What is Production Management? | Meaning, Functions & Scope
Production management is a process of organizing and planning the manufacturing activities in a factory to transform input resources like raw material, machinery and manpower into finished goods in a controlled manner and maintaining the quality levels set by the organization.
Simply put, the production department supervises smooth shop floor operations to produce the right quantity of goods efficiently and cost-effectively. Production management is responsible for running and scheduling production lines and ensuring effective utilization of resources and production capacity.
Understanding the Nature of Production Management
The production management encompasses several parameters that help to understand its essence. Here are the defining parameters of its nature:
1. Results in Value Addition
The production activities add incremental value to raw material at every stage of production. The resulting value added in terms of price and benefits is nothing short of production excellence.
2. Interdisciplinary Approach
At its core, production management may seem to be just concerned with manufacturing. On the contrary, it spans multiple disciplines, including statistics, science, mathematics, and economics.
3. Part of General Management
Production management is not an isolated activity. General administrative functions like planning, organizing and scheduling operations and services fall well within the ambit of production management.
4. Transformative Process
Production leads to the transformation of raw materials into finished goods through processes like cutting, drilling, and punching that may change the shape, size, and property of raw materials.
5. Operative Function
Sustaining and managing the routine operations of the business like people management, machinery maintenance, inventory, procurement and warehouse operations with a long-term focus using ERP solution is an essential part of production management.
6. Both Art and Science
Understanding customer sentiments, handling the workforce and taking all stakeholders along the production journey is an art that needs mastery. Meeting the technical specifications of the product and driving innovation make it a scientific field.
7. Management of Service Sector
Production operations are incomplete without service components. Equipment installation and maintenance, employee training, and customer service are central to production management.
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What is the Importance of Production Management?
The manufacturing sector has witnessed rapid growth in recent years with India fast becoming a global production hub. According to Statista , the manufacturing industry grew at 4.7% in the financial year 2023 due to strong consumer demand. Production management is the core function of a manufacturing company, surrounding which all other operations are aligned. Ensuring its success using advanced tools like ERP software is pivotal to the company’s growth for various reasons.
1. Resource Utilization
Resources are always limited. The real skill of the production department is showcased through building efficiencies in raw material consumption, labor distribution, and optimizing outputs at every work center.
2. Quality Assurance
Quality is a hallmark of most manufacturing corporations. Many take years of perfection to excel at their processes and refine products to get top-notch results.
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3. Market Changes
Clients always demand improvements in products. If you don’t evolve and keep up with the changing trends, someone else will take your place. Responding quickly to market changes is key here.
4. Operational Safety
Eliminating occupational hazards during production and maintaining product use safety is the foremost concern for manufacturers to prevent accidents and adhere to government regulations.
5. Unique Selling Proposition
At the heart of market leadership is constant product innovation through rigorous R&D and testing. This is only possible with a robust design team backing the production department.
What are the Functions of Production Management?
Production management is the process that involves a range of functions to fulfil an organization’s production and business objectives. They are as follows:
1. Product and Design Selection
Your product design could be excellent. But does it fit in with customer requirements? Can you adapt and make changes to accommodate specific customer needs? Selecting the right product with the right design is important to ensure design feasibility and durability in the long run.
2. Production Process Selection
Selecting a production process depends on various factors like quality needs, customer requirements, time, funds and skills available and output levels desired. For example, a manufacturer may need to choose between hot forging and cold forging depending on the material strength desired.
3. Production Capacity Selection
Planning production capacity is a capital-intensive task, involving machinery and space requirements. It obviously cannot happen overnight. One must have long-term capacity plans according to market demands and trends.
4. Production Planning
Production planning includes all activities that enable the organization to fulfil customer orders on time and cost-effectively. Developing daily, weekly and monthly production plans using business management software ensures that resource allocation of labor and material is effectively accomplished.
5. Production Control
Another crucial function of production management is to monitor all pre-production and production tasks for the effective utilization of raw materials. Material acquisition, material handling , storage and distribution to managing the workflows – all form a part of production control.
6. Quality and Cost Control
A minor negligence can lead to tremendous cost overruns for a company. That’s why, keeping the cost of production low is always the primary focus during production management. Be it procurement, inventory or material consumption per machine cycle, low costs multiply the profits.
7. Inventory Control
Inventory control is the process of managing a company’s stock levels of raw materials and finished goods. An accurate assessment of inventory in the warehouse with inventory management software ensures that the company’s production is aligned with forecasted demand.
8. Machine Maintenance and Replacement
The machines are always expected to yield maximum output. It is only possible if a company undertakes routine check and maintenance of machines without waiting for expensive breakdowns to occur. Collecting data on parts usage helps with timely part replacement, reducing the chances of downtime.
What are the Benefits of Production Management?