Production & Operation

Management [POM]

Leather Engineering(Footwear Technology)

Target Group- 5 Year
th
 CHAPTER ONE
INTRODUCTION TO PRODUCTION & OPERATION MANAGEMENT

INTRODUCTION
SCOPE OF POM
FRAME WORK OF POM
Contents CONCEPT OF PRODUCTION FUNCTION
PRODUCTION SYSTEM
 1. Introduction to Production & Operation Management (POM)
1.1 Production Management
Production: is a scientific process which involves the transformation of raw material
(input) into the desired product or service (output) by adding economic value. When the
principles of management are applied to the production function of the company, it is known
as production management.
Production Management is a process of planning, scheduling, supervising, and controlling
the activities involved in the production of goods and services, i.e. the transformation of
various resources into the value-added product, in an efficient manner. OR it refers to the
management of activities related to the production of goods.

For example, the production process in Footwear manufacturing company consists of inputs
of materials, transformation processes, and final output i.e. (different shoe styles).
Raw material, labour, machines, technology, are considered as the primary requirement
which is an input in the production process of a product.
 Cont. …
Production management plays an important part in the success of a
business.

The main purpose of product management is to produce the right quality

at the right time and cheaply.

Production management, increases the reputation of the business by

ensuring that high-quality products are consistently produced.

Additionally, it ensures efficient use of resources, without deteriorating

the quality of the final product. This decreases the production cost,
because of which customers can obtain the merchandise at a reasonable
cost.
Objectives of Production Management
 Production management deals with decision making related to production processes
so that the resulting goods are produced according to specifications.

1. RIGHT QUALITY: quality of product is established based upon the customers needs.
It is determined by the cost of the product and the technical characteristics as suited to
the specific requirements.

2. RIGHT QUANTITY: manufacturing organization should produce the products in

right number. If they are produced in excess of demand the capital will block up in the
form of inventory and if the quantity is produced in short of demand, leads to shortage
of products.
 Cont.

3. RIGHT TIME: Timeliness of delivery is one of the important parameter to judge the
effectiveness of production department.

4. RIGHT MANUFACTURING COST: Manufacturing costs are established before

the product is actually manufactured.
 All attempts should be made to produce the products at pre-established cost, so as
to reduce the variation between actual and the standard (pre-established) cost.
 C0nt. …
1.2 Operations management
 It is the branch of management that administers the complete production
timeline of a service/ product from the input stage to the finished stage.

 It involves all the activities that involved within the production of goods and
delivery of services such as material management, quality management,
maintenance management, process management, process design, and
product design, and so on.

 It simply means the end-to-end process of transferring and storing

supplies of finished and unfinished goods.
 For example, a shoe manufacturer that manages the flow of materials and
parts to its factories and the delivery of finished shoe to customers. For this
example, take the following diagram(Production / Operation System).
 Cont. …

Figure– Production / Operation System

 Cont. …
• Operations management consists of different tactics such as scheduling work, assigning
resources including people and equipment, managing inventories, assuring quality
standards, process-type decisions that include capacity decisions, maintenance policies,
equipment selection, worker-training options, and the sequence for making individual
items in a product-mix set.

• Generally, as shown in the above diagram, operation management Plan, coordinates and
controls all the activities in the operation system to achieve the stated objectives (the
Operations Management activities, ensure the objective of quantity, quality, delivery
1.2.1 A Framework for Managing Operations
• The business function responsible for planning, coordinating, and controlling
the resource needed to produce service to a company.
PLANNING
Activities that establishes a course of action and guide future
decision-making. operations manager defines the objectives for the
operations sub-system
E.g. forecasting, layout planning, facility location planning, operation
strategy & scheduling etc,
ORGANIZING
 Activities that establishes a structure of tasks and authority. Operation
managers establish a structure of roles and the flow of information within
the operations subsystem.
E.g job design, production standard, work measurement
 Cont. …

 CONTROLLING: Activities that assure the actual performance in accordance with

planned performance. Controlling costs, quality, and schedules are the important functions
here; E.g. MRP, inventory control
 BEHAVIOUR: Operation managers are concerned with how their efforts to plan, organize,
and control affect human behavior.

 MODELS: Operation managers simplify their difficulties using models. E.g. aggregate
planning-examine how best to use existing capacity in short-term, break even analysis-
identify break even volumes, decision tree analysis-long-term capacity problem of facility
expansion.
 Cont.

1.2.3 Objectives of Operations Management

 Customer Service
 To provide agreed or adequate levels of customer service by providing goods or
services with the right specification, at the right cost and at the right time.

 Resource Utilization
 To achieve adequate levels of resource utilization. e.g., to achieve agreed levels of
utilization of materials, machines and labor.
 Production Management Vs. Operation Management
Production Management Operation Management
Production Management can be found in firms • The operation system includes both
where the production of goods is undertaken. manufacturing sector as well as service sector.
E.g. A layout design for a manufacturing found in Banks, Hospitals, Companies, Agencies,
sector you can say that you are applying etc.
Production Technique or Operation Technique • E.g. Designing of a layout for the hospital you
or vice versa. should say that you are applying Operations
Production management involves taking Management Technique not the Production
decisions with respect to the quality, quantity, Management Technique.
design, and pricing of the product being created • It focuses on using the organization’s resources
by the company or organization, i.e. its scope is in the most efficient and effective manner, so as
limited to the production of goods. to meet the requirements of customers.
Its objective is to produce the best goods or • Involves all the activities involved within the
services that are of the right quality, right production of goods and delivery of services
quantity at the right time. such as material management, quality
Production management is a subset of management, maintenance management,
Operations Management. process management, process design, and
product design, and so on
 1.3 Scope Of Production & Operations Management
 Production and operations management concerned with the conversion of inputs into
outputs. It distinguishes itself from other functions such as personnel, marketing, finance,
etc., by its primary concern

 Following are the activities which are listed under production and operations management
functions:
1. Location of facilities 5. Production and planning control
2. Plant layouts and material handling 6. Quality control
3. Product design 7. Materials management
4. Process design 8. Maintenance management
 Cont.
1. LOCATION OF FACILITIES
 It is a long-term capacity decision which involves a long-term commitment about the
geographically static factors that affect a business organization. proximity to good
highways, abundant labor supply, proximity to markets, availability of suitable land and
land cost, adequate water supply, nearness to raw materials etc.

2.PLANT LAYOUT AND MATERIAL HANDLING

 Plant layout refers physical arrangement of facilities. It is the configuration of
departments, work centers and equipment in the conversion process.
 Material Handling defined as the art and science of moving, packing and storing of
products in any form.
 Cont.
3. PRODUCT DESIGN
 Deals with conversion of ideas into reality. Every business organization have to design,
develop and introduce new products as a survival and growth strategy.
4. PROCESS DESIGN
 A macroscopic decision-making of an overall process route for converting the raw material
into finished goods. These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities.
5. PRODUCTION PLANNING AND CONTROL

 Process of planning the production in advance, setting the exact route(path) of each item,
fixing the starting and finishing dates for each item, to give production orders to shops and
to follow up the progress of products according to orders.
 Cont.

 Main functions of production planning and control includes planning, routing, scheduling,
dispatching and follow-up.
 Planning is deciding in advance what to do, how to do it, when to do it and who is to
do it.
 Routing defined as the selection of path which each part of the product will follow,
which being transformed from raw material to finished products.
 Scheduling defined as the fixation of time and date for each operation as well as it
determines the sequence of operations to be followed.
 Cont.
 Dispatching release of orders and instruction for the starting of production for any item
in acceptance with the route sheet and schedule charts
 Function of follow-up is to report daily the progress of work in each shop in a
prescribed proforma and to investigate the causes of deviations from the planned
performance

6. QUALITY CONTROL
 It is a system that is used to maintain a desired level of quality in a product or service’.
Quality control aims at prevention of defects at the source, relies on effective feed back
system and corrective action procedure.
 Cont.
7. MATERIALS MANAGEMENT
 It is aspect of management function which concerned with the acquisition, control and
use of materials needed and flow of goods and services connected with the production
process having some predetermined objectives in view.

8. MAINTENANCE MANAGEMENT
 Equipment and machinery are a very important part of the total productive effort.
Therefore, their idleness or downtime becomes are very expensive. Hence, it is very
important that the plant machinery should be properly maintained
1.4 Concept of Production Function
 Cont. …
 Production Function: in economics, equation that expresses the relationship
between the quantities of production factors (such as labour and capital)
used and the amount of product obtained.
Mathematically production function can be written as:

Q= f (A, B, C, D)

Where “Q” stands for the quantity of output and A, B, C, D are various input
factors such as land, labour, capital and organization.
Here output is the function of inputs. Hence, output becomes the dependent
variable and inputs are the independent variables.
1.5 Production System

• Production system, any of the methods used in industry to create goods and services from
various resources.
• It consists of three main components; Inputs, Conversion Process and Output. Inputs include
raw materials, machines, man-hours, components or parts, drawing, instructions and other
paper works. Conversion process includes operations (actual production process).
 Cont.

 The production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to control and improve
system performance.
Basically, Production systems can be classified in to two main types (i.e. continuous and
Intermittent production system.)
 Cont.

Figure: Classification of Production System

1. Continuous/Repetitive Production System
It is the mass production facilities that produce high volume of the same
products.
Manufactures mostly happen in automated and special purpose-equipment
(i.e. petrochemical, cement, steel, sugar and fertilizer) industries uses
continuous production systems.

a) Process/ continuous-flow production:

In this type of production system, the production is continuous, 24*7 hours all
over the year.
Same type of products flow continuously through a linear line.
Example: Oil and gas refineries, petroleum refineries, chemical processing etc.
uses this type of production system.
 cont. …

b). Mass/flow production

In this type of production, both machine and humans work together to produce
products of similar types in huge quantity, but production does not run
continuously around the year.

Here the production can be break down into small repetitive continuous tasks.

Example: cars, washing machine, fridges, sewing machine etc. are produced in
comparatively large volumes in this production system.

The feature of this production system is, Low Varity and high volume of products
are produced.
 Cont.
2. Intermittent/ Non-Continuous Production System …
Intermittent means something that starts (initiates), and stops (halts) at irregular
(unfixed) interval (time gaps).
In this types of production, manufacturing takes place in discrete batch or groups
rather than flowing continuously.
The production system keeps changing according to design and size of the product
(i.e. it is very flexible).
a). Job Shop Production

 A job shop is a kind of manufacturing process. It makes small batches of custom

goods, i.e., specifically for one customer. The distinguishing feature of this is low
volume and high variety of products,

 E.g a machine tool shop, a machining centre, a paint shop, a commercial printing
2. Batch Production Cont. …

 A form of manufacturing in which the job passes through the functional

departments in lots or batches and each lot may have a different routing. It is
characterized by the manufacture of limited number (medium volume and
variety) of products produced at regular intervals and stocked awaiting sales

Example: Drugs, pharmaceutical, chemicals, Apparel etc.

3. Project Production
A product/service based production system where a company accepts a single,
complex and large contract in the form of a project.
The order must be completed with in a given period of time and at estimated
cost.
Example: construction of airports, dams, roads, buildings, shipbuilding etc.
Cont.
Conclusion
Production and Operation Management is a set of general principles for
production economies, facility design, job design, schedule design, quality
control, inventory control, work study and budgeting control.

In short, the main activities of operation and production management can be
listed as;

Specialization and procurement of input resources namely management,

material and labour, equipment and capital.
Product design and development to determine the production process for
transforming the input factors into output goods and services.
Specialization and control of transformation process for efficient
production of goods and services.
Discuss
1.Framework for Managing Operations
2.Objectives of Operations Management
3.Scope Of Production & Operations Management
4.Difference between Production & Operation Management
5.Concept of Production & Production function
6.Production system & their classification
7.Production Management & its objective
 Assignment-1
Assignment-1.1 Explain characteristics, advantage and limitation of production
system classification (2pt)
Assignment-1.2 Explain the difference between manufacturing & service
operations (2pt)
Assignment-1.3 Explain the difference between Production and Productivity (2pt)
Assignment-1.4 Relating your internship experience with your hosting company
explain the concept of this chapter by answering the following question. (4pt)
Identify the type of production system followed and how they operate?