2. Any process which involves the conversion of raw
materials and bought-out components into
finished products for sale is known as production.
Such conversion of inputs adds to the value or
utility of the products produced by the conversion
or transformation process.
The utility or added value is the difference
between the value of outputs and the value of
The value addition to inputs is brought about by
alteration, transportation, storage or preservation
and quality assurance.
3. Production Management refers to the application
of management principles to the production
function in a factory. In other words, production
management involves application of planning,
organizing, directing and controlling the
E.L. Brech -Production Management is the process
of effective planning and regulating the operations
of that section of an enterprise which is responsible
for the actual transformation of materials into
5. The term “operations” refers to a function or system
that transforms inputs into outputs of greater value.
(goods and services).
outputs are strictly tangible goods, such a system is
referred to as a “production system” and the
transformation process is referred to as “production”.
Nowadays, the service system in which the output
is predominantly a service or even a pure service, is
also treated as a productive system and often referred
to as an “operating system” instead of a “production
6. Operations management (OM) is the
administration of business practices to create
the highest level of efficiency possible within
an organization. It is concerned with
converting materials and labor into goods and
services as efficiently as possible to maximize
the profit of an organization.
10. Nature of POM
It is an inter-subjective approach .
15. Facility Location - Selecting appropriate location for the
Plant layouts and material handling - Deciding upon the
machines, equipment and necessary devices that leads to
desired production. Storage of material and handling it in most
effective way to avoid the wastage
Product design - Designing the product with regards to its
Process design - Determination of the production process
which is most relevant and efficient in the given state of affairs.
Production and planning control – of its various aspects how,
when and where producing a particular product will be done
16. Quality control - Controlling the production and ensuring the
quality by setting the check points and taking the periodic
measurements of the current performance.
Materials management - Managing the inventories of raw
material, semi-finished and finished goods such that there is no
excessive money may block.
Maintenance Management - Analysis the deviations and
formulating the corrective measures to stay in track with planned
quality, time-schedule and predetermined cost schedules.
Utility Creation (Form, Place, Time, Possession, knowledge)
20. Product: interface between customer and
company-. It includes characteristics such as
performance, aesthetics, quality, reliability,
selling price, delivery dates and/ or lead times.
Plant-The plant should have the capacities to
meet the present needs as well as that of the
future. The considerations are :
(i) design and layout of buildings,
(ii) performance and reliability of machines and
(iii) maintenance of machines and equipment,
(iv) safety of installation and operation of
machinery and equipment and
(v) environment protection
21. Process: include the transformation or conversion
processes which convert the inputs into outputs. The
factors to be examined in deciding upon a process
(i) available capacity,
(ii) available labor skills,
(iii) type of production,
(iv) layout of plant and equipment,
(v) safety requirements in operations and
(vi) costs to be achieved.
22. Programs: consist of schedules or timetables
which set times for delivery of products or
services to customers.
These delivery schedules in turn decide the
time schedules for various activities such as
design, purchase, manufacture, assembly,
packing and dispatch etc.
People aspect of production management
includes the skills, knowledge, intelligence, etc.,
of labor and managerial personnel which is
crucial for the efficient and effective utilization
of resources for the production of outputs.
23. Meeting requirements of quality demanded by
Establishing realistic delivery or completion dates.
Producing the required volume of products to
meet the demand.
Selection and application of most economic
methods or processes.
Controlling the cost of inputs and conversion
process and thereby keeping the cost of outputs
within the desired limits.
24. Strategic Decisions: These are decisions concerning
long range production/operations strategies. Some of the
examples of strategic production/operations management
(POM) decisions are :
Deciding about launching of a new-product development
Deciding on the design for a production process for a new
Deciding on how to allocate scarce resources such as
machine and labour capacities and utilities.
Deciding about what new facilities are needed and where
to locate them.
25. Operating Decisions: These decisions must help to
resolve the issues concerned with planning production to meet
customers’ demands for products and services and to achieve
customer satisfaction at reasonable costs.
Deciding how much finished goods inventory to be carried
for each product.
Deciding the next month’s production schedule for producing
Deciding about hiring of casual (temporary) workers for the
Deciding about the volume of purchase from each vendor for
the next month.
26. Control Decisions: Production/ operations managers
need to control poor worker performance, inferior product
quality and excessive equipment breakdowns so that the
profitable operation of the productive system is not affected.
Deciding the course of action about a department’s failure
to meet the planned labour cost target.
Developing labour cost standards for a new or modified
product design which is about to be taken up for production.
Deciding about the new quality control acceptance criteria
for a product for which the design has been changed.
Deciding about the frequency of preventive maintenance
for key machinery or equipment.
27. Type of
Area of Involvement Nature ofActivities
(i) Manufacturing processesand
(ii) Plant location and plant
(iii) Long range capacity planning
(iv) Production planning
(v) Inventory planning
(i) Resource requirement
(ii) Production scheduling
(iii) Procurement planning
(iv) Labour productivity
(i) Product design, processdesign
(ii) Choice of production
(iii) Choosing the bestlocation
(iv) Deciding about the type of plantlayout
and shop layout.
(v) Deciding the installed capacityof the
(i) Preparing the master production
(ii) Planning inventory levels for raw
materials, work-in-process and finished
(iii) Planning for requirements of materials&
capacities (Labour and equipment)
(iv) Detailed scheduling and machine
(v) Vendor selection
(i) Controlling labour output through
establishment of performance standards
(ii) Controlling quality of incoming
materials, semifinished goods and
(iii) Controlling projects (Costs and
completion dates) using PERT/CPM
(iv) Controlling machine down-time andrepair
time by good maintenance practices.
29. The industrial revolution spread from England to other
European countries and to the United Sates
Adam Smith (1776)
– who was the very first person to draw some attention
towards the scientific operations management. As
• Higher skill accompanied with greater degree is
achieved by the workmen who are performing work in
• Specialization in certain works by the workmen
very often results in improvement of the various steps
involved in the production methodology.
• Time is saved while changing from one activity to
30. In 1790 an American, Eli Whitney, developed
the concept of interchangeable parts.
In the 1800s the development of the gasoline
engine and electricity further advanced the
By the mid-1800s, the old cottage system of
production had been replaced by the factory
The first great industry in the US was the
31. During the post-Civil War period great
expansion of production capacity occurred.
By post-Civil War the following developments
set the stage for the great production explosion
of the 20th century:
increased capital and production capacity
the expanded urban workforce
new Western US markets
an effective national transportation system
32. Frederick Taylor (1859-1915)is known as the
father of scientific management. His shop
system employed these steps:
Each worker’s skill, strength, and learning ability
Stopwatch studies were conducted to precisely set
standard output per worker on each task.
Material specifications, work methods, and routing
sequences were used to organize the shop.
Supervisors were carefully selected and trained.
Incentive pay systems were initiated.
33. Henry Ford (1913)
The concept of mass production and organized work
stations into a conveyorised assembly line was given to
the world by Henry ford.
Henry Gantt (1913)
His main contribution is the ―Gantt chart ― which is a
very important practical tool even in today‘s world, in
order to chart the production schedules and also the
machine load schedules.
F.W Harris (1914)
The first economic lot size (EOQ) model was
developed by Harris
Frank B. Gilbreth (1917) founder father of work study. He
laid emphasis on explaining the importance of the
correlation between the physical effort and the
34. In the 1920s, Ford Motor Company’s operation
embodied the key elements of scientific
standardized product designs
low manufacturing costs
mechanized assembly lines
specialization of labor
35. Walter Shewhart (1924)
In 1924 Walter was the one to introduce the
concept of statistical quality control.
F.H Dodge (1931)
Developed the concept of sampling inspection
and published statistical sampling tables.
L.H.C Tippett (1937)
The phenomenon of work sampling was
developed by Tippett in order to know the
manpower and machine utilization and also for
setting performance standard.
36. In the 1927-1932 period, researchers in the
Hawthorne Studies realized that human factors
were affecting production.
Researchers and managers alike were
recognizing that psychological and sociological
factors affected production.
From the work of behavioralists came a
gradual change in the way managers thought
about and treated workers.
37. During World War II(1939-45) enormous
quantities of resources (personnel, supplies,
equipment, …) had to be deployed.
Military operations research (OR) teams were
formed to deal with the complexity of the
OR helps operations managers make decisions
when problems are complex and wrong
decisions are costly.
In 1947 Dantzig developed simplex method of
optimisation for US Airforce
38. 2-Total Quality(1950-1995) influences of Japanese
Jurans 1951- quality control pareto principles 80/20 , 80
defects due to human error and controllable
Quality Planning (Quality by Design)
Quality Improvement (Lean Six Sigma)
Quality Control (Process Control & Regulatory)
Quality circles (1960)
Deming 1970- 14 principles, PDCA cycle
JIT-1980 Mass Production-customization
Six Sigma (6σ) is a set of techniques and tools for process
improvement. It was introduced by American engineer Bill
Smith while working at Motorola in 1986 . 3.4 defects per
40. Customization (1995-2005) Service Revolution
service sectors booms-2000.
There is a huge trade surplus in services.
Investment per office worker now exceeds the
investment per factory worker.
Thus there is a growing need for service
41. Explosive growth of computer and communication
technologies ,RFID, CAD, CAM
Easy access to information and the availability of more
Advances in software applications such as Enterprise
Resource Planning (ERP) software
Widespread use of email
More and more firms becoming involved in E-Business
using the Internet
Result: faster, better decisions over greater distances
43. Opportunity to serve customer over the world
Geographical boundaries has shirked downs
Availability of resources around the world
Exchange of resources at minimum cost
44. Business Process Reengineering is the radical redesign of business
processes to achieve dramatic improvements in productivity, cycle
times, quality, and employee and customer satisfaction
After the trend of Scientific Management and automation, the next
big step was CAD/CAM. These computer-aided operations meant
that all the designing and manufacturing of the product
would be done with the help of computers making the operations
way more efficient
These systems immensely helped in new product development
and redesigning the processes.
General Motors had its first brush with computer-aided systems in
1996 and ended up saving time and money by using these
45. Shrinking product life cycle:
Now with the fast expansion of technology,
product life cycles have become short and almost
every product gets replaced by a new product in
shorter time spans .
Operations must be redesign with greater
companies are forced to introduce rapid
development of new products with encouraging
innovation . This has provided a new challenge
and requires redesigning of operations making the
46. With the development of HRM alongside,
firms tend to focus more on employee
empowerment, treating employees as resources
that bring competitive edge to the firm.
Quality management training based on lean
philosophy has been very popular recently,
making employee involvement an essential
part of the improvement process
47. Supply Chain partners are required to be more
in tune with the needs of the end users
shorter product life cycles, demanding
customers, fast changes in technology, material
and processes , suppliers have to contribute
unique expertise in the operations.
managers have opportunity for outsourcing
and building long-term partnerships with
critical players in the supply chain.
48. Interestingly, all the trends discussed above can
boil down to the “Lean” philosophy. Be it
Sustainability or Mass Customization, both the
trends are two different aspects of lean
operations. Businesses can lead to successful
Sustainable Management, only by following a part
of lean philosophy: continuous improvement or
In fact, Mass Customization has been possible just
because JIT, since it helps customize the products
according to the customers’ needs or preferences
without increasing costs or manufacturing time
50. Managers now are increasingly
getting concerned with design of products and
processes that are ecologically sustainable.
That means designing and packaging products
that minimize resource use, are biodegradable,
can be recycled and generally environment
friendly In other words, Green production