What is Production Management?


Production management means planning, organizing, directing and controlling of production activities. Production management deals with converting raw materials into finished goods or products. It brings together the 6M's i.e. men, money, machines, materials, methods and markets to satisfy the wants of the people.

Production management also deals with decision-making regarding the quality, quantity, cost, etc., of production. It applies management principles to production. Production management is a part of business management. It is also called "Production Function." Production management is slowly being replaced by operations management. The main objective of production management is to produce goods and services of the right quality, right quantity, at the right time and at minimum cost. It also tries to improve the efficiency. An efficient organisation can face competition effectively. Production management ensures full or optimum utilisation of available production capacity.

Definition of Production Management
According to Elwood Spencer Buffa, "Production management deals with decision-making related to production processes so that the resulting goods or service is produced according to specification, in the amount and by the schedule demanded and at minimum cost."

Importance of Production Management

The importance of production management to the business firm:

1. Accomplishment of firm's objectives : Production management helps the business firm to achieve all its objectives. It produces products, which satisfy the customers' needs and wants. So, the firm will increase its sales. This will help it to achieve its objectives. 2. Reputation, Goodwill and Image : Production management helps the firm to satisfy its customers. This increases the firms reputation, goodwill and image. A good image helps the firm to expand and grow. 3. Helps to introduce new products : Production management helps to introduce new products in the market. It conducts Research and development (R&D). This helps the firm to develop newer and better quality products. These products are successful in the market because they give full satisfaction to the customers. 4. Supports other functional areas : Production management supports other functional areas in an organisation, such as marketing, finance, and personnel. The marketing department will find it easier to sell good-quality products, and the finance department will get more funds due to increase in sales. It will also get more loans and share capital for expansion and modernisation. The personnel department will be able to manage the human resources effectively due to the better performance of the production department. 5. Helps to face competition : Production management helps the firm to face competition in the market. This is because production management produces products of right quantity, right quality, right price and at the right time. These products are delivered to the customers as per their requirements. 6. Optimum utilisation of resources : Production management facilitates optimum utilisation of resources such as manpower, machines, etc. So, the firm can meet its capacity utilisation objective. This will bring higher returns to the organisation.
7. Minimises cost of production : Production management helps to minimise the cost of production. It tries to maximise the output and minimise the inputs. This helps the firm to achieve its cost reduction and efficiency objective. 8. Expansion of the firm : The Production management helps the firm to expand and grow. This is because it tries to improve quality and reduce costs. This helps the firm to earn higher profits. These profits help the firm to expand and grow. The importance of production management to customers and society: 1. Higher standard of living : Production management conducts continuous research and development (R&D). So they produce new and better varieties of products. People use these products and enjoy a higher standard of living. 2. Generates employment : Production activities create many different job opportunities in the country, either directly or indirectly. Direct employment is generated in the production area, and indirect employment is generated in the supporting areas such as marketing, finance, customer support, etc. 3. Improves quality and reduces cost : Production management improves the quality of the products because of research and development. Because of large-scale production, there are economies of large scale. This brings down the cost of production. So, consumer prices also reduce. 4. Spread effect : Because of production, other sectors also expand. Companies making spare parts will expand. The service sector such as banking, transport, communication, insurance, BPO, etc. also expand. This spread effect offers more job opportunities and boosts economy.

5. Creates utility : Production creates Form Utility. Consumers can get form utility in the shape, size and designs of the product. Production also creates time utility, because goods are available whenever consumers need it. 6. Boosts economy : Production management ensures optimum utilisation of resources and effective production of goods and services. This leads to speedy economic growth and well-being of the nation.

Production management Scope. Production management include; covers activitys including decisions about covering production system design: a. Screening and design result of production, through research and product development ( r and D ). b. Equipments screening and process. c. Production Planning and goods which will is processed. d. Job(activity duty design. e. Four p's place of business. f. compilation of Equipments from plant. Gets information as complete his (its in http://businessinformation-leaderz.blogspot.com by adopting innovative strategies and other cost-cutting exercises. For example, TISCO stopped using manganese, inexpensive metal used to increase the strength and flexibility of steel. to reduce its manpower costs-reduced its workforce from78,000 to 40,000 employees

Objective of production Management
Producing right kind of goods Maximizing output of goods Quality objective Capacity utilization Cost objective

Importance of Production Management
To ensure smooth and efficient operation Minimization of production cost To Improve productivity of business firm Maximize profit Reduction of waste

Responsibilities of Production Manager
To forecast the requirement Utilize the factor Reduce quality costs Reduce material handling costs Improve labor productivity Minimize throughput time To build team spirit

Functions of Production Management

Functions of production management are depicted, listed & explained below.

The components or functions of production management are as follows:
1. 2. 3. 4. 5. 6. 7. 8. Selection of Product and Design, Selection of Production Process, Selecting Right Production Capacity, Production Planning, Production Control, Quality and Cost Control, Inventory Control, and Maintenance and Replacement of Machines

The above functions of production management are briefly discussed below.

1. Selection of Product and Design

Production management first selects the right product for production. Then it selects the right design for the product. Care must be taken while selecting the product and design because the survival and success of the company depend on it. The product must be selected only after detailed evaluation of all the other alternative products. After selecting the right product, the right design must be selected. The design must be according to the customers' requirements. It

must give the customers maximum value at the lowest cost. So, production management must use techniques such as value engineering and value analysis.

2. Selection of Production Process

Production management must select the right production process. They must decide about the type of technology, machines, material handling system, etc.

3. Selecting Right Production Capacity

Production management must select the right production capacity to match the demand for the product. This is because more or less capacity will create problems. The production manager must plan the capacity for both short and long term's production. He must use break-even analysis for capacity planning.

4. Production Planning

Production management includes production planning. Here, the production manager decides about the routing and scheduling. Routing means deciding the path of work and the sequence of operations. The main objective of routing is to find out the best and most economical sequence of operations to be followed in the manufacturing process. Routing ensures a smooth flow of work. Scheduling means to decide when to start and when to complete a particular production activity.

5. Production Control

Production management also includes production control. The manager has to monitor and control the production. He has to find out whether the actual production is done as per plans or not. He has to compare actual production with the plans and finds out the deviations. He then takes necessary steps to correct these deviations.

6. Quality and Cost Control

Production management also includes quality and cost control. Quality and Cost Control are given a lot of importance in today's competitive world. Customers all over the world want goodquality products at cheapest prices. To satisfy this demand of consumers, the production manager must continuously improve the quality of his products. Along with this, he must also take essential steps to reduce the cost of his products.

7. Inventory Control

Production management also includes inventory control. The production manager must monitor the level of inventories. There must be neither over stocking nor under stocking of inventories. If there is an overstocking, then the working capital will be blocked, and the materials may be spoiled, wasted or misused. If there is an understocking, then production will not take place as per schedule, and deliveries will be affected.

8. Maintenance and Replacement of Machines

Production management ensures proper maintenance and replacement of machines and equipments. The production manager must have an efficient system for continuous inspection (routine checks), cleaning, oiling, maintenance and replacement of machines, equipments, spare parts, etc. This prevents breakdown of machines and avoids production halts.

Difference between Operations Managers and General Managers

In any organization, good leadership is required for growth and success, and is always cherished. For this reason, the position of a General Manager and Operations Manager are considered paramount. But what is the nature of the job of Operations Managers and General Managers that make them so important? What is the difference between Operations Managers and General Managers? Let’s look at the answers to these questions. First, let’s find out about the position of the General Manager. General Manager: General Managers are a part of a lot of activities in the business. They manage all the portions of all the operations of the business. Administrative services, human resources, operations, policies and procedures and accounts are just some areas where General Managers are directly or indirectly involved. For this reason, General Managers are required in every business and every industry. Looking at human resources, a General Manager has the responsibility of recruiting, training and selecting candidates, with the help of the human resource department of the company. When the human resource department is in charge of recruiting, the General Manager ensures that the quality of organizational training is maintained to a certain level. A General Manager may also participate in evaluating the performance or reviewing the feedback of employees. Another important role of the General Manager is that of a communication link between the management of the company and its staff. Reviewing and monitoring the performance of the employees and directing them to the goals and targets of the company are the jobs of a General Manager. Next let’s take a look at Operations Managers. Operations Managers: The roles and responsibility of an Operations Manager are similar to that of a General Manager in many ways. Operations Managers chalk out efficient strategies for the profit and financial growth of the company. An Operations Manager works in tandem with the finance department, human resource department, accounts department and many other such departments within the company. An Operations Manager is responsible for increasing the efficiency of a business’s product and services. For this reason, Operations Managers maintain discipline among the employees and motivate them to improve their output. In terms of production, Operations Managers make financial decisions for purchasing items and manage the company’s budget. If they find new techniques to improve the performance of the employees, they implement them. Operations Managers deal with the queries and grievances of customers of the company, related to the products and services offered. Difference between Operations Managers and General Managers: While the roles of a General Manager and Operations Manager are similar, their responsibilities differ. A General Manager is responsible for all the aspects of the company, while an Operations

Manager is responsible for the aspects of operations and production within the company. General Managers, as the name suggest, have a more general scope of power, while an Operations Manager can do whatever is possible to increase the efficiency of the production machine of the business. Thus, a General Manager is needed in all businesses without exception, while an Operations Manager has a niche in companies that offer products and services. Artyom Malkov MBA Operations Manager

The very essence of any business is to cater needs of customer by providing services and goods, and in process create value for customers and solve their problems. Production and operations management talks about applying business organization and management concepts in creation of goods and services.

Production is a scientific process which involves transformation of raw material (input) into desired product or service (output) by adding economic value. Production can broadly categorize into following based on technique: Production through separation: It involves desired output is achieved through separation or extraction from raw materials. A classic example of separation or extraction is Oil into various fuel products. Production by modification or improvement: It involves change in chemical and mechanical parameters of the raw material without altering physical attributes of the raw material. Annealing process (heating at high temperatures and then cooling), is example of production by modification or improvement. Production by assembly: Car production and computer are example of production by assembly.

Importance of Production Function and Production Management

Successful organizations have well defined and efficient line function and support function. Production comes under the category of line function which directly affects customer experience and there by future of organization itself. Aim of production function is to add value to product or service which will create a strong and long lasting customer relationship or association. And this can be achieved by healthy and productive association between Marketing and Production people. Marketing function people are frontline representative of the company and provide insights to real product needs of customers. An effective planning and control on production parameters to achieve or create value for customers is called production management.
Operations Management

As to deliver value for customers in products and services, it is essential for the company to do the following:
1. 2. 3. Identify the customer needs and convert that into a specific product or service (numbers of products required for specific period of time) Based on product requirement do back-ward working to identify raw material requirements Engage internal and external vendors to create supply chain for raw material and finished goods between vendor → production facility → customers.

Operations management captures above identified 3 points.
Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be done on following characteristics:
    Output: Production management deals with manufacturing of products like (computer, car, etc) while operations management cover both products and services. Usage of Output: Products like computer/car are utilized over a period of time whereas services need to be consumed immediately Classification of work: To produce products like computer/car more of capital equipment and less labour are required while services require more labour and lesser capital equipment. Customer Contact: There is no participation of customer during production whereas for services a constant contact with customer is required.

Production management and operations management both are very essential in meeting objective of an organization.

It is very important for an organization to have well defined objective. A well-defined objective facilitates development of strategies and policy thereby creating value for customers.

Operation Strategy

Operational strategy is essential to achieve operational goals set by organization in alignment with overall objective of the company. Operational strategy is design to achieve business effectiveness or competitive advantage. Operational strategy is planning process which aligns the following:

In this global competitive age organization goal tend to change from time to time therefore operations strategy as a consequence has also be dynamic in nature. A regular SWOT analysis ensures that the organization is able to maintain competitive advantage and business leadership.
Strategic Management Process for Production and Operation

For success of organizational strategic objective, strategic planning has to trickle down to various function areas of the business. In order to build strategy management process a sequential process as below is followed Competition Analysis: In this step company evaluates and studies current competition in the market and practices that are followed in the industry for operations and production vis-à-vis company policies Goal Setting: Next step involves narrowing down the objective towards which the organization wants to move towards. Strategy Formulation: The next step is breaking down of organizational goals into operations and production strategies. Implementation: The final step is to convert operations and production strategies into day to day activities like production schedule, product design, quality management etc. As organizations are always customer-centric, production and operation strategy for organization are built around them

Measurement of formulated operations and production strategy is important to maintain alignment with the organization objectives. In simple terms productivity is defined as sum of total output per employee or per day. Productivity of company is dependent on industry and environmental conditions in which it is operating. Two essential part of productivity are labor and capital. In scenario of limited resources, optimum and efficient utilization of labor and capital will generate favorable productivity.

Productivity measurement also enables company to identify areas which require improvement or special focus. Also productivity provides ready report card to measure status against company’s production objective. Productivity measurement can be classified in three categories based on the inputs used for calculation. Partial productivity ration of output is compared to one of resource used for example, labor productivity where output is compared to the labor wages. Total productivity measure takes into consideration sum of all input factors which are used for the output. In the modern age technology plays an important part in productivity.

Another important factor is the case of production is wastivity. Not 100% of input would be converted to output, there is going to waste during production. Wastivity is reciprocal of productivity. Classic examples of wastivity are defective products and services which either have to be re-cycle or disposed of completely. Other example is idle capacity of material, man-power equipment etc.

Importance of Production Management
It is a very important aspect of an organization or business because it spearheads the process of production which will ultimately bring in your profit. Having talented production managers is vital because they will help the company gain a competitive advantage over their rivals.

There are a wide range of responsibilities and tasks that a production management team is responsible for. It is a very stressful job because a product manager or team of production staff need to make sure they are constantly making profit from the manufactured wares or services they are selling. The type of roles bestowed upon the production management staff differ between companies. Some are responsible for creating the product and the marketing aspects, where others oversee the processes and monitor its success or failure in the market. It is important for the manager or management team to form good relations with the various teams within the organization. For example, they will have to ensure that the workers responsible for the engineering process and the employers that cover the commercial aspects will have to communicate and work well together. When it comes to the marketing side of things, the production staff may have to have the final input of what is appropriate and what needs to be done in order to sell large units. Also, production management needs to be able to instil confidence in their team as well as confidence and drive to get the products perfect as well as make them attractive to the market.