Production Management is the most important functional area of Management. It is the basic line activity which forms the very basis of all further business operations- marketing, financing, personnel management etc. Though important, however, it is not an independent activity. Hence, it is very difficult to give an appropriate definition of Production Management as such. However, we shall try to define, first, ‘production as a function’ and then Management’.
Production Function : Production implies the creation of goods (products) and services to satisfy human wants. It involves the transformation of inputs (resources) into output (i.e. product or service). According to Carl Heyel, “Production is the process of transforming raw materials or purchased components into finished products for sale.”
Thus, any process involving the conversion of raw materials and components into finished products may be called production. According to Bethel, Smith and others, “Production is the transformation of raw materials by factory methods into things wanted by society.” According to economic concept of production, it is the process of creating utility in products or adding the value of products. The utility so created is the difference between the value of inputs and the value of outputs. Such production is not only factory production. In modern connotation, production is a very wide term including in its purview all activities which create utility or add value to the inputs. The basic purpose of this process is to satisfy human wants. In the words of R.R. Mayer,
In a manufacturing organization, production is the fabrication of a physical object through the use of men, materials and equipment. In a service organization, production is the discharge of a function which has some utility. This ranges from such acts of repairing an automobile to providing a client with legal service.
Thus, the basis of production is the transformation of inputs into goods and services. The main objectives of this process are two-fold:
(a) optimum use of resources at optimum cost of production
(b) production of the goods or providing services of the desired quality
The second word is “Management.” Management is the practice or determining what has to be done, by whom to be done, and how to be done in the best possible manner. It is getting the things done through and with the people. Let us examine following definitions of production management :
1. According to A.W. Field,” Production management is the process of planning and regulating the operations of that past of an enterprise which is responsible for actual transformation of materials into finished products.”
2. This definition limits the scope of production management to those activities of an enterprise which are associated with the transformation process of inputs into output. The definition does not include the human factor involved in the production process. The stress is on material inputs only, hence, it is an incomplete definition.
2. In the words of S. Buffa “Production Management deals with decision making related to production process, so that the resulting goods and services are produced in accordance with the quantitative specification and demand schedule with minimum cost.” According to this definition design and control of the production system are two main functions of production management.
3. According to another definition, “
Production Management is a set of general principles for production economies, facility design, Job design, schedule design, quality control, inventory control, work study and cost and budgetary control.
This definition explains the main areas of an enterprise where the principles of production management can be applied. This definition clearly points out that production management is not a set of techniques, rather, it is an over-all process. It is evident from above definitions that production planning and its control is the main characteristic of production management. In the case of poor planning and control of production activities the organization may not be able to attain its objectives and may result in loss of customer’s confidence and retardation in the progress of the establishment.
The main activities of production management
In short, the main activities of production management can be listed as:
(i) Specification and procurement of input resources namely manage meet, material and land, labour, equipment and capital.
(ii) Product design and development to determine the production process for transforming the input factors into output of goods and services.
(iii) Supervision and control of transformation process for efficiency of production of goods and services.