OM – CP 1
PRODUCTION MANAGEMENT
Functions within business operations
1. OPERATIONS
- all the activities that are directly related to
producing goods or providing services
2. FINANCE
- " art and science of managing money"
- it is concerned with allocation, procurement and
effective utilization of financial resources
3. MARKETING
- concern with selling the organizations products or
services. includes advertising and promotion,
generally developing and maintaining a market and
sales forecasting.
PRODUCTION/OPERATIONS
MANAGEMENT
- combines and transforms various resources used in
the production/operations subsystem of the
organization into value added product/services in a
controlled manner
- concerned with the transformation of a range of
inputs into the required products/services
PRODUCTION MANAGEMENT
- The set of interrelated management activities,
which are involved in manufacturing certain
products,
OPERATIONS MANAGEMENT
- if the same concept is extended to services
- But nowadays the term operations management is
used both for manufacturing & service business.
ADAM SMITH
- economic benefits of specialization of labor (18th).
- recommended breaking of jobs down
FREDERICK W. TAYLOR
- developed scientific method (20th)
- acceptable term from 1930s to 1950s.
1970s distinct changes
- reflected in the new name operations management
was a shift in the service and manufacturing sectors
of the economy.
- more suitable change was the beginning of an
emphasis on synthesis, rather than just analysis, in
management practices.
Concept of production
PRODUCTION FUNCTION
- concerned with the transformation of a range of
inputs into the required outputs (products) having
the requisite quality level.
PRODUCTION
- "the step-by-step conversion of one form of
material into another form through chemical or
mechanical process to create or enhance the utility of
the product to the user.”; value addition process.
EDWOOD BUFFA defines production as “a
process by which goods and services are created”
Concept of operations
OPERATION
- mission it serves for the organization, technology it
employs and the human and managerial processes it
involves.
Can be categorized by:
a. Manufacturing operations - a conversion process
that includes manufacturing yields a tangible output
b. Service operations -
OPERATING SYSTEM
- converts inputs in order to provide outputs which
are required by a customer.
ex: Bus and taxi services, tailors, hospital and
builders are the examples of an operating system.
 EVERETT E. ADAM & RONALD J. EBERT
- An operating system (function) of an organization
is the part of an organization that produces the
organization's physical goods and services.
RAY WILD
- An operating system is a configuration of resources
combined for the provision of goods or services.
OPERATING SYSTEM
- resources, flowing within a defined system, are
combined and transformed in a controlled manner to
add value.
SYSTEM
- provides an efficient and effective framework of
activities necessary to attain an objective.
- dynamic arrangement of elements, each designed to
interact harmoniously with the others.
OPERATIONS MANAGEMENT
- planning, implementation, and control of
production and operations processes to ensure
smooth and efficient operation.
OPERATIONS MANAGER
- is to guide the system through decision making
- is the key figure in the system: he or she has the
ultimate responsibility for the creation of goods and
services.
Objectives of Operations Management
1. CUSTOMER SERVICE
- must provide something to a specification which
can satisfy the customer in terms of cost and timing.
providing the right thing at a right price at the right
time.
2. RESOURCE UTILIZATION
- must be provided with the achievement of effective
operations through efficient use of resources.
- obtaining maximum effect from resources or
minimizing their loss, underutilization or waste.
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A. CONTINUOUS PRODUCTION or flow Shop
or mass production
- Used for standardized products. Definite set input,
going through the same operation at a uniform phase
and coming out with a definite set of output.
Characteristics
1. Definite plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of
operations.
4. Component materials cannot be readily identified
with final product.
5. Planning and scheduling is a routine action.
Advantages
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as
it is completely automatic.
5. Person with limited skills can be used on the
production line.
6. Unit cost is lower due to high volume of
production.
Limitations
1. Flexibility to accommodate and process number of
products does not exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited.
B. JOB SHOP PRODUCTION or unit production
- Used for customized products. Multiple input
requiring different degrees and combinations of
process.
- characterized by manufacturing of one or few
quantities of products designed and produced as per
the specification of customers within prefixed time
and cost.
Characteristics
1. High variety of products and low volume.
2. Use of general-purpose machines and facilities.
3. Highly skilled operators who can take up each job
as a challenge because of uniqueness.
4. Large inventory of materials, tools, parts. 3. Cost per unit is lower as compared to job order
production.
5. Detailed planning is essential for sequencing the
requirements of each product, capacities for each 4. Lower investment in plant and machinery.
work center and order priorities.
5. Flexibility to accommodate and process number of
products.
Advantages 6. Job satisfaction exists for operators.
1. Because of general purpose machines and facilities
variety of products can be produced.
Limitations
2. Operators will become more skilled and
1. Material handling is complex because of irregular
competent, as each job gives them learning
and longer flows.
opportunities.
2. Production planning and control is complex.
3. Full potential of operators can be utilized.
3. Work in process inventory is higher compared to
4. Opportunity exists for creative methods and
continuous production.
innovative ideas.
4. Higher set up costs due to frequent changes in set
up.
Limitations
5. Each batch must be tested for quality and
1. Higher cost due to frequent set up changes. uniformity before future batches can be produced,
thus causing idle downtime
2. Higher level of inventory at all levels and hence
higher inventory cost.
3. Production planning is complicated. D. PROJECT
4. Larger space requirements. - the product is in a fixed location and the factors of
productions are brought to it instead of the product
moving from one are or process stage to another.
C. BATCH PRODUCTION or Intermittent
Manufacturing
TOTAL QUALITY MANAGEMENT (TQM)
- defined by American Production and Inventory
Control Society (APICS) "as a form of Total - the involvement and input of everyone
manufacturing in which the job passes through the
Quality - fully meeting customer's needs and
functional departments in lots or batches and each lot
requirements all the time
may have a different routing." identical products are
produced Management - the way we act, operate, control and
handle it.

Characteristics
1. When there are shorter production runs.
2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the
production of item in a batch and change of set up is
required for processing the next batch.
4. When manufacturing lead time and cost are lower
as compared to job order production.
Advantages
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
KHURRAM HASHMI (2017) TQM can be defined
as a management philosophy that seeks to integrate
all organizational functions such as, marketing,
finance, operations, customer service etc. focus on
meeting customer needs and organizational
objectives.
TQM EVOLUTION
- is a customer-oriented philosophy and strategy.
- COMPANY WIDE QUALITY CONTROL in
Japan
- EDWARDS DEMING, an American Quality
expert helped the Japanese to apply concepts of
TQM. American Industry ignored this development.
American industry then realized the importance of
Demings' teachings and started applying them
- Assuring quality in products and services evolved
continuously finally leading to TQM. Experts from
many countries spearhead this evolution with
Deming playing an important role. They are
popularly called Quality Gurus.
TQM addresses the concepts of Product quality,
Process Control, Quality assurance, Quality
Improvement that aimed at customer Satisfaction
Definition of quality
1. JURAN- fitness for use, suitability for use. Quality
does not mean expensive product
INTERNATIONAL ORGANIZATION FOR
STANDARDIZATION (ISO)
- The world body for standards formulation. Founded
on 1946 in Geneva, Switzerland
- Known all over the world because of its path
breaking ISO 9000 standards released for the first
time in the year 1987.
PER ISO 9000 STANDARD, quality means "The
totality of features and characteristics of product and
service, that bear on its ability to satisfy a given or
implied need
QUALITY
- superiority or excellence of a product or service
- Lack of manufacturing or service defects
AMERICAN NATIONAL STANDARDS
INSTITUTE (ANSI) AND AMERICAN
SOCIETY FOR QUALITY (ASO) defined quality
as “the totality of features and characteristics of a
product or service that bears on its ability to satisfy
given needs.” it is meeting or exceeding customer
expectation
Dimensions of Quality
1. FUNCTIONALITY - core features and
characteristics of a product.
2. RELIABILITY - a product should not breakdown
often. It is measured by mean (average) time between
failures (MTBF). an indicator of durability.
3. USABILITY - a product should be easily usable.
The customer should be able to use the products
easily without help of experts.
4. MAINTAINABILITY - refers to the ease with
which a product can be maintained in the original
condition.
5. EFFICIENCY - ratio of output to input.
6. PORTABILITY - ability of the product to be
transferred from one environment to another, or one
place to another.
QUALITY MANAGEMENT (QM)
According to ISO 9000 standards QM comprises all
activities of the overall management function that
determine the quality policy, objectives and
responsibilities and implement them by means such
as quality planning, quality control, quality assurance
and quality improvement within the quality system.
QUALITY CONTROL
- operational techniques and activities that are used
to fulfill the requirements for quality.
QUALITY ASSURANCE
- All the planned and systematic activities
implemented within the quality system and
demonstrated as needed, to provide adequate
confidence that an entity will fulfill the requirements
for quality
QUALITY PLANNING
- Refers to activities that establish the objectives and
requirements for quality
QUALITY IMPROVEMENT
- This process aims in attaining unprecedented level
of performance, which are significantly better than
the past level