Introduction to Production/Operations Management

Product/Operations Management

Chapter 1.0 – Introduction

Production – is the management function concerned with the transformation of input resources into desired outputs.

Production as a System

                                  

   Inputs of a Production System

   • External

     – Legal, Economic, Social, Technological

   • Market

     – Competition, Customer Desires, Product Info.

   • Primary Resources

     – Materials, Personnel, Capital, Utilities

Conversion Subsystem

   • Physical (Manufacturing)

   • Location Services (Transportation)

   • Exchange Services (Retailing)

   • Storage Services (Warehousing)

   • Other Private Services (Insurance)

   • Government Services (National, Local)

Outputs of a Production System

   • Direct

     – Products

     – Services

   • Indirect

     – Waste

     – Pollution

     – Technological Advances

What is a Transformation Process?

   A transformation process is defined as a use of resources to transform inputs into some desired outputs.

Applying in the POM, P/O Managers have the so called 5Ps:

1.      People

2.      Plant

3.      Parts

4.      Process

5.      Power

What is Operations Management?

    Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.

Why Study Operations Management?

   • Production and Operations Management (POM) is the management of an organization’s 

       production system.

   • A production system takes inputs and converts them into outputs.

   • The conversion process is the predominant activity of a production system.

   • The primary concern of an operations manager is the activities of the conversion process.

Objectives of Production Management

       The Operations Managers, aim is to create the desired end product in the:

·        Right quantity

·        Right quality

·        At the right time

·        To the right customer

·        Economically

To achieve the objective of producing the product in the right “mix”, production managers must engage in production planning and control using scientific techniques like: Forecasting, Queuing, Inventory Management, Scheduling, Break-Even Analysis, Facility Layout, Line Balancing, among others.

To maximize the probability that the end product at lowest possible cost, the following concepts are used: Methods Study, Time Study, Work Sampling, Safety, Reliability and Maintenance Engineering.

Functions of Production Management:

·        Product Planning – defines what good or service to produce.

·        Process planning - involves determining the required input resources, general work flow, and specific work content.

·        Physical facilities – concerned with the optimum plant layout and location; most efficient combinations of machine and equipment; physical arrangement that results in the most efficient material handling.

·        Production planning & control – involves forecasting the demand for the company’s products and converting the forecast in terms of the need for various input resources (called loading/routing); scheduling the required work; giving the go-signal to start and providing the necessary instructions to different production sections (called dispatching); checking on the progress to ensure effective/efficient usage of the factors of production.

·        Quality control – ensures meting product’s specifications; functions for which it is intended to satisfy the customers.

·        Methods improvement – concerns with the development of the most efficient, economical way of doing production jobs.

·        Work measurement – applies techniques designed to establish the time for a qualified worker to carry out a specified job at a defined level of performance.

·        Inventory Management – determines the most economical inventory level.

Manufacturing Process Design

Two Categories of Manufacturing Systems:

            In terms of:

1.      Material Process Flow

2.      Manufacturing Process Flow

Material Process Design (Flow)

a.      Continuous Manufacturing – (Flow Shop), characterized as having its input, throughput, and output rates being fairly uniform.

-          There is a definite set of inputs which go through similar operations at uniform rates and produces definite set of outputs.

-          Ideal for mass production where products are standard in form and there is high volume demand for them.

-          Examples are bottling and petroleum companies which produced family of closely- related products and uses generalized-purpose equipment.

b.      Intermittent Manufacturing – (Job Shop), its main feature is a multiple input system which require different degrees and combination of processes.

-          It produces multiple product output at irregular intervals and in variable quantities depending on customer and order.

-          It is preferred for small volume products and uses special machines.

-          Examples are printing houses and book publishing where quantity and variety is dependent on demand.

c.       Batch Manufacturing – A business type which exhibit this type are garments. Each batch cloth product to be processed in each work station would have same operations performed on each of the pieces in the batch. Basically, workers do the same working steps to successive batches of materials. Although models may vary such as shirt with collar versus those without collar, it follows general similar steps.

-          Operations managers of batch flow have less expediting to do; fewer scheduling changes hence, making it possible to supervise more people.

d.      Hybrid Manufacturing – This covers manufacturing which are part Batch and part Continuous.

-          In brewery for example, the production of the raw material, work follows the Continuous type while starting on the fermentation stag onwards; when beers are processed to the desired flavors, the Batch process principles are followed. Aside from the production nature, the set up is for convenience.

-          Since it takes months to brew a beer, production depends on forecast of sales. On the other hand, the packaging of the beer to the desired brand and flavor are done to suit the recent customer orders.

e.      Project Production System – Examples of this system are construction of buildings, ships, and airplanes where the size of the product prohibits its flow from one station to another.

-          Instead, the input resources are brought to the location site.

-          This is characterized whereby each project is distinct from another owing to the variety of customer specifications despite similarities in physical appearance.

Manufacturing Process Design (Flow)

a.      Analytical Manufacturing – This type processes the product by breaking down the raw material into basic components to produce various products which are different from the original material. Usually, there are few inputs utilized but the process turns out multiple outputs.

Two familiar examples are:

1.      Coconut processing where the fruit is processed into several product outputs like milk, copra, and oil.

2.      Crude oil processing which turns out different products like gasoline, diesel, kerosene, and liquefied petroleum gas (LPG), among others.

b.      Synthetic Manufacturing – This process combines the various raw materials to produce a product which is very different from any of the original parts.

-          There are generally many inputs required to produce only one output.

-          A common example is the manufacture of “chop-chop” vehicles which require numerous parts coming from different supply source and used to produce one vehicle at a time.

c.       Assembly Manufacturing – Industries which follow this process are the automobiles, appliances, machineries and others where the raw materials and the various parts in different stages of completion are combined to produce a desired set of output.

Service Process Design

1.      Service Factory

2.      Service Shop

3.      Mass Service

4.      Professional Service