Production N Operations Introduction

Module I
PRODUCTION &
OPERATIONS
MANAGEMENT
Introduction
2
Among all the areas of management, production is
considered to be crucial in any industrial organization.

Production in simple words is referred to as Manufacturing.
But there is difference between the two terms.
Manufacturing is the process of producing only tangible
goods, whereas production includes creation of both

tangible goods as well as intangible services.
Vrushali Pakhannavar
Production
3
Production is the process by which raw materials and other
inputs are converted into finished goods.
Raw
Materials
Finished
Goods
Production Process
Nature of production
4
The nature of production can be understood under three
simple steps.
a. Production as a system:
b. Production as an organizational function
c. Decision making in production
Contd
5
The Production as a system: involves three main categories of
activities:
a. Production system: whose function is to convert a set of inputs
into desired output.

b. Conversion sub-system: it is a sub-system of the larger
production system where inputs are converted into outputs.

c. Control sub-system: also a sub-system where a portion of the
output is monitored for feedback signals to provide corrective

actions.
Contd
6
Production as an organizational function: the system of
production (i.e. conversion of inputs into outputs) exists in

every organization whether manufacturing or service
industry.
This system involves workers, machines and materials for
their conversion process.

Thus managing departments and personnel play a key role
in achieving the objectives of the organization.

Contd
7
Decision Making in Production: to take care of the production
function in any organization the managers are required to make

a series of decisions.
The decisions made by the operation managers under the
production system basically involve three categories:

a. Strategic Decisions (Relate to Products, processes, facilities, etc.)
b. Operating Decisions: (Relate to planning production activities)
c. Control Decisions (day to day activities of production)
Megafactories Frito Lay
QUESTIONS???
Production Management
10
Production Management refers to the application of
management principles to the production function in a

factory.
It involves applications of planning, organizing, directing
and controlling functions to the production process.

It relates to the decision making of the production process
so that the resulting goods & services are produced

according to specified standards.
Operations Management
11
Operations refer to the decided actions done methodically
as part of a plan of work by a process that is designed to

achieve the pre-defined aims.
Operations management is the process in which resources
or inputs are converted into more useful products.

It involves tactics of scheduling work, assigning resources
(Manpower, Machines, inventories, etc.), assessing quality

standards, etc.
12
Differences between Production and Operations

Management
13
Though both the terms seem similar in nature, there are
certain differences between the two:

a. Tangible/Intangible nature of output: The term production
management is more used for a system where tangible

goods are produced. Whereas operations management is
more frequently is used where various inputs are
transformed into intangible services.
b. The evolution: of production is historical but, operations
management is recently developed.

Contd
14
c.
Consumption of output: Production deals with outputs that

customers consume overtime. But under Operations the
outputs are consumed by the customers immediately.
d. Nature of work (job): Jobs that use less labour and more
equipment come under production. And under operations

there are jobs that use more labour and less equipment.
e.
Degree of customer contact: Production involves little

customer contact . And operations require direct consumer
contact.
Contd
15
f.
Customer participation in conversion: No customer

participation in the conversion process is necessary in
production. But frequent customer participation in the
conversion process is required for operations.
g. Measurement
of
performance:
Production
involves
Sophisticated methods for measuring production activities.

And elementary methods for measuring conversion
activities is required for operations.
Scope of Production ands Operations Management

16
The scope of the subject is very vast. It involves a lot of
activities involving:
Selection of location
Acquisition of land and constructing buildings
Procuring and installing machinery
Purchasing and storing raw materials
Conversion of raw materials into desired products
Quality management, maintenance management, PPC, etc.
Features of Production and Operations

Management
17
1) Manufacturing as Competitive Advantage

2) Services Orientation
3) Disappearance of Smokestacks (pollution generating plants)
4) Small has become Beautiful
Duties & Responsibilities of Production Managers

(in manufacturing organizations)
18
Planning the geographical location of the factory

Purchasing production equipments
Layout of equipments within the factory
Designing production processes and equipments
Product design
Capacity planning
Production planning and scheduling
Contd
19
Production control
Inventory management
Supply chain management
Quality control
Production equipment maintenance and repair
Industrial relations
Health and safety
Duties & Responsibilities of Production &

Operations Managers
20
Take part in strategic decision making of the company

Take part in the implementation and use of Enterprise
Resource Planning in the company

Automate processes as per the requirements of the company
Enhance the R & D effort in developing self-relevant new
technologies
Reduce time lag in implementation of projects
Protection of the environment
Contd
21
Act as a member of the concurrent engineering teams in
new product design and old product development.

Give more attention to technology management
Internal
quality
auditing
in
quality
certification
programming such as ISO 900 series and ISO 14000 series.
Historical Evolution of POM

22
For
over two centuries production and operations
management has been recognized as an important factor

in a countrys economic growth.
The traditional view of manufacturing management began
in eighteenth century when Adam Smith recognized the

economic benefits of specialization of labour.
Contd
23
He recommended breaking of jobs down into subtasks and
recognizes workers to specialized tasks in which they would

become highly skilled and efficient.
In the early twentieth century, F.W. Taylor implemented
Smiths theories and developed scientific management.

From then till 1930, many techniques were developed
prevailing the traditional view.
Contd
1776 -Specialization of labor in manufacturing -Adam Smith
1799 -Interchangeable parts, cost accounting -Eli Viihitney
and others
1832 -Division of labor by skill; assignment of jobs by skill;
basics of time study -Charles Babbage

1900- Scientific management time study and work study
developed; dividing planning and doing of work -Frederick

W. Taylor
1900- Motion of study of jobs -Frank B. Gilbreth
Contd
1901- Scheduling techniques for employees, machines jobs in
manufacturing -Henry L. Gantt

1915 -Economic lot sizes for inventory control -F.W. Harris
1927 -Human relations; the Hawthorne studies -Elton Mayo
1931 -Statistical inference applied to product quality: quality
control charts -W.A. Shewart

1935
-Statistical sampling applied to quality control;
inspection sampling plans -H.F. Dodge &H.G. Roming
Contd.
1940- Operations research applications in World War ll
-P.M. Blacker and others.

1946- Digital computer -John Mauchlly and J.P. Eckert
1947-Linear programming -GB. Dantzig, Williams & others
1950- Mathematical programming, on-Iinear and stochastic
processes A. Charnes, W.W. Cooper & others

1951-
Commercial
digital
computer;
computations available. -Sperry Univac
large
scale
Contd.
1960- Organizational behavior; continued study of people at
work -L. Cummings, L. Porter

1970- Integrating operations into overall strategy and
policy.
Computer
applications
to
manufacturing.
Scheduling and control. Material requirement planning

(MRP)-W. Skinner J. Orlicky and G. Wright
1980-Quality and productivity applications from Japan
robotics. CAD-CAM -W.E. Deming and J. Juran.
Contd
28
As we can clearly see, Production management became the
acceptable term from 1930s to 1950s.

As F.W. Taylors works become more widely known,
managers developed techniques that focussed on economic

efficiency in manufacturing.
They began to study people and human behaviour in the
working environment. Even economists, mathematicians,

and
computer
socialists
contributed
sophisticated analytical approaches.

newer,
more
Contd
29
With the 1970s emerging two distinct changes took place.

The first reflected in the new name operations management
which was a shift in the service and manufacturing sectors .

As service sector became more prominent, the change from
production to operations emphasized the broadening of

our field to service organizations.
The second, more suitable change was the beginning of an
emphasis on synthesis, rather than just analysis, in

management practices.
Recent Trends in POM

30
Global Market Place

Production/Operations Strategy
Total Quality Management (TQM)
Flexibility
Time Reduction
Technology
Worker Involvement
Contd
31
Re-engineering
Environmental Issues
Corporate Downsizing (or Right Sizing)
Supply-Chain Management
Lean Production
32
QUESTIONS???
Classification of Production System

33
The production system of an organization is that part,
which produces products of an organization.

It is that activity whereby resources, flowing within a
defined system, are combined and transformed in a

controlled manner to add value in accordance with the
policies communicated by management.
Production systems can be classified as Job Shop, Batch,
Mass and Continuous Production systems.

Contd
34
Continuous
Production
Mass Production
Batch Production
Job Shop Production
Output or product variety

Job shop production

35
Job shop production are characterised by manufacturing of
one or few quantity of products designed and produced as

per the specification of customers within prefixed time and
cost.
The distinguishing feature of this is low volume and high
variety of products.
A job shop comprises of general purpose machines arranged
into different departments. Each job demands unique

technological requirements, demands processing on
machines in a certain sequence.
Batch production
36
Batch production is defined by American Production and
Inventory Control Society (APICS) as 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 characterised by the manufacture of limited number
of products produced at regular intervals and stocked

awaiting sales.
Mass Production
Manufacture
37
of discrete parts or assemblies using a

continuous process are called mass production.
This production system is justified by very large volume of
production.
The machines are arranged in a line or product layout.
Product and process standardisation exists and all outputs
follow the same path.
Continuous Production
38
Production facilities are arranged as per the sequence of
production operations from the first operations to the

finished product.
The items are made to flow through the sequence of
operations through material handling devices such as

conveyors, transfer devices, etc.
Productivity
39
The terms Production and Productivity
may seem
similar. But they are different.

Production as we know, refers to the total output
produced.
Productivity refers to the amount of goods and services
produced with the resources used.

It is known as the output relative to the inputs. (or ratio of
output to input).
Contd
40
Output may refer to the sales made, products produced,
customers served, meals delivered, or calls answered

Inputs may refer to labor hours, investment in equipment,
material usage, or machineries used.
Measures of Productivity
41
Productivity = Quantity of goods & services produced
Amount of resources used

The equation makes it clear that the two variables in
measuring productivity are: the amount of production and

the amount of resources used.
All the organizations always aim at achieving maximum
productivity.
Contd
42
The steps to increase the productivity of an organization are:

a) Increase production using the same or a smaller amount of
resources
b) Reduce the amount of resources used while keeping the same
production or increasing it.

c) Allow the amount of resources used to increase as long as
production increases more.

d) Allow production to decrease as long as the amount of
resources used decreases more.

Production Processes
43
Process refers to the facilities, skills and technologies used
to produce products and services.

Production
processes
basically
concentrate
on
the
conversion or transformation processes used to produce

products.
INPUTS
Conversion
Process
OUTPUTS
Manufacturing & Service Operations

44
Manufacturing Operations
Convert inputs like materials, labour and capital into
tangible outputs.
These manufacturing processes can be grouped under three
broad categories:
a) Forming Processes (include casting, forging, embossing, etc.)
b) Machining Processes (include turning, drilling, grinding, etc.)
c) Assembly Processes (welding, brazing, soldering, riveting, etc.)
Characteristics of Manufacturing
45
Specialisation
Mechanisation
Use of Technology of Industrial Engineering
Increasing use of Computers and Data Processing
Equipments
Use of Scientific Method
Contd
46
Non-Manufacturing or Service Operations

Transforms a set of inputs into a set of outputs that are
intangible in nature.
Service operations can be classified into the following types
based on the degree of standardization of their outputs and

they processes they perform.
a) Standard Services
b) Custom Services
Characteristics of Services
47
Intangibility
Perishability
Inseparability
Variability
Differences between Goods & Services

48
Goods (Tangible Products)
Services (Intangible Products)
Goods can be resold
Reselling services is unusual
Goods can be stored
Services cannot be stored
Quality is measurable
Quality is difficult to measure
Selling is distinct from production of
Selling is often a part of the production
goods
of service
Goods are transportable
Service provider, not the service itself is

often transportable
Location of facility is important for cost
Location of facility is not important
It is easy to automate production of goods
Service is difficult to automate
Differences Between Manufacturing and

Service Operations
49
Service Operations
Productivity can be easily measured
Productivity cannot be easily measured
since tangible products are produced
since the outputs are intangible
Establishing Quality Standards &
Quality establishing in service operations
Product Quality is easy
is difficult
Little customer contact
Extensive customer contact
Proportion of expenses required for
Proportion of expenses required for
material handling is more
material handling is less
Products can be inventoried (can be
Outputs cannot be inventoried (cannot be
Stored)
Stored)
Contd
50
Investments in assets such as
Service Operations
Investments in assets are lower
equipments and inventory are higher

Long lead times
Short lead times
Capital intensive
Labour intensive
Product quality is easily determined
Service quality is determined with

difficulty
Operations depend more heavily on
Operations do not depend much on
maintenance and repair work
maintenance and repair work
Challenges Facing Operations Managers

51
Managing Multiple Customers
Understanding the Service Concept

Managing the Outcome and Experience
Managing in Real-Time
Knowing, Implementing and Influencing Strategy
Continually Improving Operations
Encouraging Innovations
Managing Short-term and Long-term Issues Simultaneously
52
QUESTIONS???

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What are the three main categories of activities involved in production as a system?

What are the three main categories of activities involved in production as a system?

What are the three types of decisions involved in production management?

What are the three types of decisions involved in production management?

Module I

Among all the areas of management, production is

considered to be crucial in any industrial organization.

goods, whereas production includes creation of both

Production is the process by which raw materials and other

inputs are converted into finished goods.

The nature of production can be understood under three

The Production as a system: involves three main categories of

into desired output.

production system where inputs are converted into outputs.

output is monitored for feedback signals to provide corrective

Production as an organizational function: the system of

production (i.e. conversion of inputs into outputs) exists in

their conversion process.

in achieving the objectives of the organization.

Decision Making in Production: to take care of the production

function in any organization the managers are required to make

production system basically involve three categories:

Megafactories Frito Lay

Production Management refers to the application of

management principles to the production function in a

and controlling functions to the production process.

so that the resulting goods & services are produced

Operations refer to the decided actions done methodically

as part of a plan of work by a process that is designed to

or inputs are converted into more useful products.

(Manpower, Machines, inventories, etc.), assessing quality

Differences between Production and Operations

Though both the terms seem similar in nature, there are

certain differences between the two:

management is more used for a system where tangible

management is recently developed.

Consumption of output: Production deals with outputs that

equipment come under production. And under operations

Degree of customer contact: Production involves little

Customer participation in conversion: No customer

Sophisticated methods for measuring production activities.

Scope of Production ands Operations Management

The scope of the subject is very vast. It involves a lot of

Features of Production and Operations

1) Manufacturing as Competitive Advantage

Duties & Responsibilities of Production Managers

Planning the geographical location of the factory

Duties & Responsibilities of Production &

Take part in strategic decision making of the company

Resource Planning in the company

Act as a member of the concurrent engineering teams in

new product design and old product development.

programming such as ISO 900 series and ISO 14000 series.

Historical Evolution of POM

over two centuries production and operations

management has been recognized as an important factor

in eighteenth century when Adam Smith recognized the

He recommended breaking of jobs down into subtasks and

recognizes workers to specialized tasks in which they would