MEANING

 Production management means planning,

organizing, directing and controlling of production
activities.

 Production management deals with converting raw

materials into finished goods or products.
 It brings together the 6M's i.e. men, money,
machines, materials, methods and markets to
satisfy the wants of the people.

 Production management also deals with decision-

making regarding the quality, quantity, cost, etc., of
production. It applies management principles to

production .
IMPORTANCE OF PRODUCTION MANAGEMENT

1. Helps the Firm to achieve its Objectives

Production management helps the firm to achieve its sales and
business objectives by producing goods and services that
meet the need of consumers. Sales and profit will increase if
the product produced satisfies the customers’ needs.

2.Reputation, Goodwill and Image : Production management

helps the firm to satisfy its customers. This increases the firms
reputation, goodwill and image. A good image helps the firm to
expand and grow.

3.Helps to introduce new products : Production

management helps to introduce new products in the market. It
conducts Research and development (R&D). This helps the
firm to develop newer and better quality products.
4.Helps to face competition : Production management helps
the firm to face competition in the market. This is because
production management produces products of right quantity,
right quality, right price and at the right time. These products
are delivered to the customers as per their requirements

5. Optimum utilization of resources : Production management

facilitates optimum utilization of resources such as manpower,
machines, etc. So, the firm can meet its capacity utilization
objective.

6.Reduces cost of production : Production management

helps to reduce the cost of production. It tries to maximize the
output and minimize the inputs. This helps the firm to achieve
its cost reduction and efficiency objective.
7.Generates employment : Production activities create many
different job opportunities in the country, either directly or
indirectly. Direct employment is generated in the production
area, and indirect employment is generated in the supporting
areas such as marketing, finance, customer support, etc.

8.Creates utility : Production creates Form Utility. Consumers

can get form utility in the shape, size and designs of the
product. Production also creates time utility, because goods
are available whenever consumers need it.

9.Boosts economy : Production management ensures

optimum utilisation of resources and effective production of
goods and services. This leads to speedy economic growth
and well-being of the nation.
 SCOPE OF PRODUCTION MANAGEMENT.
Production Management is a vast concept it involves a huge chain.
Production starts with input and ends with output i.e finished product.
Following are the scope of production management
1. Selection of Location
The selection of location is a key decision as large investment is made in
building, land, and machinery.
2.Plant Layout & material handling
Plant layout refers to the physical arrangement of facilities. Material
handling refers to the moving of material from the storeroom to the machine
& from machine to the next during the process of manufacturing.
3.Product Design
Product design deals with the conversion of the ideas about the product
into the reality.
4.Process Design
It is the decision making on overall process route for converting the raw
material into the finished goods
5.Production Planning & Controlling ( P.P.C)
P.P .C can be defined as the process of planning the
production in advance, setting the exact route of each item,
fixing the starting & finishing dates for each item to give
production orders to shops & to follow up the progress of
products according to the orders.
6.Quality Control
Quality control may be defined as a system that is used to
maintain a desired level of quality in a product & service.
7.Material Handling
Material management is that aspect of management function
which is primarily concern with the acquisition control & use of
the needed material.
8.Maintenance Management
Maintenance deal with taking care of factory layout, types of
machinery. This is essential for equipment & machinery which
are a very important part of the total production process.
 MEANING
 Production planning and control is an important task
of Production Manager. It has to see that production
process is properly decided in advance and it is
carried out as per the plan.
 Production is related to the conversion of raw
materials into finished goods. This conversion process
involves a number of steps such as deciding what to
produce, how to produce, when to produce, etc.
 These decisions are a part, of production planning.
Merely deciding about the task is not sufficient.

OBJECTIVES OF PRODUCTION PLANNING AND CONTROL:

 Planning of production precedes control. Whatever

is planned needs to be controlled. The ultimate
objective of both planning and control is to use
various inputs in an efficient way and to have a
proper control over various targets and schedules
fixed earlier.

 The following details will bring out the objectives of

production planning and production control:

PRODUCTION PLANNING:

 1. To determine the requirements for men, materials

and equipment.
 2. Production of various inputs at a right time and in
right quantity.
 3. Making most economical use of various inputs.
 4. Arranging production schedules according to the
needs of marketing department.
 5. Providing for adequate stocks for meeting
contingencies.
 6. Keeping up-to-date information processes.
PRODUCTION CONTROL:
 1. Making efforts to adhere to the production
schedules.
 2. Issuing necessary instructions to the staff for
making the plans realistic.
 3. To ensure that goods produced according to the
prescribed standards and quality norms.
 4. To ensure that various inputs are made
available in right quantity and at proper time.
 5. To ensure that work progresses according to the
pre-decided plans.
 The four stages or steps in production planning and
control are:

 Routing,
 Scheduling,
 Dispatching, and
 Follow-up.

 Initial two steps i.e. Routing and Scheduling, relate to

production planning.
 Last two steps i.e. Dispatching and Follow-up, relate to
production control.

 1. Routing

Routing is the first step in production planning and control.
 Routing can be defined as the process of deciding the path (route) of work
and the sequence of operations.
 Routing fixes in advance:

 The quantity and quality of the product.

 The men, machines, materials, etc. to be used.
 The type, number and sequence of manufacturing operations, and
 The place of production.
 In short, routing determines ‘What’, ‘How much’, ‘With which’, ‘How’ and
‘Where’ to produce.

Routing gives a very systematic method of converting raw-materials into

finished goods. It leads to smooth and efficient work. It leads to optimum
utilization of resources; namely, men, machines, materials, etc. It leads to
division of labor.
 2. Scheduling

Scheduling is the second step in production planning and control. It
comes after routing.
 Scheduling means to:

 Fix the amount of work to do.

 Arrange the different manufacturing operations in order of priority.
 Fix the starting and completing, date and time, for each operation.
 Scheduling is also done for materials, parts, machines, etc. So, it is
like a time-table of production. It is similar to the time-table, prepared
by the railways.
 Time element is given special importance in scheduling. There are
different types of schedules; namely, Master schedule, Operation
schedule and Daily schedule.
 3. Dispatching

Dispatching is the third step in production planning and control. It is the
action, doing or implementation stage. It comes after routing and
scheduling.
 Dispatching means starting the process of production. It provides the
necessary authority to start the work. It is based on route-sheets and
schedule sheets.
 Dispatching includes the following:

 Issue of materials, tools, fixtures, etc., which are necessary for actual
production.
 Issue of orders, instructions, drawings, etc. for starting the work.
 Maintaining proper records of the starting and completing each job on time.
 Moving the work from one process to another as per the schedule.
 Starting the control procedure.
 Recording the idle time of machines.
 4. Follow-up

Follow-up or Expediting is the last step in production planning and
control. It is a controlling device. It is concerned with evaluation of
the results.
 Follow-up finds out and removes the defects, delays, limitations,
bottlenecks, loopholes, etc. in the production process. It measures
the actual performance and compares it to the expected
performance. It maintains proper records of work, delays and
bottlenecks. Such records are used in future to control production.
 Follow-up is necessary when production decreases even when there
is proper routing and scheduling. Production may be disturbed due to
break-downs of machinery, failure of power, shortage of materials,
strikes, absenteeism, etc.
 Follow-up removes these difficulties and allows a smooth production.

 Productivity – Meaning
 Productivity refers to the physical relationship
between the quantity produced (output) and
the quantity of resources used in the course of
production (input).
 “It is the ratio between the output of goods and
services and the input of resources consumed
in the process of production.”

 Output implies total production while input
means land, labour, capital, management, etc.
 Productivity measures the efficiency of the
production system.
 The efficiency with which resources are utilized
is called productive efficiency.
 Higher productivity means producing more from
a given amount of inputs or producing a given
amount with lesser inputs.

 Productivity can be increased by:
 i. Generating more outputs from same level of
inputs.
 ii. Producing same level of outputs with
reduced level of inputs.
 iii. A combination of both.
 FACTORS AFFECTING PRODUCTIVITY

 Productivity is the outcome of several factors. These factors are

so interrelated that it is difficult to identify the effect of any one
factor on productivity.

 These factors may broadly be divided as follows:

 1. Human:
 Human nature and human behaviour are the most significant
determinants of productivity.
 Human factors may further be classified into two categories as
given below:
 (a) Ability to work – Productivity of an organization depends
upon the competence and calibre of its people—both workers
and managers. Ability to work is governed by education,
training, experience, aptitude, etc. of the employees.

 (b) Willingness to work – Motivation and morale of
people is the second important group of human factors
that determine productivity.
 Wage incentive schemes, labour participation in
management, communication system, informal group
relations, promotion policy, union management
relations, quality of leadership, etc., are the main factors
governing employees’ willingness to work.
 Working conditions like working hours, sanitation,
ventilation, schools, clubs, libraries, subsidized canteen,
company transport, etc., also influence the motivation
and morale of employees.

 2. Technological:

 Technological factors exercise significant influence on

the level of productivity.

 The main technological factors are as follows:

 (a) Size and capacity of plant
 (b) Product design and standardization
 (c) Timely supply of materials and fuel
 (d) Rationalization and automation measures
 (e) Repairs and maintenance
 (f) Production planning and control

 (g)Plant layout and location
 (h) Materials handling system
 (i) Inspection and quality control
 (j) Machinery and equipment used
 (k) Research and development
 (l) Inventory control
 (m) Reduction and utilization of waste and
scrap, etc.
 3. Managerial:
 The competence and attitudes of managers have an important
bearing on productivity.
 In many organizations, productivity is low despite latest technology
and trained manpower. This is due to inefficient and indifferent
management.
 Competent and dedicated managers can obtain extraordinary results
from ordinary people.
 Job performance of employees depends on their ability and
willingness to work.
 Management is the catalyst to create both. Advanced technology
requires knowledge workers who in turn work productively under
professionally qualified managers.
 It is only through sound management that optimum utilization of
human and technical resources can be secured.

MEASURES TO INCREASE PRODUCTIVITY
 (I) Providing various incentives to workers:
 Labour productivity can be increased to a great extent by providing
various wage and non-wage incentives to the workers. Some of the
important non-wage incentives are workers’ participation in
management, job security, praise of their work and giving proper
recognition etc. Results shown by workers’ participation in management
are very encouraging and positive.
 (2) Provision of adequate health, safety and welfare measures:
 Health, safety and welfare measures as given under Factories Act, 1948
should be provided to workers in the factories. This will lead to lesser
accidents and will considerably improve productivity and overall
efficiency of the workers.
 (3) Improved working conditions:
 Working conditions and environment of work should be proper. There
should be limited number of working hours followed by rest pauses.
Proper arrangements for light, ventilation and cleanliness etc., should be
made. These amenities have a positive impact on labour productivity.

 (4) Application of scientific management:
 Scientific management techniques and practices including the
application of work, time and motion studies will lead to saving in
time and most effective utilisation of available resources and removal
of wastage and inefficiency which will greatly help in enhancing the
productivity of workers and machines.
 (5) Application of simplification, standardisation and
specialisation to all production activities:
 Process of simplification, standardisation and specialisation has
positive impact on productivity. Work is carried out systematically
and in the most effective manner thereby considerably reducing
production costs and enhancing productivity. The concepts of
simplification, standardisation and specialisation have been
explained under scientific management.
 (6) Scientific selection and training of workers:
 Scientific selection, placement and training is greatly helpful in
increasing productivity of the workers. Right type of candidate is
selected for the right type of job.

 (7) Application of cost, quality and production
control:
 Different techniques of cost, quality and production control
are very helpful in increasing productivity.
 (8) Industrial research:
 Constant industrial research and experimentation brings
about new methods and techniques of production which are
greatly helpful in increasing industrial productivity and total
production.
 (9) Proper plant layout:
 The layout of machines and equipment should be in such a
manner which ensures smooth and unrestricted flow of
production operations and processes. Thus proper
arrangement ensures lesser work stoppages thereby
increasing total volume of production and productivity.

 (10) Effective material handling and internal
transport:
 Defective system of material handling and improper
internal transport system i.e. taking material, equipment
and tools from one job to another or from the department
to another adversely affects the productivity.
 On the other hand, effective and proper system of
material control and internal transport is immensely
helpful in enhancing productivity. An effective system of
material handling and internal transport can be ensured if
plant layout is effective.

IMPORTANCE OF HIGHER PRODUCTIVITY
 Attainment of higher productivity is one of the
main aims of any business enterprise.
 Higher productivity ensures lesser cost of
production, higher production and most effective
utilisation of available resources.
 The concept of productivity is gaining immense
popularity among producers, employees, and
consumers.
 It is being applied with utmost success in
Government, private and every other type of
undertakings.

 1. It ensures effective utilisation of available
resources thereby increasing total volume of
production and decreasing cost of production.

 2. It reduces the price of goods to be sold and better

quality products are provided to consumers.

 3. It leads to lesser overhead costs.

 4. It leads to higher profits to entrepreneur which

can be re-invested in meeting future financial needs
of the concern.

 5. It is considerably helpful in increasing
exports.

 6. It leads to higher per capita income.

 7. It is greatly helpful in achieving overall

prosperity and growth of an economy.

 INCREASE IN PRODUCTIVITY MOVEMENT IN
INDIA
 The productivity movement has been on in India for a long
time. With a view to increasing productivity of different
segments of the economy, the Government of India has been
making systematic efforts especially since independence.
 The most important landmark in the history of productivity
movement in India is the establishment of National
Productivity Council.
 The council was established in January, 1958 and was
registered under the Societies Registration Act in February,
1959.
 The council is an independent autonomous organisation
having sixty as the maximum number of members
comprising eleven from employers, employees and
Government.

 The objectives are:

 1. To create and develop the concept of productivity

consciousness among the people in the country.
 2. To make arrangements for training of managers
at every level of management.
 3. To undertake research with regard to various
production processes.
 4. To make arrangements for the services of experts
on the requisition of local productivity councils.
 5. To send delegations to developed countries to
collect and study information with regard to
increased productivity .

 6. To invite experts on productivity from other
countries to make use of their expert knowledge
and services.
 7. To impart various productivity services with a
view to having maximum utilisation of available
sources viz., men, money, materials and machines.
 8. To ensure higher and better living standards to
the people.
 9. To conduct various seminars on different
subjects relating to productivity.
 10. To create a positive productivity atmosphere in
the country by developing harmonious employer—
employee relations.
 Quality refers to a parameter which decides the
superiority or inferiority of a product or service.

 Quality plays an essential role in every business.
Business marketers need to emphasize on quality
of their brands over quantity to survive the cut
throat competition.
 Why would a customer come to you if your
competitor is also offering the same product?

 The difference has to be there in quality. Your brand

needs to be superior for it to stand apart from the
rest.

 Total Quality Management

 Total Quality management is defined as a

continuous effort by the management as well as
employees of a particular organization to ensure
long term customer loyalty and customer
satisfaction.

 One happy and satisfied customer brings ten new

customers along with him whereas one disappointed
individual will spread bad word of mouth and spoil
several of your existing as well as potential
customers.


 Total quality management is a structured effort by
employees to continuously improve the quality of their
products and services through proper feedbacks and
research. Ensuring superior quality of a product or
service is not the responsibility of a single member.

 Total quality management ensures that every

single employee is working towards the
improvement of work culture, processes,
services, systems and so on to ensure long term
success.

 FEATURES OF TQM
 1. Customer Focused
 Quality begins and ends with the customer.
 The customer dictates what the focus will be as well as the
approach to achieving those results.
 But most importantly the customer determines if the efforts
were successful.
 For instance, organizations solicit feedback from
customers about products and services. Use what is
learned from that feedback to improve the product or
service.

 2. Involved Employees
 Organizations that manage with TQM
understand the importance of employee
involvement.
 These front-line members of the team often hold
the answers to solving problems and improving
how work gets done.
 Who more than the person on the line to
recognize when something is not working.
 For instance, in the service industry, employees
are the ones who interact with customers and
hear real-time feedback.
 Use employees to help identify areas to improve
for the customer.
 3. Process Oriented
 Everything has a process. Whether the
process to hire employees or a process to
make a cake – there are steps that lead the
way.
 TQM organizations study steps in a process,
fine-tune those steps, and work to eliminate
unnecessary steps that can save time and
money.
 For instance, use quality tools to create a
visual for internal processes. Look at the
steps in the process and work to reduce or
eliminate unnecessary steps.
 4. Mutually Dependent Systems
 Most organizations have several departments or
areas of expertise but all have systems that
support the final delivery of the product.
 Organizations that manage with TQM integrate
these internal systems to create a seamless
process.
 This is done by creating a culture that understands
and values how quality is determined and how it is
achieved.
 For instance, create training for all employees that
teaches quality concepts and reinforces why they
are there – the vision and mission of the
organization.
 5. Strategic Approach
 Businesses that operate under a TQM
model, use strategy to help achieve mission
and vision.
 They develop a strategic plan and use that
as the cornerstone for its quality efforts and
all decision making.
 Invest the time to create a mission and vision
statement and use that to guide the
development of a strategic plan.

 6. Continuous Improvement
 Continuous improvement is how organizations get
better at what they do by working to improve
processes that create products and services.
 These constant efforts help to ensure the
organization remains competitive and meets the
expectations of key stakeholders.
 Make it part of daily practice to pay attention to how
work gets done and continuously look for ways to
improve even the most insignificant tasks.
 7. Data-Driven Decisions
 Data drives decisions in TQM organizations. Data is
collected, analyzed, and used to improve internal
operations.
 All decisions are based on the continuous collection of
business data.
 Business Data is determined by the identification of key
success measures. It is those measures that drive
decisions.
 Spend some time identifying the critical success
factors for your organization and create a process to
collect and report data on those factors.


 8. Effective Communications
 Communicating is a priority in organizations that
strive to improve.
 Employees and customers are provided with
ongoing communication and interaction with the
organization.
 There are strategies that drive communication and
employees are provided information about internal
changes as they become available.
 Create a communication strategy and constantly
look for ways to communicate with all key
stakeholders.
 9. Continuous Process: - TQM is a
continuous process. Constant and
continuous efforts are made to improve the
quality, and to reduce internal costs. Quality
improvement helps the organisation to face
the challenges of the competitors and to
meet the requirements of the customers.
TQM is a process which goes on forever,
because at no time the quality can be 100%
right. There is always a possibility for new
and better way of doing things.

10. Recognition and Rewards: - Recognition and
rewards is an integral part of company’s TQM
Programme. Positive reinforcement through
recognition and reward is essential to maintain
achievement and continuous improvement in
quality.
 Definition: The Quality
Circle refers to the
group of individuals who
meet on a regular basis
to discuss the work-
related problems.
 Generally, the quality
circles are small group
gatherings, led by the
supervisor or the
manager who presents
the solutions to the
management.

 The quality circles are formed to fulfill any of the
following objectives:
• To contribute towards the development of an
organization.
• To create a healthy work environment such that
employees find the place worthwhile to work
• To explore the hidden potential of the individuals and
drawing out the infinite possibilities.
• To improve the product quality and the productivity of
the organization.
• To improve the team skills, capabilities, confidence
and creativity through education, training, and
participation of volunteers in the circles.
 FEATURES OF QUALITY CIRCLE
 The main features of QC can be listed as follows:
 1. Voluntary Groups
 QC is a voluntary group of employees generally coming from the
same work area. There is no pressure from anywhere on
employees to join QC.
 2. Small Size:
 The size of the QC is generally small consisting of six to eight
members.
 3. Regular Meeting:
 QC meetings are held once a week for about an hour on regular
basis. The members meet during working hours usually at the
end of the working day in consultation with the manager. The
time of the meetings is usually fixed in advance in consultation
with the manager and members.
 4. Independent Agenda:
 Each QC has its own agenda with its own terms of
reference. Accordingly, each QC discusses its own
problems and takes corrective actions.
 5. Quality Focused
 As per the very nature and intent of QC, it focuses
exclusively on quality issues. This is because the
ultimate purpose of QC is improvement in quality of
product and working life.
 ISO 9000 is defined as a
set of international
standards on quality
management and quality
assurance developed to
help companies
effectively document the
quality system elements
needed to maintain an
efficient quality system.
They are not specific to
any one industry and can
be applied to
organizations of any size.
 The International Organization for
Standardization (ISO) is an independent, non-
governmental organization made up of
members from the national standards bodies of
over 160 countries that set international
standards related to products and services. ISO
has published over 13,000 standards.
 The ISO 9000 series of standards, related to
quality management, is perhaps the most widely
known and impactful of any standards issued by
ISO.

 ISO 9000 standards were developed to help
manufacturers effectively document the quality
system elements that need to be implemented to
maintain an efficient quality system.
 They are increasingly being applied to any
organization or industry.
 ISO 9001 is now being used as a basis for quality
management—in the service sector, education, and
government—because it can help organizations
satisfy their customers, meet regulatory
requirements, and achieve continual improvement.

 The ISO 9000 series, or family of standards,
was originally published in 1987, by
the International Organization for
Standardization.
 They first gained popularity in Europe, and
then spread to the U.S. in the 1990s.
 As the world’s view of quality assurance has
evolved, these standards have been revised,
in 2000 and 2008.

 Both the ISO 9000 and 9001 standards are based on a number of
quality management principles including a strong customer focus,
the motivation, and implication of top management, the process
approach and continual improvement. The seven quality
management principles include the following as described by the ISO:

• Customer focus – Quality management primarily focuses on

meeting customer requirements and striving to exceed customer
expectations.
• Leadership – Helping leaders to establish unity of purpose and
direction at all levels and to create conditions to engage members
of the organization in achieving the organization’s quality
objectives.
• Engagement of people – Obtaining and maintaining (at all levels
throughout the organization) competent, empowered, and
engaged people to enhance the organization’s capability to create
and deliver value.

• Process approach – Delivering consistent and predictable
results through the use of effective and efficient activities that are
understood and managed as interrelated processes that function
as a coherent system.

• Improvement – Maintaining an ongoing, organization-wide focus

on improvement.

• Evidence-based decision making – Using the analysis and

evaluation of data and information in the decision making process
to produce desired results.

• Relationship management – Managing the organization’s

relationships with related parties, such as partners or vendors, for
sustained success.

 ISO 14000
ISO 14000 is a family of standards related
to environmental management that exists to help
organizations
(a) minimize how their operations (processes,
etc.) negatively affect the environment (i.e. cause
adverse changes to air, water, or land);
(b) comply with applicable laws, regulations, and
other environmentally oriented requirements; and
(c) continually improve in the above.
 There are five environmental management system
principles within ISO 14000:
1. Commitment and Policy Principle 1: An
organization should focus on what needs to be done -
- it should ensure commitment to the environmental
management system and define its policy.
 2. Planning (PLAN) Principle 2: An organization
should formulate a plan to fulfill its environmental
policy.
 3. Implementation (DO) Principle 3: For effective
implementation an organization should develop the
capabilities and support mechanisms necessary to
achieve its environmental policy, objectives, and
targets.
 4. Measurement and Evaluation
(CHECK) Principle 4: An organization should
measure, monitor, and evaluate its
environmental performance.
 5. Review and Improvement (ACT) Principle 5:
An organization should review and continually
improve its environmental management
system, with the objective of improving its
overall environmental performance.
 Inventory Management refers to the process of ordering,
storing and using a company's inventory. This includes
the management of raw materials, components and
finished products, as well as warehousing and
processing such items.
 Inventory management is a systematic approach to
sourcing, storing, and selling inventory—both raw
materials (components) and finished goods
(products).
 In business terms, inventory management means the
right stock, at the right levels, in the right place, at the
right time, and at the right cost as well as price.