Production and operations management

Production and trading operations managementProduction and Operations Management (POM) is about the transformation of payoff and operational inputs into output signals that, when distributed, suit the inescapably of nodes.The butt in the above diagram is ofttimes referred to as the Conversion Process. thither be several(prenominal) different modes of handling the conversion or toil serve Job, Batch, closure and GroupPOM incorpo evaluate m any tasks that argon interdependent, but which lowlife be grouped under five main headings intersectionMarketers in a stemma must tick that a cable sells products that meet guest take and wants. The role of Production and Operations is to ensure that the air actu each(prenominal)y makes the take products in accordance with the plan. The role of PRODUCT in POM therefore concerns areas such as Performance Aesthetics flavour depend efficacy Quantity Production cost Delivery datesPLANTTo make PRODUCT, PLANT of some kind is nee ded. This pull up stakes comprise the bulk of the fixed assets of the business. In determine which PLANT to use, management must consider areas such as Future demand (volume, timing) Design and layout of manufactory, equipment, offices Productivity and reli capability of equipment Need for (and costs of) maintenance heathland and safety ( in event the operation of equipment) Environmental issues (e.g. creation of waste products)PROCESSESThere are many different instructions of producing a product. Management must choose the shell process, or series of processes. They will consider Available susceptibility Available skills Type of outturn Layout of plant and equipment Safety Production costs Maintenance requirementsPROGRAMMESThe fruit PROGRAMME concerns the dates and times of the products that are to be dod and supplied to customers. The decisions made about programme will be influenced by factors such as Purchasing patterns (e.g. lead time) bullion hunt down Need for / av ailability of storage TransportationPEOPLEProduction depends on PEOPLE, whose skills, experience and motivation transform. Key tidy sum-related decisions will consider the interest areas final payment and salaries Safety and training Work conditions Leadership and motivation Unionisation Communication++++++++++++++++++++++++++++++++++++++++++++++++++ proceeds types of intersection methodDefinitionIn our introduction to occupation and operations management (POM) we suggested that there are several different methods of handling the conversion or production process Job, Batch, Flow and Group. This revision note explains these methods in more(prenominal) detail.IntroductionThe various methods of production are not associated with a particular volume of production. Similarly, several methods may be used at different stages of the boilersuit production process.Job MethodWith Job production, the complete task is handled by a single break a steeringer or group of workers. Jobs can be nonaged/low technology as well as complex/high technology.Low technology jobs here the organisation of production is extremely simply, with the required skills and equipment easy obtainable. This method enables customers specific requirements to be holdd, often as the job progresses. Examples include hairdressers tailoringHigh technology jobs high technology jobs involve untold greater complexity and therefore present greater management challenge. The important ingredient in high-technology job production is project management, or project surmount. The essential features of inviolable project authority for a job are Clear definitions of objectives how should the job progress (milestones, dates, stages) Decision-making process how are decisions taking about the needs of to each one process in the job, labour and other resourcesExamples of high technology / complex jobs film production large construction projects (e.g. the Millennium Dome)Batch MethodAs businesses conj ure up and production volumes increase, it is not unusual to see the production process organised so that Batch methods can be used.Batch methods require that the work for any task is divided into parts or operations. Each operation is completed through the whole batch before the next operation is performed. By apply the batch method, it is possible to achieve specialisation of labour. Capital expenditure can too be kept lower although careful planning is required to ensure that production equipment is not idle. The main aims of the batch method are, therefore, to Concentrate skills (specialisation) Achieve high equipment utilisationThis technique is probably the most commonly used method for organising manufacture. A good example is the production of electronic instruments.Batch methods are not without their problems. There is a high probability of poor work flow, particularly if the batches are not of the optimal size or if there is a significant difference in productivity by ea ch operation in the process. Batch methods often core in the build up of significant work in progress or stocks (i.e. completed batches waiting for their turn to be worked on in the next operation).Flow MethodsFlow methods are similar to batch methods except that the problem of rest/idle production/batch queuing is eliminated.Flow has been defined as a method of production organisation where the task is worked on continuously or where the processing of material is continuous and progressive,The aims of flow methods are Improved work material flow Reduced need for labour skills Added value / completed work fasterFlow methods mean that as work on a task at a particular stage is complete, it must be passed directly to the next stage for processing without waiting for the remain tasks in the batch. When it arrives at the next stage, work must start immediately on the next process. In order for the flow to be smooth, the times that each task requires on each stage must be of agree l ength and there should be no movement off the flow production term. In theory, therefore, any fault or error at a particular stageIn order that flow methods can work well, several requirements must be met(1) There must be substantially constant demandIf demand is unpredictable or irregular, accordingly the flow production note of hand can lead to a substantial build up of stocks and possibility storage difficulties. Many businesses using flow methods get round this problem by building for stock i.e. keeping the flow breeze working during quiet periods of demand so that output can be produced efficiently.(2) The product and/or production tasks must be standardizedisedFlow methods are inflexible they cannot deal effectively with variations in the product (although some variety can be fulfil through applying different finishes, decorations etc at the end of the production line).(3) Materials used in production must be to specification and delivered on timeSince the flow product ion line is working continuously, it is not a good idea to use materials that vary in style, form or look. Similarly, if the required materials are not available, then the whole production line will come to a close with potentially serious cost consequences.(4) Each operation in the production flow must be carefully defined and recorded in detail(5) The output from each stage of the flow must conform to theatrical role standardsSince the output from each stage moves forward continuously, there is no room for sub-standard output to be re-worked (compare this with job or batch production where it is possible to compensate for a lack of attribute by doing some extra work on the job or the batch before it is completed).The achievement of a successful production flow line requires considerable planning, particularly in ensuring that the correct production materials are delivered on time and that operations in the flow are of equal duration.Common examples where flow methods are used are the manufacture of motor cars, chocolates and televisions.+++++++++++++++++++++++++ subject matter management the meaning of readinessIntroductionThe capacity of a production unit (e.g. machine, factory) is its ability to produce or do that which the customer requires. In production and operations management, three types of capacity are often referred toPotential contentThe capacity that can be made available to influence the planning of senior management (e.g. in helping them to make decisions about overall business growth, investment etc). This is essentially a long-term decision that does not influence day-to-day production managementImmediate CapacityThe amount of production capacity that can be made available in the short-term. This is the maximum potential capacity assuming that it is used productivelyEffective CapacityAn important concept. non all productive capacity is very used or usable. It is important for production managers to understand what capacity is actu ally achievable.Measuring capacityCapacity, being the ability to produce work in a given time, must be measured in the unit of work.For example, consider a factory that has a capacity of 10,000 machine hours in each 40 hour week. This factory should be capable of producing 10,000 standard hours of work during a 40-hour week. The actual volume of product that the factory can produce will depend on the amount of work involved in production (e.g. does a product require 1, 5, 10 standard hours? any additional time required in production (e.g. machine set-up, maintenance) the productivity or effectiveness of the factoryConstraints on capacityIn capacity management there are usually two potential constraints TIME and CAPACITY while may be a constraint where a customer has a particular required delivery date. In this situation, capacity managers often plan backwards. In other words, they allocate the final stage (operation) of the production tasks to the period where delivery is required the penultimate task one period earlier and so on. This process helps identify whether there is sufficient time to meet the production demands and whether capacity needs to be increased, albeit temporarily.Production SchedulingA schedule is a representation of the time necessary to take to the woods out a particular task.A job schedule shows the plan for the manufacture of a particular job. It is created through work / study reviews which determine the method and times required.Most businesses carry out several production tasks at one time which entails amalgamating several job schedules. This process is called scheduling. The result is known as the production schedule or factory schedule for the factory/plant as a whole.In preparing a production schedule, attention needs to be paid to Delivery dates (when are finished products due?) Job schedules for each relevant production task Capacities of production sections or departments involved Efficiency of these production sections or departments Planned holidays evaluate sickness / absenteeism / training Availability of raw materials, components and packagingThere are two key problems with production scheduling(1) Measurement of slaying (e.g. should financial performance be most important (e.g. minimise the amount of stock), or are marketing objectives more important e.g. always produce enough to meet customer demand).(2) The large number of possible schedules often caused by too much complexity or variety in the production needs of the business.+++++++++++++++++++++++++++++++++++++++++++++++introduction to break-even depth psychologyIntroductionBreak-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs betwixt those which are variable (costs that change when the production output changes) and those that are fixed (costs not directly related to the volume of production). come up variable and fixed costs are compared with sales revenue in order to determine the level of sales volume, sales value or production at which the business makes uncomplete a pro shot nor a hurt (the break-even quest).The Break-Even ChartIn its simplest form, the break-even chart is a graphical representation of costs at various levels of activity shown on the same chart as the variation of income (or sales, revenue) with the same variation in activity. The point at which neither profit nor loss is made is known as the break-even point and is represented on the chart below by the intersection of the two linesIn the diagram above, the line OA represents the variation of income at varying levels of production activity (output). OB represents the total fixed costs in the business. As output increases, variable costs are incurred, meaning that total costs (fixed + variable) also increase. At low levels of output, Costs are greater than Income. At the point of intersection, P, costs are exactly equal to income, and hence neither profit nor loss is made.Fixed CostsFixed costs are those business costs that are not directly related to the level of production or output. In other words, even if the business has a zero output or high output, the level of fixed costs will remain broadly the same. In the long term fixed costs can alter perhaps as a result of investment in production capacity (e.g. adding a new factory unit) or through the growth in overheads required to support a larger, more complex business.Examples of fixed costs Rent and rates Depreciation Research and development Marketing costs (non- revenue related) Administration costsVariable CostsVariable costs are those costs which vary directly with the level of output. They represent payment output-related inputs such as raw materials, direct labour, fuel and revenue-related costs such as commission.A distinction is often made between Direct variable costs and Indirect variable costs.Direct variable costs are those which can be directly referable to the production of a particular product or service and allocated to a particular cost centre. Raw materials and the wages those working on the production line are good examples.Indirect variable costs cannot be directly attributable to production but they do vary with output. These include depreciation (where it is metrical related to output e.g. machine hours), maintenance and certain(a) labour costs.Semi-Variable CostsWhilst the distinction between fixed and variable costs is a convenient way of categorising business costs, in reality there are some costs which are fixed in nature but which increase when output reaches certain levels. These are largely related to the overall scale and/or complexity of the business. For example, when a business has relatively low levels of output or sales, it may not require costs associated with functions such as human resource management or a fully-resourced finance department. However, as the scale of the business grows (e.g. output, number p eople employed, number and complexity of transactions) then more resources are required. If production rises suddenly then some short-term increase in warehousing and/or becharm may be required. In these circumstances, we say that part of the cost is variable and part fixed.++++++++++++++++++++++++++++++++++++++++++++++ fibre management introductionOne of the most important issues that businesses arrive focused on in the last 20-30 years has been quality. As markets let become much more competitive quality has become widely regarded as a key ingredient for success in business. In this revision note, we discover what is meant by quality by focusing on the key monetary value you will come up against.What is quality? You will comes across several terms that all seem to relate to the concept of quality. It can be instead confusing working out what the difference is between them. Weve defined the key terms that you need to know belowTermDescriptionQualityQuality is first and fore most about meeting the needs and expectations of customers. It is important to understand that quality is about more than a product simply working properly. ring about your needs and expectations as a customer when you buy a product or service. These may include performance, appearance, availability, delivery, reliability, maintainability, cost effectiveness and price.Think of quality as representing all the features of a product or service that affect its ability to meet customer needs. If the product or service meets all those needs then it passes the quality test. If it doesnt, then it is sub-standard.Quality managementProducing products of the required quality does not happen by accident. There has to be a production process which is properly managed. Ensuring satisfactory quality is a vital part of the production process.Quality management is concerned with experienceling activities with the aim of ensuring that products and services are fit for their purpose and meet the spe cifications. There are two main parts to quality management(1) Quality impudence(2) Quality controlQuality assuranceQuality assurance is about how a business can design the way a product of service is produced or delivered to minimise the chances that output will be sub-standard. The focus of quality assurance is, therefore on the product design/development stage.Why focus on these stages? The idea is that if the processes and procedures used to produce a product or service are tightly controlled then quality will be built-in. This will make the production process much more reliable, so there will be less need to inspect production output (quality control).Quality assurance involves developing close relationships with customers and suppliers. A business will want to make sure that the suppliers to its production process understand exactly what is required and deliverQuality controlQuality control is the traditional way of managing quality. A further revision note (see the list o n the right) deals with this in more detail.Quality control is concerned with checking and reviewing work that has been done. For example, this would include lots of inspection, testing and sampling.Quality control is mainly about detecting defective output rather than preventing it. Quality control can also be a very expensive process. Hence, in recent years, businesses have focused on quality management and quality assurance. fare quality managementTotal quality management (usually shortened to TQM) is a modern form of quality management. In essence, it is about a kind of business philosophy which emphasises the need for all parts of a business to continuously look for ways to improve quality. We cover this important concept in further revision notes.++++++++++++++++++++++++++++++++++++++++++++++++++quality controlQuality control is the more traditional way that businesses have used to manage quality. Quality control is concerned with checking and reviewing work that has been don e. But is this the best way for a business to manage quality?Under traditional quality control, inspection of products and services (checking to make sure that whats being produced is meeting the required standard) takes pasture during and at the end of the operations process.There are three main points during the production process when inspection is performed1When raw materials are received introductory to entering production2Whilst products are going through the production process3When products are finished inspection or testing takes emerge before products are despatched to customersThe problem with this sort of inspection is that it doesnt work very wellThere are several problems with inspection under traditional quality control1The inspection process does not add any value. If there were any guarantees that no defective output would be produced, then there would be no need for an inspection process in the first place2Inspection is costly, in terms of both tangible and non physical costs. For example, materials, labour, time, employee morale, customer goodwill, lost sales3It is sometimes done too late in the production process. This often results in defective or non-acceptable goods actually being received by the customer4It is usually done by the wrong people e.g. by a separate quality control inspection team rather than by the workers themselves5Inspection is often not compatible with more modern production techniques (e.g. Just in Time Manufacturing) which do not allow time for much (if any) inspection.6Working capital is tied up in stocks which cannot be sold7There is often disagreement as to what constitutes a quality product. For example, to meet quotas, inspectors may approve goods that dont meet 100% conformance, giving the message to workers that it doesnt matter if their work is a bit sloppy. Or one quality control inspector may follow different procedures from another, or use different measurements.As a result of the above problems, many b usinesses have focused their efforts on improving quality by implementing quality management techniques which emphasise the role of quality assurance. As Deming (a quality guru) wroteInspection with the aim of finding the bad ones and throwing them out is too late, ineffective, costly. Quality comes not from inspection but from improvement of the process.++++++++++++++++++++++++++++++++++++++++++++total quality management tqmTotal quality management is a popular quality management concept. However, it is about much more than just assuring product or service quality. TQM is a business philosophy a way of doing business. It describes ways to managing people and business processes to ensure complete customer satisfaction at every stage. TQM is often associated with the pronounce doing the right things right, first time. This revision note summarises the main features of TQM.Like most quality management concepts, TQM views quality entirely from the point of view of the customer.All businesses have many types of customer. A customer can be someone internal to the business (e.g. a production employee working at the end of the production line is the customer of the employees involved earlier in the production process).A customer can also be external to the business. This is the kind of customer you will be familiar with. When you fly with an airline you are their customer. When Tescos buys products from food manufacturers, it is a customer.TQM recognises that all businesses require processes that enable customer requirements to be met. TQM focuses on the ways in which these processes can be managed with two key objectives1100% customer satisfaction2Zero defectsThe Importance of Customer Supplier Relationships Quality ChainsTQM focuses potently on the importance of the relationship between customers (internal and external) and supplier. These are known as the quality chains and they can be broken at any point by one person or one piece of equipment not meetin g the requirements of the customer. Failure to meet the requirements in any part of a quality chain has a way of multiplying, and failure in one part of the system creates problems elsewhere, leading to yet more failure and problems, and so the situation is exacerbated.The ability to meet customers (external and internal) requirements is vital. To achieve quality throughout a business, every person in the quality chain must be trained to ask the following questions about every customer-supplier chainCustomers Who are my customers? What are their real needs and expectations? How can I measure my ability to meet their needs and expectations? Do I have the capability to meet their needs and expectations? (If not, what must I do to improve this capability?) Do I continually meet their needs and expectations? (If not, what prevents this from accident when the capability exists?) How do I monitor changes in their needs and expectations?Suppliers Who are my internal suppliers? What are my true needs and expectations? How do I communicate my needs and expectations to my suppliers? Do my suppliers have the capability to measure and meet these needs and expectations? How do I inform them of changes in my needs and expectations?Main Principles of TQMThe main principles that underlie TQM are summarised belowPreventionPrevention is better than cure. In the long run, it is cheaper to stop products defects than trying to find themZero defectsThe ultimate aim is no (zero) defects or exceptionally low defect levels if a product or service is complicatedGetting things right first timeBetter not to produce at all than produce something defectiveQuality involves everyoneQuality is not just the concern of the production or operations department it involves everyone, including marketing, finance and human resources ceaseless improvementBusinesses should always be looking for ways to improve processes to help qualityEmployee involvementThose involved in production and operations have a vital role to play in spotting improvement opportunities for quality and in identifying quality problemsIntroducing TQM into a BusinessTQM is not an easy concept to award into businesses particularly those that have not traditionally concerned themselved too much with understanding customer needs and business processes. In fact many attempts to introduce TQM failOne of the reasons for the challenge of introducing TQM is that it has significant implications for the whole business.For example, it requires that management give employees a say in the production processes that they are involved in. In a culture of continuous improvement, workforce views are invaluable. The problem is many businesses have barriers to involvement. For example, middle managers may feel that their authority is being challenged.So empowerment is a crucial part of TQM. The key to success is to identify the management culture before attempting to install TQM and to take steps to change towards the ma nagement style required for it. Since culture is not the first thing that managers think about, this step has often been missed or ignored with resultant failure of a TQM strategy.TQM also focuses the business on the activities of the business that are closest to the customer e.g. the production department, the employees facing the customer. This can cause resentment amongst departments that previously considered themselves above the shop floor.+++++++++++++++++++++++++++++++