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PRODUCTION AND MATERIALS MANAGEMENT           PAPER 3.1 : PRODUCTION AND MATERIALS MANAGEMENT                             ...
PRODUCTION AND MATERIALS MANAGEMENT                                   Lesson – 1                             PRODUCTION FU...
PRODUCTION AND MATERIALS MANAGEMENT      These decisions are called strategic decision. They are also long-run      decisi...
PRODUCTION AND MATERIALS MANAGEMENTSCOPE OF PRODUCTION FUNCTIONThe scope of production function is very wide in the presen...
PRODUCTION AND MATERIALS MANAGEMENT      This is a specialized function of process design, plant layout design,      mater...
PRODUCTION AND MATERIALS MANAGEMENTThe responsibility of performing production function varies in different types ofbusine...
PRODUCTION AND MATERIALS MANAGEMENTchanges in product design can contribute greatly to the attractiveness andutility of th...
PRODUCTION AND MATERIALS MANAGEMENTprocurement of raw material and other production inputs at reasonable rates. Itis from ...
PRODUCTION AND MATERIALS MANAGEMENTProduction ManagerProduction manager must concern himself with a number of interrelated...
PRODUCTION AND MATERIALS MANAGEMENT   motor car assembly line production. flow production can be controlled   more easily ...
PRODUCTION AND MATERIALS MANAGEMENT3. Unit Production  It means a type of production where only one article is produced an...
PRODUCTION AND MATERIALS MANAGEMENT     2. The Employees: The employees including the managers get higher        remunerat...
PRODUCTION AND MATERIALS MANAGEMENT                                  LESSON – 2                               PRODUCTIVITY...
PRODUCTION AND MATERIALS MANAGEMENTAccording to J.M.S. Risk, “Productivity is a physical ratio, it relates to thequantity ...
PRODUCTION AND MATERIALS MANAGEMENT   3. Productivity is applicable to all factors of production: The word      productivi...
PRODUCTION AND MATERIALS MANAGEMENToutput and the number of man-hours worked. Symbolically, it may beexpressed as:        ...
PRODUCTION AND MATERIALS MANAGEMENTproduction. it does not refer to the contribution made by labour alone to theproduct.IM...
PRODUCTION AND MATERIALS MANAGEMENTThe term ‘technology is very broad and may include inventions, techniques, andthe vast ...
PRODUCTION AND MATERIALS MANAGEMENT   5. Sociological and Cultural Factors:Sociological factors such as class structure, b...
PRODUCTION AND MATERIALS MANAGEMENTLABOUR EFFICIENCYAlthough efficiency can be calculated for various factors of productio...
PRODUCTION AND MATERIALS MANAGEMENT      vital. The management must also take upon itself the responsibilities of      ful...
PRODUCTION AND MATERIALS MANAGEMENTThe term ‘efficiency’ should be differentiated from ‘effectiveness’. Efficiencyestablis...
PRODUCTION AND MATERIALS MANAGEMENTHowever, productivity is affected not only by the management’s attitude andresourcefuln...
PRODUCTION AND MATERIALS MANAGEMENTReview Questions:  1. explain the concept of productivity. Bring out its importance.  2...
PRODUCTION AND MATERIALS MANAGEMENT                                 LESSON – 3                               ERGONOMICSErg...
PRODUCTION AND MATERIALS MANAGEMENTWork DesignWork design or methods improvement is one of the techniques used often byman...
PRODUCTION AND MATERIALS MANAGEMENT   (1) Method – the way in which work is done   (2) Value – work content of the task it...
PRODUCTION AND MATERIALS MANAGEMENT      Use fewest basic motions from the simplest to the most complex.      Eliminate de...
PRODUCTION AND MATERIALS MANAGEMENT   1) Establishing the method, equipment and workplace condition under      which the j...
PRODUCTION AND MATERIALS MANAGEMENTcould. It is the natural outcome of continuous work – reaction on body, mindand nerves....
PRODUCTION AND MATERIALS MANAGEMENT  7. A tired worker may be unwittingly responsible for damages of machinery     and equ...
PRODUCTION AND MATERIALS MANAGEMENTor methods for performing the tasks which are already existing. Methodsanalysis is made...
PRODUCTION AND MATERIALS MANAGEMENT                                   LESSON – 4                    PRODUCTION PLANNING AN...
PRODUCTION AND MATERIALS MANAGEMENTIn the words of Alford and Beatty, “Production planning and control comprisethe plannin...
PRODUCTION AND MATERIALS MANAGEMENT  2. Intermittent Process Industry: In intermittent process industry, under     batch p...
PRODUCTION AND MATERIALS MANAGEMENT   production plans, and translates them into requirements for men,   machinery and mat...
PRODUCTION AND MATERIALS MANAGEMENT3. SchedulingScheduling is planning the time element of production – i.e.           pri...
PRODUCTION AND MATERIALS MANAGEMENT     The order number;     The quantity to be produced;     Descriptions and numbers of...
PRODUCTION AND MATERIALS MANAGEMENTcompetitive market rates. One thing must be borne in mind that productionplanning and c...
PRODUCTION AND MATERIALS MANAGEMENT     (a) Possession of requisite qualities to understand and perform various         op...
PRODUCTION AND MATERIALS MANAGEMENTThis scheduling technique, developed by Henri Lawrence Gantt (1861 – 1919),is one of th...
PRODUCTION AND MATERIALS MANAGEMENTThere job orders to be processed on three machines are shown. In the ordercontrol chart...
PRODUCTION AND MATERIALS MANAGEMENTInspections vs Quality ControlInspection shall be differentiated form quality control. ...
PRODUCTION AND MATERIALS MANAGEMENT(3) Manufacture the part or product completelyAn organization cannot manage its operati...
PRODUCTION AND MATERIALS MANAGEMENTsame characteristics, the minimum cost-point for each must be determinedfor a final cho...
PRODUCTION AND MATERIALS MANAGEMENT                                   LESSON – 5                               PLANT LOCAT...
PRODUCTION AND MATERIALS MANAGEMENTIMPORTANCE OF PLANT LOCATION  1. Influence on the Cost of Production and Effectiveness ...
PRODUCTION AND MATERIALS MANAGEMENT      that of coordination with government policies. The government’s policy      on lo...
PRODUCTION AND MATERIALS MANAGEMENTminimum transportation cost are near the raw materials and not in the market.Iron and s...
Production and materials management
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Production and materials management
Production and materials management
Production and materials management
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Production and materials management

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Production and materials management BEC DOMS BY BABASAB PATIL

Production and materials management

  1. 1. PRODUCTION AND MATERIALS MANAGEMENT PAPER 3.1 : PRODUCTION AND MATERIALS MANAGEMENT SYLLABUSUnit 1Introduction: Production function – Design of production – Systems – Types ofprocess – Productivity – ErgonomicsUnit – 2Production Planning and Control: Planning – Routing – Scheduling -Despatching – Inspection – Gnatt Charts – Make or Buy DecisionsUnit – 3Plant Location and Layout : Factors influencing plant location – Relocation –Types of layouts – Process and product layout.Unit – 4Materials Management: Concept - Purchasing – Vendor rating – MaterialHandling: Importance – Selection of material handling equipments.Unit – 5Stores Management : Functions – Stores location – Stores layout – Essentials ofgood layout – Stock verification.Unit – 6Inventory Management : Concept – Importance – Techniques. BABASAB PATIL
  2. 2. PRODUCTION AND MATERIALS MANAGEMENT Lesson – 1 PRODUCTION FUNCTIONPRODUCTION MANAGEMENTProduction management is the process of effectively planning, organizing,directing the controlling the production function or production system i.e. theoperations of that part of an enterprise which is responsible for the actualtransformation of materials into finished products. It deals with man – machineorganisation to accomplish both productivity and satisfaction – the desirableend results.Scope of Production ManagementMajor activities included under the production management are: (1) Product planning and development, i.e. evolution of new products and designing of those products on the basis of specific demands received from marketing or sales department. (2) Production administration which deals with three specialized parts of production activity, namely, production engineering production planning, and production control (3) Execution of plans, policies and decisions, i.e. implementation function (4) Department services and departments, e.g. standardization, simplification, specialization, inspection and quality control, inventory control, research and development, diversification, employee amenities etc.Major Decisions of Production Management The are two major areas of responsibilities of production, managementrequiring management decisions. 1. Strategic Decisions: The design of the production system involves decision on many problems such as selection of product, equipment and process, location and layout plant etc. They may need large capital investments. BABASAB PATIL
  3. 3. PRODUCTION AND MATERIALS MANAGEMENT These decisions are called strategic decision. They are also long-run decision. Such major decisions of production management are taken by the top management and not by production or manufacturing managers. 2. Tactical Decisions: The tactical or short-run or recurring decision relating to the operations and control of the production system are usually taken by production manages. These tactical decision are on the problems such as forecasting, production planning, production control, inventory control, quality cost control and productivity. When competitive, economic, social and technological changes occur in the environment of the enterprise new approaches and adoptions are required in both the areas to justify its existence and to ensure steady growth. The production function of a business is concerned with the creation of a product or service required to satisfy customer needs, wants and desires. In any business that supplies a needed product or service, it is quite obvious that activities of product system must be closely related to the customer demand as reflected in the continuous flow of order.PRODUCT FUNCTIONProduction function involves an organized activity for converting materials intoa finished product desired by customers.Production function will be considered most effective when it serves a dualpurpose. 1) It must operate primarily to satisfy customer demand particularly relating to quality, quantity, price and above all timing of delivery as scheduled in the order. 2) It must permit production activities to operate in an economical and efficient manner because cost of production is a vital factor is facing the market competition and in ensuring normal profit or return on the investment. Higher costs may wipe off normal profit and sooner or later enterprise will be wiped out of the market. BABASAB PATIL
  4. 4. PRODUCTION AND MATERIALS MANAGEMENTSCOPE OF PRODUCTION FUNCTIONThe scope of production function is very wide in the present era of intensecompetition and sophisticated technology. The production function in anenterprise is not only concerned with the proper and full use of productionfacilities, utilization of latest techniques of production, and production ofquality goods satisfying the varied segments of customers, but also with thehuman factor. The scope of production function is not fixed. It depends upon amultiplicity of factors. The scope of production function is not fixed. It dependsupon a multiplicity of factors, two more important ones being nature ofbusiness and activity and size of business operations. However, in a largemanufacturing concern, the various activities that generally from part ofproduction function include the following: 1. Production Planning: Production planning deals with the preparation of production programmes, that is, about number and types of product to be manufactured, the technique of production to be employed, the quality specification to be met, the delivery schedules to be adhered to, and utilizing all production facilities with optimum results. Thus, production planning is a comprehensive function which decides in advances about the production objectives and the methods to realize those objectives. 2. Plant (or works) Engineering: This function is concerned with installation of plant and equipment, and provision of plant services (like power, steam, compressed air, water etc., plant and building maintenance; safety precautions; and the like. 3. Purchasing: After production planning and plant engineering, the function of purchasing becomes relevant. Purchasing activity is aimed at meeting the requirements of production department for raw materials, intermediate products, and consumables. In order to be useful, the purchasing activity must pay due attention to such aspects of quantity, quality, source, price, delivery time, planning and control etc. 4. Production (or manufacturing) Engineering: BABASAB PATIL
  5. 5. PRODUCTION AND MATERIALS MANAGEMENT This is a specialized function of process design, plant layout design, materials handling, method engineering, design of tooling and equipment, work measurement etc. 5. Manufacturing: This is the function of actual conversion of physical inputs into outputs of product and services. There could be various operations, depending on the nature of products and production for example, matting, grinding, pressing, cutting, heat treating, welding, finishing etc. or fabrication and assembling. It may be pointed out that the functions of production planning, plant engineering, purchasing and production engineering are undertaken with the object of facilitating manufacturing. They all set stage for the actual manufacturing operations by providing production programmes, routes, schedules and work orders, by installing plant and equipment and making available plant services, by buying raw materials, intermediate products, and consumables, and specifying methods, processes and standards of operations. 6. Production Control: The final activity that forms part of production function relates to production control. Production control mainly deals with bringing actual performance at par with planned performance in terms of quantity and quality requirements, time schedules and cost standards. As such, production control is closely related to production planning.Organizing production functionTo understand how production function is organized in a business enterprise, itis pertinent to know (a) who is responsible for performing production functionin a business enterprise, and (b) what organizational set-up is followed toperform production function in a business enterprise. These aspects are brieflydescribed below.Responsibility of Product Function BABASAB PATIL
  6. 6. PRODUCTION AND MATERIALS MANAGEMENTThe responsibility of performing production function varies in different types ofbusiness enterprises. In sole-proprietary organization, for instance, the owner(i.e. sole proprietor) looks after this responsibility. In partnership firm, theresponsibility of production department can be entrusted to one of the activepartners. In a company, which is generally organized on a large scale, theresponsibility of production function is given a formal shape. A separatedepartment (generally known as Production Department) is created and putunder the charge of an individual (generally known as Production Manager),who functions under the overall guidance, superintendence, and control of theChief Executive (Manager or Managing Directors), or Board of Directors. It isthis organ of company management (i.e. top management) that is responsiblefor taking broad policy decision about production activities.Relationship of production with other functions of businessProduction functions, in a typical manufacturing organisation, operates in anetwork of inter-dependencies and interactions with other major functionssuch as marketing, finance and accounting, personnel, office, and research anddevelopment (R&D). the nature of relationships between production and otherfunctions of business is briefly given below.Production in Relation to Marketing FunctionIn the nature of things, two functions are more closely interrelated than otherfunctions. At every stage, right from conceiving the product idea down toafter-sales service, production and marketing departments have to work inunison. Several decisions in marketing the production have common premisesand inputs. Production designs, sizes and quality ranges have to be determinedkeeping in view the preferences of the various customer groups, as studied bythe marketing people. Decision on introduction of new products, improvementof existing product and elimination of slow-moving and obsolete products haveto be taken in consultation with the manufacturing department. There areseveral areas in which both the departments can cooperate and integrate theiractivities. For instance, new product ideas that may emanate from researchlaboratories attached to production department may be taken up by themarketing department to build up potential customers. Similarly, productiondepartment can furnish details of the distinct technical features of products toadd grist to the sales promotional campaigns. Sometimes even marginal BABASAB PATIL
  7. 7. PRODUCTION AND MATERIALS MANAGEMENTchanges in product design can contribute greatly to the attractiveness andutility of the products.Production in Relation to Finance and Accounting FunctionProduction function is closely interlinked with finance and accounting functionin a business enterprise. Long range and short range financial planning has totake into consideration production costs which are a sizeable component oftotal costs of products. In evaluation of production performance, aspects ofcost minimization get the attention of finance manager. In the task of producton planning, the production people have to depend on costing and otheraccounting units to provide the needed estimates and computations of costs ofalternative product designs, process and plant engineering, methods, processes,standards, and production programmes. Further, any proposal for capitalexpenditure for acquisition and replacement of assets, balancing equipment etc.emanating from production department should be cleared by the financedepartment. Thus, both departments should work in close cooperation witheach other and appreciate the complexities and compulsions of each other’s jobresponsibilities.Production in Relation to Personnel Function The personnel manager in a manufacturing organisation helps the productiondepartment in several matters such as man-power planning, recruitments andselections, training, design or wage incentive systems, discipline and grievancesettlement process, welfare and safety programmes, and relations with labourunions. Apart from these aspects, personnel manager also assists theproduction department in motivating employees and works, in establishingcommunication with them, and in injecting humanism in work units.Production in Relations to Office FunctionLike other functions, production stands in interdependent and interactionalposition with office function. The production function can not be satisfactorilyperformed if an efficient office does not exist in the organisation. It is the officethat will inform the production department, through relevant records, about thetime schedules of production, the quantities of production, and the qualityspecifications of production. it is the office that makes arrangement for the BABASAB PATIL
  8. 8. PRODUCTION AND MATERIALS MANAGEMENTprocurement of raw material and other production inputs at reasonable rates. Itis from the office that raw materials and other supplies are issued to theproduction department, on requisition. It is the office that keeps a periodiccheck on the inventories and ensures their proper management. Thus,production department and office are closely related.Production in Relation to R & D FunctionIn a large sized manufacturing organization there is an organic link between theproduction department and R & D unit. R & D is a melting pot of ideas withregard to products, processes and techniques employed in production. it feedsthe production department with new, improved and innovative product idea andproduction methods. All technical aspects, specifications and designs ofproducts are generally cleared in R & D unit. Likewise, R & D unit has to dependon production department for understanding the environmental setting inwhich production people work, availability and acquisition of plant andequipment, skills of personnel and so on. Manufacturing, industrial and qualitycontrol engineers are also associated with R & D with respect to several aspectsof product engineering. This close inter-relationship between production and R& D needs continuous communication and coordination among them.PRODUCTION SYSTEMA business enterprise may be a manufacturing or service organisation. It mayproduce a product or a service, i.e. provide advice, information, help or anyassistance. In either case it is producing something which did not exist before.Such a business organisation can b e regarded as a system, whose elements areproduction, marketing, finance and personnel relations. A system is a complexunity formed of many and often diverse parts which are interconnected and arealso interrelated. All the parts making a system are subject to common plan forserving a common purpose. A business is a system because the four functionsmentioned above are interrelated and they can be coordinated and integrated toachieve common organisation objectives namely, profit and satisfaction.Production function is regarded as a subsystem of the business firm – a systemwithin a system. It represents a regularly interacting or interdependent group ofitems forming a unified whole. BABASAB PATIL
  9. 9. PRODUCTION AND MATERIALS MANAGEMENTProduction ManagerProduction manager must concern himself with a number of interrelated areas.These areas are: production planning production control quality control methods analysis material handling plant layout inventory control work measurement wage incentives, and working conditionsHe is also involved in other areas incidentally, e.g. plant location, buildingdesign, product development. Similarly under systems approach he isinterested in the decisions made in other functional areas of the business, e.g.marketing, finance and personnel as his department always interacts with thesedepartments. Of course these other areas are not his primary responsibilities.TYPES OF PRODUCTIONThere are three basic types of productions which can be easily identified andwhich affect the complexity of the required production control system. 1. Flow Production It is called on-line or mass production. all the work done on a series of machines (or manual work) flows through those machines in the same sequence. There is no waiting period between the two successive processes. Time taken for each operation must be equalized in order to maintain steady flow of operations. This is done by increasing the number of machines performing larger operations or by altering the content of the operation. The famous example of flow production is the BABASAB PATIL
  10. 10. PRODUCTION AND MATERIALS MANAGEMENT motor car assembly line production. flow production can be controlled more easily and cheaply than batch production. of course, failure in material supply, machines, or quality standards can stop the line and maximum attention is necessary to maintain the flow of materials, machine operations and we must have statistical quality control devices. Flow production is adopted invariably to meet high demand as we can have large output. C A B D ELine (Product) form ofProduct OrganisationCar Assembly Line2. Batch Production If the same sequence of operations on all the work produced in manufacturing section is not there, then the flow production cannot be adopted. In that case, the batch production on a small or a large scale will be preferred. Batch producers may arrange their machine shops so that their similar machines are grouped together. Machines are grouped according to type, e.g. the presses in one area, automatics in another, lathes in another, milling machines in another and so on. This is also called functional layout.Start A A B B B En BABASAB PATIL C C En
  11. 11. PRODUCTION AND MATERIALS MANAGEMENT3. Unit Production It means a type of production where only one article is produced and it is not repeated, except after a long interval. The article is made as per customer’s specific needs. It may have standard elements but those are combined in a unique manner. In practice a factory specializing in unit production may produce more than one of a particular article. As long as the number is small, the organisation for unit production may also serve small – batch production. unit production and batch production have difference only in degree. Unit or jobbing production differs from batch production only in one respect. In unit production, batch qualities are much smaller (only a few articles – custom made) and the variety of components manufactures is much greater than that of batch production. in unit production, the product is costly and the customer wants it designed to suit his special requirements. Benefits of good production management 1. The Consumers: The consumer benefits from higher productivity, better and reliable quality, reasonable price, satisfactory services, and timely as well as speedy delivery of goods. BABASAB PATIL
  12. 12. PRODUCTION AND MATERIALS MANAGEMENT 2. The Employees: The employees including the managers get higher remuneration, stable employment, security of jobs, better working conditions, and above all enhanced personal satisfaction through sense of achievement. 3. The Investors: When the enterprise has good production management, it is prosperous. The investors get higher return of income and their investments obtain capital appreciation also. 4. The Suppliers: The good production management helps bring enduring positive relationship between companies and their suppliers through effective cooperation, better communication and mutual confidence. 5. The Community: Due to better production management, all types of business operating in the community become prosperous. 6. The Nation: When all industries in the national economic, system demonstrate good production management, the entire national economy will accomplish around security and prosperity.REVIEW QUESTIONS 1. What is production function? What is its scope? 2. Bring out the relationship between production and other functions of business 3. What are the different types of production? 4. What are the benefits of good production management? ************ BABASAB PATIL
  13. 13. PRODUCTION AND MATERIALS MANAGEMENT LESSON – 2 PRODUCTIVITYCONCEPT OF PRODUCTIVITYProductivity is the talk of the day and increase in productivity is looked upon asthe key to prosperity at all levels. It refers to the relationship between the resultand the means employed, or, to be more specific, between the product and thefactors used for obtaining it. It seeks to measure the economic soundness ofthe use of the means. Consequently, productivity can be considered to behigher if the same product is obtained with more limited means; it will be loweris the same product can be obtained by a larger quantity of the means./ it willbe maximum when the highest output is obtained with the minimum expenseof resources; it will be the lowest when the resources are not used in the mosteconomical manner with the result that the smallest amount of output requiredthe maximum expense of the resources required for the purpose.Productivity, in simple works, is a tool which aims at measuring relationshipbetween the results achieved (output) and the means employed (input) toachieve the results, in financial and or physical terms, in relation to given timeand conditions.A few definitions of productivity are given below:According to I.L.O. “Productivity is the ratio between the ‘output’ of wealthproduced and ‘input’ of resources used up in the process of production”Peter Drucker, defines productivity as “that balance between all factors ofproduction that will give the greatest output for the smallest effort.”Shri V.K.R. Menon defines productivity as “development of an attitude of mindand a constant urge to find better, cheaper, quicker, easier and safer ways ofdoing a job, manufacturing an article, and providing a service. It aims at theoptimum utilization of the available resources for yielding as many goods aspossible at the lowest possible costs.” BABASAB PATIL
  14. 14. PRODUCTION AND MATERIALS MANAGEMENTAccording to J.M.S. Risk, “Productivity is a physical ratio, it relates to thequantity of goods produced or services given in comparison with the quantityof resources consumed.”To reduce the above description of productivity to precise technical terms,productivity may be described as a relationship between output and input. It isthe ratio of the output (of product) to the input (of factors required forproducing the products) Symbolically. O P = ---------------- IWhere P = productivity, O = output, and I - inputThe output may be measured in terms of the units of goods produced or thevalue of the goods and services produced. The input, on the other hand, refersto the combination of the raw materials, machinery, worker’s time, power,efforts and imagination of the entrepreneur and the managers. A unit of inputcan, therefore be expressed as one worker, or one hour labour time, or onetone of raw material, or one kilowatt of electricity, and so on and so on and soforth. It follows from above that it is possible to calculate and measure theproductivity of each one of the factor comprising the input or of all the factorscombined together. The productivity of capital can, for example, be found outby ascertaining the ratio between the value of the output produced and theamount invested in the production of such output.Characteristics of Productivity 1. Productivity establishes relationship between output and input: Productivity does not study a variable in isolation. It is a measure that established definable relationships between an output and the relative production factor. 2. Productivity is applicable to all kinds of activities: Productivity is a general measure applicable to the various functions of different organizations such as business enterprise and non-business organizations like hospitals, military, government etc. BABASAB PATIL
  15. 15. PRODUCTION AND MATERIALS MANAGEMENT 3. Productivity is applicable to all factors of production: The word productivity has become almost a synonym of ‘productivity of labour’. This is obviously not very true. Productivity may be calculated for labour, capital, power, raw materials and all other factors which exhibit identifiable relationship between output and input. 4. Productivity reflects a general attitude of eliminating wastage and inefficiency in business functioning: The term productivity should not always be taken in its technical sense – i.e. a ratio between output and input. Rather, it is a philosophy, an attitude that aims at making the most economical use of scarce resources. It implies development of an attitude of mind and a constant urge to find better, cheaper, quicker, easier, and safer ways of doing a job, manufacturing a product and providing a service.PRODUCTION AND PRODUCTIVITYThe term production should be clearly distinguished from productivity.Production refers to the volume, value or quantity of goods and servicesproduced in a given period by a worker, plant, firm or economy. It is thesum-total of the results achieved by the various factors used together.Productivity, on the other hand, is concerned not merely with the total value orvolume of output or production, what is more important it shows the efficiencyof production. In other words, productivity is relative to the resources used inturning out a certain amount of physical output, while production is used in amore or less absolute sense. The distinction between the two becomes all theclearer when we find that all increases in production do not necessarily result inincreased productivity. If increase in total output is brought about with anincrease in the input of the factors of production, production will haveincreased, but productivity may actually decline or may remain constant. Thus,if output is just doubled by doubling the capital investment in machinery, rawmaterials, the number of workers etc. production is twice as much as it was inthe beginning, but productivity does not record any rise and is constant.Labour ProductivityAccording to the above description of productivity, it should be possible tomeasure it by dividing the output by the quantity of raw material used or by thekilowatts of electric power consumed, or even by the total time devoted by theworkers to production. the productivity of labour is the ratio between the BABASAB PATIL
  16. 16. PRODUCTION AND MATERIALS MANAGEMENToutput and the number of man-hours worked. Symbolically, it may beexpressed as: O PL = ---------- MHwhere, PL = productivity of labour O = Output in terms of units or quantity or value orstandard time for actual output MH = Number of man-hours spend on production, and Man-hours = Number of workers employed on production x Numberof hours worked.To take an example, if a drill operator marked the centres of three holes on aniron casting and then drilled the three holes on each piece one by oneproducing 100 pieces in 4 hours, the productivity of the operator will be 100/4= 25 per man-hour worked.Of all the factors of production, labour is usually selected as the unit of inputfor the following reasons: Labour occupies a central position in the industrial order for man is both the end and an agent of production. Productivity of labour is the key to higher standard of living Labour is an element of cost in all branches and sectors of productive activity through its precise importance varies from industry to industry. Labour as a factor of production is easily measurable in terms of man-hours spent on production. All other factors of production are subject to laws of mechanics, that is to say, their output increases in a more or less fixed proportion to their input.It must be remembered that labour productivity simply indicates theeffectiveness with which labour is being utilized along with other factors of BABASAB PATIL
  17. 17. PRODUCTION AND MATERIALS MANAGEMENTproduction. it does not refer to the contribution made by labour alone to theproduct.IMPORTANCE OF PRODUCTIVITYHigher productivity is of vital importance for the speedy industrialization andeconomic development of a country. The available resources have to be used insuch a manner that both the total output and the productivity per unit areincreased. In this manner, capital will become available for investment in newplants and projects opening the way to economic advancement.In short, improvement in productivity brings the following advantages to thefirm and the community at large: Reduction in the cost of raw materials )through increase in the productivity of raw materials) Reduction in labour cost per unit of output. Reduction in overheads and power costs per unit of output. Reduction in the price of goods. Increase in wages and salaries (through schemes for sharing the gains of productivity) Increase in reserve fund that can be utilized for expansion and modernization. Better standards of living for people through increase in their incomes and improvement in the quality of goods can be made available at cheaper rates.FACTORS AFFECTING PRODUCTIVITYIndustrial productivity is affected by a wide variety of complex and inextricablyinterwoven factors. They can be categorized as technological, financial,managerial, natural, sociological and cultural, and political factors. The impactof these factors on productivity is studied below. 1. Technological Factors: BABASAB PATIL
  18. 18. PRODUCTION AND MATERIALS MANAGEMENTThe term ‘technology is very broad and may include inventions, techniques, andthe vast store of organized knowledge of doing a work. There is an ampleempirical evidence to show that technology is the major determinant ofindustrial productivity. Specifically stated, technological factors that havegreatly influenced industrial productivity include: the use of specialized andautomatic machines, application of mechanical power, integration of processes,design of plant and machinery, division of labour, simplification andstandardization of products and techniques, product mix, location and layout ofplant, materials handling, size and capacity of plant, rationalization andautomation of manufacturing process and so on. 2. Financial Factors:Finance – the backbone of industry – is essential to high productivity. It is sobecause finances facilitate conduct of research in innovations and technologicalimprovements; introduce schemes of modernization, mechanization,automation and rationalization of production processes, and undertakeprogrammes of upkeep of plant and machinery. 3. Managerial Factors:The energetic, enterprising, far-sighted managerial talents coupled with thespirit of adventure, imagination and vigilance can go a long way in affectingindustrial productivity. All these managerial qualities, can be used forformulating short and long-term organizational plans; devising soundorganizational structure; introducing efficient staffing policies, evolvingappropriate motivational, leadership and communication systems; introducingeconomical and effective systems; and showing bold initiatives in handlingorganizational conflicts and crises. These managerial factors have a bearing onproductivity and help in minimizing wastage and idleness of organizationalresources and increasing their contributions in goal accomplishment. 4. Natural Factors:The natural factors such as physical, geographical and climatic differencesexert significant influence on the productivity of industrial enterprises. Inextractive industries like coal mines, geological and physical conditions directlyaffect the productivity of workers. BABASAB PATIL
  19. 19. PRODUCTION AND MATERIALS MANAGEMENT 5. Sociological and Cultural Factors:Sociological factors such as class structure, beliefs and customs of people andcultural factors such as values, norms and accepted behaviour do affectproductivity of industrial organization. 6. Political Factors:Political factors especially the government’s policies like taxation, financialtariff are major determinants of industrial productivity. Favourable taxationpolicies, granting tax concessions and incentives, may encourage industries toinstall latest equipment and machinery. This has a positive impact on theproductivity of such industries. Liberal financial policy, that makes availablesufficient finances at reasonable rates of interest, would enable the industry tofinance their activities to an uninterrupted manner and show better productivity.Similarly, excessive restrictions on licensing, location, big business, areresponsible for low productivity.INDUSTRIAL EFFICIENCYConcept of EfficiencyApart from productivity, another concept closely related to a production systemis ‘efficiency’. Efficiency is basically an output-cost-input relationship. Asexplained earlier, productivity is a ratio only between output and input, withoutany regard to cost implications. Efficiency, however, centres around threevariables: output, cost and input. Increased output with reduced cost is anindication of high efficiency. The task of measuring the efficiency of a businessunit involves setting up standards of output for various inputs and comparingthe achievements with the standards. Deviations from the standards aremeasured and suitable corrective actions initiated. The corrective actions wouldinclude the revision of the standards themselves. In general, an enterprise maybe deemed efficient if it is able to satisfy a given demand at the lowest possibleof cost besides stimulating the demand. Yet another simplest method ofevaluating the efficiency of an enterprise is in terms of its rate of profit. Thus,efficiency can be measured or defined in terms of cost-minimization,profitability and productivity. BABASAB PATIL
  20. 20. PRODUCTION AND MATERIALS MANAGEMENTLABOUR EFFICIENCYAlthough efficiency can be calculated for various factors of production, but itassumes special significance for labour. Increasing and maintaining theefficiency of labour is vital to produce more goods at less expenditure of timeand energy. Increased labour efficiency means reduced labour cost per unit.Further, an efficient worker would not wear him out easily through unnecessarymotions and exertions.Factors Affecting Labour Efficiency 1. System of Wage and bonus Payment: The various systems of wage and bonus payment (such as Halsey Plan, Rowan Plan, and the like) are introduced to increase the efficiency of the workers. Satisfactory wages enable the workers to have a decent standard of living and turns out a good work as well. 2. Working Conditions: In additions to good wages and systems of bonus payment, the conditions of work also should be satisfactory. The working conditions within the factory must be safe and healthy. These relate to cleanliness, adequate ventilation and lighting, elimination of dust and fumes, sanitary conveniences, drinking water facilities, prevention of over-crowding, fencing of dangerous machinery, reduction of noise, emergency measures in case of the fire accidents etc. 3. Machinery and Equipment: Since the efficiency of workers in a modern factory largely depends upon the machinery, equipment, and tools which they use there, the management should provide them the best possible machinery etc. 4. Internal Organisation: Internal organisation outlines the authority – responsibility relationships of organizational positions. Management should take the responsibility to provide an efficient internal organisation to ensure the smooth flow or work inside the factory. 5. Humane Treatment of Workers: The efficiency of the workers also depends upon the treatment method out to them. 6. Provision of Education and Training: Provision of facilities and incentives to workers to get theoretical and practical education is also BABASAB PATIL
  21. 21. PRODUCTION AND MATERIALS MANAGEMENT vital. The management must also take upon itself the responsibilities of full training of the workers after their recruitment for a given job. 7. Responsible Trade Union Leadership: A strong workers’ association and a competent trade union leadership will go a long way in securing more welfare facilities for the workers, which in turn will increase the efficiency of the workers.SOME INDICES OF EFFICIENCYLabour Efficiency The efficiency of labour is measured through: ratio of actual output to a work standard, the ratio of indirect labour cost to the total pay-roll, the ratio of set-up time required for each direct labour hour; and the ratio of maintenance and repair time for each direct labour hour.Enterprise’s Efficiency For measuring the efficiency of a business enterprise as a whole, the useof financial ratio analysis, technique can be made. These ratios include: percentage of profits before tax to sales, percentage of profits before tax to gross fixed assets, percentage of profits before tax to capital employed, percentage of profits after tax to net worth percentage of value of production to net worth, stock of raw-materials and supplies in month’s consumption for production requirements, and debtors in month’s turnover.SOME DISTINCTIONSEFFICIENCY AND EFFECTIVENESS BABASAB PATIL
  22. 22. PRODUCTION AND MATERIALS MANAGEMENTThe term ‘efficiency’ should be differentiated from ‘effectiveness’. Efficiencyestablishes relationship between output and costs. as the cost of a factordeclines, its efficiency increases. A business enterprise is said to be efficientwhen it is able to achieve its objectives with lowest costs. efficiency is largelyinfluenced by internal factors such as improvement of standardized procedures,reducing waste and raising quality levels. Effectiveness refers to the ability of afactor or variable to achieve its objective. An organisation is said to be effectivewhen it is able to achieve its goals.PRODUCTION, PRODUCTIVITY AND MATERIALS MANAGEMENT-THE BASIC RELATIONSHIPThe production function has some basic characteristics which involve identicalactivities in almost all companies. Information must flow authorizingproduction of specific quantities within a specific period in time. Authorizationmust state, in clear terms, the product specification, quality and performancecharacteristics to be built into the product, either to meet pre-establish salesforecasts or as a routine procedure of replacement of finished goods. Once thisis done, the routing procedure for Materials Management involves a series ofsteps like whether to make or buy, establishing materials requirement,scheduling, placing of orders, follow-up etc.It is difficult to grasp the full implications of materials management withoutproduction and operations, which have pronounced sensitiveness to it. All themanagement systems are designed to raise production and improveproductivity. Productivity has been defined as the ability to produce goods andservices efficiently and economically. But productivity, as defined by ‘outputobtained for a given resources expended’, must not only take into accountdiverse resources employed in the productive process which are fairlymeasurable (both quantitatively and qualitatively) and brought into beingthrough the common medium of ‘money costs’, but must also take into accountsuch intangible factors as management, supervision and control.Cost can furnish, if only with some difficulty, a dependable index of comparisonthrough the common medium of ‘money value’ for bringing together suchdiverse resources like, men, materials, machines as well as capital. reduction incost, therefore, has long been recognized as an effective measure ofproductivity analysis for both inter- firm and intra-firm comparisons. BABASAB PATIL
  23. 23. PRODUCTION AND MATERIALS MANAGEMENTHowever, productivity is affected not only by the management’s attitude andresourcefulness, but also by the day-to-day operation of the productiveorganisation as well its supervision and control. Management must not onlykeep itself abreast of the latest developments and new improvements in theproductive processes but also consistently strive to improve skills, methods andprocedures in relation to materials in order to increase overall productivity.Recent shift of emphasis on materials cost-control has again made itincumbent on management to use materials management as an important toolto reach the basic objectives of economic control of product cost and bettercustomer service. Therefore, the need arises to organize and plan, coordinateand control various activities concerned with materials, which then becomes thebasis for improvement in productivity. This has a far-reaching effect oncorporate goal of profit through elimination of waste and reduction in costs.therefore, it has to be realized that technological changes for improvingproductivity are not confined to technical innovations, plant size andinstallation of modern types of machinery and capital equipment necessary forproduction. It also lies in the inherent nature and quality of materials used inthe production process and the methods employed to handle them, which isreflected in the final output cost via lower cost of production. And here, inorder to optimize production and reduce cost, Materials Management pl.ays thekey role. There may be some dispute over its boundary, but there is no disputeabout its role and contribution to productivity and profit. BABASAB PATIL
  24. 24. PRODUCTION AND MATERIALS MANAGEMENTReview Questions: 1. explain the concept of productivity. Bring out its importance. 2. What are the factors affecting productivity? 3. Distinguish between production and productivity. 4. What do you understood by the term efficiency? What are the factors affecting labour efficiency? BABASAB PATIL
  25. 25. PRODUCTION AND MATERIALS MANAGEMENT LESSON – 3 ERGONOMICSErgonomics has been defined as fitting the job or the machine to the worker.The word is derived from the Greek Ergon (work) and nomos (law). Ergonomicsanalyses and designs work equipment and environments to fit human physicaland cognitive capabilities. It implies recognition of human relations andindividual differences. Ergonomics views management and organisation of workor job primarily from the worker or employee convenience and case. It usesknowledge of anatomy, physiology, psychology and social psychology to reducethe stress and strain on the workers in their work area.It covers three areas: 1. The Work Places: The workers pass major part of their daily life at the work. These areas include layout of equipment and machinery, display of information and controls. 2. General Environment: This refers to work environment and working conditions, such as lighting, noise, vibration, air circulation, industrial hygiene and safety measure etc. 3. Other Factors: These cover industrial fatigue, degree of vigilance and control, typical problems of women, old persons, disabled workers etc.When a worker operates a machines, uses a tool or an equipment, it isabsolutely necessary to ensure that man and machine form a good partnership(on equal terms) so that they have unity and work as a single unit. Hence, indesigning a machine, tool or instrument, in evolving a process of control, inestablishing a flow of information, human element and individual humandifferences must be recognized.Management is naturally interested in discovering more effective and cheaperways to perform work. If cost of production goes down, the organisation canhave rising earning power placing the business in a more favourable situationto face increasing competition. The sole objective of management of work in isto optimize returns on all resources including the human resources with dueconsideration to human valued. BABASAB PATIL
  26. 26. PRODUCTION AND MATERIALS MANAGEMENTWork DesignWork design or methods improvement is one of the techniques used often bymanagement to control labour costs. work design eliminates unnecessary,pain-giving movements and in reality it reduces (not increases) human efforts.A worker can get more work done – without his working any harder.Work design or methods improvement is also called time and motion study ormethods analysis, or work simplification or simply work study.We will deal in detail the following branches of man-machine organization: (1) Work Study (2) Motion Study (3) Time Study and (4) Fatigue Study (5) Methods Study or Analysis 1. Work StudyWork study covers both time study as well as motion or method study to assesshuman effectiveness and to improve methods of production. Motion studyprovides evolution of ideal methods of doing the work. Time study provides theevolution of work measurement device etc. to establish time standards.Objectives of Work Study: The most effective use of plant and equipment The most effective use of human effort The evaluation of human workWork study provides the means to achieve higher productivity under prevailingcircumstances. Work study is associated with two distinct techniques which areinterdependent. BABASAB PATIL
  27. 27. PRODUCTION AND MATERIALS MANAGEMENT (1) Method – the way in which work is done (2) Value – work content of the task itself.Uses of Work Study: It is the best means of raising productivity. It is a universal tool of work reorganization involving minimum capital investment in plant. It can reveal organizational inefficiency due to job structure or job contents. It can eliminate waste of resources. It can help management in planning, controlling and motivating It facilitates production planning and control by providing best means for setting standards of performance. It can evolve humanized man-machine system. 2. Motion Study (A Device of Work Improvement)It is the study of movements, whether of a machine or an operator, inperforming an operation for the purpose of eliminating useless motions and ofarranging the sequence of useful motions in the most efficient order indicatingthere by ‘one best way of doing the work’ according to Gilbreth, the pioneer ofmotion study. “Motion Study is the science of eliminating ineffective, unwantedand wasteful motions. It has to do with the selection, invention and substitutionof effective for non-productive, and wasteful motions. Its end objective is tofind a simpler, easier and better way of performing a job.Management is interested not only in increasing the worker’s efficiency but alsoin reducing or eliminating fatigue due to unnecessary months. The better workmethods aim at reducing fatigue and making the worker more efficient. Thebetter way is usually a faster and simpler way involving fewer motions andinducing less fatigue.Procedure for a Motion Study: Develop a normal and maximum working area. BABASAB PATIL
  28. 28. PRODUCTION AND MATERIALS MANAGEMENT Use fewest basic motions from the simplest to the most complex. Eliminate delay Achieve rhythm and automaticity in motions Improve the work place and Improve the working conditionsAs a result of motion analysis and adherence to the principles of motioneconomy, management can set the standard of ‘how’ to do the job. Thisstandard method forms the backbone of the training programme for newworkers. The new worker can be given detailed instructions as to how he is touse machines, tools, his body etc. The standard method (through motion study)is usually established concurrently with the standard time (through time study)for performance of the job. 3. Time Study (A Device of Work Measurement) Time study, on the other hand, is the are of systematically recording, analyzing and synthesizing the time required to perform a motion or a series of motions. It is the art of observing and recording the time required to do each detailed element of an assigned job or work. Time study’s purpose is to determine how much time is required to perform the job. Taylor, the father of scientific management, introduced for the first time, the concepts of time and motion study for systematic establishment of work standards. Use of Time Study: To establish a fair incentive wage plan To estimate the time and cost involved in new production orders To achieve a uniform flow of work in improving plant layout To help the analysis of work methods during a motion study of jobs. Standard time is the basis for labour cost controlSteps in Time Study: BABASAB PATIL
  29. 29. PRODUCTION AND MATERIALS MANAGEMENT 1) Establishing the method, equipment and workplace condition under which the job is to be done. 2) Selecting the average worker who is to be studied as he performs the task and securing his cooperation. 3) Breakdown of the job into elements suitable for timing purposes 4) Recording time with the help of stopwatch 5) Grading the study 6) Applying relaxation allowances, e.g. personal allowance (3 to 5 pc.), fatigue allowance (3 p.c.), delay allowance (3 p.c.) 7) Determining the time standardThe object of time study and motion study is to establish standardizedperformances. When used together, motion and time study concerns itself withthe analysis of work and the time required to perform it. In current usage itembraces two facts – (1) Determining the most economical and effective method of performing a task. (2) Determining the time required by trained employees working at a normal pace to perform the job.Taylor advocated and emphasized time study of the various components of jobby means of a stopwatch so that it would be possible to determine a fair day’swork scientifically. Gilbreth placed more emphasis on motion study than ontime study and financial incentives. He was conceived that there was one bestway to perform each physical motion necessary in completing a job. Gilbrethsidentified seventeen basic elements in on-the-job motions, which theychristened ‘thebliges’. 4. Fatigue StudyMeaning of Industrial Fatigue: Industrial fatigue is reduced capacity for further work as a consequenceof previous continuous activity, where a worker was trying almost as hard as he BABASAB PATIL
  30. 30. PRODUCTION AND MATERIALS MANAGEMENTcould. It is the natural outcome of continuous work – reaction on body, mindand nerves. It indicates negative appetite for work.Causes of Industrial Fatigue: 1. Unreasonably long working week and/or working hours. 2. Bad plant layout, faulty machine design – leading to unwanted and inconvenient and painful movements. 3. Inconvenient, awkward or bad posture at the work bench – standing, bending position (continuous) for a prolonged period 4. Unfavourable work environment, e.g. defective or glaring light; bad ventilation, noise and vibration. 5. Acute division of labour making the work or the job meaningless, monotonous, tedious. 6. Unpleasant jobs, e.g. repetitive or routine work. 7. Unfavourable personal factors, i.e. bad nutrition, bad health, poor family life, absence of interest etc.Consequence of Fatigue:The following are the consequences of continued activity or excessive fatigue. 1. A tired person is accident-porne. It leads to increased number of accidents which may cause partial or total disability or even loss of human life. 2. It leads to a low rate of output – diminishing returns 3. When a worker is tired, he cannot give proper attention and concentration to his job. He becomes careless. This may increase wastage or spoilage. 4. Fatigue also can reduce quality of output. 5. As it induces mental and physical sickness, the worker may have low morale due to lack of case at work. Low morale is reflected in the form of frustration, disappointment, non-cooperative and grudging temperament. 6. Fatigue leads to physical, mental and nervous debility resulting in higher rate of absenteeism and/or labour turnover. BABASAB PATIL
  31. 31. PRODUCTION AND MATERIALS MANAGEMENT 7. A tired worker may be unwittingly responsible for damages of machinery and equipment or machine breakdown creating further loss in production.In short, non-stop excessive work without suitable rest pauses will beprejudicial to both the parties, employer as well as employees. Above all, itleads to wastage of humand and material resources.Remedies: The management must adopt concrete measures to eliminate or minimizethe adverse effects of industrial fatigue on the business enterprise. (1) Ideal working week is five days or 40 hours week. Two weekend holidays will enable employees to start the routine work with new vigour. (2) Ideal length of working day is 8 hours work per day. This is now universal (3) Rest pauses within the working day. The rest pauses can maintain warming-up effect, interest and enthusiasm in the work throughout the working day. (4) Favourable work environment and working conditions also can prevent to a great extent industrial fatigue. (5) Work study, particularly motion study, can also help the management to reduce undue stress and strain in the performance of a job. (6) Proper plan layout, material handling, designing of machines and equipment to suit the human needs also can reduce industrial fatigue. (7) Job enlargement and job rotation also can reduce boredom. In short, any measure to provide case of work – physical and mental – can ensure reduction or elimination of fatigue and boredom. 5. Methods Study or AnalysisMethods analysis aims to evolve the most effective method of accomplishing agiven task or job. Methods analysis attempts to improve existing methods aswell as develop efficient methods for new tasks to be performed for the firsttime. However, it concentrates more on the improvement of existing methods BABASAB PATIL
  32. 32. PRODUCTION AND MATERIALS MANAGEMENTor methods for performing the tasks which are already existing. Methodsanalysis is made with the help of both motion study and time study.Review Questions: 1. What do you understand by ‘Ergonomics” 2. What is work study? What are its objectives? 3. What do you understand by motion and time study? What are its objectives? 4. What is fatigue? Explain the causes and consequences. What are the remedies to minimize fatigue? ********************* BABASAB PATIL
  33. 33. PRODUCTION AND MATERIALS MANAGEMENT LESSON – 4 PRODUCTION PLANNING AND CONTROLProduction planning and control is one of the most important phases ofproduction management, it is, as a matter of fact, the nervous system of amanufacturing organisation. In manufacturing organisation, it is essential thatproduction is carried on in the best manner at the lowest cost, and the goodsare of right quality and are produced at the proper time. This can be ensuredonly through proper planning of production. but mere planning of productionwill not solve the problem because production plans are not capable ofself-actuating and do not lead to automatic accomplishement. For that theproduction manager has to take certain steps like, he has to regulate workassignment, review the work progress, and devise methods to bring conformitybetween the actual performance and planned performance – so that planschalked out are adhered to and the standards set at the planning stage areproperly attained and improved. This is the function of ‘production control’.Production control, therefore, is a directive function which involves thecoordination and integration of operations and activities of different factors ofproduction with a view to optimizing efficiency. Optimum efficiency isattainable by proper planning of work, laying down of exact routes whichoperations shall follow, correct fixing of time-table within which productiveoperations shall start and come to a close, uninterrupted releasing of ordersand work facilities, and timely initiation of appropriate follow-up steps toensure smooth functioning of the enterprise. In other words, production controlinvolves planning, routing, scheduling, dispatching and follow-up.DefinitionThe concept of production planning and control can be better understood withreference to a few definitions:According to Spriegel and Lansburgh. “Production planning and control is theprocess of planning production in advance of operations: establishing the exactroute of individual item, part, or assembly; setting, starting, and finishing datesfor each important item, assembly, or the finished product; and releasing thenecessary order as well as initiating the required follow up to effectuate thesmooth function of the enterprise.” BABASAB PATIL
  34. 34. PRODUCTION AND MATERIALS MANAGEMENTIn the words of Alford and Beatty, “Production planning and control comprisethe planning, routing, scheduling, dispatching and follow-up functions in theproductive process, so organized that the movements of material, performanceof machines, and operations of labour, however subdivided, are directed andcoordinated as to quantity, quality, time and place.Prof. Koepke production planning and control “as the coordination of a series offunctions according to a plan which will economically utilize the plant facilitiesand regulate the orderly movement of goods through their entiremanufacturing cycle, form the procurement of all materials to the shipping ofgoods at a predetermined rate”.Objectives of Production Planning and ControlBasically production control function involves the coordination and integrationof the factors of production or production facilities to produce a product at anoptimum efficiency. An elaborate definition of production control is given below:“Production control is the function of directing and regulating the orderlymovement of goods through the entire production cycle form the requisitioningof raw materials to the delivery of finished products to meet the objectives of (i)customer service, (ii) minimum inventory investment and (iii) maximumproduction efficiency”.In this sense production control includes planning of production as well asproduction control proper and also inventory control. Production planningcovers setting the requirements of production. Production control coverskeeping production within the planned requirement.Importance of Production Planning and Control 1. Plant’s Nervous Systems: Production planning and control coordinates and regulates all plant operations just as our nervous system regulates and coordinates the breathing and muscular movement. In a large plant involving numerous parts and components to manufacture a final product such as motor car, production planning and control assumes importance. BABASAB PATIL
  35. 35. PRODUCTION AND MATERIALS MANAGEMENT 2. Intermittent Process Industry: In intermittent process industry, under batch production, goods are made as per order. in such industries production planning and control become absolutely necessary to assure deliveries as planned and as demanded by customers. 3. Cost Control: Good production planning and control help optimize the utilization of men, machinery, materials and money through effective planning, organizing motivating and controlling multifarious operations in the plant. The net result is reflected in reducing all costs to the minimum. 4. Developing Economy: In a developing economy, production planning and control is a boon for optimum use of scarce economic resources particularly capital, machinery and equipment. Proper planning and adequate control can accelerate industrial productivity and consequently helps develop economy. 5. Rationalization of Plant Operations: Production planning and control helps rationalization of plant operations and helps optimum utilization of plant and machinery.STEPS IN PRODUCTION PLANNING AND CONTROL 1. Planning 2. Routing 3. Scheduling 4. Dispatching 5. Expediting 1. Planning The first important step in production planning and control is concerned with the careful preparation of production plans. Production plans determine what will be produced and where, at what type, by whom, and how. For detailed planning of operations, the relevant information may be obtained from several sources in the enterprise. Information about quantity and quality of products to be manufactured may be obtained from customers’ orders and the sales budget, and information about production facilities may be obtained from the management and the engineering department. Thus, the planning function formulates BABASAB PATIL
  36. 36. PRODUCTION AND MATERIALS MANAGEMENT production plans, and translates them into requirements for men, machinery and materials.Whatever be the planning period, production planning helps in avoiding randomness in production, providing regular and steady flow of production activities, utilizing production facilities to its maximum for minimizing operating costs and meeting delivery schedules; coordinating various departments of the enterprise for maintaining proper balance of activities, and above all, providing the basis for control in the enterprise.2. RoutingThe next important function of production planning and control is routingwhich involves the determination of the path (i.e. route) of movement of rawmaterials through various machines and operations in the factory. “Routing”,to quote Spriegel and Lansburgh, “includes the planning of where and bywhom work shall be done, the determination of the path that work shallfollow, and the necessary sequence of operations”. To find this path,emphasis is placed on determining operating data, which usually includesplanning of ‘where’ and ‘by whom’ work should be done, the determinationsof the path that work shall follow, and the necessary sequence of operations.These operating data are contained in the standard process sheet whichhelps in making out a routing in the standard process sheet which helps inmaking out a routing chart showing the sequence of operations and themachines to be used. If the machine loan chart indicates the non-availabilityof certain machines, alternate routings may also be included on the routingchart. The most efficient routing may have to be compromised with theavailability of the machines at a particular time. In other words, “routingestablishes the operations, their path and sequence, and the proper class ofmachines and personnel required for these operations.”From the above, it can be inferred that routing is one of the highly essentialelements and prime considerations of production control because manyproduction control functions are closely related processes and aredependent on routing functions. Thus, it is essential to solve the differentproblems concerning: appropriate personnel; full utilization of machines;and determining with precise degree the time required in the productionprocess. BABASAB PATIL
  37. 37. PRODUCTION AND MATERIALS MANAGEMENT3. SchedulingScheduling is planning the time element of production – i.e. priordetermination of “when work is to be done”. It consists of the starting andcompletion times for the various operations to be performed. In other words,scheduling function determines when an operation is to be performed, orwhen work is to be completed, the difference lies in the details of thescheduling procedure. To work out effectively, the scheduling, as a part ofproduction control function, determines the time when each operation calledfor on the route sheet is to be done on the specified machine in order tomeet the desired delivery dates. Good control function directs not only thetime that each particular operation should start but also indicates theprogress of each manufacturing part, the amount of work ahead of eachmachine, and the availability of each machine for the assignment of newwork.Schedules are of two types: Master schedule and Detailed schedule.Activities, if recorded on plant-wise basis, would be preparing masterschedule, while mere detailed schedules are employed to plan themanufacturing and assembly operations required for each product.4. DispatchingDispatching is the part of production control that translates the paper – work into actual production. It is the group that coordinates and translates planning into actual production. dispatching function proceeds in accordance with the details worked out under routing and scheduling functions. As such, dispatching sees to it that the material is moved to the correct work place, that tools are ready at the correct place for the particular operations, that the work is moving according to routing instructions. Dispatching carries out the physical work as suggested by scheduling. Thus, dispatching implies the issuance or work orders. These work orders represent authority to produce. These orders contain the following information: The name of the product; The name of the part to be produced, sub-assembly or final assembly; BABASAB PATIL
  38. 38. PRODUCTION AND MATERIALS MANAGEMENT The order number; The quantity to be produced; Descriptions and numbers of the operations required and their sequence, The departments involved in each operation The tools required for particular operation; and Machines involved in each operation and starting dates for the operations. 5. Expediting Expedition or follow-up is the last stage in the process of production control. This function is designed to keep track of the work effort. The aim is to ensure that what is intended and planned is being implemented. “Expediting consists in reporting production data and investigating variances from predetermined time schedules. The main idea behind expedition is to see that promise is backed up by performance”. It includes the following functions: (i) Check-up to ensure that all materials, tools, component parts, and accessories are available at all work centres in specified quantities for starting and carrying out manufacturing operations. (ii) Check-up on the status of work-in-progress and completed work at various work stations. This includes collecting information relating to the starting and completion time and date of work completed, status of work-in-progress relative to scheduled completion dates, position of movements of materials, component parts, and sub-assemblies within the plant, and inspection results. (iii) Preparation of progress records and keeping the control boards up-to-date. (iv) Reporting to manufacturing management on all significant deviations so that corrective action may be taken. It also includes reporting to production planning department so that future plans may be adjusted.Thus production planning and control by completing the above discussedphases ensures the manufacturing of goods of right quality, quantity and at BABASAB PATIL
  39. 39. PRODUCTION AND MATERIALS MANAGEMENTcompetitive market rates. One thing must be borne in mind that productionplanning and control is a never-ending process, and its various functions areinter-dependent.REQUIREMENTS OF AN EFFICIENT SYSTEM OF PRODUCTION PLANNING ANDCONTROLThe scheme of production planning and control system will require reliableinformation about productive capacities and production standards, a soundorganizational structure, and trained and competent personnel, for it successfuloperations. These requirements are enumerated below: 1. Reliable information about productive capacity and production standards: a. Complete knowledge of products be manufactured b. Detailed information about the number and types of each machine and processing unit together with the complete data on power, speeds, and feeds of all machines. c. Full information relating to production materials which are to be used. d. Accurate knowledge of job analysis – particulars as to the work to be performed, and the type of skill required. e. Information relating to completion times of all previous operations and their actual cost. f. Accurate knowledge of operation method, machine layout, and the best way of handling a task. g. Knowledge of the work-in-progress h. Work performances expected from workers, machines etc. i. Information regarding the orders on hand, their quality specifications, and their delivery schedules. 2. Sound organizational structure: (a) A clear delineation of the authority – responsibility relationships in the production planning and control department (b) Full and active support from the top management 3. Trained and competent personnel: BABASAB PATIL
  40. 40. PRODUCTION AND MATERIALS MANAGEMENT (a) Possession of requisite qualities to understand and perform various operations. (b) Well trained to assume newer and higher responsibilities. (c) Scientifically remunerated.ADVANTAGES OF PRODUCTION PLANNING AND CONTROL 1. Efficient Service to Customers: The greatest advantage of a proper system of production planning and control is that it renders prompt and economical service to customers. This is possible by proper scheduling and expediting of manufacturing operations which enables a business enterprise to meet delivery dates. Not only that customers are served on time, but they also get quality products. 2. Lower Investment: Proper production planning and control holds investment to the minimum necessary level by avoiding unnecessary stock inventories and machines. 3. Reduced Costs: Good production planning and control means minimum waste of materials and labour efforts, avoidance of idle machine time, and fewer production interruptions. All these reduce production cost. 4. Higher Morale of Workers: Good production planning and control system avoids rush orders, maintaining an even flow of work, and providing congenial working conditions. All this means avoidance of ‘speeding up’ of workers, maintenance of efficiency and productivity and healthy attitude of workers towards work and work organization. These elements determine the morale of the workers. 5. Better Public Relations: A well-planned and well-controlled production system not only reduces investment and costs for the enterprise, but also improves its image with the outside public. A company that provides better quality products on announced time schedule is looked favorably upon by the general public.Thus, a good and efficient system of production planning and control isbeneficial to the manufacturer, workers, customers and the society.GANTT CHART BABASAB PATIL
  41. 41. PRODUCTION AND MATERIALS MANAGEMENTThis scheduling technique, developed by Henri Lawrence Gantt (1861 – 1919),is one of the most practical and efficient methods which shows at a glance thework planned and work completed.Gantt schedules show how much time was planned for each activity in a projectand how much of each has been completed upto the present date. Theirpopularity can be attributed to their simplicity and case of use. Like any goodschedule, they show, at a glance, how the project is progressing. They alsoshow the sequence of events or activities.Two basic types of Gantt charts are used extensively in production controlwork, namely, order control chart and machine load chart. Both contain ahorizontal time axis. In the order control chart which shows both planned andactual progress for various orders, the orders being charted are listed on thevertical axis. In the machine load chart, the various machines or work centresare listed on the vertical axis. This pair of simplified matching Gantt charts isillustrate below: Order Control Chart Order January February March No. 1 A – 007 C – 009 No. 2 B – 008 A – 007 No. 3 A – 009 A – 007 C - 009 Machine Load Chart Machine January February March No. 1 A – 007 C – 009 No. 2 B – 008 A – 007 No. 3 A – 009 A – 007 C - 009 BABASAB PATIL
  42. 42. PRODUCTION AND MATERIALS MANAGEMENTThere job orders to be processed on three machines are shown. In the ordercontrol chart, the dotted line shows that work is progressing according to theschedule (in the month of January) which is indicated by the solid line.Apparently order B-008 was started about one week prior to the regularlyscheduled starting date, and it is about two-thirds, rather than just one half,completed, as was originally planned. Order C-009 was processed on machineNo. 3 according to schedule, but there ahs been some delay in getting it startedon machine No. 1. This situation probably would lead to expediting to see whatwas causing the delay. The machine load chart portrays the information in aslightly different manner. For instance, the first time shows that order A-007was completed satisfactorily on machine No. 1 but scheduled work in orderC-009 has not been started.The Gantt chars shown in the figure may be used individually or in pair. Theirusefulness lies in the fact that they portray plans and progress in such asmanner as to facilitate comparison of the two. These charts may also be used tokeep track of which machines are down for any reason. This chart is dynamicand must be constantly updated with current information. In order to makeGantt chart more useful, use of computers can be made in which softwarepackage generate Gantt charts.INSPECTIONProduction control is introduced not merely to ensure that the goods will beproduced on time, but is also meant to see that the goods produced are of theright quality. This is done through inspection of the products manufactured.Since the purpose of inspection is to compare the products with the standardsof quality set earlier, it too, can be regarded as an effective agency ofproduction control. One way of inspection is to examine the quality of finishedproducts at the end of the process of production. But this may involve too muchof wastage in the form of rejected products. To minimize the rejection ofdefective products, inspection may be conducted at every stage of production.similarly, materials, machines and tools may be inspected against certainestablished standards to find out their performance and accuracy. Inspectionsmay be made either in respect of samples selected at random or of eachparticular product (i.e. cent percent inspection). The inspectors may inspectmaterials, semi-finished and finished products either at the work bench or inspecial laboratories on testing rooms. BABASAB PATIL
  43. 43. PRODUCTION AND MATERIALS MANAGEMENTInspections vs Quality ControlInspection shall be differentiated form quality control. Inspection involveschecking to see if a product meets or does not meet a stated standards. Theresult of the inspection process is acceptance or rejection of production. qualitycontrol, as distinguished from inspection, is directed towards future productionrather than the past production. also, inspection methods only enable one ‘tobe wise after the event’. Quality control serves to make one ‘get wise before theevent’. Truly speaking, quality control is a basic function, while inspection isone technique of executing it. “Quality control sets burglar alarm whichprevents law from being broken. Inspection, on the other hand, is simply thepolice dragnet that catches the burglar after the law has been broken. Qualitycontrol enlarges the production pile, inspection only enlarges the scrap pile”.MAKE OR BUY DECISIONSWhen needs arise in a manufacturing concern for a material, part or a productthese have to be satisfied either by purchaser form an outside source or thefirm may seek the atternative course of satisfying the need by undertakingproducoitn within the firm’s own plant for reasons of cost, convenience andcontrol, which outside supply source do nto always provide. Fornon-manufacturing organisatoins, such as hospitals, research and educationalinstitutions, government agencies and commercial establishments, it is servicerather than the product that mattes. Even in manufacturing organisatoins, thepossibility of becoming one’s own supplier receives scant attention, yet it isvital strategy for efficient materials management. Probably because mostconcerns do nto have a clear-cut policy on ‘make or buy’, they prefer to decideeach case on cost, volume, sevice and other considerations. There are, however,some companies which tend towards their manufacturing operation. There are,however, some companies which companies which tend towards theirmanufacturing operation. On the other hand, there are companies which believein specializing in a limited production line, even if an opportunity exists for themanufacture of the part or component.Theoretically at least, any manufacturing concern has three basic alternatives insourcing a part or a product that it needs. (1) Buy the part/product completely from an outside source. (2) Buy some components/ parts or materials and manufacture and assemble others. BABASAB PATIL
  44. 44. PRODUCTION AND MATERIALS MANAGEMENT(3) Manufacture the part or product completelyAn organization cannot manage its operations on the basis of the thirdalternative alone, even thought it may have a large base of an integratedoperation starting from extraction of basic raw materials down to finalproduction of marketable finished goods. And some companies prefer tostick to the first alternative because they are either a merchandising firm oran engineering organisatoin and the part or product is not suited to theirmanufacturing facilities, or may be due to the patent or specialization of thevendor or the supplier. As a general rule, therefore, a manufacturingcompany will make some of its parts or components and buy others fromoutside sources, either in a semi-finished or finished state. Even whenprocurement of an item by purchasing looks bright, the question of‘make-or-buy’ must be settled first in the form of an economic analysis ofcost, if no definite company policy exists. Such decisions have obviously tobe made before making the purchase requisition and placing supply order.often it is outside the scope and responsibility of the materials departmentto find an answer. Cost considerations and conditions in the supply marketmay suggest a change even when the part or product was formerlypurchased. On the other hand, it may work in a quite opposite direction,although the significance and justification of the propositions‘make-or-buy’ largely depends on the volume and cost involve ed. For thisreason, cost comparison is one of the first considerations that confronts thedecision-maker, but it may not always be the most important one. Theestimated total cost of production must be compared with the cost ofpurchase to know the pay-off. It is apparent, therefore, that when a‘make-or-buy’ decision has to be made, what matters is not purchasingpolicy or source of supply but the consultation and cooperation ofproduction, cost, quality another technical departments. Even marketingexecutive may have to be consulted. A simple ‘make-or-buy decision mayhave such economic implications as that may effect the total organisationinterest on a much wider scale which can even overthrow a product orthreaten product stability in a highly competitive market.Formally, ‘make-or-buy’ decision of such vital importance are made bytop-management and the materials manager here plays the key role incollecting, analyzing and interpreting data. He also acts as a coordinatorbetween other departments so as to assists top management indecision-making. A decision based on minimum cost-point has to belocated for an optimum decision and if, two or more alternatives posses the BABASAB PATIL
  45. 45. PRODUCTION AND MATERIALS MANAGEMENTsame characteristics, the minimum cost-point for each must be determinedfor a final choice.REVIEW QUESTIONS1. Define production planning and control. What are its objectives?2. Discuss the various steps involved in production planning and control.3. Write a note on Gantt’s Chart4. Distinguish between inspection and quality control.5. As a production manager, how would you take ‘make –or – buy’ decisions? **************** BABASAB PATIL
  46. 46. PRODUCTION AND MATERIALS MANAGEMENT LESSON – 5 PLANT LOCATIONAn important decision which has a bearing on efficiency of productionmanagement relates to the suitable location of plant. The chief object of anindustrial concern is to maximize profit through the minimization of cost ofproduction. this is possible when the firm is of the right (i.e. optimum) size andis located at a place which provides economies of all kinds in production. Inother words, optimum size has to be combined with optimum location if profitis to be maximized. It must be clearly understood at this stage that optimumlocation does not necessarily imply the most favourable location where labourcosts are lowest, transportation cost are minimum, and the water is the best,“but rather where the entire group of considerations is the optimum size. Justas the optimum size is determined through a reconsiderations is the optimumsize. Just as the optimum size is determined through a reconciliation of thevarious relevant forces, the optimum location is also the outcome of properreconciliation of various considerations relevant to the question.It is responsibility of the promoter or entrepreneur to search for a locationwhich yields maximum advantage to the business enterprise in terms of rawmaterials, labour, market, transportation and communication, power and fuel,storage, climate, security, and the like. It is important for the entrepreneur tochoose a location which meets not only the present requirements of anenterprise, but also the changes likely to occur in the foreseeable future.Consideration of this factor is important for an enterprise which proposes toundertake expansion and growth programmes without the botheration ofsearching for alternative locations.The problem of location has several technical, economic, managerial, social andstrategic implications. These various aspects vary in their importance anddirection at various places. So that al the relevant consideration are fully takeinto account, it is imperative for the promoter or entrepreneur to be extracareful in choosing a location. In medium and large-sized enterprises, thelocation study is usually conducted by a special committee consisting ofmembers having a through understanding of the technical, managerial, social,and political aspects of location. When the location problem is very complex, itis expedient to use an outside consulting firm that specializes in locationstudies. BABASAB PATIL
  47. 47. PRODUCTION AND MATERIALS MANAGEMENTIMPORTANCE OF PLANT LOCATION 1. Influence on the Cost of Production and Effectiveness of Marketing: The location chosen for a business enterprise has a direct influence on the cost of production as well as on the effectiveness of marketing. It is one location that the ability of a business at a minimum cost, to maintain a sufficient labour force, and to serve satisfactorily its customers. 2. Effect on the Life of the Business: The factor of location assumes greater importance because once a plant location is chosen, the enterprise is compelled to remain in that location for may years. Any decision to change the location later on may mean a substantial loss in the value of the assets and additional cost in resetting the business. Thus, errors in decision-making in the realm of plant location often lead to long-term problem which are very difficult to overcome.OBJECTIVES ACHIEVED THROUGH LOCATION 1. Holding Capital Investment and Operating Costs to Minimum: The foremost objective in selecting an ideal location should be to ensure a minimum amount of investment in capital assets and also lowest possible operating costs. 2. Ensuring Smooth Operation of the Business: Another objective that an entrepreneur can hope to achieve through ideal location is the smooth running of the business enterprise. For smooth operation, a business enterprise needs the efficient services of transportation, communication, banking, repairs and maintenance and regular supply of raw materials, labour, power and fuel, and the like. An ideal location by making these services and facilities available with regularity and in sufficient quantities helps a business enterprise in conducting its operations smoothly and economically. 3. Promoting Employee Welfare and Public Needs: an ideal location, by making available various facilities and resources, helps achieving employees’ welfare and public needs. For instance, if the enterprise is located where educational, recreational, medical, religious and security needs of employees are met, they will certainly feel attached to the enterprise and would develop their loyalty and commitment for it. 4. Coordinating with Government Policies: Another objective that may guide an entrepreneur’s decision to select a particular location may be BABASAB PATIL
  48. 48. PRODUCTION AND MATERIALS MANAGEMENT that of coordination with government policies. The government’s policy on location veers around one important consideration, that is, a balanced regional development. This policy is sought to be accomplished through various positive and negative measures. While selecting a location for enterprise, the entrepreneur must ensure that his decision does not conflict with the government’s policy.WEBER’S DEDUCTIVE THEORYAlferd Weber’s (a German Economist) analysis was one of the first attempts tobase location decisions on some sort or analysis. Weber’s theory is based onthe study of general factors which determine the framework of industrialorientation. In his ‘pure theory’, Weber classified the causes influencing locationinto two categories: (i) primary causes of regional distribution of industry – regional factors; and (ii) secondary causes responsible for redistribution of industry – agglomerative and deglomerative factors.Regional FactorsWeber maintains that the distribution of an industry between regions is largelythe result of two factors, transportation costs and labour costs. Transportationcosts have to be incurred by an industry in respect of raw materials, fuels, andmarkets and since these are not available at the same place the industry has tochoose its location in such a way that its total transportation costs will be theminimum. The relative influence of materials and markets on the developmentof industries depends upon the nature of the materials as well as the nature oftheir transformation into products. In this connection Weber distinguishesbetween ubiquitous and localized raw materials. The former type of materialsare available almost everywhere such as brick-clay and water, localizedmaterials, on the other hand, are available in specific location such as wood,coal, iron are cotton, jute etc. he further classified localized raw materials intotwo classes: weight losing and non-weight losing. Weight losing (or impure)raw material are those which lose a high proportion of their weight in theprocess of manufacture and contribute only a small fraction weight to thefinished goods. Others like cotton, wool, etc, add the whole or bulk of theirweight to the finished product and hence are called “pure” materials. Weberholds that in case of industries using impure raw materials, the centres of BABASAB PATIL
  49. 49. PRODUCTION AND MATERIALS MANAGEMENTminimum transportation cost are near the raw materials and not in the market.Iron and steel, aluminium, copper, and all other metal smelting industries,sugar and heavy chemicals industries etc. are best located near the centres ofraw materials. Textiles, automobiles, oil refining industries, on the contrary,use pure raw materials and are best located near the market. Moreover, quite alarge number of such industries is also localized near the centre of rawmaterials where better regulative in the supply of raw materials is assured.Weber explains this position by what he calls the ‘material index’, which iscalculated as follows: Weight of the Localized MaterialsMaterials Index =-------------------------------------------------- Weight of the Finished ProductIf this production is high, i.e. equal to or more than unity, location tends to beattracted to the places of materials deposit, and if low, then to the market placeWeber proceeds to examine the causes of deviation from the poient ofminimum transportation costs and according to him this is mainly in order totake advantage of favourable labour location. In thickly populated areas,differences inlabour costs are more marked, and therefore, industries in suchareas are mainly attracted to labour locations. The attracting power of labourlocation depends upon two main factors, labour costs index and locationalweight. The ratio of labour costs of the manufacturing industry to the weight ofproduct has been termed by Weber as the Labour Cost Index and the weight tobe transported during the whole process of production as the Locational Weight.The extent of variation caused by the varying labour costs can be determinedby its “Labour Coefficient”, that is, the rates of the labour costs to the locationalweight. Weber forms the laws of labour orientation. An industry deviates fromtransport locations in proportion to the size of its labour coefficients, whenlabour costs vary.Agglomerative and Deglomerative FactorsAccording to Weber, an industry also deviates from the point of minimum costs,in order to take advantage of agglomerating and deglomerating factors, which BABASAB PATIL

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