Production Management

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Meaning of Production Management

Production Management is a process which involves managing and
controlling production activities of business. It involves the application
of management principles to the production function of the business to
increase productivity. Production management applies planning,
directing, organising and controlling for managing production
operations. This process is concerned with the conversion of raw
materials into business finished products efficiently without any wastage
of resources.
Production management involves framing of various production
strategies and ensures the successful implementation of these strategies
in business operations. These strategies are formed and implemented by
production management for achievement of different pre-set goals in
terms of unit costs, quality, production mix and capacity of production.
Production management aims at proper integration and utilisation of
6M’s: Men, Machine, Money, Methods, Materials and Market to satisfy
the customer needs in a better way. Its main objective is to manufacture
products and services in the right quantity, of the right quality, at the
right time and at a lower cost. Various technological and innovation
changes are easily implemented in business using Production
management. Production management supervises and controls all
persons associated with production operations of the business and ensure
the desired output.

Nature of Production Management

1. Results in Value Addition: Production management is a key tool
available with an organization which assist in value addition. It is a
process which enables in producing high-quality products by
purchasing raw materials from the right source, in right form, at
right price and in right quantity. These quality goods provide better
satisfaction to customers thereby improving goodwill of an
organization.
2. Inter-Disciplinary Approach: It is an inter-disciplinary approach
which is derived from several disciplines and subjects. Different
subjects like statistics, mathematics, economics, engineering,
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sociology and human psychology have contributed toward the

development of production management approach.
3. Part of General Management: Production management is an
essential component of General management. It is a tool which
assist managers in planning, organizing, coordinating and
controlling all activities related to the production of products and
services.
4. Transformation Process: It is a process of transformation in
which raw materials are converted into finished products that are
ready for consumption by consumers. Production management
focuses on economical production of products avoiding any
wastage of raw materials used.
5. Operative Function: Production management monitors day to day
operations of business for ensuring long-term continuity. It
supervises all production activities on daily basis for checking out
whether all resources are efficiently utilized.
6. Both Art and Science: It can be treated both as an art as well as
science. Production management is termed as art as it is the one
which assign, coordinates and monitors all work activities of an
organization. Whereas, it is a science as it manages all machines
and technical aspects helping in production activities.
7. Management of Service Sector: Production management not only
manages the activities related to production of tangible products. It
is a process which monitors the service sector also where
intangible products are provided to customers as per their needs.

Scope of Production Management

1. 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.
2. 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
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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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
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Objectives of Production Management

Production in Right Quantity

Production management formulate and implement various production
strategies to ensure production in right quantity. Production in the right
quantity is important for every organisation to ensure profitability.
Excess or shortage in production will have adverse effects. Excess
production of products will leads to blockage of funds in inventory.
Whereas the shortage in production will create a shortage of its products
and will not be able to fulfil demand.

Minimisation of Production Time

Completion of production activities timely is essential for the
achievement of the goal. Production management designs schedules for
various production activities of business. It monitors all production
activities and ensures that all operations are going as per planned
schedules. In case of any deviation in production activities, production
manager takes all necessary corrective measures to remove these
deviations. It helps in minimising the overall time involved in
production activities.

Production of Right Quality

Production management ensures that quality products are manufactured
by the organisation. It aims that customers’ expectations are fulfilled by
the product. Attempts are made to convert the needs of customers into
production specification while designing a product. Certain standards are
set through production management process and attempts are made to
fulfil these standards.

Minimisation of Cost
Cost reduction is the primary focus of every business. Production
management aims at minimising the cost of product activities of
business. It involves usage of sound supply chain management in
production planning minimising the overall production and supply cost.
Production management estimates the true cost of a product before its
production and tries to keep its production cost within the parameter of
pre-estimated cost.
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Planning and Control of Materials

Production management helps in maintaining the optimum stock of
inventory within the organisation. It keeps complete record of all
materials required for various production activities. By maintaining
records, shortage of any raw materials can be easily detected. It helps in
ensuring that all raw materials are always available in the right quantity
so that production activities are not affected.

Analyse the Market

Production management completely analyse market situations before
framing production strategies. It recognises and takes into account
various technological and innovation changes at early as possible. All
these changes are implemented in production activities of the
organisation to face the market competition. Production activities go in
line with market demand.

Optimum Utilisation Of Resources

Proper utilisation of all resources is must to earn the desired profit and
achieve desired goals. Production management issues rules and
guidelines for all persons associated with production operations. It
monitors their activities and helps them in improving their efficiency.
Production managers check the overall activities and productivity of all
departments of organisations. It is ensured that there is no wastage of
resources and all resources are efficiently utilised.

Functions of Production Management

Selection of Products and Its Design
Production management helps the firm in selection of proper products
and design. Selection of the right product and its proper design is
important for the survival of every business in the market. It performs
several research programs to understand the wants of customers. Proper
knowledge of customer requirements helps the firm in deciding the right
product. After choosing a product, its proper design is selected to ensure
that customer needs are fully satisfied at a lower cost.
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Production Planning and Control

Planning and monitor production activities are quite important for every
business. Production management keeps an eye on each and every
activities and element associated with production operations. It decides
in advance what to produce and in how much quantity, then decides
process for production, sets the starting and completion dates for
production activities. It designs an exact plan route in advance and
implements that in operations to ensure timely delivery of orders.
Production managers monitor all production activities and take all
necessary activities as and when required.

Location of Facilities
Selection of proper location for setting production facilities is a must for
ensuring smooth functioning. It is a long term capital decision which
affects the business organisation in the long run. Production
management properly analyse the area before setting up production
plants and other facilities of business. It takes into account various
geographical and other factors to ensure the availability of raw materials,
enough employees and various infrastructural facilities.

Machines Maintenance and Replacement

Production management plays a significant role in the maintenance of
machinery and plant. Proper functioning of machinery is important for
uninterrupted production. Production management process focuses on
continuous routine inspection of machines, performs regular cleaning
and oiling, removal and replacement of any obsolete and damaged
equipment’s. All these steps taken by production management prevent
any machinery breakdown and avoid any production halts.

Enhances Goodwill and Reputation of Business

Goodwill and image of a business is a key element in attracting and
retaining customers. Production management helps the business in
improving its goodwill by properly satisfying customer needs.
Production management ensures that the right quality products at the
right cost are delivered to customers at the right cost. This increase the
overall confidence and satisfaction level of customers.
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Helps in Facing Competition

Production management helps the business is facing stiff competition in
the market. It properly analyzes the market requirements and
competitors activities before planning for production activities. All
strategies are framed and implemented in accordance with the situations
of the market. It ensures that a firm produces the right product in the
right quantity, at the right time and provides it to the customer at the
right cost. Customers’ needs are given prime importance by production
management. This will helps in facing the competition easily.

Helps in Expansion and Growth

Expansion and growth are the ultimate aims of every business.
Production management supports the business in its expansion and
growth. It aims at increasing the profitability of the business by
decreasing the overall operating cost. This process ensures optimum
utilisation of all resources. Production monitors operations of every
department of business and takes all corrective measures as and when
required. High-profit earnings by business help in expanding its
operations and growing its size.