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PRODUCTION AND
OPERATIONS
MANAGEMENT
@ Manipal University
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Unit 1 :: PRODUCTION
MANAGEMENTProduction is the process by which raw materials
and other inputs are converted into finished
products. This could be manufacturing of
tangible goods or rendering intangible services
which is referred as production.
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Production Management
Need ??
PM is required for transforming raw materials and
partly, fabricated materials into finished products.
Mean ??
PM does not imply management of productive process
alone, but it covers all there activities which go into
the making of production.
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To make production a concrete reality, one ,must pay heed to the
factors of production like land, labour, capital and organization, or to
speak in the language of business (5Ms), materials, men, money,
machines and methods.
Production management requires work of planning and control
pertaining to each of these factors of production.
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Production can be studied in 3 angles
System
OrganizationalFunction
Decision Makingin Production
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Production system model comprises:
i. Production system,
ii. Conversion sub-system and
iii. Control sub-system.
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Production as Organisational function
The conversion sub-system is the core ofproduction system and is also considered as the
heart of production function.
Every organisation has a production function /
department regardless of the purpose/business it is
involved.
This production function / department plays the
key role in meeting the business objectives of theorganisation.
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Decision Making in Production.
Operation managers are required to make a series ofdecisions in the production function.
The decisions made by operation managers about theactivities of production systems tend to fall into threegeneral categories, viz.,i. Strategic decisions
ii. Operating decisions
iii. Control decisions
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Work Of Production Manager ? Production planning
Production control Inventory control
Maintenance
Replacement Cost control
Work System Design
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Functions of production management
To identify the new product.
To design the new product.
Process design and planning.
Design of layout.
Design of material handling system.
Capacity planning.
To forecast the demand.
To find out the requirements of Various FOP.
To plan the production activities.
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To select and implement a method to produce
a product.
Production control. Inventory control.
To carry out the maintenance activities as per
schedule.
Replacement.
Cost control.
Work system design.
To arrange for various service such asmaintenance, material handling, storekeeping,
inspection and quality control.
To utilize effectively the FOP.
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Importance of Production
FunctionProduction function can offer competitive
advantage to a firm in the following areas:
Shorter new-product-lead time
More inventory turns Shorter manufacturing lead time
Higher quality
Greater flexibility Better customer service
Reduced wastage
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Production Management and
Operations Management Production management refers to the application of
management principles to the production function ina factory. In other words, production managementinvolves application of planning, organising,directing and controlling to the production process.
Operations management is the process in whichresources/inputs are converted into more usefulproducts
Production management and operations managementare differentiated based on tangibility's of finishedgoods/services
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Characteristics of Modern Production
and Operations Function
1. Manufacturing as Competitive Advantage
2. Services Orientation
3. Disappearance of Smokestacks4. Small has Become Beautiful
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Recent Trends in Production/Operations
management
1.Global Market Place
2. Production/Operations Strategy
3. Total Quality Management (TQM)
4. Flexibility
5. Time Reduction
6. Technology7. Worker Involvement
8. Re-engineering
9. Environmental Issues
10. Corporate Downsizing (or Right Sizing)
11. Supply-Chain Management12. Lean Production
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Integrated Production Management
Indian industries spends billions of dollars on
warehousing, inventory control, physical distribution,
production management etc.
In 1980s, problems like:Labor shortage, increased global competition, shortage
& rising cost of energy, need for increased
productivity, increased cost of carrying inventories,
increased attention to quality & reindustrialization
influences the need for improved management.
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According to the need of improved managementof materials in the factory & warehouse,production management is included inMaterial Management.
MATERIAL MANAGEMENT: it is procuring,storing, handling, controlling, packaging,
inspecting & transporting materials as well asproviding customer service.
In general: it can be defined as providing safelythe right amount of the right material at theright place, at the right time, and at the rightcost without damage.
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Today we have factories with segregatedtechnology. We need technologicallyintegrated factories. It will become a reality inindividual companies only if strategicmanufacturing plans are developed & suchplans include material handling strategies.
Attempts by industries to implement automationin manufacturing have tended to createislands of automation, rather than automatedsystems.
Robots, flexible manufacturing systems,numerically controlled machine centres etc. aregood examples.
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System Productivity
Rapid technological advancement, futuristic
manufacturing equipment & processes,
networked systems tend to become more &
more complex.
This has necessitated the organisation to have
effective and efficient systems and procedures.
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Key aspects of System Productivity
Analytical Supply Chain Management
Solutions
Scientific ABC analysis
Dynamic control of Inventory
Dynamic scheduling-fulfillment-based
planning through ERP Broad based Outsourcing
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CAPITAL PRODUCTIVITY
Capital:- It refers to financial wealth, especially that
used to start or maintain a business, sometimes
referred to as Cash flow.
Capital deployed in plant, machinery, buildings,distribution system etc.& it need to be productive.
Reasons for low productivity:
Demand fluctuations Uncertainties of production owing to breakdowns
Inventories
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Various Methods Of Capital
Productivity
Outsourcing
Methods of Improvement
Balancing of workstations Rationalization of packaging methods
Quality circles
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LABOR PRODUCTIVITYProductivity: proper utilization of available
resources to achieve the best results withminimum cost.
Frederick W. Taylor in his "Task Study" said,
"Human work Can be made infinitely moreproductive not by 'working harder' but by"working smarter'.
How to increase labor productivity:-
Balancing operations in assembly line
Reallocation of workers
Setting up productivity norms and evaluationof Production Operations
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Labour productivity is equal to the ratio between a
volume measure of output (gross domestic product or
gross value added) and a measure of input use (the
total number of hours worked or total employment).
labour productivity = volume measure of output /
measure of input use
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Factors effecting the Labor
productivity(1) physical-organic, location, and technological
factors;
(2) cultural belief-value and individual attitudinal,
motivational and behavioural factors;(3) international influencese.g. levels of innovativeness
and efficiency on the part of the owners and managers of
inward investing foreign companies;
(4) managerial-organizational and wider economic and
political-legal environments;
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(5) levels of flexibility in internal labour markets
and the organization of work activitiese.g.
the presence or absence of traditional craftdemarcation lines and barriers to occupational
entry; and
(6) individual rewards and payment systems, andthe effectiveness of personnel managers and
others in recruiting, training, communicating
with, and performance-motivating employees
on the basis of pay and other incentives.
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Training
In practical terms, Training would mean
imparting competencies to do a particular act
in a particular manner.
Training helps
Improve Productivity
Reduce CostMake Production Competitive
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Computer Integrated
Manufacturing (CIM)
Integration occurs when a broad range of
manufacturing & supporting activities are
linked.
Activities include engineering design, production
planning, shop control, order processing,
material control, distribution etc.
Information flow across all functions takes place
with the help of computers.
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CIM helps in avoiding accumulation of materialsresulting in better throughput & betterutilization of space. Identifying shortages,ensuring faster deliveries becomes easy withCIM.
Transmission, processing, distribution &feedback happen with CIM resulting rapidproduction & reduced indirect costs.
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Split- Case Order Fulfillment
Methods & Mechanization
Split-case order: Fulfillment of orders which
need different merchandise in different
quantities requires that cases will have to be
split, and pieces picked, repacked in cartons &ship to the customer.
Mechanization: it helps in improving
identification, pick-up & repacking thematerials in addition to relieving monotony of
the workers.
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ORDER PICKING METHODS
Items should be picked & packed in a logical manner &assigned to personnel as per customerrequirements, so that their productivity ismaximized.
Accuracy of fulfillment of order is ensured by 2 basic
factors:1. Order Extent- It is defined as the number of order to
be picked simultaneously by a picker in anassignment.
Discrete order: Single order is selected at a time. Batch order: the merchandise requirements of many
orders are put together & selected for pick up in thegeographical area which is covered in a single pass.
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Coverage extent: the physical area to be traversed by the picker inselecting merchandise for an assignment within the pickingzone. The zones are identified within the picking area.
Tour picking: the entire picking area is considered for picking
merchandise.SORTING- It is done for the purpose of easing the operation of
matching orders, merchandise & the customers for whom theyare done. Sort immediate or by merging a number of order &batches are made to consolidate the priorities for execution.
This method is called Merge & Sort.ROUTING: when orders are routed among the zones where picks
are required, we call them Routing the picks. When orders are
routed from zone to zone, in a particular order, whether any
picks are there or not, we call them Chaining.When multiple zones are covered simultaneously in different
zones we call themparallel routing.
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ORDER PACKING METHODS
When split-case is executed it becomes
necessary that the merchandise is repacked for
shipment to meet the requirements of the
customers.
In first method, they are picked & packed. This
method is used where customer use the
merchandize directly.
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CLASSIFICATION SCHEMES
Discrete Order Picking or Batch Order Picking
Z one picking or T our picking
BS Batch order picking-sort immediate
BM Batch order picking- sort immediate
ZR Zone picking with routing
ZC Zone picking with chaining
ZP Zone picking in parallel.
For example: BSDZCA- batch order picking, sort
immediate discrete order picking, zone picking with
chaining and Assemble.
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CHOICE OF OPTIMAL
FULFILLMENT STRATEGIESGeneral order characteristics:
Number of line-items
Quality of pieces per line- item
General order categories:
1. Wholesale distribution
2. Retail distribution
3. Direct marketing
4. Consumer DistributionThe performance measures to be satisfied by the choice
of strategy are to minimize the costs involved &maximize desirable characteristics.
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Communication of Picking Directives
For efficient process of order picking by personnel, weneed accurate, timely & sufficient information.
Various Techniques:-
1. Reports- Customers order either in the printed
format generated by the customer or converted to oneby the marketing deptt., pick lists, packing slips,
stock location reports, delivery notes.
Labels: These labels are bar coded for item sorting &order verification.
Radio frequency Terminals: coding & bar coding for
identifying orders for routing & sorting.
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2. Display Light- These computer activated
lights are used to direct order selectors to items
& locations to pick order or batch
requirements. They call for the attention of thepersonnel & alert them.
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Order Picking & Packing
EconomicsThe main cost factors can be divided into two
categories: Capital Costs & Operating Costs.
Capital costs- it includes facilities, material handlingsystems, weighing systems, supporting & facilitiesgoods which are used over a long time.
Operating Costs- include labor, consumable supplies,insurance, utilities, taxes etc.
Incidental costs- those associated with damages,resolution of errors, return handling, inventoryshrinkage etc.
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Space & Storage Equipment
Costs
Split case picking & packing functions & the
space required for them can be broadly
categorized as-
1. On line storage
2. Replenishment aisles
3. Picking aisles
4. Packing work space
5. Material handling space
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Storage Density Vs. Velocity
Storage Density refers to quantity of material or
number of items that can be stored in a unit of
volume, say 10 cubic meter.
Velocity refers to the speed with which materials
are moved to the next point in the supply
chain.
The major costs that are necessary to be incurred
for an on-line storage system are space &
equipment costs.
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Capital Costs for on-line storage
Mechanization Costs
Picking and Packing costs
Order assembly and packing system costs.