POM- UNIT-1

Introduction
The very essence of any business is to cater needs of customer by providing services and
goods, and in process create value for customers and solve their problems. Production and
operations management talks about applying business organization and management
concepts in creation of goods and services.
Production
Production is a scientific process which involves transformation of raw material (input) into
desired product or service (output) by adding economic value. Production can broadly
categorize into following based on technique:
Production through separation: It involves desired output is achieved through separation or
extraction from raw materials. A classic example of separation or extraction is Oil into various
fuel products.
Production by modification or improvement: It involves change in chemical and
mechanical parameters of the raw material without altering physical attributes of the raw
material. Annealing process (heating at high temperatures and then cooling), is example of
production by modification or improvement.
Production by assembly: Car production and computer are example of production by
assembly.

OPERATION MANAGEMENT

As to deliver value for customers in products and services, it is essential for the company to
do the following:

1. Identify the customer needs and convert that into a specific product or service
(numbers of products required for specific period of time)
2. Based on product requirement do back-ward working to identify raw material
requirements
3. Engage internal and external vendors to create supply chain for raw material and
finished goods between vendor → production facility → customers.
Operations management captures above identified 3 points.
Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be done
on following characteristics:

 Output: Production management deals with manufacturing of products like (computer,

car, etc) while operations management cover both products and services.
 Usage of Output: Products like computer/car are utilized over a period of time
whereas services need to be consumed immediately
 Classification of work: To produce products like computer/car more of capital
equipment and less labour are required while services require more labour and lesser
capital equipment.
 Customer Contact: There is no participation of customer during production whereas
for services a constant contact with customer is required.
Production management and operations management both are very essential in meeting
objective of an organization.

Scope of production management

Facility location: It involves selecting the right location for setting up production facilities of
business that affects its long term growth. This is an important decision to be taken as it
involves long term commitment and huge investments in land, building and machinery.
Location of facility should be appropriate from where raw materials, labor and other factors of
production are easily accessible by business.
Plant layout and Material Handling: Plant layout is concerned with physical arrangement of
facilities set up by business. It involves deciding departments, work Centre’s, machines and
necessary equipment’s within the facility for ensuring better productivity. Material handling
refers to managing the movement of materials from storeroom to machinery and from
machinery to another stage of production like packaging and storing.
Product Designing: Product designing means giving shapes to ideas of products for
converting them into a reality. Every organization should come up with innovative products in
market after conceiving new ideas based on market requirements.
Designing of Process: Process design is an overall route followed by business for
transforming raw materials into finished products. It is a crucial decision to be taken as it
determines the efficiency of business. It involves choosing appropriate technology, deciding
sequence of production processes and facilities layout.
Production Planning and Control (PPC): It involves planning and controlling various aspects
of production activities. PPC is a process of deciding production in advance, setting up the
exact route for each item, deciding the start and finish deadline of each product for directing
production orders to shops and following product progress in accordance with the order.
Quality Control: Quality control is a process of checking and maintaining the required quality
standards of production activities within the organization. It ensures that goods produced are
of high quality by setting up check points and measuring performance from time to time.
Maintaince Management: It refers to evaluation of all business activities for identifying any
deviations if there. Maintaince management involves taking all corrective steps for removing
these deviations. It focuses on keeping all the processes on track in line with decided quality,
pre-determined cost schedule and time range. Taking care of all machinery repairs,
replacement and servicing are included in this.

Types of production system:

The production system of a company mainly uses facilities, equipments and operating
methods(called the production system) to produce goods that satisfy customers’ demand.The
above requirements of a production system depend on the type of product that the company
offers and the strategy that it employs to serve its customers. The classification of production
system is explained in the table

Job shop production

 Job shop is appropriate for manufactures of small batches of many different products,
each of which is custom designed and requires its own unique set of processing steps or
routing through production process.
 The production system in which different types of product follow different sequences
through different shops. Ex. Furniture manufacturing company, restaurant, prototype
industry.
 Much time is spent waiting for access to equipment. Some equipment overloaded.
 A process technology suitable for a variety of custom designed products in some
volume.
 This production system adopts process layout as by this production system we
manufacture more variety of products at low product volume.
Batch production
 A process technology suitable for variety of products in varying volumes.
 Here limited product variety which is fixed for one batch of product. Ex. Bakery shop,
medicine shop
 Within the wide range of products in the facility, several are demanded repeatedly and
in
 large volume.
 This type of production system should be preferred when there is wide variety of
products in wide variety of volumes.

Assembly line (mass) Production

 A process technology suitable for a narrow range of standardized products in high
volumes.
 The successive units of output undergo the same sequence of operation using
specialized equipment usually positioned along a production line.
 The product variety is fixed here. Ex. Assembly of television sets, assembly of auto,
assembly of computer keyboard, cold drinks factory etc.

Continuous production
 A process technology suitable for producing a continuous flow of products.
 The product is highly standardized.
 Material and products are produced in continuous, endless flows, rather than in
batches
or discrete units.
 Continuous flow technology affords high volume, around-the clock operation with
capital intensive, specialized automation.

Benefits of production management

 It brings down the cost of production.
 It is advantageous for market competition to expand.
 Your chances of attaining your company’s objectives are higher.
 It could significantly improve how people view your business as a whole.
 All of your resources can be used effectively.
 Good production management is essential.

Responsibility of production manager

 Oversee the production process of goods or products
 Plan, schedule, coordinate and organize production activities and schedules
 Manage budgets and costs
 Ensure quality standards and specifications are met
 Supervise and lead the production team

Decisions in production management

Goods and services: This includes looking for ways to implement consistency in
costs, quality, and resources across all business divisions.

Quality Management: Be clear on the customer’s demands and then meet those
expectations. Use market research to determine customer needs and batch quality
assurance testing on products and services in production.
 Process and Capacity Design: Design strategies which support all production goals
including technology and resources. A value stream map can help determine what
processes are necessary and how to keep them running efficiently.

Location: In developing a location strategy consider supply chain and how the location
will receive supplies, the movement of goods and services internally and to customers,
and the role of marketing and public relations in the location choice.

Layout Design and Strategy: Consider the placement of desks, workstations, and
how materials are delivered and used.

Human Resources and Job Design: Implement continuous improvement programs

with regular reviews, provide continuous training for employees, and institute
employee satisfaction programs to achieve success in this area.

Supply Chain Management: Determine the best strategies to streamline, be cost

effective, and to develop trusted partners.

Inventory: Different markets mean different challenges when it comes to inventory but
all need to strategize and plan their inventory control. Weather, supply shortages, and
labor all influence how an organization maintains its inventory.

Scheduling: Consider both production and people. Ask questions such as how much
product is required to be produced for the customer in the required time? How many
people and how many machines are required to do the job effectively and efficiently?
This differs among industries and business departments. For example, emergency
rooms need to maintain different schedules than a hospital’s corporate office.

Maintenance: This includes maintaining people and machines, as well as, process.
What do you need to do to maintain quality and keep resources reliable and stable?

Functions of operations management

 Production planning and control
 Finance
 Product Design
 Inventory management
 Quality control
 Forecasting
 Supple Chain Management
 Operational Strategy
 Unit- plant location
Introduction
Plant location refers to the choice of region and the selection of a particular site
for setting up a business or factory.
But the choice is made only after considering cost and benefits of different
alternative sites. It is a strategic decision that cannot be changed once taken. If at
all changed only at considerable loss, the location should be selected as per its
own requirements and circumstances. Each individual plant is a case in itself.
Businessman should try to make an attempt for optimum or ideal location.

Principles of plant layout

Principle of Overall Integration
Deals with the integration of men, materials and machinery.
Principle of Minimum Distance
According to this, the best layout is the one in which men and materials have to
move minimum distance.
Principle of Flow
It signifies that the best layout is one which arranges the work area for each
operation or process in the same order in which assembly takes place of the
materials.
Principle of Cubic Space
It states that there should be best utilization of space, both horizontal and vertical
space.
Principle of Satisfaction and Safety
The best layout offers safety for worker and gives a feeling of satisfaction.
Principle of Flexibility
It states that the efficient layout o offers minimum cost and least inconvenience during
rearrangement.

Factors affecting plant location

1. Nearness to Raw Material
Availability of the raw material near the plant will reduce the cost of transporting raw material
from the vendor’s end to the plant.
Especially those plants, which consume raw material in bulk, or need heavy raw material but
loses a good amount of material in processing must be located close to the source of raw
material.

2. Transport facilities
One point must be kept in mind that cost of transportation should be small in proportion to the
total cost.
Depending upon the size of the raw material and finished goods, a suitable method of transport
like roads, rail, water, or air is selected, and site location is decided accordingly.

3. Nearness to market
It reduces the cost of transportation as well as the chance of finished product getting damaged
and spoiled in the way. If the industry is nearer to the market then it can catch a big market
share by offering quick services.

4. Availability of the labour

Another important factor that influences plant location decisions is the availability of labour.
The combination of an adequate number of labour with suitable skills and reasonable labour
wages can highly benefit the firm.
However, labor-intensive firms should select the plant location which is nearer to the source
of manpower.

5. Availability of fuel and power

Because of the wide spread use of electric power, in most cases, fuel has not remained a
deciding factor for plant location. Even then steel industries are located near the source of fuel
to reduce fuel transportation costs.

6. Availability of water
Water is used for processing, drinking and sanitary purpose. Depending upon the nature of
the plant water should be available in adequate quantity and proper quality.

7. Climate condition
With the development of heating, ventilating, and air conditioning climate of the region does
not present much problem for many industries.

But, for industries such as agriculture, leather, and textile, etc climate is an influencing factor.
For such industries extreme humid or dry conditions are not suitable for plant location.

8. Financial factor
In order to attract investment and large-scale industries various states offer loans, subsidies,
benefits, and sales tax exemptions to the new units.
So, choosing the state is an important factor in order to a new industries.

9. land
Area, shape of the site, cost, drainage, and other facilities, the probability of floods, chance of
earthquakes, etc influence the selection of plant location.

10. Presence of related industries

An industry can outsource some of the parts from the related industries near the plant location.
It reduces the headache of making every part within the plant.

11. Availability of facilities

Availability of basic facilities such as schools, hospitals, housing and recreation clubs, security
etc can motivate the workers to stick to the jobs.

The success of industries depends very much on the attitude of its workers, so while selecting
the plant location organization must be given preference to other facilities also.

12. Disposal of waste

Disposal of waste is becoming a major problem for industries like chemical, leather, sugar,
etc. So, plant location should have proper provision for this.
Plant layout means the disposition of the various facilities (equipment, material, manpower
etc.)
and services of the plant within the area of site located.
Objectives
 Material handling and transportation is minimized and effectively controlled.
 Bottlenecks and points of congestions are eliminated (by line balancing) so that the
rawmaterial and semi-finished goods move fast from one workstation to other.
 Workstations are designed suitable and properly.
 Suitable spaces are allocated to production centers and service centers.
 The movements made by the workers minimized.
Layout can be classified into the following four categories:
a. process layout
b. product layout
c. Group layout (combination layout)
d. Fixed position layout

a. process layout:
• It is also known as functional layout.
• Here similar machines and services located together Ex. All the lathe machines
will be at one place and all milling machines at another place and so on.
• This type of layout generally employed for industries engaged in job-shop
production and non-repetitive kind of production.
• When there variety of products manufactured at low volume we prefer this type of
layout.
• Ex. furniture manufacturer company, restaurant etc.

b. Product layout
• It is also known as line (type) layout.
• The flow of product will smooth and logical.
• When the machines and auxiliary services are located according to the processing
sequence we prefer this layout.
• It implies that various operations raw material are performed in a sequence and
the machines are placed along the product flow line.
• The product layout is selected when the volume of production of a product is high
such that separate production line to manufacture it can be justified.
• Assembly line production or mass production prefer this type layout. Ex.
Assembly of television sets assembly of computer key-board etc.

c. Group layout:
• It is the combination of both process and product layout.
• In this type of layout a set of machinery or equipment is grouped together in a
section so that each group of machines or equipment is used to perform similar
operations to produce a family of components. These machines grouped in to
cells.
• It minimizes the sum of cost of transport and the cost of equipment

d. Fixed position layout

 It is also called static product layout in which the physical characteristics of the
product dictate as to which type of machine and men are brought to the product.
 This type layout is inherent in ship building, aircraft manufacture and big pressure
vessels fabrication.
 In other type layout the product moves past stationary production equipment
where as in this case men and equipment are moved to the material at one place
and the product is completed at the place where the material lies