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Mb0044 Unit 01 Slm

Nov 08, 2014

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Production and Operations Management

Unit 1

Unit 1

Production Management

Structure: 1.1 Introduction Objectives 1.2 Integrated Production Management Production management and production control Inventories Material control and material handling 1.3 System Productivity 1.4 Capital Productivity Outsourcing strategies Balancing of workstations Quality tools Rationalisation of packaging methods 1.5 Labour Productivity Balancing operations in assembly line Reallocation of workers Setting up productivity norms 1.6 Personnel Productivity 1.7 Training 1.8 Summary 1.9 Glossary 1.10 Terminal Questions 1.11 Answers 1.12 Case Study

1.1 IntroductionProduction refers to the creation of goods and services for consumption by the society. Such creation typically involves converting inputs to desired outputs using different conversion or transformation processes. In fact, the first step is to decide upon the desired outputs and then to identify the inputs and the corresponding conversion processes. Production management encompasses all those activities that enable conversion of a set of inputs into outputs which are useful to meet the human needs. Figure 1.1 depicts a diagrammatic representation of production management.Sikkim Manipal University Page No. 1

Production and Operations Management

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Inputs

Production Management

Output

Fig. 1.1: Diagrammatic Representation of Production Management

It is also important to have a feedback loop connecting the information from output to input stages to ensure that the desired type of output has been produced. This also ensures the right quantity and the right quality. The below table 1.1 shows some of the examples of production systems.Table 1.1: Examples of production systems Production System University Inputs Transformation processes Knowledge dissemination, evaluation, administration Transaction, money exchange, accounting, tallying Cleaning, washing, rinsing, soaking, drying Outputs

Students, lecturers, staff, facilities, labs, library Accountants, cashiers, equipment, staff, client request Dirty clothes, soap, water, energy, equipment,

Graduates, qualified persons

Banks

Money instruments, financial services, satisfied customers Neat and clean clothes, dry pressed clothes

Laundry

Production management involves the following activities: Identification of the requisite materials, acquiring the knowledge of the processes, and installation of equipments necessary to convert or transform the materials to products. Further, the quantities to be produced have to be ascertained, processes established, specifications detailed out, quality maintained, and products delivered in time to meet the demands. Decisions need to be taken about: o Location of the facilityPage No. 2

Sikkim Manipal University

Production and Operations Management

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o o o o o

Variety of machineries required to be installed Technologies to be deployed Recruitment of workforce with adequate training to perform the tasks Facilities to be provided Items to be produced in-house and those outsourced

These decisions will help to achieve productivity with utmost efficiency. Constraints on resources and competition demands that optimisation be obtained in all functions at all levels. In addition, attempts are made to improve output quality, increase yield, and develop systems that are not harmful to the society. Different types of materials have to be procured, stored, and transported inside the organisation for transformation using processes. Information flows throughout the cycle to instruct, monitor, and to control the processes to establish and control the relevant costs and to look for opportunities for continuous improvement. All these functions generate their own subsystems which help in the establishment of accountability and the recognition of performance necessary for improvement. Strategies at various levels will have to be formulated with appropriate implementation procedures established with checks and balances. Flexibility will have to be designed into the system to take care of fluctuations in the market both for purchased items and the in-house production based on demand. Technological changes have to be accommodated both as challenges and opportunities for development to be abreast of the global environment.

You will learn about these aspects of production and understand the intricacies involved so that you will be able to adapt yourself to a production environment. Objectives: After studying this unit, you should be able to: define production management list the various functions involved in production management explain the significance of inventories and material handling define productivitySikkim Manipal University Page No. 3

Production and Operations Management

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describe the role of quality circles in achieving quality explain the methods of balancing workstations and their impact on productivity identify the importance of training

In this module, you will learn about the methods and strategies deployed for ensuring productivity. You will realise the importance of balancing loads on various workstations and how setting up norms and evaluation of personnel improves productivity. The concepts behind quality circles, methods improvement, and training will become clear to you.

1.2 Integrated Production ManagementThe set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. The various functions involved in production management are: Procuring the materials Moving the material for transformation, that is, to adapt processes which change their characteristics and attributes to make them suitable for the product Training and deploying the workforce Implementing the procedures for systematic loading of machines Maintaining the inventories Maintaining the machines Establishing the methods of inspection to ensure quality Packaging the products for safe distribution and dispatch Planning, both long and short term, requires information about the production capacities of different facilities. Many items need to be purchased, some partially manufactured, and some partially processed. The quantities of each of these have to be assessed for procurement, storage, quality, and receipt. Information flow at every stage helps to identify the value additions that are taking place. A faithful record of the various stages, the time consumed, costs involved, and their impact on other processes helps in identifying the bottlenecks and also the opportunities for improvement. It has been widely recognised that inventories such as raw materials, work-in-process, and finished goods castSikkim Manipal University Page No. 4

Production and Operations Management

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a heavy burden on profitability. In the modern times, when there is pressure on margins from all sides, it is mandatory to keep inventories to the minimum. So the concepts of Just-In-Time (JIT) and lean manufacturing are applied to utilise the resources to the best advantage and also to minimise or eliminate inventories. Integrated production manufacturing is expected to address these concerns and offer methodologies to make the production system efficient. 1.2.1 Production management and production control Production management typically starts with aggregate planning. The data for this planning comes from the marketing department which forecasts the demand and determines the quantities of various products needed to fulfill the orders. The delivery schedules are also established. The available stocks and buffer stocks needed to meet the exigencies are also considered. In aggregate planning, all inputs that are required to meet the targets such as, machinery, raw materials, number of machines and their types, work force, storage space, facilities for movement and storage, and policy options like sub-contracting, overtime, hiring, and laying off workers are considered. Make or buy decisions have to be taken to meet the varying demands to avoid the deficits or excesses by two well known methods - matching demand and level capacity. Figure 1.2 depicts the make or buy decisions.

Fig. 1.2: Make or Buy Decisions

In the matching method, the production capacity is adjusted to match the forecast demand by varying the level of the work force by hiring or laying off.

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The advantage of this method is that there will be no finished goods inventory. In the level capacity method, the production capacity is held constant at an optimum level. The varying demands are met by maintaining the inventory, backlog, overtime, or subcontracting. The choice between the two is determined by the capacities available, availability of part-time labour, reliability of subcontractors, and managements policies. Master production schedule sets the quantity of each end item to be completed during each time period of the short-range planning. The details are arrived at after verifying the progress of the schedules of work, expected receipts, available stocks from inventory, and the needs of assembly shops to meet the demands. Constant reviewing makes for successful scheduling which results in economies as well as high rate of order completion. The functions of production planning are broadly classified into three. They are estimating, routing, and scheduling. Figure 1.3 depicts the production planning. Production Planning

Estimating

Routing

Scheduling

Fig. 1.3: Production Planning

Estimating Estimating involves identifying the manpower requirements, machine capacity, and m