Production & Operations
Management
CHAPTER - 9
What is Production?
Production creates form utility by converting raw
materials and other necessary inputs into finished
products or services, which add value to the end
users.
Example: Production of
Tesla electric cars.
Production vs Manufacturing
People sometimes use the terms production and
manufacturing interchangeably, but the two are
actually different.
Production spans both manufacturing and
nonmanufacturing industries. For example, companies
that engage in fishing, engage in production.
Production Process
Whether the production process results in a tangible
or intangible goods, it always converts input to
outputs.
•
•
INPUTS
Resources
Raw Materials
CONVERSION
PROCESS
• Add Value
•
•
OUTPUTS
Goods
Services
Operations Management
Operations management is the administration of
business operations within an enterprise to achieve
the best quality products and services.
It is, therefore, involved with the most effective
conversion of materials and labor into products and
services to maximize an organization's profitability.
Types of Production
Mass Production: It is a system for manufacturing
products in large quantities through effective
combinations of –
- employees with specialized skills
- mechanization
- standardization
Mass production makes outputs available in large
quantities at lower price than individually crafted
items would cost.
1.
Types of Production
2.
Flexible Production: It allows manufacturing
equipment to be used for more than one purpose,
usually more cost effective for producing smaller
quantity items.
This type of production relies on the expertise and
knowledge of individual workers to innovate.
Example: Toyota and Honda Motors are now using
same plant to manufacture different kinds of cars.
Types of Production
3.
Customer-Driven Production: This system
evaluates customer demands in order to make
the connection between products manufactured
and products bought.
One method is to establish information systems
between production facilities and retailers using sales
data as the basis.
Example: Netflix
Green manufacturing Process
Green manufacturing is the renewal of production
processes and the establishment of environmentallyfriendly operations within the manufacturing field.
In this process workers use fewer natural resources,
reduce pollution and waste, recycle and reuse
materials, and moderate emissions in their processes.
Green manufacturers research, develop, or utilize
technologies and practices to lessen their impact on
the environment.
The Location Design
It is the decision to locate a production facility based
on the concept of time-to-market.
For any type of industry, a production & operations
manager’s facility location decision must consider the
following factors –
- Proximity to suppliers, warehouse and service
operations
- Insurance & taxes
- Availability of employee needs (e.g. housing)
The Location Design
needs.
- Size, skills, and costs of the labor force
- ample space for current and future growth
- Distance to market goods
- Receptiveness of the community
- Economical transportation
- Climate & environment that match the
industry’s needs and employees’ lifestyle.
- Amount & cost of energy services
- Government incentives
Inventory Control
It is function that requires production and operations
manager to balance the need to keep stock on hand to
meet demand against the costs of carrying inventory.
The expenses involved in storing inventory includes
warehousing costs, taxes, insurance, and maintenance.
Companies try to hold least quantity of inventory to
minimize unnecessary cost.
Just-in-Time (JIT) System
Just in time (JIT) is a manufacturing and inventory
system that helps to increase efficiency and
decrease loss.
This supply chain management strategy aims to
align raw material deliverers directly with the
production schedule and customer orders.
Just-in-Time (JIT) System
This essentially ensures that materials are shipped
“just in time” for when the factory is ready to
produce the goods, and the goods are produced “just
in time” to be shipped out to customers or
distribution centers.
Example: Toyota cars, McDonalds, Apple
Quality Control
It involves measuring output against established
quality standards.
Companies need such checks to spot defective
products and to avoid delivering inferior shipments to
customers.
Example: ISO Standards is short name for an
organization whose mission is to develop and
promote international quality standards for
businesses.
The End!