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THE UNIVERSITY OF MANILA GRADUATE STUDIES WHAT IS PRODUCTION MANAGEMENT? PRODUCTION MANAGEMENT also called operations management, planning and control of industrial processes to ensure that they move smoothly at the required level. Techniques of production management are employed in service as well as in manufacturing industries. It is a responsibility similar in level and scope to other specialties such as marketing or human resource and financial management . In manufacturing operations, production management includes responsibility for product and process design, planning and control issues involving capacity and quality, and organization and supervision of the workforce. THE “FIVE M’S Production management’s responsibilities are summarized by the “five M’s”: men, machines, methods, materials, and money. “Men” refers to the human element in operating systems. Since the vast majority of manufacturing personnel work in the physical production of goods, “people management” is one of the production manager’s most important responsibilities. The production manager must also choose the machines and methods of the company, first selecting the equipment and technology to be used in the manufacture of the product or 1


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WHAT IS PRODUCTION MANAGEMENT?PRODUCTION MANAGEMENTalso called operations management,planning and control of industrial processes to ensure that they move smoothly at the required level. Techniques of production management are employed in service as well as in manufacturing industries. It is a responsibility similar in level and scope to other specialties such as marketing or human resource and financial management. In manufacturing operations, production management includes responsibility for product and process design, planning and control issues involving capacity and quality, and organization and supervision of the workforce.THE FIVE MSProduction managements responsibilities are summarized by the five Ms: men, machines, methods, materials, and money. Men refers to the human element in operating systems. Since the vast majority of manufacturing personnel work in the physical production of goods, people management is one of the production managers most important responsibilities.The production manager must also choose the machines and methods of the company, first selecting the equipment and technology to be used in the manufacture of the product or service and then planning and controlling the methods and procedures for their use. The flexibility of the production process and the ability of workers to adapt to equipment and schedules are important issues in this phase of production management.The production managers responsibility for materials includes the management of flow processesboth physical (raw materials) and information (paperwork). The smoothness of resource movement and data flow is determined largely by the fundamental choices made in the design of the product and in the process to be used.The managers concern for money is explained by the importance of financing and asset utilization to most manufacturing organizations. A manager who allows excessive inventories to build up or who achieves level production and steady operation by sacrificing good customer service and timely delivery runs the risk that overinvestment or high current costs will wipe out any temporary competitive advantage that might have been obtained.PLANNING AND CONTROLAlthough the five Ms capture the essence of the major tasks of production management, control summarizes its single most important issue. The production manager must plan and control the process of production so that it moves smoothly at the required level of output while meeting cost and quality objectives. Process control has two purposes: first, to ensure that operations are performed according to plan, and second, to continuously monitor and evaluate the production plan to see if modifications can be devised to better meet cost, quality, delivery, flexibility, or other objectives. For example, when demand for a product is high enough to justify continuous production, the production level might need to be adjusted from time to time to address fluctuating demand or changes in a companys market share. This is called the production-smoothing problem. When more than one product is involved, complex industrial engineering or operations research procedures are required to analyze the many factors that impinge on the problem.Inventory control is another important phase of production management. Inventories include raw materials, component parts, work in process, finished goods, packing and packaging materials, and general supplies. Although the effective use of financial resources is generally regarded as beyond the responsibility of production management, many manufacturing firms with large inventories (some accounting for more than 50 percent of total assets) usually hold production managers responsible for inventories. Successful inventory management, which involves the solution of the problem of which items to carry in inventory in various locations, is critical to a companys competitive success. Not carrying an item can result in delays in getting needed parts or supplies, but carrying every item at every location can tie up huge amounts of capital and result in an accumulation of obsolete, unusable stock. Managers generally rely on mathematical models and computer systems developed by industrial engineers and operations researchers to handle the problems of inventory control.To control labour costs, managers must first measure the amount and type of work required to produce a product and then specify well-designed, efficient methods for accomplishing the necessary manufacturing tasks. The concepts of work measurement and time study introduced by Taylor and the Gilbreths, as well as incentive systems to motivate and reward high levels of worker output, are important tools in this area of management. In new operations particularly, it is important to anticipate human resource requirements and to translate them into recruiting and training programs so that a nucleus of appropriately skilled operators is available as production machinery and equipment are installed. Specialized groups responsible for support activities (such as equipment maintenance, plant services and production scheduling, and control activities) also need to be hired, trained, and properly equipped. This type of careful personnel planning reduces the chance that expensive capital equipment will stand idle and that effort, time, and materials will be wasted during start-up and regular operations.The effective use and control of materials often involves investigations of the causes of scrap and waste; this, in turn, can lead to alternative materials and handling methods to improve the production process. The effective control of machinery and equipment depends on each machines suitability to its specific task, the degree of its utilization, the extent to which it is kept in optimum running condition, and the degree to which it can be mechanically or electronically controlled.THE IMPORTANCE OF MODELS AND METHODSBecause of the enormous complexity of typical production operations and the almost infinite number of changes that can be made and the alternatives that can be pursued, a productive body of quantitative methods has been developed to solve production management problems. Most of these techniques have emerged from the fields of industrial engineering, operations research, and systems engineering. Specialists in these fields are increasingly using computers and information processing to solve production problems involving the masses of data associated with large numbers of workers, massive inventories, and huge quantities of work in process that characterize most of todays production operations. Indeed, many mass production operations could not run without the support of these industrial engineers and technical specialists.PRODUCTION-CONTROL SUMMARY PROCESSESINVENTORYINSPECTIONCOSTS

OBSERVATIONmeasuring rate of output; recording idle time or downtimerecording stock levelsinspecting materials and partscollecting cost data

ANALYSIScomparing progress with the plananalyzing demand for stocks in different uses and at different timesestimating process capabilitiescomputing costs in relation to estimates

CORRECTIVE ACTIONexpeditingissuing production and procurement ordersinitiating full inspection; adjusting processesadjusting selling price of product

EVALUATIONestimating production capacity and maintenance schedulesdrawing up replenishment policies and inventory systemsreassessing specifications; improving processes and proceduresevaluating production economics; improving data

IMPORTANCE OF PRODUCTION MANAGEMENTThe importance of production management to the business firm:

1. Accomplishment of firm's objectives : Production management helps the business firm to achieve all its objectives. It produces products, which satisfy the customers' needs and wants. So, the firm will increase its sales. This will help it to achieve its objectives.2. Reputation, Goodwill and Image : Production management helps the firm to satisfy its customers. This increases the firms reputation, goodwill and image. A good image helps the firm to expand and grow.3. Helps to introduce new products : Production management helps to introduce new products in the market. It conducts Research and development (R&D). This helps the firm to develop newer and better quality products. These products are successful in the market because they give full satisfaction to the customers.4. Supports other functional areas: Production management supports other functional areas in an organisation, such as marketing, finance, and personnel. The marketing department will find it easier to sell good-quality products, and the finance department will get more funds due to increase in sales. It will also get more loans and share capital for expansion and modernisation. The personnel department will be able to manage the human resources effectively due to the better performance of the production department.5. Helps to face competition : Production management helps the firm to face competition in the market. This is because production management produces products of right quantity, right quality, right price and at the right time. These products are delivered to the customers as per their requirements.6. Optimum utilisation of resources : Production management facilitates optimum utilisation of resources such as manpower, machines, etc. So, the firm can meet its capacity utilisation objective. This will bring higher returns to the organisation.7. Minimises cost of production : Production management helps to minimise the cost of production. It tries to maximise the output and minimise the inputs. This helps the firm to achieve its cost reduction and efficiency objective.8. Expansion of the firm : The Production management helps the firm to expand and grow. This is because it tries to improve quality and reduce costs. This helps the firm to earn higher profits. These profits help the firm to expand and grow.The importance of production management to customers and society:

1. Higher standard of living : Production management conducts continuous research and development (R&D). So they produce new and better varieties of products. People use these products and enjoy a higher standard of living.2. Generates employment : Production activities create many different job opportunities in the country, either directly or indirectly. Direct employment is generated in the production area, and indirect employment is generated in the supporting areas such as marketing, finance, customer support, etc.3. Improves quality and reduces cost : Production management improves the quality of the products because of research and development. Because of large-scale production, there are economies of large scale. This brings down the cost of production. So, consumer prices also reduce.4. Spread effect : Because of production, other sectors also expand. Companies making spare parts will expand. The service sector such as banking, transport, communication, insurance, BPO, etc. also expand. This spread effect offers more job opportunities and boosts economy.5. Creates utility : Production creates Form Utility. Consumers can get form utility in the shape, size and designs of the product. Production also creates time utility, because goods are available whenever consumers need it.

6. Boosts economy : Production management ensures optimum utilisation of resources and effective production of goods and services. This leads to speedy economic growth and well-being of the nation.

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 (Chase, Jacobs, et al; 2006). OM is concerned with the entire system that provides a good or delivers a service.Broadly interpreted, operations management underlies all functional areas, because processes are found in all business activities Karjewski & Ritzman (2002).Why Study Operations & Supply Chain ManagementOperations management is important to study because (Chase, Jacobs, et al, 2006; Bozarth & Handfield, 2006):

A business education is incomplete without an understanding of modern approaches to managing operations

Every organization must make a product or provide a service that someone values

Operations management provides a systematic way of looking at organizational processes

Most organizations function as a part of larger supply chains

Operations management presents interesting career opportunities

The concepts and tools of OM are widely used in managing other functions of a businessTYPES OF OM DECISIONS

1. Strategic decisions that affect a companys future direction. Operations managers help determine the companys global strategies and competitive priorities and how best to design processes that fit with its competitive priorities (operations strategy).2. Process decisions about the types of work to be done in-house, the amount of automation to use, and methods of improving existing processes; how to manage processes for one-time projects; and the technologies to pursue and ways to provide leadership and technological change (managing technology).

3. Quality decisions underlie all processes and work activity. Operations managers help establish quality objectives and seek ways to improve the quality of the firms products and services (TQM) and the use of inspection and statistical methods to monitor the quality produced by the various processes (statistical process control).4. Capacity, location and layout decisions. The types of decisions in this category often require long-term commitments. Operations managers help determine the systems capacity; the location of new facilities, including global operations; and the organization of departments and a facilitys physical layout.5. Operating decisions (sometimes called the operations infrastructure) deal with operating the facility after it has been built. At this stage operations managers help coordinate the various parts of the internal and external supply chain (Supply-Chain Management), forecast demand (Forecasting), manage inventory (Inventory Management), and control output and staffing levels over time (Aggregate Planning). They also make decisions that synchronize internal processes with those of suppliers and that release new purchase or production orders (Resource Planning), whether to implement just-in-time techniques (Lean Systems), and which customers or jobs to give top priority (Scheduling) (Karjewski & Ritzman, 2002). DIFFERENCES & SIMILARITIES BETWEEN MANUFACTURING & SERVICE ORGANIZATIONS


Manufacturing OrganizationsService Organizations

Physical, durable product

Output that can be inventoried

Low customer contact

Long response time

Regional, national, international markets

Large facilities

Capital intensive

Quality easily measured Intangible, perishable product

Output that cannot be inventoried

High customer contact

Short response time

Local markets

Small facilities

Labor intensive

Quality not easily measured


Every organization has processes that must be designed and managed effectively

Some type of technology must be used in each process

Every organization is concerned about quality, productivity, and the timely response to customers

Both must make choices about the capacity, location, and the layout of its facilities

Every organization deals with suppliers of outside services and materials as well as scheduling problems

Matching staffing levels and capacities with forecasted demands is a universal problem

Even the distinctions between them can get blurred: Manufacturers do not just offer products and service organizations do not just offer services. Both typically provide a package of goods and services. Despite the fact that service providers cannot inventory their outputs, they must inventory their inputs for their productsOperations management is relevant to both manufacturing and service organizations. Historical Summary of Operations ManagementHistory of OM (Chase, Jacobs, et al, 2006)


1910'sPrinciples of scientific managementFormalized time-study and work-studyFrederick Taylor

Industrial psychologyMotion studyFrank & Lillian Gilbreth

Moving assembly lineActivity scheduling chartHenry Ford & Henry Gantt

Economic lot sizeEOQ applied to inventory controlF.W. Harris

1930'sQuality controlSampling inspection & statistical tables for quality controlWalter Shewhart, H.F. Dodge, & H.G. Romig

Hawthorne Studies of worker motivationActivity sampling for work analysisElton Mayo & L.H.C. Tippett

1940'sMultidisciplinary team approaches to complex system problemsSimplex method of lineary programmingOperations research groups and George B. Dantzig

1950's-60'sExtensive development of operations research toolsSimulation, waiting-line theory, decision theory, mathematical programming, project scheduling & CPMMany researchers

1970'sWidespread use of computers in businessShop scheduling, inventory control, forecasting, project management, MRPLed by computer manufacturers

Service quality & productivityMass production in the service sectorMcDonalds

1980'sManufacturing strategy paradigmManufacturing as a competitive weaponHarvard Business

JIT, TQC, and factory automationKanban, poka-yokes, CIM, FMS, CAD/CAM, robots, etTai-Ichi Ohno, W.E. Deming, J.M. Juran

Synchronous manufacturingBottleneck analysis, OPT, theory of constraintsEliyahu M. Goldratt

1990'sTotal quality managementBaldrige quality award, ISO 9000, QFD, value & concurrent engineering, continuous improvementNIST, ASQ, ISO

Business process reengineeringRadical changeM. Hammer & major consulting firms

Electronic enterpriseInternet, WWWUS Government, Netscape, Microsoft

Supply chain managementSAP/R3, client/serverSAP, Oracle

2000'sE-commerceInternet, WWWAmazon, eBay, AOL, Yahoo

What is Your Business Sign? MARKETINGYou are ambitious yet stupid. You chose a marketing degree to avoid having to study in college, concentrating instead on drinking and socializing which is pretty much what your job responsibilities are now. Least compatible with Sales.SalesLaziest of all signs, often referred to as "marketing without a degree." You are also self-centered and paranoid. Unless someone calls you and begs you to take their money, you like to avoid contact with customers so you can "concentrate on the big picture." You seek admiration for your golf game throughout your life.


Unable to control anything in your personal life, you are instead content to completely control everything that happens at your workplace. Often even YOU don't understand what you are saying but who the hell can tell. It is written that Geeks shall inherit the Earth.


One of only two signs that actually studied in school. It is said that engineers place ninety percent of all Personal Ads. You can be happy with yourself; your office is full of all the latest "ergodynamic" gadgets.


The only other sign that studied in school. You are mostly immune from office politics. You are the most feared person in the organization; combined with your extreme organizational traits, the majority of rumors concerning you say that you are completely insane.

Human Resources

Ironically, given your access to confidential information, you tend to be the biggest gossip within the organization. Possibly the only other person that does less work than marketing, you are unable to return any calls today because you have to get a haircut, have lunch AND then mail a letter.

Management/Middle Management

Catty, cutthroat, yet completely spineless, you are destined to remain at your current job for the rest of your life. Unable to make a single decision you tend to measure your worth by the number of meetings you can schedule for yourself. Best suited to marry other "Middle Managers" as everyone in your social circle is a "Middle Manager."

Senior Management

See above - Same sign, different title

Customer Service

Bright, cheery, positive, you are a fifty-cent cab ride from taking your own life. As children very few of you asked your parents for a little cubicle for your room and a headset so you could pretend to play "Customer Service." Continually passed over for promotions, your best bet is to sleep with your manager.


Lacking any specific knowledge, you use acronyms to avoid revealing your utter lack of experience. You have convinced yourself that your "skills" are in demand and that you could get a higher paying job with any other organization in a heartbeat. You will spend an eternity contemplating these career opportunities without ever taking direct action.

Recruiter, "Headhunter"

As a "person" that profits from the success of others, most people who actually work for a living disdain you. Paid on commission and susceptible to alcoholism, your ulcers and frequent heart attacks correspond directly with fluctuations in the stock market.

Partner, President, CEO

You are brilliant or lucky. Your inability to figure out complex systems such as the fax machine suggests the latter.

Government Worker

Paid to take days off. Government workers are genius inventors, like the invention of new Holidays. They usually suffer from deep depression or anxiety and usually commit serious crimes while on the job...Thus the term "Go Postal".


A production manager is involved with the planning, coordination and control of manufacturing processes. They ensure that goods and services are produced efficiently and that the correct amount is produced at the right cost and level of quality.

The scope of the job depends on the nature of the production system:




batch production.Many companies are involved in several types of production, adding to the complexity of the job. Most production managers are responsible for both human and material resources.The job role is also referred to as operations manager.

Typical work activities

The exact nature of the work will depend on the size of the employing organisation. However, tasks typically involve:

overseeing the production process, drawing up a production schedule;

ensuring that the production is cost effective;

making sure that products are produced on time and are of good quality;

working out the human and material resources needed;

drafting a timescale for the job;

estimating costs and setting the quality standards;

monitoring the production processes and adjusting schedules as needed;

being responsible for the selection and maintenance of equipment;

monitoring product standards and implementing quality-control programmes;

liaising among different departments, e.g. suppliers, managers;

working with managers to implement the company's policies and goals;

ensuring that health and safety guidelines are followed;

supervising and motivating a team of workers;

reviewing worker performance;

identifying training needs.

A production manager is involved in the pre-production (planning) stage as well as the production (control and supervision) stage.A large part of production management involves dealing with people, particularly those who work in your team.Production managers are also involved with product design and purchasing. In a small firm you may have to make many of the decisions yourself, but in a larger organisation planners, controllers, production engineers and production supervisors will assist you.

In progressive firms, the production manager's role tends to be more closely integrated with other functions, such as marketing, sales and finance.PRODUCTION MANAGERWhat do Production Managers do?Production Managers organize the business, finance and employment issues in film and television productions. As a Production Manager, you would bein charge ofhow the production budget is spent and making sure that everything runs smoothly during filming.

Before production begins, yourwork would involve:meeting the producer and other seniorproduction staff to examinescripts or program ideas drawing up a shooting schedule and estimating costhiring crews and contractors, and negotiatingrates of paynegotiating costs and approving the booking of resources, equipment and suppliersoverseeing location bookings and arranging any necessary permissions and risk assessments

During filming,duties include:making sure that the production runs to schedule, and reporting to the producer on progressmanaging the production schedule and budgetmanaging the production teamdealing withany problemsmaking sure that insurance, health and safety rules,copyright laws and union agreements are followed

To become a Production Manager you will needsubstantialexperience in TV or film, in-depth understanding of the production process, and a network of contacts in the industry. Experience and track record is more important than formal qualifications, however,you may find it helpful to take a course that includes practical skills, work placements and the chance to make contacts. You will need a good understanding of budget management, so skills and qualifications in accountancy are useful.

You could work your way up through the industry to become a Production Manager in various ways. For example you could start as a runner or an assistant or secretary in the production office, and progress to production coordinator then assistant production manager. You might also start as a trainee production accountant. Alternatively, you could progress from runner to 3rd assistant director then 2nd and 1st assistant director, or to assistant TV floor manager then floor manager or location manager. CAREER: PRODUCTION MANAGER

A Day in the life of a Production Manager A few production managers we surveyed added traffic controller to their title parenthetically. The clarification is apt, since their job is not to produce but to make sure that production runs smoothly. Production managers are primarily administrators or supervisors; they determine the allocation of labor resources, track production scheduling and costs, make any on-the-fly adjustments to the process, and coordinate any receiving of raw materials or shipping of final goods. A production manager is very busy most days. The job is a lot of coordination. You should be able to juggle a lot of different jobs at the same time and deal with any emergencies that come up, explained one. The variety of the work on a day-to-day basis recommends this job to people with strong work ethics, curious minds, and organizational abilities. Many production managers are asked to implement systems of production tracking and quality control, so the first step for product managers is to become intimate with existing systems of production, past cost estimates, and company policies. Youve got to be careful not to make recommendations until youve gathered enough information to make intelligent ones, offered a five-year production manager. Also, production managers need to gain the trust of the people who work for them. If youre not credible, youre not effective, said one production manager. A good production manager will also react to situations as they occur. Flexibility is the key to success, as one respondent noted. Priorities, backlogs, breakdowns, strikes-all of these can alter intricately planned scheduling, and the production manager has to be flexible enough to adjust to these situations without reducing overall efficiency. Its not unusual for the production manager to be located on the production floor, in order to see first-hand the running of the production process. But while production managers are involved in each stage of production, few micromanage the day-to-day details of each departments work. A production manager spends some time working alone on reports, but most of his/her time (over 60 percent) is spent meeting with representatives from different levels of the production process. In situations where production facilities are spread over large areas, a production manager spends a significant amount of time on the telephone. The visible, tangible results they produce are a source of satisfaction for most production managers. Many noted that it was good to be able to point to shipments going out and coming in, to quality products produced cheaply and efficiently, and to the increase companies see in their bottom line. One summarized his feelings simply by saying, It feels great because people at first resent what you do, and when they see the results, they come around. Everybody wins.PAYING YOUR DUESProduction managers have no specific academic requirements, but coursework that proves helpful includes economics, accounting, finance, production and manufacturing systems, organizational behavior, psychology, sociology, and English. Production managers have to be well organized and creative-a combination of talents that many find difficult to demonstrate through ordinary work experience. Production experience can be a big plus on a resume. No licensing requirements exist, and professional organizations are significant only in areas of specialization, such as for quality control managers or human resource managers.ASSOCIATED CAREERSProduction managers who decide to leave the profession search out challenges that excite both the creative and the detailed sides of their personalities. Many become entrepreneurs, efficiency experts, and strategic marketers. Their intimacy with the production process makes a transition to general administrative management easy, but relatively few take this option. It seems that the profession provides a challenge that few are in a hurry to forsake.