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Product Operation Planning & Control

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In this presentation, we will discuss production planning system, factors determining production control procedure, role of production planning and control in operations management, scope of production planning and control, its phases and principles. We will also talk about framework for strategy formulations and task control, PPC limitations, effectiveness, PPC in different systems, requirement of an effective PPC in a system and make or buy analysis.
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Product Operation Planning & Control

  1. 1. Production Planning & ControlChapter 1Production /Operations Planning & Control Chapter1 1
  2. 2. Production/Operations Planning & Control Production is a process whereby raw material isconverted into semi finished products and thereby addsto the value of utility of products, which can be measured as the difference between the value ofinputs and value of outputs. Production function encompasses the activities ofprocurement, allocation and utilization of resources.The main objective of production function is toproduce the goods and services demanded by thecustomers in the most efficient and economical way.Therefore efficient management of the productionfunction is of utmost importance in order to achieve thisobjective. Chapter1 2
  3. 3. Production/Operations Planning & ControlProduction/Operations Planning involves theorganization of an overall manufacturing system toproduce a product.The various activities involved are: Designing a product Determining the equipment & capacityrequirements Designing layout of physical facilities. Designing material handling system Designing sequence of operations Chapter1 3
  4. 4. Factors determining Production Planning ProceduresThe three major factors determining production planningprocedures are:1.Volume of production:The amount & intensity of productionplanning is determined by the volume and character of theoperations & nature of manufacturing process.Productionplanning is expected to reduce manufacturing costs.2.Nature of production Process:In job shop ,the productionplanning may be informal and the development work methods isleft to individual workman who is highly skilled3.Nature of operations:Detailed production planning isrequired for repetitive operations for example continuousproduction of single standardized product Chapter1 4
  5. 5. Production Planning SystemThere are two interrelated subsystems in the productionplanning system Product Planning System Process Planning SystemA generic business process, which has • Data embedded systems at all levels, namely, • Plant operation level, • Physical variable controls level. • Process control levels, and at • Information control level • resulting in vertical and horizontal system interfacesbetween its all external and internal system modules,and Chapter1 5
  6. 6. Production Planning System Which is characterized by the real world feedbackinformation in respect of: (a) customer requirements, which are becomingincreasingly local and instant, product needs, (b) process costs and capabilities, (b) input orders, innovation desired, and (c) questions, etc.presents itself as an an opensystem. This leads to modeling the business process asintegral to a close loop information and control system. Chapter1 6
  7. 7. Production ControlImportance of Control function: Provide the production of parts,assemblies & productsof required quantity and quality at the required time Co-ordinate ,monitor,and feedback to manufacturingmanagement,the result of productionactivities,analyzing and interpreting there importance&taking correct actions Provide optimum utilization of all resources Achieve the broad objectives of low cost productionand reliable customer service Chapter1 7
  8. 8. Production ControlBenefits of Control function:Improvement in profit through:1. Maintenance of balance inventory of material2. Balanced and stabilized production3. Maximum utilization of equipment4. Minimum investment in inventory5. Reduction in set up cost6. Reduction in scrap7. Minimum investment in inventoryCompetitive advantage1. Reliable delivery to customer2. Shortened delivery schedule to customer3. Lower production costs Chapter1 8
  9. 9. Elements of Production Control1. Control of Planning:2. Control of Materials3. Control of tooling4. Control of manufacturing capacity5. Control of activities6. Control of Quantity7. Control of material handling8. Control of due dates9. Control of information Chapter1 9
  10. 10. Elements of Production ControlThe production Control System consists of a group of procedural elements that operate as a whole to fulfill four functions Means of setting the system in motion such as production orders Methods to determine Lead time for production Methods to control & monitor production What,where& How work is to be done Techniques for measuring & recording data on machine utilization Chapter1 10
  11. 11. Factors Determining Production Control proceduresNature of Production: The manufacturing firms areclassified as Intermittent,continuous,or compositeproduction firms,depending upon length of processing timeComplexity of operations: Generally Complexity increaseswith increase in the variety of operations1.Number of ultimate parts in the product2.No of different operations3.Extent to which processes are dependent on previousoperations.4.Variation in production rates of machines used in theprocess5.Receipt of may small lot orders Chapter1 11
  12. 12. Factors Determining Production Control proceduresMagnitude to operations: The size of operation,(time taken to completeoperation)and the distance traveled by the parts fromoperations to operations are important in establishing properproduction control procedures. Generally the need is greater for centralized productioncontrol organization and the formal procedures as the size ofthe operations increases and dependent operations are morephysically separated Chapter1 12
  13. 13. Factors Determining Production Control proceduresFollowing factors need to be considered before makinga choice of manufacturingprocess.a) Effect of volume/variety: This is one of the majorconsiderations in selection of manufacturing process.When the volume is low and variety is high, intermittentprocess is most suitable and with increase in volumeand reduction in variety continuous process becomesuitable. The following figure indicates the choice ofprocess as a function of repetitiveness. Degree ofrepetitiveness is determined bydividing volume of goods by variety. Chapter1 13
  14. 14. Factors Determining Production Control proceduresb) Capacity of the plant: Projected sales volume is thekey factor to make a choice between batch and lineprocess. In case of line process, fixed costs aresubstantially higher than variable costs. The reverse istrue for batch process thusJobbingBatchingLineProcessDegree ofrepetitivenessQuantityMany Chapter1 14
  15. 15. Factors Determining Production Control proceduresc) Lead time: - The continuous process normally yieldsfaster deliveries as compared to batch process.Therefore lead-time and level of competition certainlyinfluence the choice of production process.d) Flexibility and Efficiency: - The manufacturingprocess needs to be flexibleenough to adapt contemplated changes and volume ofproduction should be large enough to lower costs.Hence it is very important for entrepreneur to considerall above mentioned factors before taking a decisionregarding the type of manufacturing process to beadopted as for as SSI are concerned they usually adoptbatch processes due to low Chapter1 15investment.
  16. 16. Objectives of Production Planning & Control1. To deliver Quality goods in required quantities2. To ensure maximum utilization3. To ensure production of Quality products4. To maintain optimum inventory levels.5. To maintain flexibility in manufacturing operations6. To coordinate between labor & machine.7. To ensure effective cost reduction and cost control8. To prepare production schedule9. To produce effective results for least total cost10. To remove bottlenecks in production Chapter1 16
  17. 17. Role of Production Planning& Control in Operations ManagementThere are a variety of production /operations managementresponsibilities such as:1.Product Design2.Job & process Design3.Equipment Selection & replacement4.Labor skills5.Input material selection6.Plant selection and layout7.Scheduling steps of the plan8.Implementing & controlling the schedule9.Operating the production system Chapter1 17
  18. 18. Role of Production Planning& Control in Operations Management Strategic Planning Tactical Planning Implementation Operations Control Evaluation Replanting Chapter1 18
  19. 19. Scope of Production Planning & ControlProduction Planning and control encompasses the following areas:1. Materials2. Methods3. Machine & equipment4. Manpower5. Routing6. Estimating7. Loading & scheduling8. Dispatching9. Expediting10. Evaluating11. Cost Control Chapter1 19
  20. 20. Principles of Production Planning & Control Functions1. Types of production determines the kind of production planning & control2. Number of parts involved in the product3. Complexity off PPC function4. Time is common denominator for all scheduling activities5. PPC permits “management by exception”6. Cost control should be a by product of PPC function7. The size of the plant has relatively little to do with the type of ppc system needed8. The highest efficiency in production is obtained by manufacturing the required quantity of a product Chapter1 20
  21. 21. Phases in Production Planning & Control Function1. Planning Phases a) Pre planning: Activity involves product planning & development ,resource planning ,Plant planning b)Active Planning: involves planning for quality2. Action Phase : Execution or implementation phase includes dispatching and progressing function3. Control Phase : Includes status Reporting Material control, Tool control,Quality control Chapter1 21
  22. 22. Main Functions of Production Planning & Control Department Production Planning & ControlProduction Planning Production ControlEstimating DispatchingRouting InspectionScheduling Evaluating Chapter1 22
  23. 23. Levels of Production Planning Management control fits in betweenStrategy formulation & Task control Strategy formulation focuses on long run &Task control on short run activities Strategy formulation uses roughapproximations of future & Task control usescurrent accurate data Chapter1 23
  24. 24. Levels of Production Planning Strategy Goals, Strategies,policies Formulation Implementation of Management Strategies Control Efficient,& effective Performance of individual Task tasks Control Nature of end Product Activity Chapter1 24
  25. 25. Management ControlManagement control is the process by which managersinfluence other members of the organization toimplement the organizations strategies.Several aspects ofthis is amplified below.Management Control ActivitiesPlanning What the organization should do.Co-Ordination The activities of several parts oforganizationCommunicating informationEvaluating informationDeciding What if any action should be takenInfluencing people to change there behavior Chapter1 25
  26. 26. Framework for Strategy Implementation Implementation mechanisms Management Control OrganizationalStrategy HR Performance Structure Management Culture Chapter1 26
  27. 27. Strategy Formulation & task controlStrategy formulation Management control Task Control Acquire Business Introduce new product Coordinate order entry Enter new Business Expand a plant Schedule ProductionAdd direct mail selling Determine ad budget Book 6v Commercials Decide magnitude & Control research Run individual direction of research organization Research project Device inventory Reorder an item Decide Speculation policy inventory levels Chapter1 27
  28. 28. Production Planning Function The main functions of production planning are: Estimating: Decides the quantity of products to be produced & cost involved on the basis of sales forecast Routing :This is process of determining sequence of operations to be performed in the production process Scheduling : Involves fixing priorities for each job and determining the starting time & finishing time Loading:Loading facility or work center& deciding or machine which job is assigned to which work centerChapter1 28
  29. 29. Production Control Function The main functions of Production Control are: Dispatching: Setting of production activities in motion through release of orders Providing movement of Raw material Issuing Job ordersIssue of Drawings ,process sheets,job log sheets to machine & assembly shop Obtaining inspection Schedules Expediting /follow up/ progressingExpediting ensures that the work is carried out as per plan and delivery schedules are met Chapter1 29
  30. 30. Limitation of PPC FunctionProduction planning functions are based oncertain assumptions or forecast of customerdemand,plant capacity.Employees may resist changes in productionProduction planning process is time consuming.Production planning is difficult when when theenvironmental factors change rapidly,such asTechnology changes, Governmentpolicies,Customers taste regarding fashion. Chapter1 30
  31. 31. Measuring Effectiveness of PPC FunctionThere are four specific areas in which effectiveness ofPPC function can be measuredDelivery:This can measured by finding out the numberDeliveryof deliveries effected on time and those delayed overperiod of timeInventory levels.The value of average inventory held levelsannually.Production & operations management: Comparison of managementplanned & actual production indicates the performanceof PPC functionThe expenditure incurred for carrying out variousfunctions of PPC department Chapter1 31
  32. 32. PPC In different Production SystemsPPC in job Productionjob production Job production involves producing aone-off product for a specific customer. Job productionis most often associated with small firms (makingrailings for a specific house, building/repairing acomputer for a specific customer, making flowerarrangements for a specific wedding etc.) but large firmsuse job production too. Examples include:Designing and implementing an advertising campaignAuditing the accounts of a large public limited companyBuilding a new factoryInstalling machinery in a factoryBenefits and disadvantagesKey benefits of job production include: Chapter1 32
  33. 33. PPC In different Production Systemswork is generally of a high qualitya high level of customization is possible to meet thecustomers exact requirementssignificant flexibility is possible, especially whencompared to mass productionworkers can be easily motivated due to the skilled natureof the work they are performingDisadvantages include:higher cost of productionrequires the use of specialist labor (compare with therepetitive, low-skilled jobs in mass productionslow compared to other methods (batch production andmass production) Chapter1 33
  34. 34. PPC In different Production SystemsBatch Production This approach to design production—producing individualdesigns in limited quantities—was common amongst manysmaller companies or craft workshops for much of the 20thcentury, allowing them to respond quickly to differentcommissions and market opportunities without the necessityof being tied down to the relatively inflexible and expensivetechnologies associated with the modes of mass-productionFordism. With the rise of Computer-Aided Manufacturing systemslarger manufacturers have also been able to be moreflexible and swiftly responsive to the increasingly diverseconsumer demands of the global market place. Chapter1 34
  35. 35. PPC In different Production Systems This ability to produce smaller production runs had the added economic advantage of dispensing with the need for large storage areas to hold stock and was an integral part of the Just in Time manufacturing and distribution systems that were introduced increasingly from the 1980s Batch production is a manufacturing process used to produce or process any product in batches, as opposed to a continuous production process, or a one-off production. Batch production is popular in bakeries and in the manufacture of sports shoes, pharmaceutical ingredients, inks, paints and adhesives. Chapter1 35
  36. 36. PPC In different Production Systems There are inefficiencies associated with batchproduction. The production equipment must bestopped, re-configured, and its output tested beforethe next batch can be produced. Time betweenbatches is known as down time. Batch production is useful for a factory thatmakes seasonal items or products for which it isdifficult to forecast demand. Chapter1 36
  37. 37. PPC In different Production Systems There are several advantages of batch production;it can reduce initial capital outlay because a singleproduction line can be used to produce severalproducts. Also, companies can use batch production as atrial run. If a retailer buys a batch of a product thatdoes not sell then the producer can ceaseproduction without having to sustain huge losses.Other types of production include: assembly line,job production, continuous, cell, and project. Chapter1 37
  38. 38. PPC In different Production Systems Mass Production Manufacturing or processing ofuniform products in large quantities using interchangeableparts and machinery. Mass production is either a whollyautomated process or a series of short, repetitiveprocedures. mass productionApplication of the principles of specialization, division oflabor, and standardization of parts to the manufacturing ofgoods on a large scale. Modern mass-production methodshave led to such improvements in the cost, quality,quantity, and variety of goods available that the largestglobal population in history is now sustained at thehighest general standard of living ever. Chapter1 38
  39. 39. PPC In different Production Systems Mass Production is a system of manufacturing based onprinciples such as the use of interchangeable parts, large-scale production, and the high-volume Assembly Line. Although ideas analogous to mass production existed inmany industrialized nations dating back to the eighteenthcentury, the concept was not fully utilized until refined byHenry Ford in the early twentieth century and thendeveloped over the next several decades. Fords success in producing the Model T automobile setthe early standard for what mass production could achieve.As a result, mass production quickly became the dominantform of manufacturing around the world, also exerting aprofound impact on popular culture. Chapter1 39
  40. 40. Requirement of effective PPC System Sound organization structure with mechanism ofproper delegation of authority. Information feedback system Standardization of material,tool,equipment &manufacturing process. Trained personnel Flexibility to accommodate changes Appropriate management policies Accurate assessment of lead times Plant capacity should be adequate to meet thedemands Chapter1 40
  41. 41. Make or Buy analysis The capacity of a firm to produce finishedproduct depends on at what stage the firm beginsthe manufacturing process Make or buy decisions are basically questions ofspecialization& vertical integration The product design specializes product structurewhich indicates number of sun units & piece partthat comprise a product. The process engineer has to make decision “Makeor buy”after studying drawings of parts &assemblies . Chapter1 41
  42. 42. Plant Planning & Facility Planning How to establish the long range production capacity to produce the products /services for a firm is a critical part of setting operations strategy. Facilities planning refers to the determination of how much of long range production capacity is needed.,where production facilities should be located,and layout & characteristics of these facilities. Importance of Plant Planning Plant planning is along range planning begin with the choice of suitable location Chapter1 42
  43. 43. Plant Planning & Facility Planning The right plant enables the firm to produce the desired quantity & quality of the products The choice of right plant helps to minimize the capital investment. It produces job satisfaction to employees Objectives of Plant Planning To set optimum plant system that will provide highest efficiency Effective integration of all factors such as man,material,& machine Chapter1 43
  44. 44. Plant Planning & Facility Planning Objectives of Plant Planning Logical work flow & smooth sequence of operations Compactness to minimum movement of material & labor and space Provisions of facilities for future expansion System flexibility to adopt changes in product design Satisfaction ,safety and convenience to all employees Chapter1 44
  45. 45. Plant Planning & Facility Planning Scope of of Plant Planning Selection of production of system and plant design Design of plant building Manufacturing process design Selection of equipment & machinery Design of plant layout and shop layout Selection of material handling system. Design of communication System and control system Chapter1 45
  46. 46. Production Planning & ControlEnd OfChapter 1 Chapter1 46
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