Contents
What is production?................................................................................................................................ 2 What is a production Management? ...................................................................................................... 2 Why should one study production Management? /What is importance of learning production Management? /What is the objective of learning Production Management? ...................................... 4 What is a difference between Production and Operations Management? ........................................... 5 Production System .................................................................................................................................. 6 What is Operations Management? ......................................................................................................... 7 Production function ................................................................................................................................ 8 What is Productivity? .............................................................................................................................. 8 Product Classification/types ................................................................................................................... 9 Levels of products ................................................................................................................................. 10 Relationship of Production function with other functions ................................................................... 11 Product selection .................................................................................................................................. 12 Steps for identifying the products for manufacturing .......................................................................... 12 What is Product Planning & development? .......................................................................................... 14 Categories/Types of new products ....................................................................................................... 14 Objectives of product planning & development................................................................................... 15 Characteristics of good product development ..................................................................................... 15 Reasons for new product failures ......................................................................................................... 16 New production development process ................................................................................................ 16 Challenges of product development..................................................................................................... 17 Product Life Cycle.................................................................................................................................. 17 Product design ...................................................................................................................................... 18 Process design ....................................................................................................................................... 18
Version - 1
What is production?
Creation of good and services to satisfy consumer needs Transformation process o An input is converted in to an output Its a process that adds value to the inputs which becomes consumable The Value addition can happen through o alteration (change of the form, shape of the product/service e.g. o transportation e.g. imports from states, countries...apples from north, olives from Switzerland o storage e.g. Mangoes during winter o quality assurance activities, ISI marks, audits, trainings
Version - 1
However, there are many organisations that create both goods and services through transformation of inputs in to outputs. Either along with tangible goods e.g. consumer durables like A/Cs, microwaves & the after sales services Pure services such as Hospitals, educational institutes , CA firms, BPO/KPO companies etc Therefore the term production management has been changed to production and operations management as many companies produce both goods and services as their outputs. Regardless of whether the end product is a good or a service, the production activities that go on in the organisations are often referred to as operations and function of planning, directing and controlling the processes that transform inputs in to finished goods/services is termed as operations management. Its important to note that all these three terms Production Management, Production and Operations Management and Operations Management are used interchangeably. Productions/operations management can be defined as the management of all activities directly related to the creation of goods and/or services through the transformation of inputs into output.
Version - 1
Why should one study production Management? /What is importance of learning production Management? /What is the objective of learning Production Management?
Production Management is one of the important function of an organisation others being Marketing, Finance, Human resources, IT Understand how a production system works How goods are produced How the transformation happens What activities are involved Understand how a production systems are managed effectively Understand the different production functions like, planning, directing, controlling Understand the role of the production managers, so as have an overall skills required & develop accordingly Production cost is a direct cost of any organisation having a direct impact on the profit & loss account of the company. Understanding the production Management would help where the costs can be saved & productivity can be optimised. Production management offers a great opportunity for an organisation to improve its profitability QCDS (Quality, cost, Delivery & Service) is the modern mantra of any organisation. Understanding production management would help in understanding how to produce a quality product at the competitive/reasonable cost with a timely delivery & an effective service This is possible only of the production systems are managed effectively. Whether profit or non profit, the role of an OPERATIONS MANAGER is to sustain, protect, and project the companys operations side. The complexities & challenges of modern production systems have increased. the supplying organizations have been engaging deep & across value chain of the customers.
Version - 1
Version - 1
In brief: Operations vs Production Management Both production management and operations management play an important role in an organization in increasing the efficiency and productivity. While operations management is focused upon administration, planning and execution of operations involved in production of goods and services and trying to minimize the resources at the same time increasing output, production management is more concerned with input/output and churning out products in the shape of desired finished product.
Production System
What is a system? Set of policies, processes & procedures required for planning, execution & control. Formalized system that states the structure, responsibilities & procedures required to achieve effective results Collection of interrelated activities/enti ties Arrangement of interrelated parts whose interactions can be specified and to some extent predicted
What is a Production system then? A system that converts a set of inputs in to a set of desired outputs (goods/services) Consists of elements like a) inputs b) transformation process c) outputs d) delivery systems e) communication systems f) Production control/ decision making systems.
Version - 1
Meaning: Set of activities comprising planning, supervision, planning and designing of business operations in the manufacturing of goods and services is called as operations management. Goal: Ensure that the operations of a business are efficient and effective and result in minimum of wastage. Focus Optimisation of processes: Cut down resources involved in operations while at the same time making operations more effective and productive. More concerned on processes than products. Scope: All the activities/operations right from the customer gives an order to collecting the cash
Use physical resources in an optimum manner, converting input into output, so as to supply to the market the desired and finished product in time & quality. Production management or operations management play a key role in improving the efficiency and productivity. Regardless of whether the end product is a good or a service, the production activities that go on in the organisations are often referred to as operations The function of planning, directing and controlling the processes that transform inputs in to finished goods/services is termed as operations management. Today, this discipline is generally referred to as operations management, although it includes both management of activities producing goods or services.
Production function
What is a function? Relationship between inputs and outputs What is a Production function? Creating products(outputs) using inputs such as materials, machines, labour, land capital & management. Its a relationship between inputs & outputs. Q quantity of output
Q = f (a, b, c, d)
a, b, c, d quantities of various inputs (materials, labour hours etc) Production function specifies amount of outputs that would flow from the amount of inputs used during a specified period.
What is Productivity?
Productive use of resources The level at which a process is running Productivity = Output Input Efficiency of the production Productivity index What do a productive index tells us? How well a process is carried out to convert a set of inputs in to a set of outputs Benefits Value to customer Profitability to the organization
Version - 1
Product Classification/types
From marketing perspective products are classified in to three categories: Durability & tangibility Consumer goods Industrial goods
Version - 1
Levels of products
Version - 1
10
Version - 1
11
Product selection
Meaning : Choosing the goods or services for production Focus : develop & execute a product strategy that meets the demands of the market differently than the competition does. Product selection is a key to an organization's success & sustenance Most products have limited or predictable life cycle Firms must keep looking for new products, improve existing products, build competencies around existing market products (Dell) Product selection enablers Internal sources Employees at all levels Strong communications within processes/functions External sources Customers Competitors Distributors Suppliers
Version - 1
12
Step 3 : Selection of competitive priorities Its important to improve on all the 8 priorities However, improving on all is difficult due to trade off decision between the priorities Higher customization could lead to higher cost Efficient design could lead to higher cost Volume flexibility could lead to inventory & carrying costs Low cost operation could at times affect the quality Greater quality could lead to higher cost if not managed well Important, sometimes its difficult to have a trade off as a competitive priority has become a qualifier, Must Be requirement in the industry
Step 4 : Developing the operations strategy Deciding on a flow strategy/approach based on the competitive priority selected Goal :
Owner Professor Nilesh Version - 1 13
decide on how the operations systems should be organized so that the volume, variety of products & services are handled effectively Set the stage/approach for all operational decisions at every level
Flexible flow strategy Meaning: Organizing operations around the processes Emphasis: Efficient Design, Customization, Volume Flexibility Low cost & quick delivery is less Examples: High end cars
Line-flow strategy Meaning: Organizing operations around the product or service Appropriate when products are standard Emphasis: Cost effectiveness, Quality Consistencies, Quick Deliveries Examples: Routine Consumer products
Improvements in the existing products: different in terms of functions, size, features e.g. TV, electric cars. Imitative: new to company but not new to the market e.g. chocolates, cars, new cereals. The key to success is product differentiation If market considers the product to be significantly different from the competition, then its a success Buyers perception is a reality in the imitative products
Lead time of the development Development cost Money spent on development Development capability Will it be able to churn out future products? Are learning captured & used?
Version - 1
16
Version - 1
17
Product design
Product is designed for market & market is known better by Marketing people The general specifications of the product are drawn by design persons along with marketing persons Product design is about Product form & Product Functions Product Form Deals with the shape , appearance Adds nothing to performance but packaging is very imp. Many customers cant tell if one product is better than other in terms of functions, so they buy the one which is eye-catching Product Function Deals with how it works Importance of the functional design is that it has to work else it wont sell Industrial products: The machine makers pay attention to form design although function is imp, as factories buying machines want their shop floor to look neat & clean!
Process design
Concerned with overall sequence of the operations required to meet the design specification of the product. Types of workstations required Types of machineries What technology (Manual, automated) What bandwidth? How should be the quality control?
Version - 1
18