System Approach of Production Function A system is the combination of subsystems. Every system is the sub system of larger system. If we consider a global economic system, a national economy are sub systems. If we consider a national economy is a system, different industries are sub systems. When a industry is a system different organization or firms are sub system An organization is a combination of different components (Departments) working together to achieve specific goal(s). It is a set of different sub-systems ( departments). So it is called a system. Among the different Departments, production management is one of the them.
Contd………. An Organizational Structure as a systemThe Operation Department is considered as POM
Contd……….When considering POM itself POM is system of different sub systems.The components or sub systems are input, process, output, feedback and random fluctuations. Strong interaction makes the production function supportive to meet organizational goal(s).The components of system always inter related and having interaction each other to achieve the same (organizational) goal(s).
The Economic System TransformsInputs to Outputs Random Fluctuations ( Disturbances) Input Process Outputs s Materials, Land Goods and , Labor, Capital Services , Management, Time Conversion Process Feedback loop
Inputs: Inputs are the basic needs or resources of the production system. Inputs may be land, building, labour, capital, management, raw material and WIP. The quality and nature of input determine the quality of output. Land and building should be located at the facilite area of customers. Capital should be having low cost (i.e. low cost of capital) Raw material should have quality and low cost. Labour or human resource is an important input for production and operation management
Process: It is the conversion process of inputs to outputs. It includes machine, equipments, technology, and processing steps. Major function of the process is creating utility(ies) in inputs (raw materials) and add economic values. The pace of technology differs in conversion process. It creates noise, light, wastage, which are not environment friendly. In the age of consumerism the management should choose environment friendly conversion process. Selection of appropriate, efficient and
Outputs: Output Is the desired result of the (production) system. It will tangible or intangible in nature. Production organization- tangible (car, cloths ect.) Service organization- intangible ( bank services, hair services) Some time outputs may be quasi in nature (mixed)- restaurant The output should be of desired utility in terms of quality, cost and delivery or of stakeholder’s interest (customer, shareholders)
Random Fluctuations ordisturbances: It is the unplanned or uncontrolled environmental influences in the conversion process that causes planned and actual output differ.It may be categorized as: Internal Factors- Human Resources, Breakdown of machines, supply of raw materials ( controllable but unplanned)External Factors- Electricity supply, flood, earthquake, government policies. ( Uncontrollable and unplanned)
Feedback: Feed back is the control mechanism of the production function which support management whether organizational activities need adjustment?? It has three phases: Set the goal Determine the actual result Comparison with the plane or actual result- ( +, - or = ) + or - result: need adjustment
Conclusion: POM system is the part of organization that produces the organizational physical product or services. Inputs are the basic need of production functions. Conversion process is the process of creation of unility(ies) and economic value added to the inputs. Output is the desired physical product or services which fulfill the desired of the customer as well as stakeholders. Random Fluctuations are the unplanned or uncontrolled environmental influences which influence the production process. Feedback is the control mechanism of the production function. “Production Function is the system of conversion of inputs into outputs with addition of economic values and utility(ies).”