Regardless of whether it is in a manufacturing or a service industry, every business creates its products and services, which is known as production. Production Management, therefore, means managing all the activities, functions, and strategies involved in the production of goods and services.
Before we get down to learning all that there is about production management, have a quick look at today’s agenda.
Points at a Glance
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What is Production Management
In the most basic terms, production is the process of converting raw materials into finished products or services: Input to Output.
Consequently, production management is the application of business and management principles in the production of the product. It includes a vast range of activities, such as:
- Managing, and many more.
Production Management involves the formulation of numerous different production strategies and plans to accomplish desired outcomes. Deciding the production cost, quality, and capacity of the production is all a part of production management.
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Six M’s of Production Management
In order to meet the customer needs and demands, Production Management follows these six key elements, also known as the 6 M’s, in its work:
One of the primary objectives of production management is to manufacture goods and services in the ideal amount, and quality, according to schedule, and for the best possible price. It applies the principles of management in making business-related decisions and carrying through production-related activities. All employees involved in the production process are supervised and under the control of production managers.
Importance of Production Management
Production management is an essential aspect of any organization. Here are some of the key reasons, why it is so necessary and how it helps businesses in achieving their targets:
Production management helps in increasing process efficiency, as the business is able to deliver quality goods and services. Techniques for production management aid in the development of new, high-quality products and aid in the innovation of existing ones. Less time spent on manufacturing processes implies more resources are available for other areas that might require greater attention, which can help businesses become market leaders.
- Perfect utilization of capital and resources-
Production management assists in the optimal usage of resources such as machines, workforce, raw materials, etc. It aims to minimize production costs while maximizing profits. It makes sure that both the capital and resources are being used efficiently and to their fullest.
This in turn helps the organization in achieving higher returns at a faster rate and lower cost.
- Fulfilling the organization’s objectives-
Production management aids organizations in reaching their goals and accomplishing their business objectives. Organizations leverage the principles of production planning to build products that align with their vision as well as the needs of the customers.
- Reduces risks of failure-
During the process of production management, a lot of information related to market trends, customer requirements, and business goals, is gathered. The information collected is used to formulate efficient plans and design calculated strategies. As a result, the chance of a product failing reduces to a minimum.
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Functions of Production Management
The primary aim of production management is to add value to the organization and its products. It ensures that the goods and services provided to the customers by the businesses, are of high quality and satisfy their needs.
In the present times, production management has a broad range of responsibilities.
Let’s look at some of its functions to help us understand better:
Selecting a product and its design
For the success of a business in the competitive market, a precondition is to choose the right product and consequently its right design. Production management helps organizations to conduct appropriate research and analysis to efficiently map out customer requirements and market trends. This information can be used by organizations to decide the optimal product and then eventually the optimal design for their business.
This ensures that customer satisfaction, as well as the organization’s goals, have simultaneously been taken care of.
Selecting the production process
Choosing the right production process is equally important as choosing the right product and design. It is imperative to decide a few things in advance, for example:
- What type of technology is to be used?
- Which machines will be used?
- What will be the material handling system?
- In what quantity is the product to be produced?
Another important function of production management is to plan the production process. Planning constitutes various activities and phases through which the production managers optimize the production process. In the planning phase of production, estimating, scheduling and routing are also done by the managers.
- Estimating: Estimating, as its name suggests, is the estimation of the resources required for the production process. The raw materials, men, machines, and all other resources are identified to meet the production targets decided during planning.
- Scheduling: Scheduling specifies the duration or the time required for the completion of production; when an activity is to be started and when it is to be completed.
It is designed to prioritize various tasks, and its main objective is to determine whether tasks are being done in accordance with the established schedules or not.
Therefore, it serves a crucial purpose to facilitate timely delivery and maximize efficiency.
- Routing: Routing can be termed as the path followed or the sequence of operations management. It finds out the most optimal sequence of operations for the production process. This makes the process efficient and economical while ensuring a smooth flow throughout.
The next, and most crucial, task that the production manager must complete is controlling the production process. The production planning and the actual process must be compared, and if any discrepancies between the actual planning and the process are discovered, corrective measures must be taken.
The production manager ensures that the inventory required for the production process remains accurate and under control. Measures are taken to avoid both over and under-stocking of the inventory. If the level of inventory is not properly maintained, two cases can arise:
- Understocking- In this case, production will be delayed and not be completed on schedule. As a result, deliveries will be affected.
- Overstocking- In this case, the blockage of working capital might occur, along with the wastage of materials.
Understand the importance of quality planning: Recognize the significance of quality planning in ensuring that products, services, and processes meet or exceed customer expectations.
Cost and quality control
Customers today want to purchase products and services that have good quality, but along with that they also look for cheaper prices. Production management takes care of this and tries to formulate a plan in such a way that the cost can be kept minimum without compromising on the quality. This way customer satisfaction can be achieved.
Maintenance of machines
Production management is responsible for the proper maintenance as well as the replacement of machines required for production. It is vital that the machines keep functioning without any issues. This enables the production to be completed in a smooth manner.
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Scope of Production Management
Production management definitely has an extremely vast scope. We have already discussed that the primary objective of production management is to satisfy the customers’ needs by providing them with high-quality products and services. Here is a list of some of its areas of scope:
- Process design
- Acquisition of land
- Quality control
- Material Handling
- PPC or Production Planning and Control
- Maintenance and Repair
An organization’s manufacturing processes are overseen and managed by a production manager to ensure that the desired output is achieved.
Whether it is finance, marketing, or any other area of the organization, it depends on and is supported by production management. Hence, it won’t be wrong to say that production management is the core of an organization’s development!
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