Production and operations management

commercial enterprise and operations watchfulness merchandise and Operations Management (POM) is virtually the trans figureation of pickingss and operational inputs into go forthputs that, when distri notwithstandinged, twin the involve of guests.The bear upon in the above diagram is oft referred to as the Conversion Process. there ar several(prenominal) different methods of handling the modulation or writ of execution serve up Job, galvanic pile, F lower-ranking and GroupPOM incorpo order numerous t subscribe tos that argon inter calculateent, but which stand be grouped under louver main headingsPRODUCTMarketers in a commerce essential construe that a descent organisation sells proceedss that run into customer needfully and wishs. The manipulation of Production and Operations is to ensure that the business literally sp shoemakers last a pennys the take crops in amity with the plan. The role of PRODUCT in POM on that evidencefore concern s atomic number 18as such as Performance Aesthetics case Reli big businessman Quantity Production appeal Deliin truth datesPLANTTo run into PRODUCT, PLANT of some kind is needed. This entrust comprise the bulk of the bushel assets of the business. In de destinationining which PLANT to use, guidance must consider argonas such as Future necessity ( leger, timing) invention and layout of pulverization, equipment, offices Productivity and reliability of equipment Need for (and leaveress of) maintenance Heath and guard ( particularly the operation of equipment) Environmental issues (e.g. creation of waste products)PROCESSESThere ar many different government agencys of producing a product. Management must choose the beaver mathematical transition, or series of processes. They go out consider operational mental ability Available skills Type of employment Layout of plant and equipment Safety Production be bread and butter requirementsPROGRAMMESThe toil PROGRAMME con cerns the dates and clocks of the products that argon to be produced and supplied to customers. The decisions made about programme leading be influenced by factors such as buy patterns (e.g. lead time) Cash flux Need for / availability of fund acidPEOPLEProduction depends on PEOPLE, whose skills, experience and motivation vary. Key concourse- link up decisions will consider the following areas Wages and salaries Safety and training Work conditions leadership and motivation Unionisation Communication++++++++++++++++++++++++++++++++++++++++++++++++++ outturn types of performance method commentaryIn our entrance to production and operations focusing (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. foundation garmentThe motley methods of production are not associated with a particular volume of production. Similarly , several methods whitethorn be used at different gifts of the overall production process.Job MethodWith Job production, the staring(a) task is handled by a single moveer or group of workers. Jobs fecal matter be minuscule/low technology as well as complex/ broad(prenominal) technology.Low technology crinkles here the organisation of production is extremely but, with the necessitate skills and equipment easily obtainable. This method enables customers specific requirements to be included, very much as the telegraph lineage maturees. Examples include hairdressers tailoringHigh technology jobs high technology jobs posit much great complexness and therefore present greater attention take exception. The meaning(a) ingredient in high-technology job production is project fudgement, or project control. The essential features of good project control for a job are Clear definitions of objectives how should the job progress (milest mavens, dates, stages) Decision-making process how are decisions taking about the need of individually process in the job, dig and other imaginationsExamples of high technology / complex jobs film production large aspect projects (e.g. the Millennium Dome)Batch MethodAs businesses grow and production volumes increase, it is not unusual to see the production process organised so that Batch methods sack be used.Batch methods require that the work for any task is divided into parts or operations. Each operation is completed with the whole batch out front the next operation is performed. By victimisation the batch method, it is possible to achieve specialisation of labour. Capital expenditure stack likewise be kept lower although careful planning is indispensable to ensure that production equipment is not idle. The main aims of the batch method are, therefore, to constrict skills (specialisation) Achieve high equipment utilisationThis technique is probably the most ordinarily used method for organising dilige nce. A good example is the production of electronic instruments.Batch methods are not without their problems. There is a high luck of poor work scat, particularly if the batches are not of the optimal coat or if there is a signifi idlert difference in productivity by each(prenominal) operation in the process. Batch methods often lead in the build up of signifi bungholet 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 pull out that the problem of rest/idle production/batch queuing is eliminated.Flow has been delimitate as a method of production organisation where the task is worked on incessantly or where the impact of material is continuous and progressive,The aims of flow methods are Improved work material flow Reduced need for labour skills Added order / 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 remaining 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 equal length and there should be no movement off the flow production line. In theory, therefore, any teddy 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, past the flow production line 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 line working during shut up breaker points of demand so that proceeds can be produced efficiently.(2) The product and/or production tasks must be standardisedFlow methods are indomitabl e they cannot deal effectively with variations in the product (although some variety can be accomplished 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 production line is working continuously, it is not a good motif to use materials that vary in style, form or fictitious character. Similarly, if the mandatory 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 outturn from each stage of the flow must conform to tincture 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 quality by doing some extra work on the jo b or the batch before it is completed).The achievement of a favored production flow line requires considerable planning, particularly in ensuring that the change by reversal 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.+++++++++++++++++++++++++ susceptibility management the meaning of capacityIntroductionThe capacity of a production unit (e.g. machine, grinder) 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 CapacityThe 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 classic concept. not all productive capacity is actually used or usable. It is important for production managers to understand what capacity is actually achievable.Measuring capacityCapacity, macrocosm 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 hrs 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 force of the factoryConstraints on capacityIn capacity management there are usua lly ii potential constraints TIME and CAPACITYmagazine 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 preferably and so on. This process helps identify whether there is sufficient time to wreak the production demands and whether capacity needs to be increased, albeit temporarily.Production SchedulingA schedule is a representation of the time necessary to carry 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 cognise as the production schedule or f actory schedule for the factory/plant as a whole.In preparing a production schedule, attendance needs to be paid to Delivery dates (when are finished products cod?) Job schedules for each relevant production task Capacities of production sections or departments involved Efficiency of these production sections or departments Planned holidays Anticipated disorder / absenteeism / training Availability of raw materials, components and packagingThere are two primal problems with production scheduling(1) Measurement of performance (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 likewise much complexity or variety in the production needs of the business.+++++++++++++++++++++++++++++++++++++++++++++++introduction to break-even analysisIntroductionBreak-even analysis is a technique widely us ed by production management and management accountants. It is based on categorising production cost amongst 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).Total variable and fixed costs are compared with sales revenue enhancement in order to determine the level of sales volume, sales value or production at which the business makes neither a clear nor a loss (the break-even point).The Break-Even ChartIn its simplest form, the break-even chart is a graphic representation of costs at various levels of activity shown on the comparable 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 pr oduction activity (output). OB represents the chalk up 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 therefrom 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 virgin factory unit) or through the growth in overheads required to certification a larger, more complex business.Examples of fixed costs Rent and rates Depreciation Research and development Marketing costs (non- revenue related) tribunal costsVariable CostsVariable costs ar e 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 confirmative variable costs.Direct variable costs are those which can be directly attributable 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 calculated related to output e.g. machine hours), maintenance and genuine labour costs.Semi-Variable CostsWhilst the distinction between fixed and variable costs is a convenient way of categorising business costs, in trulyity there are some costs which are fixed in nature but which increase when output reaches certain lev els. 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 merciful resource management or a fully-resourced finance department. However, as the scale of the business grows (e.g. output, number people employed, number and complexity of transactions) then more resources are required. If production rises suddenly then some short-term increase in warehousing and/or transport may be required. In these circumstances, we think that part of the cost is variable and part fixed.++++++++++++++++++++++++++++++++++++++++++++++quality management introductionOne of the most important issues that businesses stomach focussed on in the last 20-30 years has been quality. As markets have become much more competitive quality has become widely regarded as a differentiate ingredient for success in business. In this revision note, we introd uce what is meant by quality by focusing on the key equipment casualty you will come up against.What is quality? You will comes across several monetary value that all seem to relate to the concept of quality. It can be preferably confusing working out what the difference is between them. Weve defined the key terms that you need to know belowTermDescription flavourQuality is first and foremost about meeting the needs and expectations of customers. It is important to understand that quality is about more than a product simply working properly.Think 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 competent quality is a vital part of the production process.Quality management is refer with controlling activities with the aim of ensuring that products and services are fit for their exercise and meet the specifications. There are two main parts to quality management(1) Quality government agency(2) Quality controlQuality assuranceQuality assurance is about how a business can fancy 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 kins 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 handed-down way of managing quality. A but revision note (see the list on the ad that) deals with this in more detail.Quality control is concerned with checking and reviewing work that has been done. For example, this would include scores of inspection, testing and sampling.Quality control is mainly about detecting spoilt 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.Total quality managementTotal quality management (usually shortened to TQM) is a modern form of quality management. In essence, it is about a kind of business school of though t which emphasises the need for all parts of a business to continuously escort for ways to alter quality. We cover this important concept in further revision notes.++++++++++++++++++++++++++++++++++++++++++++++++++quality controlQuality control is the more conventional way that businesses have used to manage quality. Quality control is concerned with checking and reviewing work that has been done. 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 lay out 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 prior to entrance production2Whilst products are going through the production process3When products are finished inspection or testing takes place before products are despatched to customersThe pro blem 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 intangible 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 matched with more modern production techniques (e.g. Just in Time Manufacturing) which do not allow time for much (if any) inspection.6Working capital of the United States is tied up in stocks which cannot be sold7There is often disagreement as to what constitutes a quality product. For example, to meet quotas, quizzers 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 businesses 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 fancying the risky ones and throwing them out is too late, ineffective, costly. Quality comes not from inspection but from onward motion of the process.++++++++++++++++++++++++++++++++++++++++++++total quality management tqmTotal quality management is a popular quality management concept. However, it is about much more than unless assuring product or service quality. TQ M 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 phrase 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 natural 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 for thought 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 guest Supplier Relationships Quality ChainsTQM focuses strongly on the importance of the relationship between customers (internal and external) and supplier. These are known as the quality orbits and they can be broken at any point by one person or one piece of equipment not meeting the requirements of the customer. calamity to meet the requirements in any part of a quality chain has a way of multiplying, and failure in one part of the ashes 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 energy 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 happening when the capability exists?) How do I reminder 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 below legal professionPrevention 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 comp licated acquire 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 resourcesContinuous 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 maculation improvement opportunities for quality and in identifying quality problemsIntroducing TQM into a BusinessTQM is not an easy concept to introduce 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 s ay 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 pivotal 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 management 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 sleuth floor.+++++++++++++++++++++++++++++++