Chapter 2
PRODUCTION MANAGEMENT
BY: MOHAMMAD FAHIM KARIMI
Production Management
Production management is a process of planning, organizing, directing and controlling
the activities of the production function.
It combines and transforms various resources used in the production subsystem of the
organization into value added product in a controlled manner as per the policies of the
organization.
E.S. Buffa defines production management as, “Production management deals with
decision making related to production processes so that the resulting goods or services
are produced according to specifications, in the amount and by the schedule demanded
and out of minimum cost.”
Objectives of Production Management
The objective of the production management is ‘to produce goods and services of right
quality and quantity at the right time and right manufacturing cost’.
1. RIGHT QUALITY: The quality of product is established based upon the customers
needs. The right quality is not necessarily best quality. It is determined by the cost of
the product and the technical characteristics as suited to the specific requirements.
2. RIGHT QUANTITY: The 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.
Objectives of Production Management
1. RIGHT TIME: Timeliness of delivery is one of the important parameter to judge the
effectiveness of production department. So, the production department has to make
the optimal utilization of input resources to achieve its objective.
2. RIGHT MANUFACTURING COST: Manufacturing costs are established before
the product is actually manufactured. Hence, 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.
Production Process
The production process takes resources, such as raw materials, labor, capital
and equipment, and turns them into finished goods or services for
consumers.
The goal of the production process isn’t only to produce but to do so
efficiently. The goods or services should be delivered to customers as
quickly as possible.
A production process must be effective as it impacts a company’s business
performance.
Production Process
Capital, labor and whatever other resources are required to produce goods
and services are called the factors of production.
Capital is the amount of money invested in assets, such as machinery, raw
materials, etc.
Labor is the people who are involved in the time and effort required to put
into the process.
Steps of the Production Process
There are various stages that a typical production process goes through.
These steps, of course, can vary from one manufacturer to another and
across industries, but in general, the steps defined below are part of
any production management process.
1. Production Planning
Before you can go into production, you’ll need to do some planning. At this
point, you’re going to define the purpose and the goals of the production as
well as figure out how you’re going to achieve them.
Steps of the Production Process
2. Production Routing
Once the plan is in place, the procurement of the necessary resources such as raw
materials, begins.
The raw materials might need processing, finishing and to be checked for quality
and distribution. These activities are also part of the routing step.
At this point, decisions are made to determine the quantity and quality of the
goods and services and their place in production.
All steps are important in the production process, but this might be the most
important.
Steps of the Production Process
3. Production Scheduling
A schedule in the production process is where you determine the timing of
the job.
Each stage of the production process should have a start date and an end
date.
Everyone working on the production line will have a scheduled workflow.
Steps of the Production Process
4. Production Dispatching
This stage marks the start of production.
Many different activities can take place over the course of dispatching, from
the provision of items, maintenance of records to the monitoring of planned
workflows and the times a machine is working or idle to ensure the
production process is moving forward as expected.
Steps of the Production Process
5. Production Control
Production control is the stage when the actual production process is
compared to the planned production process.
This identifies issues that took the production off track and helps
managers come up with plans to remedy those issues for the next production
cycle.