Introduction to production

and operations management

 What is Production management?

The job of coordinating and controlling the

activities required to make a product, typically
involving effective control of scheduling, cost,
performance, quality, and waste requirement.
 What is Operations management?

Operations management is an area of

management concerned within overseeing,
designing, and controlling the process of
production and redesigning business operations
in the production of goods or services.
 Definition of Production & Operations
Management

Conversion of inputs into outputs using

physical resources and process to provide the
desired utility to customers while meeting the
other organizational objectives of
effectiveness, efficiency & adaptability
Transformation Process
 5Ps-Product,Plant,Process,
Programme & the People

PRODUCT
Marketers in a business must ensure that a
business sells products that meet customer
needs and wants. The role of Production and
Operations is to ensure that the business
actually makes the required products in
accordance with the plan
 Continued..

The role of PRODUCT in POM therefore

concerns areas such as:

- Performance
- Aesthetics
- Quality
- Reliability
- Quantity
- Production costs
- Delivery dates
 PLANT

To make PRODUCT, PLANT of some kind is needed.

This will comprise the bulk of the fixed assets of the
business. In determining which PLANT to use,
management must consider areas such as:
- Future demand (volume, timing)
- Design and layout of factory, equipment, offices
- Productivity and reliability of equipment
- Need for (and costs of) maintenance
- Heath and safety (particularly the operation of
equipment)
- Environmental issues (e.g. creation of waste
products)
 PROCESSES

There are many different ways of producing a

product. Management must choose the best
process, or series of processes. They will
consider:
- Available capacity
- Available skills
- Type of production
- Layout of plant and equipment
- Safety
- Production costs
- Maintenance requirements
 PROGRAMMES

The production PROGRAMME concerns the

dates and times of the products that are to be
produced and supplied to customers. The
decisions made about programme will be
influenced by factors such as:
- Purchasing patterns (e.g. lead time)
- Cash flow
- Need for / availability of storage
- Transportation
 PEOPLE

Production depends on PEOPLE, whose skills,

experience and motivation vary. Key people-
related decisions will consider the following
areas:
- Wages and salaries
- Safety and training
- Work conditions
- Leadership and motivation
- Unionization
- Communication
 Difference between Manufacturing &
Service Industry

Manufacturing: Service:
Tangible product Intangible product
Product is Product cannot be
inventoried inventoried
Low customer High customer
contact
contact
Longer response
time Short response
Capital intensive
time
Labor intensive
 Similarities for Service/Manufacturers

Both use technology

Both have quality, productivity, & response
issues
Both must forecast demand
Both can have capacity, layout, and location
issues
Both have customers, suppliers, scheduling and
staffing issues
 Service vs Manufacturing

Manufacturing often provides services

Services often provides tangible goods
Some organizations are a blend of
service/manufacturing/quasi-
manufacturing Quasi-Manufacturing (QM)
organizations
QM characteristics include
Low customer contact & Capital Intensive
 Business Information Flow

 Historical evolution
1776 -Specialization of labor in manufacturing
-Adam Smith
1799 -Interchangeable parts, cost accounting -
Eli Viihitney and others
1832 -Division of labor by skill; assignment of
jobs by skill; basics of time study -Charles
Babbage
1900- Scientific management time study and
work study developed; dividing planning and
doing of work -Frederick W. Taylor
1900- Motion of study of jobs -Frank B.
Gilbreth
 Historical evolution(cont..)

1901- Scheduling techniques for employees,

machines jobs in manufacturing -Henry L.
Gantt
1915 -Economic lot sizes for inventory control -
F.W. Harris
1927 -Human relations; the Hawthorne studies
-Elton Mayo
1931 -Statistical inference applied to product
quality: quality control charts -W.A. Shewart
1935 -Statistical sampling applied to quality
control; inspection sampling plans -H.F. Dodge
&H.G. Roming
 Historical evolution(cont..)

1940- Operations research applications in

World War ll -P.M. Blacker and others.
1946- Digital computer -John Mauchlly and
J.P. Eckert
1947-Linear programming -GB. Dantzig,
Williams & others
1950- Mathematical programming, on-Iinear
and stochastic processes A. Charnes, W.W.
Cooper & others
1951- Commercial digital computer; large s-
cale computations available. -Sperry Univac
 Historical evolution(cont..)

1960- Organizational behavior; continued

study of people at work -L. Cummings, L.
Porter
1970- Integrating operations into overall
strategy and policy. Computer applications to
manufacturing. Scheduling and control.
Material requirement planning (MRP)-W.
Skinner J. Orlicky and G. Wright
1980-Quality and productivity applications
from Japan robotics. CAD-CAM -W.E. Deming
and J. Juran
 The Industrial Revolution
The industrial revolution developed in England
in the 1700s.
The steam engine, invented by James Watt in
1764, largely replaced human and water power
for factories.
Adam Smiths The Wealth of Nations in 1776
touted the economic benefits of the
specialization of labor.
Thus the late-1700s factories had not only
machine power but also ways of planning and
controlling the tasks of workers
 The Industrial Revolution(cont..)

The industrial revolution spread from England

to other European countries and to the United
Sates.
In 1790 an American, Eli Whitney, developed
the concept of interchangeable parts.
The first great industry in the US was the
textile industry.
In the 1800s the development of the gasoline
engine and electricity further advanced the
revolution.
 Post-Civil War Period

During the post-Civil War period great

expansion of production capacity occurred.
By post-Civil War the following developments
set the stage for the great production explosion
of the 20th century:
increased capital and production capacity
the expanded urban workforce
new Western US markets
an effective national transportation system
Thank You