iii) Mass Production System:It is characterised by manufacturing one type of
article in large numbers. Themass production process is based on the
principle of parallel operations. In mass production greater efficiency of
labour is achieved due to high specialisation.

Similar types of Production can also be classified as under:

(a) Line Production: The main characteristics of line production are the use of
line layout, and the minimization of the transfer quality. Line production can
be used for matching in all industries and also for assembly. Although the
term line production can be used in a general sense to cover several of
variants described below, one particular established product. Because the
work centers in this case are left permanently set-up, run and set-up
frequencies are low. Because the machines are adjacent and in the transfer
quantities of one can be used, and transfer frequencies are therefore very
high.
(b) Line Batch Production: Line layout can also be used for families of similar
items of established design which are all tooled to use the same machines or
assembly line in the same sequence. In this case, batches of the different
components follow each other down the line, each machine being reset as it
completes the last item in a run. The transfer quantity is again minimized but

cannot achieve the high transfer frequencies obtained with pure line
production. In this instance the capacities of the different station on the line
are balanced to the total requirements of different components at different
stations on the line, there is generally some ebb and flow of work in progress
stock between the machines.
(c) Group Batch Production: Group batch production is characterized mainly
by the use of group layout. Because in this case all machining operations for
each component in the group family are controlled by one supervisor, it is
possible to start some operations before the previous operations are
completed, but it is generally impossible to achieve the high transfer
frequencies attainable with line production.
(d) Functional Batch Production: It is characterized mainly by the use of
functional layout due to the administrative complication with this type of
layout. It is generally essential to fix the same values for order, run, set-up,
and transfer quantity for each component processed. This type of production
is therefore generally accompanied by very low rates of stock turnover.
(e) Line Jobbing Production: Jobbing production is a type in which the product
design is not established, but is only known with the customers order is
received. Where there is specialization in the type of product for which
orders are accepted, line production can still be used. It is much more
difficult to achieve a balanced line, and such devices as variable overtime for
different parts of the line may have to be used to maintain balance and
minimize the stock between stations.
(f) Group jobbing Production: In this instance group layout is used, each
group being equipped to produce a general type of product.
(g) Functional Jobbing Production: Functional jobbing production finally is
jobbing production with functional layout. Because production is infinitely
variable, it is probably impossible to design a classification system which will
cover all possible differences, even in simple productionsystems. In most
companies there is a wide variety of flow types, and the type varies
according to the level which is being examined and from one process to the
next. In spite of these difficulties the above classification has been found in
practice to give a useful indication of the general type of material flow in
use.
Basic Approaches to production Management:
Three main approaches in modern production management are:

1. The Decision Theory Approach

2. The Systems Approach
3. The Contingency Approach
1. The Decision Theory Approach: It has adopted elements from decision
theory. The approach is based upon the assumption that there is a general
decision and problem hierarchy which provides a logical structure to describe
the subject.
Problems which fall outside the hierarchical structure tend to be looked as
non-production management problems. The approach is oriented towards the
decision maker and the ambition is to provide the decision maker with a set
of techniques that makes rational decisions possible for example, the first
decision is the decision as to which process orientation is the best. The
process can be made other process design decisions must follow. This
includes selection of equipment, detailed design of the process, make or buy
decision facility location and the way in which the process facilities are laid
out or decisions that follow subsequently. Then the focus is shifted to the
work station. Once the process has been designed it must be scheduled
operate land control. A forecast is required to draw the schedule. Routine
inventory planning and control system must be employed. Finally the quality
of product must be periodically sampled to ensure that actual output
complies with process objectives.
2. The Systems Approach: The system approach is characterised by the use
of the general systems theory framework. Systems theory helps us to get
insides into the overall structure of production management problems. It
tends to be a strong instrument for description and it has some sort of
analytical appeal. It emphasizes a total few rather than isolated problems. It
has been demonstrated that the most common approach includes the idea
that we are dealing with two separate systems: a production system and a
decision and information system. The decisions can be categorised into two
groups those related to the design of the system and those related to the
control of the system. The design of the system includes problem areas such
as the selection and design of products, selection of equipment and process,
job design, location of the system and facility layout. The control of the
system includes inventory control, production control, maintenance, quality
control, labour control and so on.

3. The Contingency Approach: This approach is characterised by the

assumption that there are some important contingencies determining the
relevance of different problems and therefore determining the problem
structure in a given situation. The contingency approach seems to offer a
significantly better instrument for description as well as better framework for
explanation and prediction concerning management problems. However, it is
not based on imperical dates.