Production & Operations Management - Week 8

Production & Operations Management - Week 8

• Production is defined as the activity of transforming raw materials or components into finished goods. Production management involves effectively planning and controlling operations within an enterprise.
• From an economic perspective, organizations are viable if they satisfy customer needs through products, services, or systems. Production operations management effectively manages organizational resources to achieve this.
• Production and operations management is crucial for successful organizations, ensuring efficient and effective resource utilization.
• Industries and organizations vary significantly in their organizational structures and methods of work; therefore, terminology isn't standardized across the board. Nevertheless, basic principles can be adapted to different production types.

Introduction

• Organizations are only viable if they fulfill customer wants through the products, services or systems they create or provide, economically speaking.
• Production and operations functions focus on creating goods, services, or systems.
• Production operations management specifically deals with the effective use of organizational resources in creating these goods, services, or systems.
• Efficient and effective production/operations management is essential for a successful organization.

Definition

• Essential aspects of production include converting raw materials or components into finished products.
• Production management encompasses the effective planning and control of operations within an organization's production sector.
• The various industries and companies within an industry exhibit significant variations in their organization and operational methods.
• Terminology surrounding production management has not been standardized to a large degree, but some basic principles are applicable to various production types.

The Concept of Production Management

• The production function within an organization is responsible for transforming inputs into outputs that meet required quality levels.
• Production is defined as the stepwise conversion of materials into another form, increasing the product's utility for the end user via chemical or mechanical processes.
• Production is a value-added process, with each processing stage contributing to increasing value.

Input, Transformation Process, Output

• Key inputs include people, materials, machinery, information, and capital.
• The transformation process encompasses different stages, including product design, process planning, product control, and maintenance, to transform inputs into outputs.
• Key outputs include products and services.
• Continuous monitoring of inventory levels, quality, and cost is integral in this transformation process.

Production Management Objectives

• Production management aims to create goods and services with the right quality, quantity, at the correct time, and at a suitable manufacturing cost.
• Right quality: Product quality is set based on customer needs and cost/technical characteristics. It isn't necessarily about achieving the best quality, but about the product meeting its required needs.
• Right quantity: Organizations should produce products in sufficient numbers to meet demand. Excess production leads to inventory buildup; insufficient production results in shortages.
• Right time: Timeliness of delivery is crucial for evaluating the effectiveness of the production department, thus requiring optimal input resource utilization.
• Right manufacturing cost: Manufacturing costs should be established before production begins to minimize variations between actual and planned costs.

Operating System

• An operating system transforms inputs into outputs according to customer needs, adding utility to the product/service.
• In some organizations, outputs are physical goods (e.g., hotels), while in others they are services (e.g., hospitals).
• Examples of an operating system include hospitals, transportation providers, tailors, and builders.

Scope of Production & Operations Management

• Production and operations management encompasses the conversion of inputs to outputs, maximizing efficiency and effectiveness within organizational objectives.
• This function is distinct from other organizational functions, such as personnel or finance, with its primary focus on conversion using physical resources.

Location of Facilities

• Facility location decisions are long-term strategic decisions significantly impacting organizations.
• Key considerations include the placement of primary operations and plant/machinery investments.
• Poor location decisions can lead to wasted investment in facilities, machinery, and equipment.
• Decisions should consider broader business strategies, market expansion plans, availability of raw materials, and other diverse factors.

Plant Layout and Material Handling

• Plant layout refers to the physical arrangement of facilities, work centers, and equipment to ensure efficient material flow.
• Its optimization aims to produce adequate quality and quantity most cost-effectively.
• Material handling encompasses the movement of material throughout the manufacturing process, from the storage to the production machinery, and from one machine to the next.

Product Design

• The conversion of ideas into physical products represents the crucial first stage of product design.
• An organization's survival and growth strategies often hinge on the effectiveness (or design of) new product introductions in the marketplace.
• Effective product design involves the identification of customer needs, translating these into technical specifications. It also includes the detailed design stages to meet the needs, and processes for creating the product itself.

Process Design

• Process design involves overarching decisions regarding the best route for converting raw materials into finished products, which often involves considering process selection, technology choice, process flow analysis, and facility layouts.
• Proper process design analyses workflows and identifies workstation selections conducive to optimal material transformation.

Production Planning and Control

• Production planning and control involves comprehensively planning and controlling production in advance. Exact routes, starting and finishing dates, and production orders are key elements of this process.
• The principle of production involves planning the work thoroughly before implementation (First Plan Your Work and then Work on Your Plan).
• Key planning and control aspects include planning, routing, scheduling, dispatching, and follow-ups.

Main Functions of Production Planning & Control

• Production planning and control involves establishing what to create, how to make it, who will do what, and when.
• Routing designates the preferred route through production elements and equipment, optimizing efficiency. Effective schedules, including the time and date of each step, effectively determine their sequence.

Dispatching and Follow-up

• Dispatching authorizes the commencement of production steps previously detailed in planning and scheduling.
• Follow-ups ensure that ongoing production activities and output progress align with planned performance. This detailed monitoring and reporting process is paramount for effective quality control

Quality Control

• Quality control is integral in ensuring that customers receive goods and services with adequate quality.
• The quality of a product is relevant to organizational financial performance, as high costs can be associated with poor quality.
• Objectives of quality control include improving appeal to customers, reducing manufacturing defects, achieving consistent quality across outputs, offering cost-effective production to consumers, and building customer trust.

Just-in-Time (JIT)

• The just-in-time production approach originated in Japan as an effort to optimize inventory levels, reducing waste and improving production efficiency.
• Key objectives underpinning JIT include ensuring inventory is only available when and as it's required.
• Overall, JIT aims to identify problems early on and allow for consistent improvements in production methodologies.

Objectives of JIT

• The core objectives of a JIT system center around producing finished goods as needed for sale.
• This system also aims to assemble sub-assemblies into completed products just in time for sale; purchase necessary parts just in time to assemble those sub-assemblies; and transform raw materials into manufactured components just as they're needed.

Benefits of JIT

• JIT systems offer advantages such as increased productivity, reduced inventory levels, reduced waste, enhanced employee motivation, improved customer service, lowered administrative costs, and fewer materials handling needs.

Five Types of Production Processes

• Project: This approach is suitable for unique, large-scale projects where resources are brought together to the project site.
• Jobbing: Job production entails working on small-size projects or items, completing and delivering them in-house to the end consumer.
• Batch: Batch production deals with large standardized outputs where a given facility accommodates various batches of similar items. A facility is adjusted and then re-used for different batches within the facility
• Line: This method entails a repetitive sequence of operations; all products follow the same process or line, and in limited numbers.
• Continuous: This process is customized for standardized outputs on a large scale and highly repetitive manner. The level of production is constant, often demanding standardized raw materials.
• Mass: Mass production is an identical product type, made to meet the demand of an assembly line or the market. Planning for materials, process, machine maintenance, and operator instructions are paramount in this system. Bulk material purchasing is beneficial.

People

• Organizational success is directly related to the quality of its workforce (manpower).
• Managers should actively plan and control activities related to employee recruitment, training, and development. These activities require continuous employee motivation and supervision, alongside ongoing welfare and safety program support.

Services

• Service systems' capacity and costs often exhibit greater uncertainty due to unpredictability of customer presence.
• Services cannot be stored physically and involve direct customer interaction, leading to varying service demands. This can lead to challenges in accurately calculating costs. Many customer-based business need to manage variable demands; such as doctor's appointments, concert tickets, or hotel reservations.
• Unique service dynamics, like intangibility and time-perishability, necessitate specialized production processes and customer relationship management strategies.

Scope of Production and Operations Management (Diagrammed)

• A diagram is included (with the uploaded files) encompassing several key functions within the production and operations management field.