Production and Material Management PDF

PRODUCTION AND UNIT:1 MATERIAL MANAGEMENT  PRODUCTION The making or doing of things which are not wanted or are made just for the fun of it does not qualify as production. On the other hand, all jobs which do aim at satisfying wants are part of production. Those who provide services Such as hai...

PRODUCTION AND UNIT:1 MATERIAL MANAGEMENT  PRODUCTION The making or doing of things which are not wanted or are made just for the fun of it does not qualify as production. On the other hand, all jobs which do aim at satisfying wants are part of production. Those who provide services Such as hair-dressers, solicitors, bus drivers, postmen, and clerks are as much a part of the process of satisfying wants as are farmers, miners, factory workers and bakers. The test of whether or not any activity is productive is whether or not anyone will buy its end-product. If we will buy something we must want it; if we are not willing to buy it then, in economic terms, we do not want it. It is the process by which raw materials and other inputs undergo transformation process and are converted into finished products. Production is defined as "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." Thus production is a value addition process. At each stage of processing, there will be value addition. The process of production/transformation can be carried out in the following ways: (1) Disintegration: Here, one input (raw material) is used to produce many types of output. For e.g. Steel (Input) is used to produce many types of outputs like spoons, knives, plates, etc. (2) Integration or Assembly: Here, many inputs are used to produce only one output. For e.g. many different inputs are used to assemble a car. (3) Service: Here, the value of the product is increased by providing services, for e.g. after sale service for a TV set. Production makes significant contribution to society's well- being. The standard of living of people depends mainly on the production of goods and services. Definitions of Production Management: In the words of Mr, E. L. Brech, "Production Management is the process of effective planning and regulating the operations of that section of an enterprise which is responsible for the actual transformation of materials into finished products.“ According to Elwood Spencer Buffa, "Production management deals with decision-making related to production processes so that the resulting goods or service is produced according to specification, in the amount and by the schedule demanded and at minimum cost."  OBJECTIVES OF PRODUCTION MANAGEMENT The four basic requirements that determine customer satisfaction are Right quality, Right quantity, Right time and Right price. If these are provided at minimum costs, optimally using the inputs, then the value of goods produced or services rendered increases. Thus the primary objective of production management is to produce goods and services of the right quality, in the right quantities at a minimum cost and according to the time schedule. The objectives of production management can be extended as follows: (1) Right Quality: The quality of product is established based upon the customers' needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements. (2) Right Quantity: The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, it would lead to shortage of products in the market. (3) Right Time-Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective. Also they should reduce delays, waiting time and idle time. 4) Right Manufacturing Cost: Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost. (5) Minimize the use of resources to the optimum level: These are 4 M's like Machinery, Materials, Manpower and Money. These inputs are to be used to full extent to result minimum cost, quality and time. (6) Minimizing the total cost of production with continuous elimination of non-value added activities and improving labour productivity on the production shop floor. (7) Maximize the utilization of manpower and other resources is one of the most basic objective of production management. The production manager has to ensure efficiency at every stage hence he should utilize all resources to the optimum. TYPES OF PRODUCTION PROCESSES (I) Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). In the intermittent production system, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product. Therefore, this system is very flexible. Following are examples on the intermittent production system. Please refer above chart while reading examples given below. 1. The work of a goldsmith is purely based on the frequency of his customer's orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. Here, ornaments are not done on a continuous basis. 2. Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis. The characteristics of an intermittent production system are listed as follows: 1. The flow of production is not continuous. It is intermittent. 2. Wide varieties of products are produced. 3. The volume of production is small. 4. General purpose machines are used. These machines can be used to produce different types of products. 5. The sequence of operation goes on changing as per the design of the product. 6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.  TYPES OF INTERMITTENT PRODUCTION SYSTEM INCLUDE: (1) Project Production (2) Jobbing Production (3) Batch Production (1) PROJECT PRODUCTION:A project is an activity to meet the creation of a unique product or service. It includes a series of tasks that need to be completed in order to reach a specific outcome/goal. Project production involves complex set of activities that must be performed in a particular sequence within a given period and the estimated expenditure. In project production flows, the firm accepts a single complex order or contract. The output of a project is a product that is immobile during the transformation process. Examples of project production flows mainly include construction of airports, dams, roads, buildings, shipbuilding, locomotives etc. Currently, the Metro Project is undertaken in Mumbai. Characteristics of Project Production: (1) Definite Beginning and Definite End: Each project has a definite beginning and a definite end. It has to be completed at an estimated time. (2) Definite Purpose: Project involves a single, definable purpose, product or result. 3) Temporary Activity: It is undertaken to accomplish a goal within a given period of time; once the goal is achieved, the project ceases to exist. (4) Involvement of Different Agencies: A project involves many tasks, each having its own specialization to be performed by different agencies that are well coordinated. It uses skills and talents from multiple professions and organizations. Projects often involve advanced technology and rely on task interdependencies that may introduce new and unique problems. (5) Complex: Projects involve multidisciplinary teams and have defined aims and objectives. They tend to be relatively complex as compared to the standard functional processes that operate within the organization. (6) High Costs: As much possible delays should be avoided in projects as these delays are very expensive due to escalation in the cost of production, penalties etc. (7) Unique: A project is generally a one-off activity that is never repeated. Routine activities can never be called projects.  TYPES OF PROJECTS: (a) Labour Intensive Project: Labour intensive project is the one that heavily based on labours i.e. it uses different types of work force including semi-skilled and unskilled manpower to perform the project task. These projects utilize less technology and less capital in the process of project implementation. (b) Such projects generate maximum employment opportunities for all categories of people in society, bringing social equality and justice by equal distribution of income in society and maintain economic stability in the country. Advantages of Labour Intensive Project: It provides high employment opportunities. It helps to maintain economic stability. They are very useful for countries having a vast pool of unemployed labour resources. It ensures optimum utilization of scarce resources. It requires less capital and use indigenous technology, thus its impact on environment is low. It helps to increase per capita income. It also reduces imports and increase exports of the country. Disadvantages of Labour Intensive Project: It gives less priority to technology, innovation and development. It is time consuming that lengthen the project life cycle. It is costly in long run. It is unable to handle complexities. There is lack of improved and advanced skills. It cannot meet the deadlines at times. Unable to face competition effectively.  Batch production Batch production involves manufacturing of limited number of products at regular intervals and stocking them for sales. It involves producing a number of identical or sometimes similar products in a batch. Examples of batch production are manufacturers of readymade garments, heavy motor vehicles, process industries like pharmaceuticals, paints, chemicals etc. Characteristics of Batch Production: (1) Short Runs: Batch production has shorter production runs. The equipment and assembly set up is used for a limited number of parts or assemblies and is then changed to make a different product. (2) Skilled Labour: The labour force is expected to be skilled in any of the processes like drilling, welding, grinding etc. Complex operations are supposed to be set up by separate machine setter. (3) Limited Span of Control: The amount of supervision required in batch production is relatively lower in batch production. Smaller the batches, lower is the ratio of direct workers to supervisors and vice versa. Smaller batches require each supervisor to spend a great deal of their time in allocating work and resources, giving instructions, proper movement of materials from and to machines and so on. (4) General Purpose Machines: Batch production uses general purpose machines that are capable of performing variety of operations with minimum setup time. (5) Process Lay out: The machines are arranged to give process layout i.e. layout by functions. Similar machines capable of doing similar type of operations are grouped and kept together. Each group of machines is designated as a work centre or a section. (6) Large WORK-IN-PROGRESS: There is large WORK-IN- PROGRESS due to varying work content of different components, formation of queues between machines etc. (7) Proper Production Planning and Control: Functions of production planning and control in a batch production are more complex than those in jobbing or mass production Advantages of Batch Production: ➤ Better utilization of plant and machinery. ➤ It can reduce initial capital outlay (the cost of setting up the machines) because a single production line can be used to produce several products. Hence there is lower investment in plant and machinery. ➤ Promotes functional specialization. ➤ Cost per unit is lower as compared to job order production. Flexibility to accommodate and process number of products. ➤ Batch production is also useful for a factory that makes seasonal items, products for which it is difficult to forecast demand, a trial run for production, or products that have high profit margin.  Limitations of Batch Production ➤ Material handling is complex because of irregular and long flows. ➤Production planning and control is complex. ➤ Work in process inventory is higher compared to continuous production. Higher set up costs due to frequent changes in set up. Equipment must be stopped, re-configured, and its output tested before the next batch can be produced. There is idle time between batches known as downtime Jobbing/Job-shop production They are characterized by manufacturing of one or few quantities of products designed and produced as per the specification of customers within given time period and cost fixed prior to the contract. The distinguishing feature of this system is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence. Fabrication shops and machine shops whose work is primarily of the job production type are often called job shops. The associated people or corporations are sometimes called jobbers.  Characteristics of Jobbing/Job-Shop Production: (1) Low Volume of Production: Jobbing production involves the manufacture of one or few pieces of a product at a time under separate contract. The production is made strictly as per the customers' orders and specifications. (2) Use of General Purpose Machines and Facilities: Plant and equipment is designed or procured in order to obtain maximum flexibility. The machines are capable of performing variety of operations and can be used to produce different types of products. (3) Highly Skilled Operators/Labour: The labour force is usually highly skilled who work from minimum instructions, display a great deal of initiative and judgement. They work independently and are able to take up each job as a challenge because of uniqueness. (4) Highly Competent Supervision: Highly competent engineers are engaged as foreman in the base workshop and trained managers capable of taking independent charge of each contract are employed to work at site. (6) Large Inventory of Materials, Tools and Parts. (7) Limited Functions of Production Planning and Control: The success of jobbing production depends on the in charge contract engineer. DIFFERENCES BETWEEN INTERMITTENT AND JOB PRODUCTION Product Volume: In a job shop, products are generally produced in very small quantities or even single units. Intermittent production can vary in batch size; while it includes job shops, it can also involve larger batch sizes that are not strictly custom. Production Focus: Job Shop production is highly focused on customization, creating highly specific products for clients. Intermittent Production can involve standardized products made in batches, with downtime between batches, without necessarily being as customer-specific. Continuous production system Continuous means something that operates constantly without any irregularities or frequent halts. In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence. 1. The production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production. 2. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand.  The characteristics of a continuous production system are listed as follows: 1. The flow of production is continuous. It is not intermittent. 2. The products are standardized. 3. The products are produced on predetermined quality standards. 4. The products are produced in anticipation of demand. 5. Standardized routing sheets and schedules are prepared  The types of Continuous production system include: (1) Mass Production (2) Process Production (3) Assembly Production 1) MASS PRODUCTION: Mass Production involves manufacturing of large number a similar products efficiently. Such products are stocked in warehouses till they are sold. It is the production of large amounts of standardized products, including and especially on assembly lines. This production system is characterized by very large volume of production. The machines are arranged in a line or product layout. The goods under mass production are manufactured either at single operation or series of operations on one machine. Some a of the examples of mass production units are industries such as are: plastic goods, hardware etc. The goods under Mass production system offers economies of scale as the volume of output is large. Quality of products tends to be uniform and high due to standardization and mechanization. Characteristics of Mass Production: (1)Continuous Flow of Material: In mass production system, the flow of materials, components and parts is continuous and without any back tracking. There is little or no queuing at any stage of processing. (2) Special Purpose Machines: There are dedicated special purpose machines, that have higher production capacities and output rates. (3) Product Type Layout: The plant assembly stags are laid out on the basis of product layout i.e. the layout by sequence. (4) Limited Work-in-Progress: Since the manufacturing line is balanced, the WORK-IN-PROGRESS is comparatively less. There is lower in process inventory. (5) Lesser Flexibility in Production Schedules: Interruptions due to breakdowns and absenteeism affects production as stoppage of one machine disturbs the working of other machines too (6) Standardization: There is standardization of product an process sequence. Advantages of Mass and Flow Production: ➤ Higher rate of production with reduced cycle time. ➤ Higher capacity utilization due to line balancing. ➤ Less skilled operators are required. Production planning and control is easy. ➤ Low process inventory. (It means having fewer items or materials waiting to be worked on during production.) ➤ Manufacturing cost per unit is low. Limitations of Mass and Flow Production: A Breakdown of one machine will stop an entire production line. ➤ Machinery may be expensive and therefore it may require high investment. ➤ Line layout needs major change with the changes in the product design. ➤ High investment in production facilities. ➤ Demotivated workforce as they have to do routine tasks.  (2) PROCESS PRODUCTION: In process production there is manufacturing of a single product that is stocked in the warehouse for sales. The flexibility of such plants is almost zero as only one type of product can be produced in such plants. This system is used for the manufacture of those items whose demand is continuous and high. Here, single raw material can be transformed into different kinds of products at different stages of the production process e.g., processing of crude oil in refinery we get kerosene, gasoline etc. at different stages of production. On the basis of the nature of production process, flow of production may be classified into: (a) Analytical process of production: In analytical process of production, a raw material is broken into different products. For example, crude oil is analysed into gas, naphtha, petrol, etc. Similarly, coal is processed to obtain coke, gas, coal-tar, etc. (b) Synthetic process of production: Synthetic process of production, on the other hand, involves the mixing of two or more materials to manufacture a product. For instance, lauric acid, myristic acid, plasmatic acid, stearic acid, linoleic acid, etc., are synthesized to manufacture soap.  Characteristics of Process Production: (1) Special Purpose Machine with Built-in Controls: Special, purpose machinery and equipment with built-in controls to measure output and regular inputs are employed to suit the needs. (2) Zero Manufacturing Cycle Time: The entire plant is like one large machine where the raw materials enter at one end and emerge as finished product at the other. 3) Low Skilled Labour: Labour of process production include low skilled workmen. (4) Highly Mechanized Materials Handling: Material handling is highly mechanized using automatic transfer machines for movement. (5) Small Inventory of Work-in-Progress: There is negligible work-in-progress as material flow is continuous. (6) Limited Production Planning and Control Functions: Materials control function is very important and materials need to be planned well in advance. Scheduling activity is simple and restricted to final targets. Progressing function is extremely simplified and limited to recording of the final production at the end of the shift. Advantages of Process Production: ➤ Higher, mechanized material handling ➤ Simple scheduling activity. Limitations of Process Production: ➤ Zero/no flexibility. ➤ There are low skilled workmen. (3) ASSEMBLY PRODUCTION: In assembling process, two or more components are combined to manufacture a finished product. Manufactured parts are joined into sub-assemblies or final assemblies. Such process is employed in assembling automobiles, radio sets, television set bicycles, watches, cameras, etc. In any production system, the most vital decision is the proper layout of assembly line. The design of assembly line involves the proper balancing of technology and other manufacturing facilities so as to develop a rational approach for optimization of results. The assembly line design depends largely upon product design and location of production. In order to develop an assembly line, machines are positioned keeping the following considerations in mind: ▪ the rate of flow of work, ▪ the direction of manufacturing operations, ▪ the inconvenience and comfort of operators or workers, ▪ the availability of service facilities like water, electricity, compressed air, oxygen, etc. ▪ the supply and demand of materials. In an assembly line, each machine must directly receive material from the previous machine and pass it on directly to the next machine. Therefore, the location of machines is automatically regulated by the sequence of operations. Machines and equipment should be arranged in such a manner that every operator has a free and safe access to each machine. Space should be provided for free movement of trucks, which deliver materials and collect the finished products. The passage should not be blocked and workers must not be in danger of being hit by the moving trollies. At the same time, there should be commercial utilization of floor space. Advantages of Assembly Production: ➤ Assembly lines allow workers and machines to specialize at performing specific tasks, which can increase productivity. ➤ Products manufactured are uniform. ➤ Simple process where much training is not required. Limitations of Assembly Production: ➤ While assembly lines can potentially reduce the total cost of product per unit, they can have a high initial cost. ➤ Assembly lines are geared toward producing a specific type of product in mass quantities, which can make a company less flexible if it wants to shift production to different types of products. ➤ The work itself can also be extremely repetitive and monotonous, offering little or no creative critical thinking. PRODUCTION PLANNING AND CONTROL Production planning and control refers to the two separate pre-production stages of manufacturing: production planning and production control. It’s the process of managing the resources, manpower, schedules, and other aspects of producing goods and services. Production planning and control is implemented by businesses to further strengthen their production process and prevent setbacks from affecting their normal operations. Benefits As a best practice for quality assurance and quality control, The main goal of production planning and control is to maximize the materials, workforce, productivity time, and other resources used in the process of manufacturing. With this technique, production managers also primarily aim to ensure that production results are according to set quality, quantity, and schedule. See below for other benefits of implementing production planning and control in your organization: Enhance material procurement – As a way to improve the procurement process, better communication with suppliers and other third-party vendors at the planning stage helps lead to accurate sourcing and allocation of materials. Improve production time – Proactively identify if there would be challenges, bottlenecks, or causes of production delays ahead of time. Greater visibility in the production process helps teams promptly meet production schedules and demands. Reduce production costs – With a well-planned and constantly-monitored production, businesses can utilize their resources efficiently and effectively. Lessen production costs to their ideal level while still ensuring that the quality of goods and services is not compromised Minimize resource waste – Maintain inventory at optimal levels with the execution of strong production planning and control. Avoid discrepancies between material supply and material demand to avoid waste of resources. Streamline production process – When production managers and team members follow a standardized approach in the production process, it’s easier to spot inefficiencies, prevent production delays, and identify further opportunities for growth. 8 STEPS IN PRODUCTION PLANNING AND CONTROL For smooth-running integration of production planning and control, businesses should implement a systematic routine that is proven to be effective. Production managers should also emphasize the importance of following the established process from end to end to ensure that everyone involved in the production contributes to the success of the operation. 1. Planning As the first step of the process, planning states all the materials, manpower, manufacturing techniques, resources, and other initial details needed to complete the production. If there are specific instructions from other business units, they should also be noted at this stage. This helps strengthen the production approach from the beginning to avoid misuse of resources or miscommunication in manufacturing schedules. 2. Routing Routing determines the path of goods starting from raw materials up to finished products. It specifies the most efficient sequence of the operations and also identifies the machines to be used in each step of production. Routing ensures that the process is continuous by indicating whether a machine is unavailable, or if there are other bottlenecks in the production. Deciding the sequence of operations and processes each product goes through. Example: For each jacket, the routing process may involve cutting the fabric, stitching, adding zippers, and quality checks. Routing ensures each step flows in the correct order. 3. Scheduling As the time element of production planning and control—scheduling states all the production elements that are related to timing or schedules. Scheduling should assist in arranging the manufacturing steps in order of priority and ideally include the start and end times of each production task. Businesses can utilize various types of scheduling practices such as master schedules, operation schedules, or daily schedules to further organize their production process. Setting a timeline for each step in the production process. Example: The jacket company schedules fabric cutting for week one, stitching for week two, and quality checks in week three to ensure jackets are ready by the start of winter. 4. Loading Loading, as defined in the manufacturing aspect, is the process of determining the ideal allocation of workload to employees and to machines used, in accordance with their capacity. Loading enables businesses to identify if there are potential manpower shortages or challenges in any of the workstations. With loading, you can implement proactive measures that can prevent these bottlenecks from negatively impacting productivity. Its primary goal is to ensure an efficient workflow by assigning tasks in a way that prevents overloading any one resource, minimizes idle time, and maximizes productivity. Example of Loading Consider a factory producing winter jackets that involves several steps: cutting fabric, stitching, attaching zippers, and conducting quality checks. Each workstation has a maximum daily capacity: Cutting can handle 2,000 jackets per day. Stitching can manage 1,500 jackets per day. Zipper Attachment can process 1,800 jackets per day. Quality Check can inspect 2,000 jackets per day. If the factory needs to produce 10,000 jackets in a week, loading involves distributing this target across the stations based on their capacity. For instance, the Cutting station would be loaded with 2,000 jackets per day from Monday to Friday to reach the target. However, the Stitching station, with a lower capacity, would require additional support (like overtime or extra staff) to keep up with demand. Without these adjustments, Stitching could become a bottleneck, delaying the entire production line. By carefully assigning and balancing workloads, loading prevents delays and ensures a smooth workflow. 5. Dispatching Dispatching is the implementation of all the plans stated in the previously mentioned steps, into actual production. It can be classified as either centralized—where orders are provided by a specific authority; or decentralized—where instructions are issued by all involved business units Example: Once everything is scheduled, the production manager instructs workers to begin cutting fabric on the designated date. 6. Expediting/Follow-up Also known as follow-up, expediting is designed to evaluate the effectiveness of the whole production process. The main goal of expediting is to compare the initial plans against the actual result of productions. This step can also be an opportunity to spot inefficiencies in the processes or determine whether any of the production tasks can still be improved. Scenario: Delay in Stitching Imagine that during production, the Stitching station falls behind schedule due to a machine breakdown, reducing its output from 1,500 jackets per day to 1,000 jackets per day. At this rate, the factory won’t meet the weekly target of 10,000 jackets, which could delay shipment.  How Expediting Resolves This Issue To prevent a delay, the production team decides to expedite the Stitching process through several possible strategies: 1.Adding Extra Shifts: The factory schedules an additional shift for Stitching. This helps increase the daily output and make up for the lost time caused by the machine breakdown. 2.Reallocating Resources: The production team assigns extra sewing machines or temporarily transfers skilled workers from another department to Stitching. This increases the capacity and accelerates production. 3.Outsourcing: If the delay is severe, the factory could outsource some stitching work to an external vendor to help meet the production target on time. 7. Inspection Similar to expediting or follow-up, Inspection is an extra step performed to ensure that all the planning and controlling approaches identified by the management are consistently implemented and adhered to. Regular or random inspections also help strengthen the reputation of businesses by guaranteeing the quality of goods and services produced by the company. Inspection in production planning and control is the process of checking products at various stages to ensure they meet quality standards. This step is crucial to maintain high product quality and identify defects early, preventing faulty items from reaching customers. Inspection Example with Winter Jackets Imagine a factory producing 10,000 winter jackets. Inspection is conducted at multiple stages to ensure that each jacket meets the company’s quality standards. The inspection process typically involves: 1.Raw Material Inspection: Before production starts, the quality team inspects the fabric, zippers, and other materials. They check for things like fabric thickness, color consistency, and zipper durability. Example: If the fabric is too thin or has visible flaws, it’s rejected to prevent jackets that might wear out quickly. 2.In-Process Inspection: Quality checks happen during key steps of production, such as after Cutting, Stitching, and Zipper Attachment. This helps detect issues early, saving time and resources by preventing flawed products from moving forward in the process. Example: After Stitching, inspectors check for issues like uneven seams or loose threads. If a defect is found, the jacket is pulled aside for rework, ensuring it meets standards before moving to the next step. 3.Final Inspection: After all production steps are complete, a thorough inspection takes place. Inspectors examine each finished jacket for issues like proper stitching, smooth zippers, correct sizing, and overall appearance. Example: Inspectors might zip and unzip each jacket to ensure the zipper works smoothly and doesn’t snag. They also check for consistent stitching and make sure the jacket’s insulation is evenly distributed. 8. Correction ▪ Correction in production planning and control is the process of identifying and fixing issues that arise during production to prevent delays and maintain product quality. ▪ When an issue is discovered, corrective actions are implemented to address the root cause, prevent further errors, and get the production process back on track. ▪ Once the above-mentioned steps are performed and there are issues or areas for improvement that were identified, this is the step where they can be modified. ▪ Correction enables businesses to further enhance their production process and implement planning and control techniques in a more efficient manner. Correction Example with Winter Jackets Let’s say a factory is producing 10,000 winter jackets. During production, several problems may arise that require immediate corrective action to ensure the jackets are produced to quality standards and on time. Here are a few examples of how correction might be applied in different scenarios: 1. Material Quality Issues Problem: During the initial inspection of raw materials, the quality team finds that some fabric is too thin and doesn’t meet the insulation requirements. Correction: The production team contacts the supplier to replace the defective fabric with new material that meets the specifications. Production might be paused briefly, but this corrective step ensures that jackets are warm enough for customers and prevents subpar items from being produced 2) Human Error Problem: Some workers accidentally stitch sleeves incorrectly, making them too tight. This error is noticed during in-process inspection. Correction: The defective jackets are sent back to rework, where the sleeves are fixed according to specifications. Additionally, the workers receive quick retraining on the correct stitching technique to prevent this mistake from recurring. This correction minimizes rework time and maintains the quality of the final product.  PRODUCTION DEVELOPMENT Product development includes a product's entire journey, from the initial idea to its market release and later. The objective of new product development (NPD) from a business standpoint is to satisfy consumer demand to cultivate, maintain and increase a company's market share. From a customer standpoint, it's to ensure a product's value as a quality good or service. Not every product will appeal to every customer or client base, so defining the target market for a product is a critical step that must take place early in the product development process. Organizations should conduct quantitative market research at all phases of the design process, including before the product or service is conceived, while the product is being designed, and after the product has been launched. Some organizations have product development centers that make products. For example, Alphabet Inc., Google's parent company, launched a product development center in Nairobi, Kenya, to position itself to serve a growing base of internet users. Product development frameworks Although product development is creative, it requires a systematic approach to guide the processes required to develop, test and get new products to market. Organizations such as the Product Development and Management Association as well as the Product Development Institute help businesses select the best development framework for a new product or service. This framework helps structure the actual development of the product. Development frameworks, such as the fuzzy front end (FFE) approach, define the steps that should be followed early in the development process, but leave it up to the product development team to decide in which order the steps make the most sense for the specific product that's being developed. The five elements of FFE product development are as follows: 1)Identification of design criteria. Brainstorming exercises are used to identify possible new products. 2)Idea analysis. A closer evaluation of the product concept includes market research and concept studies to determine if the idea is feasible and within a business context that's relevant to the company or to the consumer. 3)Concept genesis. This involves turning an identified market opportunity into a tangible concept. 4)Prototyping. A rapid prototype for a product concept is created. 5)Product development. This is the actual creation of the product.  Other frameworks, such as design thinking, have Iterative steps that are designed to be followed in a particular order to promote creativity and collaboration. The five steps of design thinking are as follows: 1.Empathize. Learn more about a problem from multiple perspectives. 2.Define. Identify the scope and true nature of the problem. 3.Ideate. Brainstorm solutions to the problem. 4.Prototype. Weed out unworkable or impractical solutions. 5.Test. Solicit feedback. Who is involved in the product development process? One or more product managers typically oversee and coordinate product development activities. However, these tasks are typically collaborative and involve multiple teams working in tandem throughout an organization. The people and groups involved in product development include the following: Product management. Product managers keep tabs on each team's progress towards achieving a final product and ensure they're operating on schedule. They draft a product roadmap as well as define the expectations and deliverables for the different product teams based on the roadmap. They then coordinate with the teams and people involved to ensure there are no problems or bottlenecks. Engineering. This is the most technical team involved. Engineers have the development skills needed for product development. If the new product is software, the engineers must have programming and testing skills as well as knowledge of development frameworks, such as Agile. Design. These tasks can overlap with engineering duties. Design professionals typically handle prototyping the new product and identifying user experience issues. Sales and marketing. These professionals do market research and analysis to gauge customer interest in the product under development. They're responsible for conveying this information to the other teams. Stakeholders. There are people and groups outside the organization that need to be updated on the development of a new product and might even have to approve it before it's launched. Such stakeholders include board members, investors, contractors, manufacturers, regulatory bodies and government agencies.  To Create a Product Development Plan Identify a product need and business case. Using practices such as test marketing and surveys, organizations can gauge interest in a product. This ensures the product has a strong reason to be created given the business model it's based on. Create a product vision. This covers determining the purpose of the product, what it does, who it's for and what the product design is. Having these details in place also determines the scope of the project and helps project managers craft the guiding principles for the work. Draft a roadmap. Once the project has been envisioned conceptually, an actual roadmap or detailed plan of action can be created. The roadmap aids in identifying what goals should be met when. Implementation teams create schedules, break down significant portions of the project into sprints and generate iterations of the product. Implement the roadmap-With a roadmap in hand, iterations of the product can be made, reviewed and improved upon. This identifies weak areas of the product as well as helps development teams fix and improve it. Continue with development and assessments- Development teams work on enhancements and changes to the product. In this step, customer feedback is gathered to improve the product based on customer input.  EXAMPLES OF PRODUCT DEVELOPMENT Product development is part of every industry and vertical market. The following examples depict how successful product development works in the two different industries. Uber Uber's unique backstory serves as an example of entrepreneurship and seizing the opportunity to develop a smartphone app when smartphones were in their infancy: Idea generation- In 2008, entrepreneurs Travis Kalanick and Garrett Camp began discussing the possibility of using a smartphone app to address the difficulty of getting a taxi ride on a snowy evening in Paris. Product technical design- Uber's app engineers used well-known programming languages, such as Python, Node.js and Java, for development. Concept testing- In 2010, the first Uber ride was requested and taken in San Francisco. Market entry.-In December 2011, the app was rolled out internationally, beginning in Paris. Roomba IRobot's Roomba has an interesting development story. A 2016 New York Magazine article chronicled the early stages of the autonomous robotic vacuum's development Idea generation. The idea for Roomba originated with a do-it-yourself Lego challenge when creator Joe Jones worked at the Massachusetts Institute of Technology Artificial Intelligence Lab. The challenge was to make something innovative from Legos. Idea screening. Jones showed initial concepts to companies -- Denning, Bissell, and Proctor & Gamble -- but they all declined to move forward. Product technical design. SC Johnson invested a couple million dollars in technical development for what would become the Roomba, but it then pulled out of the project because of internal changes at the company. Market entry. IRobot continued to fund the project. In September 2002, less than a year after SC Johnson withdrew financial support, iRobot launched the Roomba.  Product developer qualifications and expectations ❑ Those pursuing product development roles, especially managerial roles, typically earn a bachelor's degree in fields such as sales or marketing. ❑ The day-to-day work includes overseeing the creation of a product development plan and subsequently the actual development. ❑ Product development team members typically have multiple roles, such as researching markets and consumer trends, designing and developing the product, and testing prototypes. ❑ Because they fulfill multiple roles, product developers need diverse skill sets. Some hard skills aspiring product developers might want to have on their resumes include computer-aided design, programming languages, market research and data analysis expertise. ❑ Emerging technologies, such as artificial intelligence, are expected to create new roles in the product development field in the future. Product Classification Product classification refers to the organization of the different types of products that consumers buy. Knowing these classifications can help marketers create advertisements for their company's goods and services. Product classification can help professionals in all levels of business, as it can also help determine product demand, pricing and the primary demographic to which advertisers can target with their marketing campaigns. 1. Convenience products Convenience products describe the items and services that customers purchase on a regular basis with little thought. Typically, consumers use the same or similar brands for convenience products unless they are compelled to do otherwise through an advertisement or availability. For example, dish soap is a convenience product. Another characteristic of convenience products is that they are easy to find. Most consumers can buy dish soap without conducting research or making a special trip to the store for it. Marketers may use more techniques that discount other brands in their campaigns when marketing convenience products. This is because consumers may change their buying habits and switch to a different brand if convinced, such as through a comparison advertisement. For example, a company may market their dish soap to be more effective at removing grease from dishes. Marketers may also spend more time with consumer test groups, to determine how their brand compares to others or create marketing campaigns that get a consumer's attention by surprising them. 2. Informed purchases Informed purchases, also known as shopping goods, refers to the products and services that consumers don't make often and usually perform research before doing so. These types of products can range from more expensive items, such as a house or car, or more regular purchases, such as a pair of shoes. Consumers typically take more time to make informed purchases, which can change the way marketers advertise them. For example, because consumers typically perform more research or have higher standards for these purchases, they may include more information in their marketing campaigns and choose more specific demographic groups to target. For example, a marketing team may choose to target college-aged consumers when creating advertisements for laptops, as this demographic often needs the product. The marketing team might also include more information about the laptop's abilities, such as its graphics quality or operation speed. 3. Specialty items Specialty items are unique products that marketers can advertise to a certain demographic of consumers without worrying about their competition. These products can include innovative goods that are one of a kind on the market or brand-name products that have a loyal fan base. While these items may be more expensive than others, consumers often feel less of a need to deliberate or research their decision to purchase a specialty item. For example, the marketing team for a well-known luxury fashion brand wouldn't need to create advertisements that compare their clothes to other brands or even include detailed information. Instead, the brand's name and reputation alone can encourage consumers to purchase their products. These companies can focus more on building and maintaining customer relationships and brand recognition than distinguishing themselves from other companies. 4. Mandatory purchases Mandatory purchases, also known as unsought goods, are products that consumers buy out of necessity rather than desire. Typically, these products are household or safety items that customers don't feel excited to buy, such as batteries, smoke detectors, air filters and cleaning products. Sometimes, consumers may buy these items out of fear or an obligatory response, such as buying a fire extinguisher or a car maintenance membership just in case of an emergency. When advertising these items, marketing teams can focus more on reminding consumers of their need for these items and building brand recognition that allows consumers to purchase a specific brand with little thought. Some companies choose to feature reasons why you need these items in their advertisements, creating a sense of security through the purchase of their product. For example, a marketing team may advertise a flashlight by showing a person using one in the event of a power outage. "Product Classification Examples 1. Browndages Browndages is a convenience goods brand. It markets itself by highlighting its key feature: bandages for every skin tone. "Messaging like "The perfect bandage for brown skin" is on the brand’s website, packaging, and social media platforms. This makes it stand out against competitors like Band-Aid which usually focus on medical benefits." https://blog.hubspot.com/marketing/product-classification 2. Energizer For many consumers, the first thing they think of when they picture batteries is a pink rabbit holding a drumset. Similar to Charmin, Energizer created a brand mascot that consumers could easily recognize and remember: the Energizer Bunny. "As a convenience good, Energizer needed to increase its brand recognition so that it could stand out among competitors in the store. Now, the brand is widely popular and this is likely due to this marketing tactic.  PRODUCT DESIGN What is Product Design? Product design is the process of envisioning, planning, and creating products that deliver value to customers. It involves a combination of aesthetics, functionality, and user experience to craft a well-rounded and marketable product. Product designers work to balance the technical and artistic aspects of a product, taking into account user needs and market trends. How Product Design Evolves Product design has evolved significantly over the years. In the past, it was primarily focused on the physical appearance and functionality of products. However, with advances in technology, product design has expanded to encompass digital products, software applications, and services. The evolution of this design is closely tied to changing consumer expectations and technological advancements. Importance of Product Design Product design is of paramount importance in product management for several reasons: User Satisfaction: well-designed products cater to the needs and preferences of users, resulting in higher customer satisfaction. Competitive Advantage: A well-designed product can differentiate a company from its competitors, leading to increased market share and profitability. Innovation: Effective product design fosters innovation by pushing the boundaries of what’s possible and addressing emerging market demands. Efficiency: Properly designed products are often more efficient to manufacture, assemble, and distribute, reducing production costs. User Experience: Product design heavily influences the user experience (UX), which, in turn, impacts brand loyalty and customer retention. PRODUCT DESIGN PROCESSES The product design process typically involves several stages, such as: 1. Research Understanding target consumer demands, the competitive environment, and overall market dynamics depend on the research stage of the product design process. Researching consumers, competitors, and markets are all a component of this phase. Market research: Market research is the process of collecting information on the whole market, including market size, industry trends, and potential consumers. Surveys, focus groups, and secondary research may be used in this. User research: Understanding the demands, behaviours, and motivations of the intended audience is known as user research. This can involve empirical study, usability testing, and user interviews. Competitor analysis: Analyzing competitor products and services to determine their advantages, disadvantages, and position in the market. This may involve rival websites, market share analyses, and product reviews. 2. Conceptualization Developing ideas and concepts for the product is the conceptualization phase’s task. This phase comprises ideation workshops, brainstorming sessions, and illustrating and often is collaborative. This phase’s objective is to generate a range of product concepts while considering the results of the previous stage’s study. The concepts have to be original, imaginative, and tailored to the demands of the intended audience. 3. Prototyping Building mock-ups or prototypes of the product is part of the prototyping process, which aims to test and improve the design. Prototypes might be high-fidelity (like 3D models or interactive prototypes) or low-fidelity (like paper drawings or wireframes). Obtaining early input from users and stakeholders is the aim of this phase in order to detect any usability problems or design defects. The design can then be improved upon in order to provide a more user-friendly final product. 4. Testing and Iteration During the testing and iteration process, stakeholders and users provide input, and any required adjustments are made. `. Making sure the product is user-friendly and fits the demands of the intended market is the aim of this phase. The design may then be improved iteratively using the feedback. 5. Final Design The creation of the detailed design, including requirements, materials, and aesthetics, is the task of the final design phase. Working with engineers, designers, and other stakeholders, this step entails producing a finished, producible product. This phase’s objective is to produce a product that satisfies all technical standards and is both visually beautiful and useful. 6. Production Getting the product ready for manufacturing is the focus of the production phase. In order to guarantee that the product is manufactured to the greatest levels of quality, this step entails developing production plans, sourcing materials, and collaborating with manufacturers. Producing a product that is flawless, satisfies all quality requirements, and can be manufactured at a cost that is advantageous to the business is the aim of this phase. 7. Launch and Post-Launch Evaluation The product is released onto the market, and throughout the launch and evaluation stages that follow, its performance is monitored. This phase includes activities pertaining to sales, marketing, and customer service. The goals of this phase are to reach sales targets, ensure customer happiness, and introduce the product to the market in an efficient manner. To further refine the product, this also entails getting feedback from customers. Challenges of Product Design and Solutions Product design comes with its set of challenges, including: Balancing Aesthetics and Functionality: Finding the right balance between a product’s aesthetics and functionality can be challenging. The solution is to involve designers in cross-functional teams and conduct user testing to strike the right balance. Meeting Budget and Time Constraints: Design projects often have strict budgets and timelines. To address this, lean and agile methodologies can be applied to streamline the design process. User Feedback Interpretation: Interpreting user feedback and incorporating it into the design can be be tricky. Conduct usability testing, collect quantitative data, and prioritize changes based on impact. Maintaining Consistency: Consistency across various touchpoints and platforms is essential. Create design systems and guidelines to maintain a consistent brand image. TYPES OF PRODUCT DESIGN WITH EXAMPLES Product design encompasses diverse disciplines, each tailored to specific goals, from functionality and aesthetics to user experience and environmental considerations. Below are four key types of product design, explained with examples to illustrate their impact. 1. Industrial Design Industrial design focuses on creating physical products that are both functional and visually appealing. It involves crafting objects that meet user needs while considering ergonomics, materials, and manufacturability. A classic example is the Dyson vacuum cleaner, which revolutionized home cleaning through its innovative cyclonic separation technology. Designed for efficiency and durability, Dyson's sleek aesthetic and ease of use have made it a household name. Another example is the Apple iMac, whose minimalist design and user-centric functionality redefined the desktop computer market. Industrial design merges art and engineering, ensuring products are practical while exuding a sense of sophistication. 2. User Experience (UX) Design User experience design focuses on creating digital or physical products that offer seamless and intuitive user interactions. The goal is to enhance usability, accessibility, and satisfaction. A prime example is Spotify, the music streaming platform. Spotify’s interface prioritizes ease of navigation, personalized recommendations, and multi-device compatibility, ensuring a delightful user experience. Similarly, Tesla's in-car touchscreens exemplify UX design in automobiles, providing intuitive controls for navigation, entertainment, and vehicle functions. UX design ensures that a product not only performs its intended functions but does so in a way that engages and satisfies the user. 3. Graphic Design Graphic design focuses on visual communication through images, typography, and layout. It plays a crucial role in branding, marketing, and packaging. For instance, Coca-Cola’s iconic logo and bottle design are prime examples of how graphic design can create a timeless and globally recognizable brand. Another example is Apple’s packaging design, which uses clean typography, minimalistic layouts, and high-quality materials to convey sophistication and quality. Graphic design ensures that a product’s visual identity resonates with its audience, making it memorable and appealing.  PLANT LOCATION Plant location means the establishment of the firm/ manufacturing unit in a particular. place. Plant location refers to the choice of the region where men, materials, money, machinery and equipment are brought together for setting up a business or factory. Location decisions are strategic and long term. The selection of appropriate location can be done in two stages: (i) Evaluation of various geographic areas and the selection of an optimum area. (ii) Within each area there is a choice of proper site which can be urban, sub-urban or rural. Need for Selecting Location/Locational decisions generally arise when: Need for Selecting Location/Locational decisions generally arise when: ➤ A new manufacturing/servicing unit is to be put up. ➤ Existing plant operations are difficult to expand due to poor selection of the site earlier Additional facilities required due to growth and expansion. ➤ Changes in the cost and availability of materials, transportation etc. ➤ Lease for the site has expired. ➤ Shift in location due to emerging social, political Or economic problems at the existing one etc. The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building and machinery, equipment. Before a location for a plant is selected ,long range forecasts should be made anticipating future needs of the company. The plant policy, diversification plan for the products, changing conditions, the changing sources of raw materials and many other factors that influence the choice of the location decision. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organization. location should be based on the company's expansion plan and market Objectives of Plant Location: The basic objective of location analysis is to maximize the profits by minimizing the total cost of production associated with the production process. The location of the plant can have a crucial effect on the profitability of a firm and the scope for future expansion. Locational decisions of large projects like fertilizers, sugar mills, nuclear power stations etc. involve economists, ecologists, politicians etc.  FACTORS GOVERNING PLANT LOCATION: There are a number of factors which should be considered when selecting a suitable site. Plant location factors are grouped under three heads: (A) Regional Factors: These factors decide the overall area/ region within the country. They are proximity to the markets, proximity to the sources of raw materials, availability of various utilities, transport and other infrastructural facilities, climatic conditions etc. (B) Site Factors: These factors facilitate the location of specific site within the community. They are availability of land, cost of land, its suitability etc. (3) Proximity to Market: Firms survive only if their products reach consumers on time at reasonable prices. Firms may choose to have proximity to the market, not only to minimize transportation costs, but to provide better service and other benefits like commissions to middlemen can be avoided, easy liaison with dealers, reduction in administrative problems etc. (4) Proximity to Sources of Raw Material: Raw material has to be procured at the right time and reasonable price as it constitutes major portion of the overall cost of the product. Hence it must be ensured that raw materials are source (5) Labour and Wages: Plant location should be such that labour should be easily available in the vicinity so that there is no problem of arranging accommodation. Procuring labour from outside is usually costly and it causes a lot of administrative problems. Skilled employees may be easily available if there are management or engineering colleges in the neighbourhood. Even in the backward area that is well connected by efficient road system, labour may be available However, a backward area completely cut off from any township is likely to face problems of getting manpower. (6) Legislation and Taxation: The policies of the State. Government and local bodies relating to issue of licenses, labour laws, etc. are the factors in selecting or rejecting a particular site. In order to ensure balanced economic growth, both Central and State government offer benefits and incentives for setting up industries in particular locations. Exemption from certain duties and taxes, easy availability of loans from financial institutions, subsidy in electricity charges etc. are some of the incentives offered. (7) Climatic Conditions: Certain industries require a particular type of climate. Like textile mills which require high humidity. However, because of modern air conditioning facilities available nowadays, this problem can be solved to a certain extent. (8) Industrial and Labour Attitudes: Locating facilities in certain areas may not be desirable as frequent labour problems and interruptions in those regions may be harmful to the plant in the long run. Political situation in the state and attitude of government towards labour activities also influences selection of the site for the plant. PLANT LAYOUT Plant layout is the physical arrangement of equipment and facilities within a plant. It is a mechanism which involves knowledge of the space requirements for the facilities and also involves their proper arrangement so that continuous and steady movement of the production cycle takes place. According to Moore, "Plant Layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of best structure to contain all these facilities". "Plant layout is the arrangement of machines, work areas and service areas within a factory“x-George R. Terry Plant layout decisions are strategic ones because once a layout is made, it involves huge cost and disruptions to change/modify it. A good layout results in convenience, safety, efficiency etc., whereas a poor layout causes disruptions, congestion, scrap, inefficiency, rework etc. The problems related to plant layout are generally observed because of the various developments that occur. These developments generally include adoption of the new standards of safety, changes in the design of the product, decision to set up a new plant, introducing a new product, withdrawing the various obsolete facilities etc. Optimizing the layout of a plant can improve productivity, safety and quality of products. Unnecessary efforts of materials handling can be avoided when the plant layout is optimized. The basic objective is to ensure a smooth flow of work, material, people and information. There are probably two levels at which layouts are required. In one, the various departments have to be sited, and in other the items of equipment within a department need to be located.  OBJECTIVES OF A GOOD PLANT LAYOUT: 1) To Maximize Profit: The primary goal of plant layout is to maximize profits by arranging all the plant facilities to the best advantage of total manufacturing of the product. (2) To have Flexibility: A good layout will be one which can be rapidly modified to meet changing circumstances. (3) To Ensure Co-ordination: Entry into, and disposal from, any department or functional area should be in such a manner that it is most convenient to the issuing or receiving departments. Layout requires to be considered as a whole and not partially. (4) To Ensure Maximum use of Volume: Facilities should be considered as cubic devices and maximum use made of the volume available. This principle is particularly useful in stores, where goods can be stacked at considerable heights without inconvenience, especially if modern lifting devices are used. In offices, racking can be installed to minimize use of floor space, (5) To Provide Maximum Visibility: All the people and materials should be readily observable at all the time; there should be no 'hidden places' into which goods or information can get mislaid. (6) To Have Maximum Accessibility: All servicing and maintenance points should be readily accessible. For example, equipment should not be placed against a wall in such a manner that necessary maintenance cannot easily be carried out. (7) To Ensure Minimum Discomfort: Poor lighting, excessive sunlight, heat, noise, vibration and smells should be minimized and if possible counteracted  TYPES OF PLANT LAYOUT 1) Product Layout: This layout is also known as Line Layout or Layout by Sequence. In such layouts, the manufacturing cycle is small with minimum material handling. The space required is small and quality control is easy to exercise. The layout of plant, size of buildings, location of services etc. is such that the material flows in the same direction. Special purpose machines with built - in controls are used to measure output and input are employed. Product layout can be used to achieve a smooth and rapid flow of large volumes of products through a system. It is suitable when the products are standard, have stable demand Examples of product layout are assembly line for automobiles, television sets, motors etc. and also domestic appliances like pressure cookers, food mixing machines etc.  Advantages of Product layouts: (1) The flow of product will be smooth and logical. (2) Manufacturing cycle is small, reducing the work-in-progress. (3) Simplified production planning and control systems are possible. 4) Less space is required since conveyors are used. (5) Reduced material handling cost due to mechanized handling systems. (6) Perfect line balancing which eliminates idle capacity. (7) Manufacturing cycle is short due to uninterrupted flow of materials. 8) Material requirements can be scheduled easily and more accurately. (9) Delivery commitments to customers are more reliable and easy to conform.  Limitations of Product layouts: (1) A breakdown of one machine in a product line may cause disruptions/stoppage of machines in the downstream of the line. (2) All machines may not be used to their full capacity. (3) Lacks flexibility, like a change in product design may require major alterations in the layout. (4) Comparatively high investment in equipment is required. (5) Expansion of the capacity by addition of machines is not possible. (6) Specialization may create monotony. PROCESS LAYOUT The process layout is particularly useful where low volume of production is needed. If the products are not standardized, the process layout is more low desirable, because it has creator process flexibility than other. In this type of layout, the machines and not arranged according to the sequence of operations but are arranged according to the nature or type of the operations. This layout is commonly suitable for non repetitive jobs. Same type of operation facilities are grouped together such as lathes will be placed at one place, all the drill machines are at another place and so on. Advantages of Process Layout (i) It offers better and more efficient supervision through specialization at various levels. (ii) There is a greater flexibility in equipment and man power thus load distribution is easily controlled. (iii) Better utilization of equipment available is possible. (iv) Break down of equipment can be easily handled by transferring work to another machine/work station.  Limitations of Process Layout (i) There are long material flow lines and hence the expensive handling is required. (ii) Total production cycle time is more owing to long distances and waiting at various points. (iii) Since more work is in queue and waiting for further operation hence bottle necks occur. (iv) Generally, more floor area is required. PROJECT OR FIXED POSITION LAYOUT Project or Fixed Position Layout: Project layout includes industries such as manufactures of aero planes, ships, locomotives, heavy machinery others which involve heavy materials and sub-assemblies. In project/fixed- position layouts, the materials or major components remain in a fixed position, and workers, materials, and equipment are moved as needed. Project layout is suitable when one or few pieces of an identical product are to be manufactured. Also when the assembly consists of a large number of heavy parts and the cost of transportation is very high  TYPES OF PURCHASE MANAGEMENT 1. Operational Purchasing Operational purchasing focuses on the day-to-day procurement needs of an organization, ensuring that the necessary materials and services are available to maintain smooth operations. This type of purchase management deals with short-term requirements and addresses immediate operational needs. The process typically involves placing orders for raw materials, office supplies, or components needed for ongoing production. Operational purchasing is characterized by high-frequency, low-complexity tasks, and often includes managing relationships with suppliers for quick and reliable deliveries. For example, a factory might regularly purchase raw materials needed for production, or a retail store may need to replenish stock on a daily basis to meet customer demand. Ensuring that these purchases are made efficiently and on time is crucial for minimizing disruptions. 2. E-Procurement E-procurement involves the use of electronic tools and software to facilitate the purchasing process. This modern approach aims to streamline procurement activities by automating tasks such as order placement, invoice approval, supplier communication, and contract management. E-procurement systems offer benefits such as reduced paperwork, faster processing, improved accuracy, and easier tracking of purchasing activities. Many organizations use e-procurement platforms like SAP Ariba or Oracle Procurement Cloud, which enable users to request quotes, issue purchase orders, and handle supplier negotiations electronically. For example, a business might implement an e-procurement system to automate the process of ordering supplies, which speeds up procurement cycles and reduces human errors. 3. Spot Purchasing Spot purchasing refers to the acquisition of goods or services on an ad-hoc basis, often at market prices. It is typically used for one-time purchases or for items that are difficult to forecast. The flexibility of spot purchasing allows businesses to quickly respond to urgent or unforeseen needs, but it may come at a premium price since suppliers may charge higher rates for immediate delivery or unpredictable demand. For example, a construction company might need to purchase extra building materials unexpectedly after a project scope change, and spot purchasing allows for quick procurement. 4. Consignment Purchasing In consignment purchasing, the buyer takes possession of goods but only pays the supplier once the goods are sold or used. This strategy reduces the upfront costs for buyers while minimizing the financial risk of unsold inventory. It is commonly used in retail environments where products may be sold at varying rates, or in situations where inventory management is uncertain. This purchasing method ensures a steady flow of goods without the immediate capital outlay. For example, a bookstore may receive a consignment of books from a publisher, paying only after the books are sold to customers. 5. Bulk Purchasing Bulk purchasing involves buying large quantities of goods to secure lower unit prices, which can significantly reduce costs for the purchasing organization. Companies often use this strategy for products that have a long shelf life or are used regularly in production, such as raw materials, office supplies, or consumables. Bulk purchasing can be beneficial for companies looking to lock in discounts or deal with price volatility in certain sectors. However, businesses must ensure they have enough storage capacity and that the bulk purchases align with future demand. For example, a manufacturer might purchase large quantities of steel or plastic at a discounted price to meet future production needs. 6) Centralized vs. Decentralized Purchasing Centralized Purchasing refers to the practice where a single department handles all procurement activities for an organization. It allows for better control, negotiation power, and volume discounts. However, it may lack flexibility for individual departments with unique needs. For example, a multinational corporation may have a centralized procurement team that handles purchasing for all its global offices. Decentralized Purchasing means that each department or branch within an organization manages its own procurement activities. This allows for more flexibility and quicker responses to local needs. However, it may result in higher costs due to a lack of centralized coordination. For example, a chain of restaurants may have individual purchasing departments handling the procurement of ingredients and supplies for each location.