Production management is a process of planning, organizing, directing and controlling the activities of the production function in an organization to achieve the goals of an organization.
Production management is the management of an organization’s production systems, which converts inputs into the desired product and services. A production system takes given inputs which include raw material, people, machines, tools, building, technology, cash, information and other resources whereas the outputs include the product and services.
Production management is the study (practices) of planning, designing, and production systems and subsystems to achieve the organization goals.
E.S. Buffa defines production management as, “Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.”
Objectives of Production Management:
The four objectives of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost.’
1. Right Quality:
The quality of the product is established based on the customer needs in the market. The right quality is not necessarily the best quality of the product. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements of the customers in the market environment.
2. Right Quantity:
The manufacturing organization should produce the products in the right number. If they are produced more than demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to a shortage of products.
3. Right Time:
Timeliness of delivery of the product to the consumer or wholesaler is one of the critical parameters to judge the effectiveness of the production department. So, the production department has to make the optimal utilization of input resources to achieve its desired objectives.
4. Right Manufacturing Cost:
Manufacturing costs are incurred before the product is manufactured and released into the market. Hence, all attempts should be made to the duce the products at a pre-established cost, to reduce the variation between the actual and the standard (pre-established) cost.
Features of Production management:
Some of the key features of production management are as follows.
- Production management deals with processes. It is not possible for a single person to perform the function of production management. Production management includes some staff such as supervisors, materials managers and store managers or anyone who manage staff, equipment, or materials.
- The management term in broad interpretation includes the design of the system and performance of all the activities mandatory to operate the system, that encompasses the directions to staff and acquiring material and equipment.
- The term highlights the fact that to manage the production of the organization’s final products; there are many subsystems as parts of the production system. For example, the cost accounting department in a manufacturing company is part of the production system.
- The goal of production management is to minimize costs, for most of the organizations. It also helps to improve the efficiency and productivity of the production system.