Production and Operations
Management (POM):
An Introduction
Presented by:
Anamika Sharma
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Introduction
• Production and operations management
(POM) is the management of an
organization’s production system.
• A production system takes inputs and
converts them into outputs.
• The conversion process is the predominant
activity of a production system.
• The primary concern of an operations
manager is the activities of the conversion
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process.
DEFINITION OF PRODUCTION
MANAGEMENT
It may be defined as:
(i) The performance of the management activities
with regards to selecting, designing, operating,
Controlling and updating production system.
(ii) It is the processes of effectively planning,
coordinating and controlling the production,
that
is the operations of that part of an enterprise, it
means to say that production and operations
Management is responsible for the actual
transformation of raw materials into finished
products.
Operations Management
Operations
Management
(OM)
Operations management is defined as the
design, operation, and improvement of the
systems that create and deliver the firm’s primary
products and services.
(Development and administration of the
activities involved in transforming resources
into goods and services.)
Processes and
Operations
Internal and
external customers
•
•
•
•
•
•
•
•
Inputs
Workers
Managers
Equipment
Facilities
Materials
Services
Land
Energy
Processes and
operations
1
3
5
2
4
Information on
performance
Outputs
• Services
• Goods
Scope of POM
Maintena
nce
mngt
Locationof
facilities
Material
management
Scope
of p.o.m.
Quality
control
Production
planningand
control
Plant
layout
Product
design
Process
design
Key OM Concepts
• Efficiency - Doing something at the lowest
possible cost
• Effectiveness - Doing the right things to
create the most value for the organization
• Value - Quality divided by price
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Service or Good?
• “If you drop it on your foot, it won’t hurt
you.” (Good or service?)
• “Services never include goods and
goods never include services.” (True or
false?)
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Product
Manufacturing system often produces
standardized products in large volumes. The
plant and machinery have a finite capacity. The
facilities constitute fixed costs, which are
allocated to the products produced. Variable
costs, such as, labor cost and materials costs.
While manufacturing the product use value and
economic values are added to the product.
Hence the product is a store of values added
during manufacture. Because the input costs
and output costs are measurable, the
productivity can be measured with certain
degree of accuracy. Product can be transported
to the markets and stored physically until it is
sold.
Service
Service system present more uncertainty with
respect to capacity and costs. Services are
produced and consumed in the presence of the
customer. We cannot store the service
physically. Because of this the service
organizations, such as Hotels, Hospitals,
Transport Organizations and many other service
organizations the capacity must be sufficiently
or consciously managed to accommodate a
highly variable demand. Sometimes services like
legal practice and medical practice involve
Professional or intellectual judgments, which
cannot be easily standardized. Because of this
the calculation of cost and productivity is
difficult.
Types of production system
Manufacturing
system
Service
system
Continuous
production
Intermittent
production
Batch
production
Mass
production(flow
Processing
production
Job
production
Production system
• The production system is the framework with in
which production activities of an organization
are carried out. At one end of the production
system are the inputs and at the other end
outputs. Input and output are linked by
certain operations or process or activities
imparting value to the inputs. The processes,
operations or activities may be called
production system. The nature of production
system may differ from company to company or
from plant to plant in the same firm.
Basic production system
• Continuous production system
( production to stock or make to
stock).
• Intermittent production system
( production to order or make to
order
(a) Continuous
production system
• It involves a continuous or almost
continuous physical flow of material. It
makes use of special purpose machines
(SPMs) and produced standardized
items in large qualities.
Characteristics
• Division of labor is done more
efficiently.
• Material handling is minimized.
• Small work in progress and less
supervision
Advantages
• Reduced labour cost.
• Reduce material handling.
• Better methods of material control.
• Better return on investment.
Disadvantages
• Adjustment to new situations and
specifications because difficult,
particularly in the present period where
stock demand is causing huge losses
Types of continuous
production
• 1. Mass production
Mass and flow production is a production
system designed to produce several
standard products in mass quantities. This
type of system has a capability to produce
large quantities of products there by
providing the management with the
advantage of economic of scale. Only one
type of product or maximum 2 or 3 types of
products are manufactured in large
quantities and much emphasis is not given to
retail consumer orders.
• Example: petrochemical industry, cement
industry, steel industry, sugar industry,
cigarette industry, fertilizer industry etc.
2. Process production
• Process production is defined as a system
for production where a similar product is
produced continuously in large quantities,
year after year. This system is used for
manufacturing those items whose demand is
continuous or high. Here, single raw
material can be transformed into different
kinds of products at different stages of
the production process.
• Example: wire drawing, alloy steel
manufacturing (ASP, durgapur), rolling mills,
crude oil refinery- kerosene, gasoline, etc.
can be procured at different stages of
production
Characteristic
• Special purpose machines with built
in controls.
• Low skilled labour.
• Negligible work in progress.
• Limited production planning and
control functions
Intermittent production
system
• In this system, the goods are
manufactured specially to fulfill orders by
customers rather than producing against
stock. Here, the flow of materials is
intermittent. Intermittent systems are
those where the production facilities are
flexible enough to handle a wide variety
of products and size (e.g. switchgear
industry). Considerable storage between
operations is required so that individual
operations can be carried out
independently for further utilization of
men and machines.
Characteristics of IPS
• Products are manufactured in small
quantities.
• Highly skilled workers are required.
• Large work in progress.
• Flexible to suit production varieties.
Advantages
IPS
• Can adjust to new situation and
specifications.
• Items can be manufactured
according to order and hence
fluctuations in demand can easily be
taken care of.
Disadvantages IPS
• As production is in small quantities,
the cost of production per unit is
high.
• Initial heavy investment.
• More inventory and large space
required
Types of intermittent
• 1. Job production
• Job production is production of a single complete unit
by one operator or a group of operators. Here, whole
project is considered as one operation and work is
completed on each project before passing on to the
next. Each product is a class by itself and requires a
distinct and separate job for production process. The
system requires versatile and highly skilled labour with
high capital investment.
• Example: bridge building, dam construction, ship
building etc
Characteristics
• Small production runs.
• Highly competent knowledge
supervision
• Large work in progress.
• Discontinuous flow of materials
Batch production
•
.
• Here, items are processed in lots or batches
and a new batch is undertaken for production
only. When the production on all items of a
batch is complete. In fact, batch type
production can be considered as an extension
of job type system.
Example: chemical industry, production of
machine tools and printing press etc.
Characteristics
• Short runs
• Skilled labour in specific trades.
• Large work in progress.
• Flexibility of production schedule
Project production
• It can be defined as a set of activities
performed to produce a single product.
There product here is immobile and
different agencies with different skill sets
are deployed on that product to complete
it.
• Example: road lying companies, construction
companies, large scale fabrication
companies etc.
• Characteristics
• Definite beginning and definite end.
• High cost over runs.
• Scheduling and control.
Difference between cps-Ips
cont
Continuous production
Intermittent production
1.
There is continuous flow of
row material
The flow of row material is in
batch es or lots.
2.
It is not against a specific
order but against a stock
order.
It is against order.
3.
It is not flexible.
It is flexible and can be shifted
to other places.
4.
It include two methods
a. Mass production
b. Process production
It include three methods
Job,Batch,project production
5.
Cost of labour is low
Cost of labour is very high
Operations Management
Decision Types
• •Strategic (long-term)
•Tactical (intermediate-term)
•Operational planning and control
(short-term)
Strategic Decisions
• These decisions are of strategic
importance and have long-term
significance for the organization.
• Examples include deciding:
– the design for a new product’s
production process
– where to locate a new factory
– whether to launch a new-product
development plan
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Operating Decisions
• These decisions are necessary if the
ongoing production of goods and
services is to satisfy market demands
and provide profits.
• Examples include deciding:
– how much finished-goods inventory to
carry
– the amount of overtime to use next week
– the details for purchasing raw material
next month
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Control Decisions
• These decisions concern the day-today activities of workers, quality of
products and services, production
and overhead costs, and machine
maintenance.
• Examples include deciding:
– labor cost standards for a new product
– frequency of preventive maintenance
– new quality control acceptance criteria
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