CHAPTER 1- INTRODUCTION TO PRODUCTION MANAGEMENT

1.1 Historical Evolution of Production Management

1.2. Production – Meaning, Objectives and Functions of Production Department

1.3. Manufacturing Systems

INTRODUCTION:

 Production/operations management is the process, which combines and

transforms various resources used in the production/operations subsystem of the
organization into value-added products/services in a controlled manner as per
the policies of the organization.
 Therefore, it is that part of an organization, which is concerned with the
transformation of a range of inputs into the required (products/services) having
the requisite quality level.
 The set of interrelated management activities, which are involved in
manufacturing certain products, is called production management.
 If the same concept is extended to services management, then the corresponding
set of management activities is called operations management.

HISTORICAL EVOLUTION OF PRODUCTION MANAGEMENT

Even though systems of production have existed since ancient times (for example, the
great wall of China and Egyptian pyramids were built a long time ago) the production of
goods for sale and the modern factory system had their roots in the Industrial
Revolution (which began in the 1770s in England and spread to other countries in
Europe and later to the US in the 19th century).

However, the substitution of machine power for human power started with the most
significant invention of the steam engine by James Watt in 1764. followed by the
invention of a spinning jenny (1770) and power loom (1785). Adam Smith advocated the
concept of "division of labour" in his book "The Wealth of Nations" in 1776 and 1832,
Charles Babbage recommended the use of scientific methods for analysing production
problems.

However, the era of scientific management started with the work of F.W. Taylor in 1878
who studied work methods in great detail to identify the best methods for doing each

A 4.4 Production And Material Management Page 1

job. Taylor's book "The Principles of Scientific Management" published in 1911, laid the
foundation for the field of production management.

Several other pioneers also contributed to this movement including the following :

Frank Gilbreth and his wife Lillian Gilbreth were recognised for their contribution to the
development of the "Principles of motion economy" and the concept of "Therbligs" in
1911. Henry Gantt recognised the value of non-monetary rewards to motivate workers
and developed a widely used system of scheduling (machine loading) called "Gantt
chart" in 1912, Harrington Emerson applied Taylor's ideas to develop organisational
structure and encouraged the use of experts to improve organisational efficiency.

Henry Ford developed the concept of mass production and assembly lines with
conveyors in 1913, in his automobile plant. Ford also used the concepts of
"interchangeable parts" and division of labour (of Adam Smith) which enabled him to
tremendously increase the production rate in his factories.

F.W. Harris developed the concept of "Economic Order Quantity" in 1915 which is still
recognised as a classical work in inventory control systems. In 1931, Dodge and Romig
and W. Shewhart developed the concept of sampling inspection and the use of
statistical tables for acceptance sampling plans. Earlier in 1924, Shewhart developed the
concept of statistical quality control and the use of control charts to control the quality
of ongoing processes.

The "human relations movement" was started by Elton Mayo in the 1930s, through his
famous experiments at Western Electric's Hawthorne plant and his findings came to be
known as the "Hawthorne effect". His studies revealed that in addition to physical and
technical aspects of work, worker motivation is critical for improving productivity.

During the 1940s, Abraham Maslow developed a motivational theory known as

"Hierarchy of Needs Theory" which was later refined by Frederick Herzberg as
"Motivation-Hygiene" theory in the 1950s. Douglas McGregor added "Theory X" and
"Theory Y" in 1960. In 1970, William Ouchi added "Theory Z" which combined the
Japanese approach and the traditional Western approach to management.

After World War II, operations research and quantitative techniques were applied to
production management resulting in decision models for forecasting, inventory
management, project management and other areas of production management.
Widespread use of personal computers and user-friendly software has popularised the

A 4.4 Production And Material Management Page 2

application of these quantitative techniques in production management since the 1980s.
Development in Management Information Systems (MIS) and Decision Support Systems
(DSS) provided a further boost to the developments in production management.

Table 1: Historical Evolution of Production Management

Advanced manufacturing technology-enabled production managers to use Computer-

Aided-Design (CAD), Computer-Aided-Manufacturing (CAM), Computer Numerically
Controlled (CNC) machines, Robots, Computer Integrated Manufacturing (CIM), Flexible
Manufacturing System (FMS), etc., in the field of production management.

Moreover, many Japanese manufacturers have developed modern management

practices that have increased the productivity of their operations and the quality of their

A 4.4 Production And Material Management Page 3

products. The new approaches in production management emphasise quality (Total
Quality Management) and continuous improvement (Kaizen), worker teams and
empowerment to achieve customer satisfaction. The Japanese have spawned the
"quality revolution" and adopted the Just-In-Time (JIT) production system to put
themselves at the forefront of time-based competition.

PRODUCTION:

The production function is that part of an organization, which is concerned with the
transformation of a range of inputs into the required outputs (products) having the
requisite quality level.

Production is defined as “the step-by-step conversion of one form of material into

another form through a chemical or mechanical process to create or enhance the utility
of the product to the user.” Thus production is a value addition process. At each stage of
processing, there will be value addition.

Edwood Buffa defines production as “a process by which goods and services are
created”

Some examples of production are manufacturing custom-made products like boilers

with a specific capacity, constructing flats, some structural fabrication works for selected
customers, etc., and manufacturing standardized products like cars, buses, motorcycles,
radios, television, etc.

A 4.4 Production And Material Management Page 4

PRODUCTION MANAGEMENT:

Production Management is a process that involves managing and controlling the

production activities of a business. It involves the application of management principles
to the production function of the business to increase productivity. Production
management applies planning, directing, organizing, and controlling for managing
production operations. This process is concerned with the conversion of raw materials
into business finished products efficiently without any wastage of resources.

OBJECTIVES OF PRODUCTION MANAGEMENT:

1. Production In Right Quantity: Production management formulate and

implement various production strategies to ensure production in the right
quantity. Production in the right quantity is important for every organisation to
ensure profitability. Excess or shortage in production will have adverse effects.
Excess production of products will lead to blockage of funds in inventory.
Whereas the shortage in production will create a shortage of its products and will
not be able to fulfil demand.
2. Minimisation Of Production Time: Completion of production activities timely is
essential for the achievement of the goal. Production management designs
schedules for various production activities of the business. It monitors all
production activities and ensures that all operations are going as per planned
schedules. In case of any deviation in production activities, the production
manager takes all necessary corrective measures to remove these deviations. It
helps in minimising the overall time involved in production activities.
3. Production Of Right Quality: Production management ensures that quality
products are manufactured by the organisation. It aims that customers’
expectations are fulfilled by the product. Attempts are made to convert the needs
of customers into production specifications while designing a product. Certain
standards are set through the production management process and attempts are
made to fulfil these standards.
4. Minimisation Of Cost: Cost reduction is the primary focus of every business.
Production management aims at minimising the cost of product activities of the
business. It involves the usage of sound supply chain management in production
planning minimising the overall production and supply cost. Production
management estimates the true cost of a product before its production and tries
to keep its production cost within the parameter of pre-estimated cost.
5. Planning And Control Of Materials: Production management helps in
maintaining the optimum stock of inventory within the organisation. It keeps a
complete record of all materials required for various production activities. By

A 4.4 Production And Material Management Page 5

 maintaining records, the shortage of any raw materials can be easily detected. It
helps in ensuring that all raw materials are always available in the right quantity
so that production activities are not affected.
6. Analyse The Market: Production management completely analyse market
situations before framing production strategies. It recognises and takes into
account various technological and innovation changes at early as possible. All
these changes are implemented in the production activities of the organisation to
face the market competition. Production activities go in line with market
demand.
7. Optimum Utilisation Of Resources: Proper utilisation of all resources is a must
to earn the desired profit and achieve desired goals. Production management
issues rules and guidelines for all persons associated with production operations.
It monitors their activities and helps them in improving their efficiency.
Production managers check the overall activities and productivity of all
departments of organisations. It is ensured that there is no wastage of resources
and all resources are efficiently utilised.

FUNCTIONS OF PRODUCTION MANAGEMENT:

The functions of Production Management depend upon the size of the firm. In small
firms, the production Manager may have to look after production planning and control
along with Personnel, Marketing, Finance and Purchase functions.

 Materials: The selection of materials for the product, Production manager must
have sound knowledge of materials and their properties so that he can select
appropriate materials for his product. Research on materials is necessary to find
alternatives to satisfy the changing needs of the design in the product and the
availability of material resumes.
 Methods: Finding the best method for the process, searching for the methods to
suit the available resources, identifying the sequence of the process is some of
the activities of Production Management.
 Machines and Equipment: Selection of suitable machinery for the process
desired, designing the maintenance policy and design of the layout of machines
are taken care of by the Production Management department.
 Estimating: To fix up the Production targets and delivery dates and to keep the
production costs at a minimum, the production management department does a
thorough estimation of Production times and production costs. In a competitive
situation, this will help the management to decide what should be done in
arresting the costs at the desired level.

A 4.4 Production And Material Management Page 6

  Loading and Scheduling: The Production Management department has to draw
the timetable for various production activities, specifying when to start and when
to finish the process required. It also has to draw the timings of materials
movement and plan the activities of manpower. The scheduling is to be done
keeping in mind the loads on hand and the capacities of facilities available.
 Routing: This is the most important function of the Production Management
department. The routing consists of fixing the flow lines for various raw materials,
components etc., from the stores to the packing of the finished product, so that
all concerned know what exactly is happening on the shop floor.
 Dispatching: The Production Management department has to prepare various
documents such as Job Cards, Route sheets, Move Cards, Inspection Cards for
every component of the product. These are prepared in a set of five copies. These
documents are to be released from the Production Management department to
give a green signal for starting the production. The activities of the shop floor will
follow the instructions given in these documents. The activity of releasing the
document is known as dispatching.
 Expediting or Follow up: Once the documents are dispatched, the management
wants to know whether the activities are being carried out as per the plans or not.
Expediting engineers to round the production floor along with the plans,
compare the actual with the plan and feedback the progress of the work to the
management. This will help the management to evaluate the plans.
 Inspection: Here inspection is generally concerned with the inspection activities
during production, but a separate quality control department does the quality
inspection, which is not under the control of Production Management. This is true
because, if the quality inspection is given to production Management, then there
is a chance of qualifying the defective products also.

MANUFACTURING SYSTEM:

This view is also known as the "systems concept of production". A system is defined as
the collection of interrelated entities. The systems approach views any organisation or
entity as an arrangement of interrelated parts that interact in ways that can be specified
and to some extent predicted. Production is viewed as a system that converts a set of
inputs into a set of desired outputs. A production system has the following elements or
parts : (i) Inputs, (ii) Conversion process or transformation process, (iii) Outputs making
subsystem.

A 4.4 Production And Material Management Page 7

The conversion or transformation sub-system is the core of a production system
because it consists of processes or activities wherein workers, materials, machines and
equipment are used to convert inputs into outputs, i.e.,

The conversion process may include manufacturing processes such as cutting, drilling,
machining, welding, tooling, painting, etc., and other processes such as packing,
dispatching etc.

PRODUCTION SYSTEM:

Production management means planning, organizing, directing, and controlling of

production activities of products or services, this whole process of managing production
is called the Production Management System.

According to Buffa and Sarin, a production system may be defined as “how we

transform resource inputs to create useful goods and services as outputs.”

TYPES OF PRODUCTION SYSTEMS:

The types of Production Management systems are grouped into two categories: –
1. Intermittent Production System
2. Continuous Production System

A 4.4 Production And Material Management Page 8

Intermittent Production System:

 It is a production system that starts and stops at an irregular interval without

having a fixed time interval.

 Goods are manufactured by customer orders on a small scale under the

intermittent production system.

 Here, the flow of production is not continuous but irregular that varies as per the
customer demands.

 It is a very flexible production system where a large variety of goods are

produced, of distinct size and design that all keep on changing as per the
customer requirements.

 An example of an intermittent production system can be the work of a

goldsmith. He does not produce goods (ornaments) continuously but on small
scale as per the demand of customers. He is dependent upon the frequency of
his customer’s order for carrying out its activities

Features of Intermittent Production System:

a) The production flow is not continuous. It is intermittent.

b) Wide varieties of products are produced.
c) The production volume is small.
d) General-purpose machines are used. Different types of products can be
produced by the use of these machines.
e) The sequence of operations continues to change according to the product
design.
f) The quantity, size, shape, design, etc. The product depends on customer orders.

The types of intermittent production systems include:

i. Project production flows

ii. Jobbing production flows, and
iii. Batch production flows.

Project production flows:

 Here, in the project’s production flows, the company accepts a single complex
order or contract. The order must be completed within a certain period and at an
estimated cost.

A 4.4 Production And Material Management Page 9

  Consider making a boat. Such products are never manufactured in large
quantities. Labor, facilities and other resources focus on these products.

 Therefore, each product can be treated as a project, which requires the

sequencing of certain activities, either in series or simultaneously. PERT/CPM or
network analysis is a useful technique to plan and control such projects.
Examples of project production flow mainly include the construction of airports,
roads, buildings, shipbuilding, dams, etc.

Characteristics of project production flow:

a) A resource requirement varies with the production phases.

b) Many agencies are involved and their jobs are interrelated.

c) Generally. Delays take place at the end of the project.

d) As routing and programming change, inspection is required.

Jobbing production flows:

 In the job production flows, the company accepts a contract to produce one or a
few units of a product strictly according to the specifications given by the
customer.

 The product is produced within a certain period and at a fixed cost. This cost is
fixed at the time of signing the contract.

 Examples of such job production flow include services provided by clothing

workshops, repair shops, manufacturers of special machine tools, etc.

Characteristics of jobbing production flow:

a) The production of items takes place in small batches.

b) Items are manufactured according to customer specifications.

c) Highly skilled labour is needed for specialized jobs

d) There is a disproportionate manufacturing cycle time.

Batch production flows:

 In batch production flows, the production schedule is decided according to

specific orders or is based on demand forecasts. Here, the production of items
takes place in lots or lots.

A 4.4 Production And Material Management Page 10

  A product is divided into different jobs. All jobs in a production batch must be
completed before starting the next production batch.

 Examples of batch production flow include the manufacture of drugs and

pharmaceuticals, medium and heavy machinery, etc.

Characteristics of batch production flow batch instruction:

a) Products are manufactured and stored until demand arises.

b) General-purpose machines and equipment are installed.

c) There is a possibility of major work in progress.

d) You need detailed production planning and control.

Continuous production system:

 Continuous means something that operates constantly without irregularities or

frequent stops. In the continuous production system, goods are constantly
produced according to the demand forecast.

 The goods are produced on a large scale for storage and sale. They are not
produced at the customer’s request.

 Here, the inputs and outputs are standardized together with the production
process and the sequence.

The following are examples of the continuous production system.

1) The production system of the food industry is based solely on the demand
forecast. Here large-scale food production takes place. It is also a continuous
production.

2) Similarly, the production and processing system of a fuel industry is also based
solely on the demand forecast. Crude oil and other raw sources are continuously
processed on a large scale to obtain a usable form of fuel and
offset global energy demand.

The characteristics of a continuous production system are listed below:

a) The production flow is continuous. It is not intermittent.

b) The products are standardized.

c) Products are produced with predetermined quality standards.

A 4.4 Production And Material Management Page 11

 d) Products are produced in anticipation of demand. Standardized roadmaps and
schedules are prepared.

The types of continuous production systems include:

1. Mass production flows

2. Process production flows.

Mass production flows:

 Here, the company produces different types of large-scale products and stores
them in warehouses until they are demanded in the market.

 Products are produced with the help of a single operation or use a series of
operations. E.g. Mass production is the production of toothpaste, soaps, pens,
etc.

Characteristics of mass production flow:

a) Continuous production flow depends on market demand.

b) Here, there is limited work in progress.

c) Supervision is easy: few instructions are necessary.

d) The material is mainly handled by machines.

e) The flow of materials is continuous with little or no glue.

Process Production processes:

 Here, a single product is produced and stored in warehouses until it is demanded

in the market. The flexibility of these plants is almost nil because only one
product can be produced. Examples of production process flows include steel,
cement, paper, sugar, etc.

Characteristics of process production flow:

a) Highly mechanized system for material handling.

b) Low skilled labour and skilled technicians are required.

c) Production planning and programming can be decided in advance.

d) The complete production system is designed to produce a single item.

A 4.4 Production And Material Management Page 12