Production management, also known as operations management or manufacturing management, is the process of planning, organizing, directing, and controlling. The production process ensures the efficient and effective creation of goods and services. It involves overseeing the conversion of raw materials, labor, and other inputs into finished products that meet customer demands and quality standards.
Key aspects of production management include:
Planning: Production managers develop production plans that outline the objectives, strategies, and resources needed to achieve production targets. This includes determining production schedules, resource allocation, and capacity planning.
Design and Process Engineering: In collaboration with engineers and designers, production managers develop and improve production processes to enhance efficiency and reduce costs while maintaining product quality.
Inventory Management: Production managers are responsible for maintaining optimal levels of raw materials and finished goods inventory to avoid stockouts or overstock situations.
Quality Control: Ensuring product quality is a critical aspect of production management. Quality control measures stand implemented to identify and rectify defects, minimize waste, and maintain consistent product standards.
Workforce Management: Production managers oversee the workforce, including hiring, training, and motivating employees to ensure a skilled and efficient team.
Scheduling and Sequencing: Production managers create production schedules that optimize resource utilization, minimize downtime, and meet delivery deadlines.
Cost Management: Production managers stand tasked with controlling production costs, including labor, materials, and overhead expenses, to ensure profitability.
Health and Safety: Ensuring a safe working environment for employees is a crucial responsibility of them.
Lean Manufacturing and Continuous Improvement: Adopting lean principles and implementing continuous improvement initiatives are common strategies used in them to eliminate waste, enhance productivity, and streamline processes.
Automation and Technology Integration: Production managers may explore the integration of automation. And advanced technologies to improve production efficiency and quality.
Efficient production management is essential for businesses to maintain a competitive edge, deliver products on time, and meet customer demands. It involves a blend of strategic planning, technical expertise, and effective leadership to optimize resources and ensure smooth production processes. By implementing best practices in them, organizations can achieve higher productivity, reduce costs, and enhance customer satisfaction.
Explain and Learn, The Strategies of Capabilities in Production Management!
What is Capacity Planning? The production system design planning considers input requirements, conversion process, and output. The concept of the study – The Strategies of Capabilities in Production Management. Capacity Planning defines, Strategic Capacity Planning, and Explaining of Capacity strategies. After considering the forecast and long-term planning organization should undertake capacity planning. Also learn, The Strategies of Capabilities in Production Management!
Capacity is defined as the ability to achieve, store or produce. For an organization, capacity would be the ability of a given system to produce output within the specific time period. In operations, management capacity is referred as an amount of the input resources available to produce relative output over the period of time.
It is a process of governing the production capacity obligatory by a manufacturing unit to meet out their varying demand for their products. It facilitates the organization to achieve their production level during the time of demand. It is the level of input that is obtainable to make the needed product in a particular period of time. It helps the management to take better management decision for optimum utilization of the resource.
In general, terms capacity is referred to as maximum production capacity, which can be attained within a normal working schedule. Capacity planning is essential to be determining optimum utilization of resource and plays an important role decision-making process, for example, the extension of existing operations, modification to product lines, starting new products, etc.
Understand the Strategic Capacity Planning: A technique used to identify and measure the overall capacity of production is referred to as strategic capacity planning. Strategic capacity planning is utilized for the capital-intensive resource like the plant, machinery, labor, etc.
Strategic capacity planning is essential as it helps the organization in meeting the future requirements of the organization. Planning ensures that operating cost is maintained at a minimum possible level without affecting the quality. It ensures the organization remain competitive and can achieve the long-term growth plan.
Strategies of Capabilities:
The Capacity strategies can explain into two types:
The short-term response, and.
Long-term response.
Short-term strategies:
In short-term periods of up to one year, fundamental capacity is fixed. Major facilities are seldom opened or closed on a regular monthly or yearly basis. Many short-term adjustments for increasing or decreasing capacity are possible, however. Which adjustment to make depend on whether the conversion process is labor or capital intensive and whether the product is one that can be stored in inventory.
Capital intensive processes rely heavily on physical facilities, plant, and equipment. Short-term capacity can be modified by operating these facilities more or less intensively than normal. The cost of setting up, changing over and maintaining facilities, procuring raw materials and managing inventory, and scheduling can all be modified by such capacity changes. In labor-intensive processes, the short term capacity can be changed by laying off or hiring people or having employees overtime or be idle. These alternatives expensive, though since hiring costs, severance pay, or premium wages may have to be paid, the scarce human skills may be lost permanently.
Strategies for changing capacity also depend upon long the product can be stored in inventory. For products that are perishable (raw food) or subject to radical style changes, storing in inventory may not feasible. This is also true for many service organizations offering such products as insurance protection, emergency operations (fire, police etc,) and taxi and barber services. Instead of storing outputs in inventory, inputs can be expanded or shrunk temporarily in anticipation of demand.
Long-term Responses:
Capacity expansion strategies- capacity expansion adds capacity, within the industry, to further the objectives of the firm to improve the competitive position of the organization. It focuses on the growth of the Organization by enabling it to increase the flow of its products in the industry. Capacity expansion is a very significant decision; the strategic issue is how to add capacity while avoiding industry overcapacity. Overbuilding of capacity has plagued many industries e.g. paper, aluminum and many chemical businesses. The accountants’ or financial procedure for deciding on capacity expansion is straightforward.
However, two types of expectations are crucial:
Those about future demand, and.
Those about competitors behavior.
With known future demand, organizations will compete to get the capacity on stream to supply that demand, and perhaps preempt such action from others.
Horizontal and vertical integration: Horizontal and vertical integration add capacity, within the industry, to further the objectives of the firm to improve the competitive position of the organization.
Horizontal Integration: Horizontal integration is the growth of a company at the same stage of the value chain. Horizontal integration consists of procuring (related companies, products or processes) the company could start the related business within the firm, which would be an example of internal concentric diversification.
Vertical Integration: Vertical integration is the combination of economic processes within the confines of a single organization. It reflects the decision the decision of the firm to utilize internal transaction rather than the market transaction to accomplish its economic purpose. It is expressed by the acquisition of a company either further down the supply chain, or further up the supply chain, or both.
Backward Integration: In case of backward integration, it is critical that the volumes of purchases of the organization are large enough to support an in-house supplying unit, If the volume of throughputs is sufficient to set up capacities with economies of scale, an organization will reap benefits in production, sales purchasing, and other areas.
Takeover or Acquisitions: Takeover or acquisition is a popular strategic alternative to accelerate growth. Major companies which have been taken over the post-liberalization period include Shaw Wallace, Ashok Leyland, Dunlop, etc. Acquisition can either be for value creation or value capture.
Several tools and techniques are available for the efficient design and development of products. The Concept of study – Explaining of Product Design Tools in Production Management with Techniques for Improving Product Design Process. These tools address all the stages of design and development. Some of the tools that are available for product designers to understand customer’s needs and translate them into meaningful design and manufacturing specifications, as well as some guidelines for incorporating the manufacturing requirements at the design stage.
Understand and Learn, Explaining of Product Design Tools in Production Management.
Understanding Customer Needs: The first step of the product design and development process is to know what exactly the product is going to be. Organizations need various methods by which they can obtain information regarding the needs of the customers.
This can be by:
Market Research:
In market research, the target group identifies, and appropriate sampling is done within the target group. Using structured data collection methods, such as questionnaire surveys and interviews, information solicit from the sample. The information subjects to statistical and other analytical reasoning before arriving at customers’ preferences and needs.
We talk about Production and market systems, laser marking systems running around 30 years. They produce materials such as METALS, PLASTIC, FOILS AND PAINTS, ORGANIC MATERIALS, and other application. LASIT is a company of one hundred people who develop laser marking technologies with passion and dedication. They are big enough to make the difference, but also small enough to take care of every single customer. The Study and Design team ensures traceability, production chain control, brand visibility, and industrial process automation.
Competitive Analysis:
Understanding what the existing offerings are now and how the gaps and problems identified could be eliminated can sometimes offer valuable inputs to the designer. One method of competitor analysis is to “reverse engineer” the product. The competitors’ product is dismantled down to individual components level and some detailed studies are conducted on them. These may sometimes reveal the probable processes utilized in their manufactures such as the choice of materials and their specifications and the relationship between these parameters and performance. Reverse engineering is one crude method of a larger issue of benchmarking.
In the case of benchmarking, competitive product offerings are chosen for detailed analysis. Specific parameters are chosen for the benchmarking exercise. For example, cost, features, performance, ease of maintenance, ease of manufacture, assembly, and distribution are some of the issues on which comparative study may be possible. Once these parameters are identified, data collection and analysis will reveal the positioning of ones’ products vis-à-vis the competitor’s offerings. Another method for competitive analysis is to develop perceptual maps. Perceptual maps are the graphical representation of various competitors offering and that of ones’ own proposed product and/or service.
Quality Function Deployment:
The goal of good product design is to bring out products that satisfy customer’s needs better than those of the competitions. However, the attributes of competitor satisfaction are often qualitative. On the other hand, the product design process results in a bundle of quantitative attributes about the product. The challenge, therefore for a designer is to ensure that the transformation from qualitative attributes to quantitative ones is smooth and complete.
Quality function deployment is a Japanese tool that helps organizations achieve this transition systematically and progressively Quality Function Deployment achieves these transition .in four stages. The first stage links customer needs to the design attributes required. In the second stage, the design attributes form the basis for actions that the firm needs to take to achieve these attributes. The actions identified at this stage are the basis for third staging arriving at the specific decisions to be implemented. In the fourth stage, the implementation decisions drive the process plan to deploy.
Value Engineering:
Value Engineering refers to a set of activities undertaken to investigate the design of components in a designing process strictly from a cost-value perspective. Typically, the design professionals brainstorm various options in conjunction with procurement, personnel, suppliers, and production personnel, concerning the value-cost dimensions of the product being designed.
Usually, several questions are addressed, which include the following:
Can we eliminate certain features from design?
Are there instances of over design of certain components increase the cost?
Are there certain features of the design that cost more than they are worth?
Is it possible to replace the proposed method of manufacture with less costly ones?
Is it possible to outsource some of the components?
Can we eliminate some parts and replace them with standard parts?
Are there opportunities for cost-cutting by developing import substitution methods?
Design for manufacturability:
Design for manufacturability (DFM) is a structural approach to ensure that manufacturing requirements and preferences consider fairly early in the design process without the need for extensive coordination between the two. DFM guidelines address three sets of generic requirements:
Reducing the variety:
They below;
Minimize the number of parts.
Minimize subassemblies.
Avoid separate fasteners.
Use standard parts when possible.
Design parts for multi-use.
Develop the modular design, and.
Use repeatable and understood processes.
Reducing cost:
They are;
Analyze failures, and.
Assess value rigorously.
Considering operational convenience:
They follow are;
Simplify operations.
Eliminate adjustments.
Avoid tools.
Design for minimum handling, top-down assembly, and efficient and adequate testing.
Tools for mass customization:
Mass customization provides a structural set of ideas and tools to provide high levels of customization without increasing the complexity of planning and control operations.
The various tools and techniques of mass customization are;
Employ a variety of reduction techniques.
Promote the modular design, The advantage of the modular design is that with fewer subassemblies (or modules) it will be possible to create a very large number of final products.
Make use of the concept of a product platform. A product platform is a collection of assets that share by a set of products. These assets can be components, including parts, designs, fixtures, and tools or manufacturing processes for manufacturing or assembly.
Techniques for Improving Product Design Process:
Many companies who know for their creativity and innovation in product design fail to get new products into the markets. The problems associated with converting ideas into finished products maybe because of poor manufacturing practices and poor design. Design decisions affect sales strategies, the efficiency of manufacturing, production cost, the speed of maintenance, etc.
A complete restructuring of the decision-making process and the participants in the decision process is essential for the improvement in the design process. Over the wall concept of design i.e., a series of walls between various functional areas must be broken down and replaced with new co-operative interaction amongst the people from various functional areas.
The improvement of the design process can achieve through:
1. Multifunctional Design Teams:
The team approach to product design has proved to be more beneficial worldwide. The participants of the design team include persons from marketing, manufacturing, and engineering, and purchase functions for the effective design process. The critical success factor between success and failure of new product launches is the involvement and interaction of creates – make and market functions from the beginning of the design product.
2. Marking Design Decisions Concurrently Instead of Sequential Decisions:
Concurrent design decisions reduce the time and cost of designs decision. Decisions are overlapping rather than sequential concurrent design is an approach to design that teams. The concurrent design process believes in “Cost plus” prices as contrasted by cost minus pricing in concurrent design.
3. Design for Manufacturing and Assembly (DFMA):
It is a process of designing a product so that it can be manufactured with ease and economically. It also calls design for production. Designing for production is a concept by which a designer thinks about how the product will make as the product designing so that potential production problems caused by design and can resolve early in the design process. This concept believes in simplifying design and standardizing parts and processes used.
The basic principles of DFMA are:
Minimize the number of parts.
Use common components and parts.
Use standard components and tools.
Simplify assembly.
Use modularity to obtain variety.
Make product specifications and tolerances reasonable.
Ensign products to be robust.
4. Design Review:
Before finalizing a design, formal procedures for analyzing possible failures and rigorously assessing the value of every part and components should be followed. The techniques such as Failure Mode Effect and Criticality Analysis FMEGAX Value Engineering (VE) and Fault Tree Analysis (FTA). FMECA is a systematic approach to analyzing the causes and effects of product failures. It anticipates failures and prevents them from occurring.
Value analysis is a design methodology developed by Lawrence Miles in the late 1940s that focuses on the function of the product, rather than on its structure or form and tries to maximize the economic value of a product or component relative to its cost. Fault Tree Analysis (FTA) emphasizes the interrelationship among failures. It lists failures and their causes in a tree format.
5. Design for Environment:
Design for Environment (DOE) involves designing products from recycled materials, using materials or components, which can be recycled. It promotes the concept of green products clean energy and environment-friendly products.
6. Quality Function Deployment (QFD):
Making design decisions concurrently rather than sequentially requires superior co-ordination amongst all the participants involved in designing, producing, procuring, and marketing. QFD is a powerful tool that translates the voice of the customer into the design requirements and specifications of a product. It uses inter-functional teams from design, marketing, and manufacturing.
QFD process begins with studying and listening to customers to determine the characteristics of a superior product. Through marketing research, the consumer’s product needs and preferences define and broken down into categories called “Customer Requirements” and the weight based on their relative importance to the customer.
Customer requirements information forms the basis for a matrix called the house of quality. By building the house of the quality matrix, the cross-functional QFD teams can use customer feedback to make engineering, marketing, and design decisions.
The matrix helps to translate customer requirements into concrete operating or engineering goals. QFD is a communication and planning tool that promotes a better/understanding of customer demands, promotes a better understanding of design interactions, involves manufacturing in the design process, and provides documentation of the design process.
Explaining of Product Design Tools in Production Management, Image Credit to Pixabay.
A successful product development requires a total-company effort. The concept of the Study – Explaining Product Development in Production Management: Standardization – advantages and disadvantages, Simplification, Specialization – advantages and disadvantages, Diversification – advantages and disadvantages, and Automation – advantages and disadvantages. The most successful innovating companies make a consistent commitment of resources to product development, design a new product strategy that is linked to their strategic planning process, and set up formal and sophisticated organizational arrangements for the managing product development process. Also learn, Explaining Product Development in Production Management!
Understand and Learn, Explaining Product Development in Production Management!
The product development process for finding and growing new products consist of eight major steps as explained below;
Idea generation
Idea screening
Concept development and testing
Marketing Strategy Development
Business analysis
Product Development
Test marketing
Commercialization
We shall briefly describe these steps:
Following are:
Idea Generation:
It is a systematic search for new product ideas. A company has to generate many ideas in order to find good ones. The search for new products should be systematic rather than haphazard. Top management should state what the products and markets to emphasize. It should state what the company wants from its new products, whether it is high cash flow, market share or some other objective. To obtain a flow of new-products ideas, the company can tap many sources. Major sources of product ideas include internal sources like customers, competitors, distributors, and suppliers. It has been found that more than 55 percent of all product ideas come from internal sources.
Idea screening:
The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to reduce that number. The first reducing stage is idea screening. The purpose of screening is to spot good ideas and drop poor ones. Most companies require their executive to write up the new product ideas in a standard format that can be reviewed by a new product committee. The write up describes the product, the target market, the competition and makes some rough estimate of market size, product development time and costs, manufacturing costs and rate of return. The committee then evaluates the idea against a set of general criteria.
Concept Development and testing:
Customers do not buy product ideas, they buy the product concepts. The concept testing calls for testing new product concepts with a group of target consumers. After being exposed to the concept, consumers then may be asked to react to it by asking a few questions.
Market strategy development:
The next step is market strategy development, designing an initial marketing strategy for introducing the concept to the market. The market strategy statement consists of three parts:
The first part describes the target market; the planned product positioning, market share and profit goals for the first few years.
The second part of the marketing strategy statement outlines the product planned price, distribution, and marketing budget for the first year.
The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and marketing mix strategy.
Business Analysis:
Once management has decided on its product concept and marketing strategy, it can evaluate the business attractiveness of the proposal. Business analysis involves a review of its sales, cost, and profit projections for a new product to find out whether they satisfy the company‘s objectives.
Product development:
If the product concept passes the business test, it moves into product development. Here, R&D or engineering develops the concept into a physical product. The R&D department will develop one or more physical versions of the product concept, R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted cost. When the prototype is ready it must be tested. Functional tests are then conducted to make sure that the product performs safely and effectively.
Test Marketing:
If the product passes functional and consumer tests, the next step is test marketing, the stage at which the product and marketing program are introduced into more realist marketing setting. This allows the marketer to find potential problems so that these could be addressed.
Commercialization:
Is introducing the new product to the market.
Tools for Product Development:
The following are various product development techniques adopted by different organizations:
Standardization:
This means fixation of some appropriate size, shape, Quality, manufacturing process, weight, and other characteristics as standard to manufacture a product of desired variety and utility e.g. manufacture of television sets of standard size of the screen using standard components and technology; shaving blades are made of standard size and shape to suit every kind of razor. The concept of standardization is applicable to all factors of production namely men, materials, machines and finished goods. These standards can become the basis to evaluate the performance of various components of production in the manufacturing process. In the words of Behel, Smith, and Stackman:
“A standard is essentially a criterion of measurement, quality, performance, the practice established by custom, consent or authority and used as a basis for comparison over a period of time. The setting of standards and the coordination of the industrial factors to comply with these standards and to maintain them during the periods for which they are effective is known as industrial standardization”.
According to Dexter S Kimball of production control operation in the manufacturing, the sense is the reduction of any one line to fixed types, sizes, and characteristics.” Standardization becomes the basis of production control operations and works as a catalyst in directing and operating the working of a business enterprise. It identifies and compares various products, systems, and performances in an enterprise. It is the function of the department responsible for designing the product to provide the guidelines and infrastructure for standardization of the whole system keeping into consideration the designing stage towards standardization may be too expensive to be rectified.
For an organization designing the product without considering the standardization, aspect is of no value of significance. Franklin F. Folts has described the concept of standardization as,” simplification of product lines and concentration on a restricted predetermined variety of output is one common application of the principles of standardization may be extended to all factors in the production process”. Standardization is an instrument to manufacture the maximum variety of products out of the minimum variety of components by means of a minimum variety of machines and tools. This decreases working capital requirements and a reduction in manufacturing costs.
Standardization also implies that non-standard items are not to be manufactured except when consumers order them specially. Some standards are enacted by law viz. automobile windscreen which must be made of safety glass. Usually, there are institutions, societies, and governmental departments that regulate the standards. In a factory, it is best to have standardization committee drawing its members from sales, engineering, production purchasing, quality control, and inspection. Sales department and engineering department have to work closely in effecting changes towards standardization because the older products that have been sold are affected by after-sales service needs. Within an organization, it is the engineering department who sets standards for the materials to be procured and specification of the end products and the mode of testing the products.
Advantages of standardization:
Standardization in designing, purchasing of raw material, semi-finished and finished goods and of the manufacturing process tries to eliminate wastage and reduces the cost of production. Reduction in varieties of raw materials means reduced investments in stocks and less attention to stock control.
Standardize product components reduce tool cost, permits larger and more economical lot sizes of production, avoids losses for obsolescence and reduces capital requirements for work in process.
Production in larger quantities can be planned which results in fewer set-up costs.
By minimizing the operations in the production process it provides facility to introduce mechanization and use of more specialized tools and equipment.
Service and maintenance costs, as well as marketing expenses, are reduced.
Encourages the manufacturer to products of the new style, use, and performance with an object to generate more customers.
The value of the standardized product lying in stocks or in stocks or in transit can be easy for the purpose of advancing loans.
Disadvantages of Standardization:
Product standardization leads to some disadvantages also. These are:
Too much standardization has an adverse effect on the efficiency and morale of the workers. They, in the long run, feel bored and fed-up in doing the same routine again. The spirit of challenge and initiative vanishes with the passage of time.
During the initial process of product Development where frequent improvements and changes may be necessary to bring the product and production process up to the mark, standardization may create obstacles in innovations.
For small-scale enterprises, standardization may not be advantageous.
Simplification:
In production, simplification can be done at two places namely (i) for product or) for work. Simplification in product development is used for products; In fact, simplification should be done before standardization.
In the words of F. Clark and Carrie, “simplification in an enterprise connotes the elimination of excessive and undesirable or ‘marginal lines’ of product to hammer out waste and to attain economy connotes the elimination of excessive and undesirable or ‘marginal lines’ of product to hammer out waste and to attain economy coupled with the main object of improving quality and reducing costs and prices leading to increased sales.”
W.R Spiegel and R.H Lansburg also define,” Simplification refers to the elimination of superfluous varieties, size dimensions etc.” Simplification can be advantageous to both producer and the consumer of a product. These can be listed as:
To the producer:
Eliminates surplus use of materials to provide economy in production cost.
More production increases the inventory size which avoids delays in supply.
Less obsolescence of materials and machinery.
Due to simplification in operation, the efficiency of the production process increase and this leads to more productive due to the scope of better training and learning facility with simplification operation.
Human efforts become more productive due to the scope of better training and learning facility with simplified operation.
After-sales service prospects are minimized.
Production planning and control operations become easy and simple.
Reduction in cost of production leads to more sales.
To jobber-wholesalers and detailers:
Increased turn over.
Sales effort on fewer items.
Reduction in storage space for.
Fewer overheads and handling expenditures.
To the consumer:
Explain it to each one with Advantage and Disadvantage, the following are:
Specialization:
Specialization implies expertise in some particular area or field. It is experienced that as the companies expand the range of their products, manufacturing system, involves more and operations for transforming inputs into output. This often results from an increase in operating cost and a decline in profits. The problem can be solved by identifying the products contributing to losses and then eliminate their production. This will lead to confine the production of profitable items only and consequently a reduction in the number of operation required in the process. The minimization of operation can lead to the use of expert knowledge, skill, and techniques in the production system, the nature and the type of product. The operation required manufacturing it and the nature of the market. Specialization implies the reduction in the variety of products manufacturing by the organization.
Advantages of specialization are:
Specialization and standardization lead to higher productivity.
In the case of output and reduction in per unit cost of production,
Savings in the purchase of raw material and improvement in the quality of the finished goods.
Disadvantages of specialization are:
Less flexibility in adjustment to changed situations.
Monotony and boredom may adversely affect the efficiency.
Diversification:
It implies the policy of producing different types of products by an enterprise. Thus it is reverse of simplification are associated with the nature of the industry e.g. in the case of capital goods industry simplification is more important as the customers give preference to economy, accuracy and performance of the product, whereas in a consumer goods industry diversification leads to produce a variety of goods in; terms of style, shape, color, design etc. The establishment facing tough competition is forced to diversify this activates to capture the market. In general, diversification can be adopted for the purpose of the market. In general, diversification can be adopted for the purpose of (a) utilization of idle/surplus resources, (b) stabilization of sales, (c) to cope with demand fluctuations and (d) for the survival of the organization.
Due care and precautions should be taken in the formulation of diversification policy. Proper and extensive market analysis at different levels of the quality and quantity of the products should be done to determine the levels of profitability. This will help in selecting the most appropriate diversification strategy under the prevailing circumstances.
Advantages of Diversifications are:
Increase in sales due to the production of different kind of products. This also leads to an increase in the volume of business.
Needs of the wider section of the consumer are fulfilled.
Risk minimization’ in the case of quick and unpredictable demand variations.
Uniform and balanced production programme can be chalked out without any consideration of wastage by production by-products.
Elimination of wastage by producing by-products.
Disadvantages of Diversifications are:
Due to the increase in the number of operations, the production process becomes quite complicated and sometimes expensive.
Production Planning and control operation becomes complicated and time-consuming requiring extra Efforts.
The size and the variety of items in; the inventory increases with diversification introducing more problems.
The worker of different types of skill and expertise is required.
Automation in Business Enterprises:
The concept of automation has brought another revolution in the industrial world. This has resulted in phenomenal growth in the industrial arena by providing a wide range of products with minimum cost and efforts.
Automation implies the use of machines and equipment for performing physical and mental operations in a production operation in place of human beings. Automation can be visualized as an electronic brain with the capacity of taking routine and logical decisions connected with the control and planning functions of management. Routine decisions can be like scheduling, routing, dispatching and inspection of modifications of operations to see that the whole system operates according to the planned strategy.
In the absence of any human intervention or activity, automation can be considered as a self-regulating and controlling system. Mechanization provides the self-regulating property and performing manual operations by means of mechanized operations.
Thus automation can be defined as “A system of doing work where material handling, production process, and product design are integrated through mechanization of thoughts and to achieve a self-regulating system.
In automation, the machines and equipment required to perform various operations process are sequents arranged in order of hierarchy of operations. Electronic devices are used to record, store and interpretation of information at various stages of production. Machines are used to operate other machines.
Automation can be done at various levels of the manufacturing system in parts or as a whole. Some of the situations can be:
Handling of raw materials, semi-finished goods or finished goods. Instead of doing the work manually the operation can be done by means of trolleys, conveyor belts, overhead cranes, lifts etc. This eliminates chances of losses due to handling and saves valuable time.
Sophisticated, reliable and efficient machines and equipment can be used in the production process. This will ensure both the quality and quantity of the product desired.
Inspection and quality control operations can be done by means of mechanical devices. This eliminates the chances of human bias and error.
Use of machines and equipment in automation ensures production of high-quality products at minimum cost. This also increases the confidence of consumers in the product and stabilizes the demand for the product. There is a general fear that automation leads to unemployment. But on the other hand operation of machines and equipment in the system need highly skilled and qualified manpower. So the technical skills of the system increase with the reduction in size. It goes without saying that automation ensures the high level of efficiency and capacity utilization.
Advantages of automation are:
Better quality of goods and services,
Reduction in direct labor cost,
Effective control of operations,
Greater accuracy, more output, greater speed,
Minimization of waste,
Production planning and control is to be done in the beginning only,
Working conditions can be improved greatly since much of the work follows an orderly path,
The waste does not come into much contact with the equipment; also the design of the special purpose equipment is usually superior to that of general purpose equipment. This improves overall safety considerably,
Direct and indirect costs, Inventories, Set-up times and lead times are all reduced. Space and equipment utilization is improved,
Since the human inputs in the production are minimized, the quality is also improved. Human beings are more erratic than machines,
Throughput time is reduced and therefore service to the customers is enhanced.
Disadvantages of automation are:
High capital investment,
High maintenance costs and requirement of the labor of high caliber,
Requires highly skilled manpower,
Can create unemployment,
Scheduling and routing operations are difficult and time-consuming,
Restriction in designing and construction of buildings,
Larger inventories,
Continuous power supply,
Automation equipment is highly inflexible i.e. if a new product is to be introduced the existing equipment may have to be salvaged entirely,
Any break down anywhere would lead to complete shut-down.
Understand and Learn, Explain to the Multiple-Regression Analysis!
In the multi-regression analysis, the regression equation is used where demand for the commodity is deemed to be the functions of many variables. Meaning of Multiple-Regression: Multiple regression is a statistical tool used to derive the value of a criterion from several other independent, or predictor, variables. It is the simultaneous combination of multiple factors to assess how and to what extent they affect a certain outcome. Also learn, Explain to the Multiple-Regression Analysis!
The process of multi-regression analysis may be briefly described as:
The first step in multiple regression analysis is to specify the variables that are supposed to explain the variations in demand for the product under reference. The explanatory variables are generally chosen from the determinants of demand, viz. price of the product, the price of its substitute, consumer’s income and their tastes and preference. For estimating the demand for durable consumer goods (e.g. TV sets refrigerators, houses etc,), the explanatory variables which are considered are the availability of credit and rate of interest. For estimating the demand of capital goods (e.g. machinery, and equipment) the relevant variables are additional corporate investments, the rate of depreciation, cost of capital goods cost of other inputs (e.g., labor and raw materials) market rate of interest etc.
Once the explanatory or independent variable is specified, the second step is to collect time-series data on the independent variables.
After necessary data is collected, the next step is to specify the form of the equation which can appropriately describe the nature and extent of the relationship between the dependent and the independent variables.
The final step is to estimate the parameters in the chosen equations with the help of statistical techniques. The multivariate equation cannot be easily estimated manually. They have to be estimated with the help of computers.
The reliability of the demand forecast depends to a large extent on the form of equation and degree of consistency of the explanatory variables in the estimated demand function. The greater the degree of consistency, the higher the reliability of the estimated demand and vice versa. Adequate precautions should, therefore, be taken in specifying the equation to be estimated.
The multiple linear regression equation is as follows:
,
where is the predicted or expected value of the dependent variable, X1 through Xp are p distinct independent or predictor variables, b0 is the value of Y when all of the independent variables (X1 through Xp) are equal to zero, and b1 through bp is the estimated regression coefficients? Each regression coefficient represents the change in Y relative to a one unit change in the respective independent variable. In the multiple regression situation, b1, for example, is the change in Y relative to a one unit change in X1, holding all other independent variables constant (i.e., when the remaining independent variables are held at the same value or are fixed). Again, statistical tests can be performed to assess whether each regression coefficient is significantly different from zero.
Selection of the Forecasting Model: We have discussed several statistical forecasting models for demand estimation in planning and control. As a manager, you now have the task of selecting the best model for your needs. Which one should you choose, and what criteria should you use to make the decision. The most important criteria are:
cost, and
accuracy
Accuracy (forecast error), can be converted into the cost. Costs to be considered in the model selection are:
implementation costs,
systemic costs,
Forecast error costs.
Of these three, forecast error costs are perhaps the most complex to evaluate. They depend upon the noise in the time series, the demand pattern, the length of the forecast period and the measure of the forecast error. Several studies have evaluated and compared the performance of different models. In general, different models are best, depending on the demand pattern, noise levels and length of the forecast period. It is typical to have a choice of several good models for anyone demand pattern when the choice is based only on forecast error.
Combining Naïve Forecasting Models: In comprehensive studies, it has been found that average and weighted average methods of forecasting are different from other forecasting methods. From these studies, we can conclude that forecasting accuracy improves and that the variability of accuracy among different combinations decreases, a number of methods in the average increases. Combining forecast models holds considerable promise for operations. As Makridakis and Walker state “Combining forecasts seem to be reasonably practical alternatives when, as is often the case a true model of the data-generating process or single best forecast method cannot or is not, for whatever reason, identified.”
Behavioral Dimensions of Forecasting: To understand some of the dimensions of forecasting, it is wise to consider human behaviors, because forecasts are not always made with statistical models. Individuals can and do forecasts by intuitively casting forth past data, and they often intervene in other ways in the statistical forecasting procedure as well. A manager may feel that item forecast generated by models must be checked for reasonableness by qualified operating decision makers. Forecasts generated by models should not be followed blindly; potential cost consequences must be considered. Decision makers can take into account qualitative data that are not in the model. Decision makers should use the forecasting model as an aid in decision making; they should not rely totally on the forecasting models for all decisions. Many, perhaps most, forecasts for production/operation management are individual intuitive forecasts.
Intuitive Forecasting as a Judgmental Process: Currently, little is known about the effectiveness of intuitive forecasting. We can, however, analyze some of the mental processes involved. A forecast may be regarded as the culmination of a process consisting of several stages, including information search and information processing. It results in human inferences about the future that are based on particular patterns of historical data presented to the forecaster. We can speculate about a number of environmental factors that may affect intuitive forecasting.
Meaningfulness: Forecasting requires considering a restricted set of information about historical demand. When we discuss job enrichment and job design we see that if repetitive tasks can be made meaningful to the person performing them, positive effects usually result. Imparting meaningfulness to the task of forecasting, then, may be expected to affect the reliability of intuitive forecasting task, the more accurate the intuitive forecast.
Pattern Complexity: Pattern complexity, the shape of demand pattern, is in general, a critical variable in intuitive forecasting, just as it is in model forecasting. Some behavioral studies suggest that intuitive forecasts may perform better on a linear than on non-linear demand patterns. In addition, people apparently try to use the non-linear date in a linear manner.
The degree of Noise: Given sufficient historical data, the forecasting problems are trivial for most cases without noise. Introducing random variations, however, often it brings about a condition called cue uncertainty. Very high noise levels obscure the basis for accurate forecasting, and often the result is lower forecast accuracy.
Individual Variability: Another finding in intuitive forecasting studies which is the wide variability of performance of the forecasters. When comparing forecasters with models, there are typically a few very good forecasters, but there are even more very poor forecasters. If planning and directing production and operation are based on poor intuitive forecasts, these variations in performance can be very expensive.
Individual versus Model Performance: How do individuals compare to naïve forecasting models? In studies, exponential smoothening models, when fit to the historical demands given to intuitive forecasters significantly outperformed group average performance. Only a very few good intuitive forecasters outperformed the models. The operation manager would be wise to consider models as an alternative to individuals. Models generally are more accurate, and if a large number of items must be forecast, the models are more economical.
Forecasting, Planning, and Behavior An excellent literature review and evaluation compare many modeling and psychological dimensions of forecasting, planning and decision making. Many information processing limitations and biases involving human judgment apply to forecast and planning as well. Errors in forecasting procedures are caused by using redundant information, failing to seek possible disconfirming evidence, and being overconfident about judgments. In addition, numerous studies show that predictive judgment of humans is frequently less reliable than that of simple quantitative models.
Forecasting and the Indian Scenario: Some of the more creative and productive organizations in India are to be found among high technology organizations such as Atomic Energy Commission, Indian Space and Research Organization, Bharat Heavy Electrical and Defense Research and Development Organization (DRDO) The participation of private sector in the high technology area has been very limited. The high technology companies in India have been scanning for technology development in the world and trying to develop indigenous equivalent products. And for this, they do forecasting, particularly that of technology, in some measures.
However, barring these few examples, by and large, other organizations have not been using forecasting in a scientific manner. The reasons could be many. One of the main reasons has been that they do not feel the need to survey the environment and forecast future business. The reason behind this has been the country’s erstwhile closure of foreign participation, ensuring secure markets for domestic companies. India has been a seller’s market at least for past half a century. If you could produce something, it could always be sold in a product-starved country.
The situation has changed since the turn of the century but old habits, beliefs, and psychology take time to change. The emphasis, therefore, had been on producing rather than on real proactive marketing. The environmental scan of business /industries stopped at that. Hence, forecasting had indeed been a neglected aspect of management. Now, with the gradual opening up of the economy, the economic scenario has changed due to the increasing participation of the multinational corporations in various areas of business/industry., including infrastructure. The Indian economy is increasingly getting the characteristics of a buyer’s market. The Indian businessman, therefore, has to be very alert about the mumblings in the gangways.
Forecasting models, such as the causal models can now be used to forecast the effect of concession on the corporate tax, customs duty, excise and other areas. Opinion based methods such as Delphi techniques and consumer behavioral surveys have increasing relevance. Monopoly or oligopoly does not need forecasting. Indian industries and businesses are waking up to the fact that it is now a different game. They know that if they do not follow appropriate management basics such as forecasting they risk the danger of being marginalized for a long time to come.
Production Management; means planning, organizing, directing and controlling of production activities. Also, in other words, P.M. involves an application of planning, organizing, directing and controlling the production process. P.M. deals with converting raw materials into finished goods or products. It brings together the 6M’s i.e. men, money, machines, materials, methods, and markets to satisfy the wants of the people. Also learn, the Financial Management, What is Definition of Production Management?
Learn, Explain, Definition of Production Management.
Production and operation management is the science-combination of techniques and systems. That guarantees the production of goods and services of the right quality, in the right quantities and at the right time with the minimum cost within the shortest possible time. The essential features of a production and operation function are to bring together people, machines, and materials to provide goods and services for satisfying customer needs.
Production management also deals with decision-making regarding the quality, quantity, cost, etc., of production. It applies management principles to production. Production management’s a part of business management. It is also called “Production Function.” Production management is slowly being replaced by operations management. The main objective of production management is to produce goods and services of the right quality, right quantity, at the right time and at minimum cost. It is also trying to improve efficiency. An efficient organization can face competition effectively. P.M. ensures full or optimum utilization of available production capacity.
Meaning of Production Management:
Production is the creation of goods and services. It is concerned with transforming the inputs in the form of raw materials, labor, machines, men and money into output i.e. goods and services with the help of certain production processes.
The production function is the most important function in an organization around. Which other activities of an enterprise (viz., marketing, financing, purchasing, and personnel, etc.) revolve. It is pertinent to note that production function should manage in an efficient and effective manner for the achievement of the organizational goals.
In a departmental type of organization, production management is concerned with carrying out the production function. Production management becomes the process of effectively planning and regulating the operations of that part of an enterprise. Which is responsible for the actual transformation of raw materials into finished products. Also, Production managing department more helps in the Business.
Simply stated, production management is concerned with decision making relating to processes for producing goods and services in accordance with the predetermined specifications and standards by incurring minimum costs.
The result of at least three developments:
First is the development of the factory system of production. Until the creation of the concept of manufacturing, there was no such thing as management, as we know. It is true that people operated one type or another business, but for the most part, these people were business owners and did not consider themselves as managers.
Essentially stems from the first, namely, the development of the large corporation with many owners and the necessity to hire people to operate the business.
Stems from the work of many of the pioneers of scientific management. Who was able to demonstrate the value, from a performance and profit point of view, of some of the techniques they were developing.
Definition of Production Management:
It is observed that one cannot demarcate the beginning and end points of Production Management in an establishment. The reason is that it is interrelated with many other functional areas of business, viz., marketing, finance, industrial relation policies, etc.
Alternately, Production and Operation Management is not independent of marketing, financial, and personnel management due to which it is difficult to formulate some single appropriate definition of Production and Operation Management.
The following definitions, also explain main characteristics:
By 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.”
This definition limits the scope of production management to those activities of an enterprise which are associated with the transformation process of inputs into outputs. & the definition does not include the human factors involved in a production process. It lays stress on materialistic features only.
Production Management deals with decision-making related to the production process. So, the resulting goods and services are producing in accordance with the quantitative specifications and demand schedule with minimum cost.
Main functions of production management:
According to this definition design and control of the production system are two main functions of production management.
Production Management is a set of general principles for production economies, facility design, job design, schedule design, quality control, inventory control, work study and cost, and budgetary control. This definition explains the main areas of an enterprise where the principles of production management can apply. This definition clearly points out that production management is not a set of techniques.
It is evident from the above definitions that production planning and its control are the main characteristics of production management. In the case of poor planning and control of production activities, the organization may not be able to attain. Its objectives and may result in loss of customer’s confidence and retardation in the progress of the establishment.
The main activities of production management can list as:
Specification and procurement of input resources namely management, material, and land, labor, equipment, and capital.
Product design and development to determine the production process for transforming. The input factors into the output of goods and services.
Supervision and control of the transformation process for the efficient production of goods and services.
What is the Definition of Production Management? #Pixabay.
