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T H E U N I V E R S I T Y OF M A N I L A

G R A D UAT E S T U D I E S

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 MS
Production 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.
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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 CONTROL


Although 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

T H E U N I V E R S I T Y OF M A N I L A
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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 welldesigned, 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
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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 METHODS


Because 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
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PROCESSES

INVENTORY

INSPECTION

COSTS

measuring
rate of
inspecting
output;
recording stock
collecting
OBSERVATION
materials and
recording idle levels
cost data
parts
time or
downtime

ANALYSIS

analyzing
demand for
comparing
estimating
stocks in
progress with
process
different uses
the plan
capabilities
and at different
times

CORRECTIVE
expediting
ACTION

EVALUATION

estimating
production
capacity and
maintenance
schedules

computing
costs in
relation to
estimates

issuing
production and
procurement
orders

initiating full
inspection;
adjusting
processes

adjusting
selling price
of product

drawing up
replenishment
policies and
inventory
systems

reassessing
specifications;
improving
processes and
procedures

evaluating
production
economics;
improving
data

IMPORTANCE OF PRODUCTION MANAGEMENT


The importance of production management to the business firm:
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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.
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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.

T H E U N I V E R S I T Y OF M A N I L A
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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 Management
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Operations 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 business
TYPES 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,

T H E U N I V E R S I T Y OF M A N I L A
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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
DIFFERENCES (KARJEWSKI & RITZMAN, 2002)
Manufacturing Organizations
Service Organizations
Physical, durable product
Intangible, perishable product
Output that can be inventoried
Output
that
cannot
be
Low customer contact
inventoried
High customer contact
Long response time
Short response time
Regional, national, international
Local markets
markets
Large facilities
Small facilities
Capital intensive
Labor intensive
Quality easily measured
Quality not easily measured
SIMILARITIES
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

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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:
o

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 products

Operations management is relevant to both manufacturing and service


organizations.
Historical Summary of Operations Management
History of OM (Chase, Jacobs, et al, 2006)
Year

Concept

Tool

Originator

1910's

Principles of scientific
management

Formalized time-study
and work-study

Frederick Taylor

Industrial psychology

Motion study

Frank & Lillian


Gilbreth

Moving assembly line Activity scheduling chart


Economic lot size

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EOQ applied to inventory


control

Henry Ford &


Henry Gantt
F.W. Harris

T H E U N I V E R S I T Y OF M A N I L A
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Quality control

Sampling inspection &


statistical tables for
quality control

Walter Shewhart,
H.F. Dodge, & H.G.
Romig

Hawthorne Studies of
worker motivation

Activity sampling for


work analysis

Elton Mayo &


L.H.C. Tippett

1940's

Multidisciplinary team
approaches to
complex system
problems

Simplex method of
lineary programming

Operations
research groups
and George B.
Dantzig

1950's60's

Extensive
development of
operations research
tools

Simulation, waiting-line
theory, decision theory,
mathematical
programming, project
scheduling & CPM

Many researchers

1970's

Widespread use of
computers in
business

Shop scheduling,
inventory control,
forecasting, project
management, MRP

Led by computer
manufacturers

Service quality &


productivity

Mass production in the


service sector

McDonalds

Manufacturing
strategy paradigm

Manufacturing as a
competitive weapon

Harvard Business

JIT, TQC, and factory


automation

Kanban, poka-yokes,
CIM, FMS, CAD/CAM,
robots, et

Tai-Ichi Ohno, W.E.


Deming, J.M. Juran

1930's

1980's

Synchronous
manufacturing

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Bottleneck analysis, OPT,


Eliyahu M. Goldratt
theory of constraints

T H E U N I V E R S I T Y OF M A N I L A
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Baldrige quality award,
ISO 9000, QFD, value &
concurrent engineering,
continuous improvement

NIST, ASQ, ISO

Radical change

M. Hammer &
major consulting
firms

Electronic enterprise

Internet, WWW

US Government,
Netscape,
Microsoft

Supply chain
management

SAP/R3, client/server

SAP, Oracle

E-commerce

Internet, WWW

Amazon, eBay,
AOL, Yahoo

Total quality
management

1990's

Business process
reengineering

2000's

What is Your Business Sign?


MARKETING
You 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.
Sales
Laziest 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.
Technology

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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.
Engineering
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.
Accounting
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.
Consultant
Lacking any specific knowledge, you use acronyms to avoid revealing your
utter lack of experience. You have convinced yourself that your "skills" are in
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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".
.

PRODUCTION MANAGER: JOB DESCRIPTION


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:
jobbing;
mass;
process;
batch production.
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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.

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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 MANAGER
What do Production Managers do?
Production Managers organize the business, finance and employment issues
in film and television productions. As a Production Manager, you would be in
charge of how the production budget is spent and making sure that
everything
runs
smoothly
during
filming.

Before production begins, your work would involve:


meeting the producer and other senior production staff to examine scripts or
program ideas drawing up a shooting schedule and estimating cost
hiring crews and contractors, and negotiating rates of pay
negotiating costs and approving the booking of resources, equipment and
suppliers
overseeing 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 progress
managing the production schedule and budget
managing the production team
dealing with any problems
making sure that insurance, health and safety rules, copyright laws and
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union agreements are followed

To become a Production Manager you will need substantial experience 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
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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 DUES
Production managers have no specific academic requirements, but
coursework that proves helpful includes economics, accounting, finance,
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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 CAREERS
Production 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.

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