2production_management

8/7/2019 2Production_Management

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Overview of Production

Management

Dr. T. T. Kachwala



Overview of Production Management

Production Function, Relation of Production with other

Disciplines of Management, Salient Characteristics of

Production.

Sub Disciplines of Production (Manufacturing) Management.

Design Department, Materials Management, Production

Function, Quality Management & Engineering Function

Productivity ± Definition, Measures of Productivity, Methods of

improving Productivity.

Productivity and Goal (Eli Goldratt).

Slide 2



Production Function

Production (Manufacturing) is an intentional act of organizing the

manufacturing resources for the purpose of transformation of raw

materials into a saleable product at optimum quality and minimum

costs.

Production Management seeks to optimize the intentional act of

planning, organizing, directing and coordinating the manufacturing

resources for the purpose of transformation of raw materials into a

saleable product at optimum quality and minimum cost, by controlling

the manufacturing cost, quality and inventory within the specific limits

laid down by the production plan, product design and available

resources of skills and capital (money)

Slide 3



R elation of Production with other

Disciplines of Management

1. Marketing: example - Sales / Production Plan

2. Finance: example - Budget

3. HRD: example - Training

� Each of the four disciplines are equally important. Each of them are

inter related and inter dependent on the other. They are like the four

columns of a building. They all represent one set of common

objectives that is - Corporate objectives.

Slide 4



Salient Characteristics of Production

The following are certain characteristics that makes

Production function distinct & different from the other

disciplines:

1. the large volume of resources it has to control.

2. the high pace at which it has to move.

3. the spot decisions it has to take.

Slide 5



Sub Disciplines of Manufacturing Department

1. Design Department :

Interface between Production &

Marketing.

Design & Development activities.

Use of tools like CAD / CAM.

Concurrent Engineering.

Slide 6



Engineering Drawing



CAD




2. Materials Management :

Purchasing Activity.

Stores.

Inventory Management

3. Production Function

Line function.

Pyramid Organization Structure.

Production Planning & Control.

Slide 9




4. Quality Management

Incoming material, Vendor Development

In-process Inspection, Process Capability

Finished Goods Inspection

Quality Audit

Quality Assurance Standards

Slide 10




5. EngineeringFunction

Plant Maintenance

Plant Layout

Material Handling

Work Study & Method Study

Slide 11



Definition of Productivity

1. The term Production is absolute. While the term Productivity is

relative (output relative to input)

2. It is ratio of output & input

i.e. Productivity = (Measure of output) / (Measure of input)

3. Productivity can be defined as incremental change in output for a

unit change in input.

Slide 12



Measures of Productivity

1. Labor productivity = Output (units) / Labor (hours)

2. Material Productivity = Output (units) / Material (kgs)

3. Machine Productivity = Output (units) / Machine (hours)

4. Total Productivity Index = Output (units) / (Labor + Material + Machine)

Slide 13



Methods of improving Productivity

1. Increase the output for the same input (Quality

Management)

2. Decrease the input for the same level of output

(R educing Wastage)

3. Small increase in input resulting in a

substantial increase in output (Capital

Investments in new facilities)

Slide 14



Productivity and Goal (Eli Goldratt)

� Productivity is the act of bringing a company closer to its goal.

Productivity is meaningless unless you know what your goal is?

� List of all the items people think of as being goals: cost-effective

purchasing, employing good people, high technology, producing &

selling quality products, capturing market share and customer

satisfaction.

� All of these are essential to running the business successfully. They

enable the company to make money. But they are not the goals

themselves, they¶re just the means of achieving the goal.

� The R eal Goal of the organization is ³To Make Money´ and all other

things are just ways to achieve that goal.

Slide 15




If the goal is to make money, then, anaction that moves us toward makingmoney is productive. And an action thattakes us away from making money is non-productive

In order to know if we are making money,

the minimum number of financialmeasurements we would need tosimultaneously increase are net profit,return on investment and cash flow

Slide 16




How to build a direct connection between the three financial

measurements and what goes on in the plant?

The measurements which express the goal of making money perfectly

well, and which also permit us to develop operational rules for running

our plant are:

1. Throughput It is the rate at which the system generates money

through sales

2. Inventory It i s all the money that the system has invested in

purchasing things, which it intends to sell.

3. Operational expense It is all the money the system spends in order to

turn inventory into throughput.

Slide 17




� The Goal is to increase throughput while simultaneously

reducing both inventory and operating expense. Each one

of those definitions contains the word money.

1. Throughput is the money coming in.

2. Inventory is the money currently inside the system.

3. Operational expense is the money we have to pay out to make

throughput happen.

� One measurement for the incoming money, one for the

money still stuck inside, and one for the money going

out.´

Slide 18



Thanks and Good Luck

Have a nice Day

Dr. T. T. Kachwala

2production_management

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