1. production mgt v1

8/6/2019 1. Production Mgt V1

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Production and Materials Management Unit 1

Owner Professor Nilesh Version - 1 1

ContentsWhat is production?................................................................................................................................ 2

What is a production Management? ...................................................................................................... 2

Why should one study production Management? /What is importance of learning production

Management? /What is the objective of learning Production Management? ...................................... 4

What is a difference between Production and Operations Management? ........................................... 5

Production System .................................................................................................................................. 6

What is Operations Management? ......................................................................................................... 7

Production function ................................................................................................................................ 8

What is Productivity? .............................................................................................................................. 8

Product Classification/types ................................................................................................................... 9

Levels of products ................................................................................................................................. 10

Relationship of Production function with other functions ................................................................... 11

Product selection .................................................................................................................................. 12

Steps for identifying the products for manufacturing .......................................................................... 12

What is Product Planning & development? .......................................................................................... 14

Categories/Types of new products ....................................................................................................... 14

Objectives of product planning & development ................................................................................... 15

Characteristics of good product development ..................................................................................... 15

Reasons for new product failures ......................................................................................................... 16

New production development process ................................................................................................ 16

Challenges of product development ..................................................................................................... 17

Product Life Cycle .................................................................................................................................. 17

Product design ...................................................................................................................................... 18

Process design ....................................................................................................................................... 18


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However, there are many organisations that create both goods and services through

transformation of inputs in to outputs.

Either along with tangible goods e.g. consumer durables like A/Cs,microwaves & the after sales services

Pure services such as Hospitals, educational institutes , CA firms, BPO/KPOcompanies etc

Therefore the term production management has been changed to production and

operations management as many companies produce both goods and services as

their outputs.

Regardless of whether the end product is a good or a service, the productionactivities that go on in the organisations are often referred to as operations and

function of planning, directing and controlling the processes that transform inputs in

to finished goods/services is termed as operations management.

Its important to note that all these three terms Production Management,

Production and Operations Managementand Operations Managementare used

interchangeably.

Productions/operations management can be defined as the management of all

activities directly related to the creation of goods and/or services through thetransformation of inputs into output.


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Why should one study production Management? /What is

importance of learning production Management? /What is the

objective of learning Production Management?Production Management is one of the important function of an organisation others

being Marketing, Finance, Human resources, IT

Understand how a production system works

How goods are produced How the transformation happens What activities are involved

Understand how a production systems are managed effectively

Understand the different production functions like, planning, directing,controlling

Understand the role of the production managers, so as have an overall skills required

& develop accordingly

Production cost is a direct cost of any organisation having a direct impact on the

profit & loss account of the company. Understanding the production Management

would help where the costs can be saved & productivity can be optimised.

Production management offers a great opportunity for an organisation to improve

its profitability

QCDS (Quality, cost, Delivery & Service) is the modern mantra of any organisation.

Understanding production management would help in understanding how to

produce a quality product at the competitive/reasonable cost with a timely

delivery & an effective service This is possible only of the production systems aremanaged effectively.

Whether profit or non profit, the role of an OPERATIONS MANAGER is to sustain,

protect, and project the companys operations side.

The complexities & challenges of modern production systems have increased.

the supplying organizations have been engaging deep & across value chain of the

customers.


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What is a difference between Production and Operations

Management?

Earlier manufacturing was used synonymously with the word production

Now manufacturing is referred to as production of tangible goods e.g.consumer durables

Production/Operations is both production of goods (tangibles) & services(intangibles e.g. medical, educational services)

Production management and operations management are management jargon that

needs to be simplified for those who are sitting on the fence or those inside anorganization unable to comprehend them clearly. Sometimes it becomes confusing

to be talking about production management inside operations management but they

are separate and distinct entities in the study of management as ultimately,

production is a part of the whole cycle of operations. Read on to clarify the doubts.

We tend to use the term "Production management" when the result is a physical

product, and "operations management" when the output is a ''service".

Operations Management

The study of set of activities comprising supervision, planning and designing of

business operations in the field of manufacturing of goods and services is termed as

operations management. The purpose of operations management is to make certain

that the operations of a business are efficient and effective and result in minimum of

wastage. Operations management tries to cut down resources involved in operations

while at the same time making operations more effective and productive. In fact

operations management is more concerned on processes than people or products.

Operations management in a nutshell is using physical resources in an optimum

manner, converting input into output, so as to supply to the market the desired and

finished product.

Production Management

Production management on the other hand focuses specifically on the production of

goods and services and is concentrated upon churning output from input. It is a

broad sum of activities that go into turning raw material into final, finished product.

One may feel that production management is a subset of operations management,

but production management in itself is a broad subject that comprises production

planning and control, inventory management, and operations control. Production

management includes all management activities spanning selection. Designing,

operating, controlling and updating production system.
http://www.differencebetween.com/category/countries/australia/business-australia/http://www.differencebetween.com/category/people/food/raw-material/http://www.differencebetween.com/category/people/food/raw-material/http://www.differencebetween.com/category/countries/australia/business-australia/


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In brief:

Operations vs Production Management

Both production management and operations management play an important role in

an organization in increasing the efficiency and productivity.

While operations management is focused upon administration, planning and

execution of operations involved in production of goods and services and trying to

minimize the resources at the same time increasing output, production management

is more concerned with input/output and churning out products in the shape of

desired finished product.

Production System

What is a system? Set of policies, processes & procedures required for planning, execution &

control.

Formalized system that states the structure, responsibilities & proceduresrequired to achieve effective results

Collection of interrelated activities/enti ties Arrangement of interrelated parts whose interactions can be specified and to

some extentpredicted

What is a Production system then? A system that converts a set of inputs in to a set of desired outputs

(goods/services)

Consists of elements like a) inputs b) transformation process c) outputs d)delivery systems e) communication systems f) Production control/ decision

making systems.


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What is Operations Management?

Meaning: Set of activities comprising planning, supervision, planning and designing of

business operations in the manufacturing of goods and services is called as

operations management.

Goal: Ensure that the operations of a business are efficient and effective and result

in minimum of wastage.

Focus Optimisation of processes: Cut down resources involved in operations while at the same time making

operations more effective and productive.

More concerned on processes than products. Scope: All the activities/operations right from the customer gives an order to collecting the

cash

Operations management in nutshell:


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Use physical resources in an optimum manner, converting input into output, so as tosupply to the market the desired and finished product in time & quality.

Production management or operations management play a key role in improving theefficiency and productivity.

Regardless of whether the end product is a good or a service, the productionactivities that go on in the organisations are often referred to as operations

The function of planning, directing and controlling the processes that transforminputs in to finished goods/services is termed as operations management.

Today, this discipline is generally referred to as operations management, although itincludes both management of activities producing goods or services.

Production function What is a function?

Relationship between inputs and outputs What is a Production function?

Creating products(outputs) using inputs such as materials, machines, labour,land capital & management.

Its a relationship between inputs & outputs.Q quantity of output

a, b, c, d quantities of various inputs (materials, labour hours etc)

Production function specifies amount ofoutputs that wouldflow from the amount

ofinputs used during a specified period.

What is Productivity?

Productive use of resources

The level at which a process is running Efficiency of the production Productivity index What do a productive index tells us?

How well a process is carried out to convert a set of inputs in to a set ofoutputs

Benefits Value to customer Profitability to the organization

Q = f (a, b, c, d)

Productivity = OutputInput


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Product Classification/types

From marketing perspective products are classified in to three categories:

Durability & tangibility Consumer goods Industrial goods


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Levels of products


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Product selection

Meaning : Choosing the goods or services for production Focus :

develop & execute a product strategy that meets the demands of the marketdifferentlythan the competition does.

Product selection is a keyto an organization's success & sustenance Most products have limited or predictable life cycle Firms must keep looking for new products, improve existing products, build

competencies around existing market products (Dell)

Product selection enablers Internal sources

Employees at all levels Strong communications within processes/functions

External sources Customers Competitors Distributors Suppliers

Steps for identifying the products for manufacturing

Focus : Understand the customers & their needs See how competition delivers Differentiate the way you deliver

Step 1 : Market Analysis -Understanding Customers & their Needs)

Market segmentation: Groups of consumers enough in common, which can be abasis for a design of a product/service

Demographics: age, occupation, income, education Psychological factors: pleasure, fear Industry factors: needs of a particular industry like banking, Medicare,

automobile.

Needs assessment: Identify the needs of each segment & check howthecompetition is meeting them.

Needs assessment includes both attributes & features of the product/service Product/service expectations: Price, quality, level of customization Delivery expectations: availability, convenience, service, safety Volume expectations: high/low, variability in volume


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Step 3 : Selection of competitive priorities

Its important to improve on all the 8 priorities However, improving on all is difficult due to trade off decision between the priorities

Higher customization could lead to higher cost Efficient design could lead to higher cost Volume flexibility could lead to inventory & carrying costs Low cost operation could at times affect the quality Greater quality could lead to higher costif not managed well

Important, sometimes its difficult to have a trade off as a competitive priority hasbecome a qualifier, Must Berequirement in the industry

Step 4 : Developing the operations strategy

Deciding on a flow strategy/approachbased on the competitive priority selected

Goal :


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decide on how the operations systems should be organized so that the volume,variety of products & services are handled effectively

Set the stage/approach for all operational decisions at every levelFlexible flow strategy

Meaning:

Organizing operations around the processes Emphasis: Efficient Design, Customization, Volume Flexibility Low cost & quick delivery is less Examples: High end cars

Line-flow strategy

Meaning:

Organizing operations around the product or service Appropriate when products are standard Emphasis: Cost effectiveness, Quality Consistencies, Quick Deliveries Examples: Routine Consumer products

Intermediate Flow strategy

Between Flexible & line flow

What is Product Planning & development?

Searching ideas, screening them systematically & converting the ideas in toproducts/services.

Includes all the activities right from idea generation to ending up with launching theproduct to the market

Its a process New product idea Filtering the ideas Convert the idea in to

tangible/intangible product/service Launch the product to the market

Includes improving the existing products or Dropping the unprofitable products

Categories/Types of new products

Unique products: from the R&D efforts.truly new/unique e.g. computers, cellphones


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Improvements in the existing products: different in terms of functions, size, featurese.g. TV, electric cars.

Imitative: new to company but not new to the market e.g. chocolates, cars, newcereals.

The key to success is product differentiation If market considers the product to be significantly different from the

competition, then its a success

Buyers perception is a reality in the imitative products

Objectives of product planning & development

Develop products systematically - Do away with firefighting

Avoid waste, avoid overproduction Better utilization of available resources Good utilization of surplus capacity Maximize return on investment Meet ever-changing customer demands Create a good product image Promote customer loyalty Increase customer satisfaction Increase market share

Replace obsolete products Diversify risks & stand firm in the competition Achieve business continuity Innovate proactively not followers/order takers

Characteristics of good product development

Successful product development gives products that can be produced & sold profitably.

Product characteristic

Product quality Does it satisfycustomer needs? Quality Indicators

Market share Price that customer is willing to pay

Development process characteristic

Development time


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Lead time of the development Development cost

Money spent on development Development capability

Will it be able to churn out future products? Are learning captured & used?

Reasons for new product failures

Overestimating the market size Design issues Incorrect positioning, incorrect pricing Poor research Uncontrolled development cost Strong competition reaction

New production development process


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Challenges of product development

Trade offs Give good customization at the same time keep costs minimal

Ever-changing technology Ever-changing customer demands Time pressures

The urgency of thoughtful decisions Team dynamics Requirement of different skills Requirement of motivation throughout the process Requirement of support from other functions throughout

Product Life Cycle


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Product design

Product is designed for market & market is known better by Marketing people The general specifications of the product are drawn by design persons along with

marketing persons

Product design is about Product form & Product Functions Product Form

Deals with the shape , appearance Adds nothing to performance but packaging is very imp. Many customers cant tell if one product is better than other in terms

of functions, so they buy the one which is eye-catching

Product Function Deals with how it works Importance of the functional design is that it has to work else it

wont sell

Industrial products: The machine makers pay attention to form design although function is imp,

as factories buying machines want their shop floor to look neat & clean!

Process design

Concerned with overall sequence of the operations required to meet the designspecification of the product.

Types of workstations required Types of machineries What technology (Manual, automated) What bandwidth? How should be the quality control?

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