Production and operational management (Total Quality

Management )

Sessions List

1. Key elects involved in the production and Steps involved. Production systems,
Inventory plan, Procurement plan and Vendor selection.
2. Supply chain, Understand the packaging, Transportation and Logistics
3. Importance of Quality Management, TQM Strategic, Theoretical Approach and
Employee Engagement During Production.

Session 01: Key elects involved in the production and Steps involved. Production
systems, Inventory plan, Procurement plan and Vendor selection.

1. What is a Production and Production System?

A Production system is any of the methods used in industry to create goods and services
from various resources. All production systems are “transformation processes”—processes
which transform resources into useful goods and services.

A production system is made up of many elements. To understand these better, we will try
to get an overview of the system as a whole, and then understand each element. While a
micro-enterprise may not have very complex systems or may not involve every element
outlined below, it is necessary to understand the elements and their relationships. This is
necessary not only to develop a holistic picture but also essential in scale-up.

 Technical elements of a production system:                                                

The elements are as follows:

The above functions of the entrepreneur are briefly discussed below.

1. Selection of Product and Design. (Cross reference the other module, so Facilitator can
refer back to it). 
The entrepreneur first selects the right product for production, as a part of the overall
business decision. Then she 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 a 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, The entrepreneur must use techniques
such as value engineering and value analysis.

2. Selection of Production Process

An entrepreneur must select the right production process appropriate to the market
demand for the quality of the product and its volume. The entrepreneur gets involved in
decisions concerning the choice of technology, machines, material handling systems, etc.
For instance, if the value of your product is handmade you might have to look into
increasing the human resource (Lijjat Papad unit)



3. Selecting the Right Production Capacity

The entrepreneur must select the right production capacity to match the demand for the
product. This is because excessive or insufficient capacity is likely to lead to market-related
and cost-related issues, that may result in serious business problems. The entrepreneur must
plan the capacity for both short- and long-term production. Among other tools, s/he can
use break-even analysis for capacity planning. 
For eg: In the initial stages of opening a tailoring training school you might just need 4
sewing machines. However, as your number of students increases in the training school
you might need to increase the number of machines as well as shifts.

4. Production Planning
The entrepreneur’s res includes production planning. Here, the entrepreneur decides
about the routing and scheduling. Routing means deciding the path and flow 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 deciding when to start and when to complete a production activity.
For instance, in the newspaper publication process, the newspaper should capture the
latest information. It should be informing any reader of the activities that happened the
day before. Hence, the number of reporters who are on the ground to capture is high in
numbers. There is middle management who are regulating activities, coordinating, and
ensuring the activities go in the flow. The publication starts in the evening to capture the
latest information and comes to a reader’s house in the morning.

5. Production Control
The entrepreneur also includes production control. The manager must monitor and control
the production volume and quality. He must find out whether the actual production is
done as per plans or not. He must compare actual production with the plans and finds out
the deviations. He then takes the necessary steps to correct the deviations.

6. Quality and Cost Control

The entrepreneur has the quality and cost control as two major focus areas. Quality and
Cost Control are given a lot of importance in today's competitive world. Customers all
over the world want good-quality products at the most competitive prices. To satisfy this
demand of consumers, the entrepreneur must continuously improve the quality of his
products by various means such as the incorporation of new technology, automation, HR
development and process control. Along with this, he must also take essential steps to
reduce the cost of manufacturing operations.

7. Inventory Control
The entrepreneur must focus on inventory management as an essential driver for meeting
the market demand effectively. The entrepreneur must monitor the level of inventories.
There must be neither overstocking nor understocking 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 may not happen as per
schedule or there will be very little quantity of the product in the market, affecting the
business adversely.

8. Maintenance and Replacement of Machines

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

2. The definition of production planning:

“Production planning can be defined as the technique of foreseeing every step in a long
series of separate operations, each step to be taken at the right time and in the right
place and each operation to be performed with maximum efficiency (Kumar, 2008).”
“Garment Manufacturing Technology,” Woodhead Publishing, 2015.

What is a production planning and what is a production schedule?

Production planning is the strategy for the whole manufacturing process. It is like making a
map consisting of all the processes that are needed to manufacture your product. This
map leads from nothing to the final product. Your manufacturing process will follow this
map step-by-step.
Some of the main steps in the production plan progress are:
● Analysing customer demand.
● Determining production capacity & timelines.
● Evaluate raw materials, output volume etc.
● Production control, quality control, accounting.
● Evaluation & improvement of the production system.
● Complete final production of finished goods.
● Format to Evaluate Customer demand
Order Status: This is where you indicate the status of the order. You can customise this
column to mirror your nomenclature. We have set the template with options of started, in
progress, done and more.
Production Number: Next is where you indicate the production number for internal
tracking. What follows is the name of the customer for whom you’re making the product
to sell. The product list is simply the number of items you’re going to manufacture.
Variations: Variations refers to any differences in the product. For example, if you’re
manufacturing lunchboxes, this would indicate different colours or designs. Then you add
up the product list and variations to come up with the total product quantity.
Starting Inventory: The starting inventory is how much inventory you have at the beginning
of the manufacturing job. The ending inventory is what you’re left with. This will help you
gauge your inventory to make sure you always have enough of what you need in stock.
Manufacturing Dates: Next is the start date for the manufacturing, followed by the end
date, which gives you a timeframe by which the work must be completed. When it is
done, there’s a place for the ship date, which can be seen as the hard deadline by which
time your product must leave the manufacturing floor.
Production scheduling is the same as planning, but it's process specific. It organises
separate parts of the whole production process and is adjusted depending on the real-
time workflow.
Production control means that you always have an actual overview of the manufacturing,
all information about the inventory is quickly accessible, you know everything about real-
time workflow, and you are ready to immediately react in an unforeseeable situation.
Without it, efficiency is unreachable. Great production control is a competitive
advantage because it gives great confidence in the manufacturing process. Good

production control is when you are sure that you have all the necessary raw materials, you
know your capacity, and you know how much you can produce at any given time.
You need it even if you are a small make-to-order enterprise. You will feel confident in front
of a client and will be able to quickly make accurate estimates. It will give the client a
sense of safety and confidence in you. Right after getting the order, you will quickly
schedule everything needed, and it will become a part of your production plan.
Production systems can be categorised into four types 
1. Continuous flow type production system: Examples of the continuous type of production
systems are: chemical plants, oil refiners, etc. This situation is unlikely to be encountered in
Micro and Small enterprises.
2. Mass production systems: In mass production components are produced in large
quantities and minimal variety. The mass production system is product layout. For instance,
garment units may work continuously on a single product.
3. Batch production system: In a batch production system, the components are produced
in medium quantities and medium variety. Examples of batch production systems are a
small sanitary pad production unit or a small pickle-making unit. 
4. Job production system: In the job production system the components are produced in
low quantities, based on the order. The minimum lot size can be one unit. A typical
example would be a tailor shop.

3. Inventory

Inventory is the goods available for sale and raw materials used to produce goods
available for sale. 
The three types of inventory include raw materials, work-in-progress, and finished goods.
● Raw materials are unprocessed materials, which will be worked upon to get the
end product. For instance, in a tailor’s shop, raw materials will include unstitched
lining cloth, thread, buttons, sari falls, etc. In a pickle-making unit, it may include
mangoes or another item which forms the core of the pickle, the oil, spices, etc.
● Work-in-progress is the partially finished goods waiting for completion. For instance,
a blouse may be half-made and waiting for finishing; mangoes may be soaked in
brine and waiting to be pickled.
● Finished goods are products that have been produced and are ready for sale—for
instance, blouses completed and waiting to be picked up; pickles ready and
bottled and ready to be transported to the retailer.
Inventory is classified as a current asset on the balance sheet because one can liquidate
it very quickly and get cash. Inventory represents a very important asset of a business
because the turnover of inventory is one of the primary sources of revenue generation
and therefore earnings. 
Inventory needs management. For instance, holding a large inventory for a long time is
usually not good for a business because of storage costs, spoilage costs, and the threat of
obsolescence. However, holding too little inventory also has its disadvantages; for
example, production may be hurt if there is a slowdown in raw material availability, or the
business may lose a potential sale if it does not have enough stock of finished goods. Risks
including fire, pests etc. require special treatment.

Inventory management forecasts and strategies can help in proper management and
can minimise inventory costs.

Inventory Management
Inventory management is the process of ordering, storing and using a company's
inventory. This includes the management of raw materials, components and finished
products, as well as warehousing and using such items.
The main objectives of Inventory Management
The main objectives of inventory management are:
– To ensure a continuous supply of the materials as required: The main objective of
inventory management is to maintain the required inventory to run the production and
sales process smoothly.
– To minimise the risk of under and overstocking of material: Under stocking may lead to
an interruption of production, which may lead to the loss of possible sales. It may leave
workers without work at a given point in time. It may lead to the need for hurrying up
production when the material does arrive, and hence loss of quality. On the other hand,
overstocking of material ties up capital. Storing inventory has its own risk, for instance,
things may spoil. Equally, something may go out of fashion—eg., last year’s sari designs,
and therefore not be saleable. Inventory management manages to minimise the risk
caused due to under and overstocking of the inventory.
– To reduce losses, damages and misappropriation of materials: Inventory management
aims to reduce or remove the losses of materials and stock, done by maintaining the
proper stock of materials with utmost care.

Some Key Inventory Management Techniques:

STOCK REVIEW
This is the simplest inventory management methodology and is, generally used by smaller
businesses. The stock review involves regular analysis of stock on hand versus projected
future needs. In small businesses, it is done manually-- regular inventory inspections are
done, followed by reordering of supplies to meet the minimum levels. Stock review can
provide a measure of control over the inventory management process, but it can be
labour-intensive and prone to errors.
JUST-IN-TIME MANAGEMENT 
Just-in-time (JIT) manufacturing originated in Japan in the 1960s and 1970s. The method
allows companies to save money and reduce waste by keeping only the inventory they
need to produce and sell products. This approach reduces storage and insurance costs,
as well as the cost of liquidating or discarding excess inventory. 
However, it can be risky! If demand unexpectedly spikes, the manufacturer may not be
able to source the required raw materials. Also, if there is any disruption in transport or any
other link in the chain of supply, say a transport strike, a landslide which may close a road
etc., production will suffer. 
MATERIALS REQUIREMENT PLANNING 
This inventory management method is sales-forecast dependent, meaning that
manufacturers must have accurate sales records to enable accurate planning of
inventory needs and to communicate those needs with materials suppliers promptly. 

 ECONOMIC ORDER QUANTITY 

The economic order quantity (EOQ) model is used in inventory management by
calculating the number of units a company should add to its inventory with each batch
order to reduce the total costs of its inventory while assuming constant consumer
demand. The costs of inventory in the model include holding and setup costs. 
The EOQ model seeks to ensure that the right amount of inventory is ordered per batch so
a company does not have to make orders too frequently and there is not an excess of
inventory sitting on hand. 
ABC ANALYSIS
This is an analysis method which classifies inventory into three categories that represent the
inventory values and cost significance of the goods. Category A represents high-value
and low-quantity goods, Category B represents moderate-value and moderate-quantity
goods, and Category C represents low-value and high-quantity goods. Each category
can be managed separately by an inventory management system. One of the
advantages of ABC analysis is that it provides better control over high-value goods, but a
disadvantage is that it can require a considerable amount of resources to continually
analyse the inventory levels of all the categories

LIFO AND FIFO

First in, first out (FIFO) methodology, in which the oldest inventory is sold first to help keep
inventory fresh. This is an especially important method for businesses dealing with
perishable products that will spoil if they aren't sold within a specific period. It also prevents
items from becoming obsolete before a business has the chance to sell them. This typically
means keeping older merchandise at the front of shelves and moving new items to the
back.
Last in, first out (LIFO) methodology, in which the newest inventory is typically recorded as
sold first. This is a good practice when inflation is an issue and prices are rising. Because the
newest inventory has the highest cost of production, selling it before the older inventory
means lower profits and less taxable income. LIFO also means the lower cost of older
products left on the shelves is what's reported as inventory. However, this is a difficult

 technique to put into practice, as older items that sit around have a chance of becoming
obsolete or perishing.

4. What is Procurement?

The strategic process of purchasing various items needed to run the enterprise is known as
Procurement. However, the procurement process stretches far beyond the straightforward
act of exchanging payment for goods. 

Procurement is a systematic process within the supply chain in which business leaders
approach spending analytically. Because it touches upon so many aspects of the
business, the procurement process typically requires coordination between multiple
departments.

Stages of the Procurement Process

● Strategically forecasting demand 

● Determining needs 
● Planning purchases
● Conducting market research (this is to get an idea of the range of prices, quality
etc)
● Evaluating and identifying potential suppliers
● Selecting suppliers with the best quality for the lowest cost
● Managing supplier relationships
● Defining standards and specifications
● Negotiating prices and terms
● Establishing payment details
● Developing contracts
● Making purchases
● Managing and controlling inventory

Types of Procurement

Procurement is generally divided into two subcategories – direct procurement and

indirect procurement. Each of these procurement types plays a crucial role in keeping
companies operational.

What is Direct Procurement?

Direct procurement is the process of purchasing components, raw materials, and services
that a company uses to produce its products. For example, a garment unit has to
purchase cloth, buttons, hooks, threads etc. All of these components are used in the
direct manufacture of the garment.

What is Indirect Procurement?

Indirect procurement is the process of purchasing products that support daily operations
and overall business functionality. These types of products include items such as office
supplies, cleaners, etc. These products contribute to the business’s function indirectly.



Session 02: Supply chain, Understand the packaging, Transportation and Logistics

1. Supply Chain
A supply chain is the sequence of processes involved in the production and distribution of
goods or services. It is the network between a company and its suppliers to produce and
distribute a product or service.

The entities in the supply chain include producers, vendors, warehouses, transportation
companies, distribution centres, and retailers. 

Proper supply chain management can help lower costs and a faster production cycle.

Generic Supply Chain

The generic supply chain begins with the sourcing and extraction of raw materials. The
raw materials are then taken by a logistics provider to a supplier, which acts as the
wholesaler. The materials are then taken to a manufacturer, or probably to various
manufacturers that refine and process them into a finished product.

The finished product goes to a distributor that wholesales it, which is next delivered to a
retailer. The retailer sells the product in a store to consumers. Once the consumer buys it,
this completes the cycle. The demand then goes back and drives the production of more
raw materials, and the cycle continues.

Here is a pictorial depiction of a typical supply chain:

Supply Chain Management is the coordination of all aspects of the supply chain, which
consists of five parts: 

● The plan or strategy

● The source (of raw materials or services)
● Manufacturing (focused on productivity and efficiency)
● Delivery and logistics
● The return system (for defective or unwanted products)

Proper Supply Chain Management can minimise shortages and keep costs down. The job
is not only about logistics and purchasing but also to improve productivity, quality, and
efficiency of operations.

Forward supply chain: A forward or traditional supply chain system deals with the flow of
products from raw materials to the manufacturer, to the retailer, and finally to the
consumer. There are different types of forwarding supply chain management that include
direct order fulfilment, hub services, pick-and-pack services, and shipping. 

Reverse supply chain: It’s a series of activities required to retrieve a used product from a
customer and either dispose of it or reuse it. And for a growing number of manufacturers,
in industries ranging from carpets to computers, reverse supply chains are becoming an
essential part of the business.

2. Packaging

Packaging refers to all those activities related to designing, evaluating and producing the
container for a product. Simply, the box-like container, wherein the product is stored to
protect it from any physical damage and at the same time attract the customer through
its appeal is called packaging. The product might have many layers of packaging, such
as toothpaste coming in a plastic tube (primary package), then it is packed in a
cardboard box (secondary package) and then finally packed in a corrugated box
(shipping or third package).
Packaging is a key part of product manufacturing. It is more important in some cases than
others, but in all cases, it needs attention. Packaging can be a significant part of costs
and hence needs thought. 
Some of the factors that have to be borne in mind while deciding on packaging: 

● The nature of the product: Liquids like juices and oils need tight, spill-proof
containers. Glass needs to packaging to protect it from breaking. Some
medicines need to be protected from the sun. Hence, often the nature of the
product governs the nature of the packaging. 
● What is the purpose of the packaging: Is it that the product needs to be
protected from pests, insects, dust, etc? Or is it that it has to be taken to a far-off
place? For instance, if you have to deliver coffee next door, you can deliver it in
a cup. However, if it is to be delivered some distance away, it needs to be put in
a flask to keep hot.
● How well your product packaging travels: It is essential to understand where the
product will be sold and ensure that the packaging enables the product to
travel from point A to point B with ease and minimal damage. At the same time,
it cannot be too heavy, as this will add to the cost. Depending on the product, it
is important to focus on materials that are specifically designed for strength if it’s
bulky or fragile when packaging your product if it needs to travel.
● Choosing the right materials: Once the above two factors are understood, there
will be a choice of materials. Glass items can be packed in a wooden crate
with shredded paper or old cloth to protect them. Oil can be packed in glass
bottles or plastic bottles. While making a choice, one has to keep in mind cost,
weight, availability and the impact on the environment. For instance, some
years ago, we used to ask for everything to be packed in a plastic bag when
we went shopping. Now, with the realisation that plastic is harming the
environment, we are taking our cloth bags.
● Knowing your audience: Many factors of packaging are based on market
research. Do you buyers prefer to buy ½ kg oil or 1 kg or 2 kg? This will decide
the size. If your product is for children, they will prefer bright colours, etc.

 ● The practicalities of product packaging: Your packed product has to meet the
requirements of your product and marketing. If it has to travel, it has to be
strong. If it is a garment, it should be such that it is protected from dust but visible
to the customer. If it is an oil bottle, it has to open easily.

3. Transportation
Transportation is the planning, execution and optimisation of the physical movements of
goods. Transportation may be different modes-land (road or train), water (ferries, boats,
ships), or air. Transport may not only be a significant cost which needs to be factored into
the business plan, but it may also lead to uncertainties. For instance, during the rainy
season, roads may be blocked in some areas and hence the product may not reach on
time. In extreme cases, it may get spoilt on the route. Or goods may get lost and stolen.

Hence planning transportation properly is important for business success. Some factors
which must be kept in mind include:

● Cost

Different modes of transport cost differently. Air transport is very expensive. Road transport
is less so, rail is even less, and transport by water far less. Within each mode of transport
also, there will be variations with express private trucks costing more than say public buses.
But not all forms of transport may be available everywhere.  

Degree of Freedom
When it is a train, goods have to be loaded at a definite time, at a specific station.
However, with trucks, they may come to the doorstep and also there may be some
flexibility in time.
Dependability
It means whether the service can be used throughout the year in all climatic conditions or
not. Railway provides more dependable service as compared to water or air
transportation. Road transport can be operated in extreme conditions like fog etc. but at
a lower speed.

* Flexibility

i) Route Flexibility: Can we take any route at any time ( Not possible in the case of
railways)
ii) Time flexibility: Can the vehicle move or stop at any time ( for Railways, time scheduling
is done to maintain a certain distance between two trains moving on the same track in
the same direction)
iii) Vehicle Flexibility: Whether various types of vehicles can be used on the facility or not.
In the case of railways, different types of vehicles can not use the track.

 Adaptability
Whether the system can be used in extreme conditions like gradients or not? The steeper
gradients should be avoided in the case of Railways and air transport can be provided

Safety
Includes safety of vehicles, goods and passengers. It has two aspects:
● Number of accidents
● Intensity of accidents

Railway accidents are lesser in number but of high intensity as compared to road
accidents.

Hauling Distance
It is the distance up to which we can transport the passengers and goods. For short/
medium distances, road transport is the most suitable. For medium/long distances, railways
are suitable. For very long distances, air transport or water transport is suitable.

Speed/Travel Time
In the case of railway, journey/Travel time can be reduced by high speed as there is no
delay due to traffic jams as in the case of road transport

Session 03: Importance of Quality Management, and Employee Engagement

During Production.

Total Quality Management is defined as a customer-oriented process and aims for

continuous improvement of business operations. It ensures that all allied works
(particularly the work of employees) are toward the common goals of improving
product quality or service quality, as well as enhancing the production process or
process of rendering services. However, the emphasis is put on fact-based
decision-making, with the use of performance metrics to monitor progress. It
includes overseeing all activities and tasks needed to maintain a desired level of
excellence. Quality management ensures that an organisation, product or service
is consistent.

Importance of Total Quality Management

Total quality management benefits and advantages

● Strengthened competitive position
● Adaptability to changing or emerging market conditions and to
environmental and other government regulations
● Higher productivity
● Enhanced market image
● Elimination of defects and waste
● Reduced costs and better cost management
● Higher profitability
● Improved customer focus and satisfaction
● Increased customer loyalty and retention
● Improved employee morale
● Enhanced shareholder and stakeholder value
● Improved and innovative processes

 Employee Engagement During Production

Responsibility: The task is taken up as it is assigned by someone who is hiring you or a

manager.

Ownership: The task is taken up as one understands the importance of the need and
delivers it with/without anyone assigning it to them.

1. Share leadership vision- help people feel that they are part of something bigger
than themselves and their individual jobs.
2. Share goals and direction- share the most common and important goals and
direction for your group.
3. Trust people- trust the intention of the people to do the right thing, make the right
decision, and make choices that still work.
4. Provide information for decision making- make certain that you have given people
or made sure that they have access to all the information they need to make
thoughtful decisions.
5. Delegate authority and impact opportunity, not just more work - don’t just delegate
the drudge work, delegate some of the fun stuff too.