Year: 2020

Management Notes

Meaning, Nature and Scope of Production and Operation Management

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Production and Operations Management (POM) focuses on efficiently managing resources, processes, and systems to produce goods and services that meet customer expectations. It encompasses planning, organizing, directing, and controlling all activities involved in the transformation of inputs (materials, labor, technology) into outputs (finished products or services). POM aims to optimize productivity, ensure quality, reduce costs, and maintain timely delivery. Key aspects include production planning, capacity management, inventory control, supply chain management, and quality assurance. It applies to both manufacturing and service industries, emphasizing continuous improvement and innovation. Effective POM enhances organizational efficiency, competitiveness, and customer satisfaction, making it a vital component of business success in dynamic market environments.

Nature of Production and Operations Management:

  • Transformational Process:

POM revolves around transforming inputs (raw materials, labor, capital, and technology) into outputs (finished goods or services). This process is at the core of POM, ensuring that resources are utilized efficiently to create value. For example, in a manufacturing setup, raw materials are converted into products, while in services, inputs like time and skills are transformed into customer experiences.

  • Goal-Oriented:

The primary objective of POM is to achieve organizational goals. This includes reducing production costs, ensuring quality, increasing productivity, and meeting customer demands. Every operation is directed toward achieving specific targets that contribute to the overall success of the organization.

  • Interdisciplinary:

POM combines principles and techniques from various disciplines, such as engineering, economics, statistics, and management. This interdisciplinary approach ensures a comprehensive strategy to optimize processes, improve efficiency, and achieve operational goals. It enables managers to apply diverse tools and methodologies for better decision-making.

  • System-Oriented:

POM views production as a system consisting of interconnected elements like inputs, processes, outputs, and feedback. Each component plays a crucial role, and the system’s efficiency depends on the harmony among its parts. A system-oriented approach ensures that all components are aligned to achieve desired outcomes.

  • Dynamic Nature:

The environment of POM is constantly evolving due to technological advancements, changing market trends, and customer preferences. To remain competitive, production and operations managers must adapt to these changes and implement innovative solutions. This dynamic nature makes POM a continuously evolving field.

  • Customer-Focused:

The end goal of POM is customer satisfaction. All activities, from planning to delivery, are designed to meet or exceed customer expectations regarding quality, cost, and timely delivery. A customer-centric approach helps businesses gain a competitive edge.

  • Decision-Making:

POM involves making critical decisions on production methods, inventory control, capacity planning, scheduling, and facility layout. These decisions impact the overall efficiency of operations and help businesses achieve their objectives. Effective decision-making is essential for optimizing resources and maintaining operational flow.

  • Continuous Improvement:

POM emphasizes ongoing process improvements through methodologies like Lean Manufacturing, Six Sigma, and Kaizen. These techniques focus on reducing waste, enhancing quality, and improving efficiency. Continuous improvement ensures that operations remain competitive and adapt to market demands.

  • Strategic Importance:

POM is a key driver of organizational success. By aligning production and operations with the company’s strategic goals, businesses can achieve higher efficiency, profitability, and sustainability. It enhances the organization’s ability to respond effectively to market challenges and opportunities.

Scope of Production and Operation Management:

  • Product Design and Development:

This involves creating products that meet customer needs and are economically viable. It includes researching market demands, designing innovative products, and determining the materials and processes required for production. A well-designed product aligns with customer expectations and enhances business competitiveness.

  • Process Design:

POM focuses on selecting and designing the most efficient processes to manufacture products or deliver services. This includes determining the technology, equipment, and methods needed to optimize production while ensuring cost-effectiveness and quality.

  • Capacity Planning:

This involves determining the production capacity required to meet market demands. It includes analyzing factors like production volume, machine capacity, labor availability, and resource allocation. Proper capacity planning prevents overproduction, underutilization, or bottlenecks in operations.

  • Facility Location and Layout:

POM involves selecting optimal locations for production facilities based on factors like proximity to markets, raw materials, labor, and infrastructure. Additionally, it focuses on designing an efficient layout within facilities to minimize material handling, reduce costs, and streamline workflows.

  • Production Planning and Control (PPC):

PPC ensures the efficient utilization of resources by planning production schedules, sequencing tasks, and monitoring progress. It helps maintain a balance between demand and supply, ensures timely delivery, and minimizes production costs.

  • Inventory Management:

Managing raw materials, work-in-progress, and finished goods is a critical aspect of POM. Proper inventory management ensures that the right quantity of materials is available at the right time, reducing storage costs and avoiding production delays.

  • Quality Management:

POM emphasizes maintaining high-quality standards in products and processes. It involves implementing quality control techniques, ensuring adherence to specifications, and continually improving processes to meet customer expectations. Techniques like Total Quality Management (TQM) and Six Sigma are often applied.

  • Supply Chain Management (SCM):

SCM focuses on managing the flow of materials, information, and finances from suppliers to customers. It includes procurement, transportation, warehousing, and distribution. Efficient SCM ensures cost savings, reduced lead times, and better customer satisfaction.

  • Maintenance Management:

Ensuring that machinery, equipment, and facilities remain operational is vital for uninterrupted production. Maintenance management involves preventive and corrective maintenance practices to minimize downtime, increase productivity, and extend the life of assets.

  • Workforce Management:

POM involves planning, organizing, and managing the workforce to ensure optimal productivity. This includes workforce scheduling, training, performance monitoring, and fostering a safe and motivating work environment. Effective workforce management contributes to efficient operations and employee satisfaction.

Management Notes

Operations Management, Concepts, Meaning, Objectives, Functions, Scope and Comparison

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Operations Management (OM) is a critical area of management concerned with the design, operation, and improvement of the systems that create goods and services. It focuses on efficiently converting inputs—such as raw materials, labor, technology, and capital—into outputs in the form of products or services. The primary goal of OM is to maximize efficiency, minimize costs, and ensure high-quality products and services that satisfy customer needs.

Operations management is essential in both manufacturing and service industries, as it oversees processes, resources, and workflows to meet organizational objectives. It involves planning, organizing, directing, and controlling production activities, ensuring that resources are used effectively and operations run smoothly. OM also integrates modern techniques like lean management, Six Sigma, and Total Quality Management (TQM) to optimize processes, reduce wastage, and improve overall productivity.

Meaning of Operations Management

Operations Management (OM) refers to the administration of business practices that create the highest level of efficiency in the production of goods or services. It involves planning, organizing, and supervising processes, transforming inputs like materials, labor, and technology into finished goods or services. The main goal of OM is to ensure that business operations are efficient, cost-effective, and meet customer requirements in terms of quality and timely delivery. Essentially, it bridges the gap between strategic goals and practical execution.

Objectives of Operations Management

  • Efficient Utilization of Resources

One of the main objectives of operations management is to ensure optimal use of resources like raw materials, labor, and machinery. Efficient utilization minimizes wastage, reduces operational costs, and increases productivity. By planning and organizing production activities effectively, operations managers ensure that every resource contributes to the value addition process. This objective is crucial for sustaining competitive advantage and maximizing the return on investment in the production system.

  • Ensuring Quality Production

Operations management aims to maintain and enhance the quality of goods and services. Managers implement quality standards, monitor processes, and carry out inspections to minimize defects. High-quality production improves customer satisfaction, strengthens brand reputation, and reduces rework or wastage. Techniques like Total Quality Management (TQM) and Six Sigma are applied to continually enhance quality. Ensuring quality production helps organizations meet market expectations consistently and sustain long-term business growth.

  • Cost Reduction and Control

A key objective of operations management is controlling production costs to improve profitability. This includes managing expenses related to materials, labor, and overheads. Cost reduction strategies like process optimization, efficient resource allocation, and waste minimization help organizations maintain competitive pricing. Effective cost control ensures financial stability and allows firms to invest in innovation, technology, and expansion. Lower costs also enhance the organization’s ability to offer better value to customers without compromising quality.

  • Timely Production and Delivery

Operations management aims to ensure that production schedules are adhered to, enabling timely delivery of goods and services. Proper scheduling of machines, labor, and materials prevents delays and avoids production bottlenecks. Timely production aligns supply with market demand, enhances customer satisfaction, and strengthens relationships with clients. Meeting delivery deadlines consistently also protects the organization’s reputation, increases market trust, and helps avoid penalties or losses arising from late delivery of products.

  • Inventory Management

Another objective of operations management is effective inventory control. It ensures the availability of raw materials, work-in-progress, and finished goods without overstocking or understocking. Proper inventory management reduces holding costs, prevents stockouts, and maintains smooth production operations. By forecasting demand and monitoring inventory levels, operations managers optimize resource use, improve cash flow, and contribute to overall operational efficiency. Inventory management also supports timely production and customer satisfaction.

  • Enhancing Productivity

Operations management focuses on improving the productivity of both labor and machinery. By streamlining workflows, eliminating bottlenecks, and implementing efficient production techniques, managers can achieve higher output in less time. Enhanced productivity leads to cost efficiency, better utilization of resources, and improved competitiveness. Continuous monitoring and performance evaluation motivate employees, ensure proper allocation of tasks, and align production processes with organizational goals, ultimately contributing to overall business success.

  • Innovation and Process Improvement

Operations management encourages research, innovation, and process improvement to maintain competitiveness. Managers adopt new technologies, modern production techniques, and innovative practices to optimize operations. Process improvement reduces production time, lowers costs, enhances quality, and improves customer satisfaction. Innovation in operations allows organizations to respond to changing market demands, develop new products, and implement sustainable production practices, ensuring long-term growth and adaptability in a dynamic business environment.

  • Customer Satisfaction

The ultimate objective of operations management is to satisfy customer needs effectively. This is achieved through quality products, timely delivery, cost-effective pricing, and reliable services. Operations managers align production strategies with market demand to meet expectations consistently. High customer satisfaction leads to loyalty, repeat business, and positive brand reputation. By focusing on customer-centric operations, organizations can strengthen their market position, gain a competitive edge, and ensure long-term profitability and business sustainability.

Functions of Operations/Production Management

  • Production Planning

One of the primary functions is planning production activities. This involves determining what to produce, the quantity, production schedule, and resource allocation. Proper planning ensures efficient use of materials, machines, and manpower, reducing delays and meeting customer demand effectively.

  • Organizing Resources

Operations management organizes resources such as labor, machinery, and materials. This includes designing workflows, assigning tasks, and coordinating departments to ensure smooth operations and optimal utilization of resources.

  • Production Scheduling

Scheduling involves setting timelines for production activities, allocating tasks to machines and workers, and ensuring timely completion of orders. Effective scheduling prevents bottlenecks, idle time, and delivery delays.

  • Quality Control

Ensuring products or services meet quality standards is a key function. Quality control includes inspections, monitoring processes, and implementing standards to minimize defects and enhance customer satisfaction.

  • Cost Control

Operations managers monitor costs of materials, labor, and overheads to ensure production remains within budget. Cost control helps improve profitability and competitive pricing.

  • Inventory Management

Managing raw materials, work-in-progress, and finished goods is essential to prevent shortages or overstocking. Proper inventory control supports smooth production operations and reduces carrying costs.

  • Maintenance of Equipment

Ensuring machinery and equipment are in good working condition through preventive maintenance, repairs, and proper handling reduces downtime and improves productivity.

  • Staff Supervision and Training

Supervising the workforce, assigning tasks, monitoring performance, and providing training ensures efficiency, motivation, and proper utilization of human resources.

  • Research and Development (R&D)

Improving production processes, adopting new technologies, and innovating products are part of operations management to maintain competitiveness and operational efficiency.

  • Ensuring Safety and Compliance

Operations management ensures workplace safety and adherence to legal and environmental regulations, protecting employees and minimizing legal risks.

Scope of Operations Management

  • Location of Facilities

The most important decision with respect to the operations management is the selection of location, a huge investment is made by the firm in acquiring the building, arranging and installing plant and machinery. And if the location is not suitable, then all of this investment will be called as a sheer wastage of money, time, and efforts.

So, while choosing the location for the operations, company’s expansion plans, diversification plans, the supply of materials, weather conditions, transportation facility and everything else which is essential in this regard should be taken into consideration.

  • Product Design

Product design is all about an in-depth analysis of the customer’s requirements and giving a proper shape to the idea, which thoroughly fulfils those requirements. It is a complete process of identification of needs of the consumers to the final creation of a product which involves designing and marketing, product development, and introduction of the product to the market.

  • Process Design

It is the planning and decision making of the entire workflow for transforming the raw material into finished goods, It involves decisions regarding the choice of technology, process flow analysis, process selection, and so forth.

  • Plant Layout

As the name signifies, plant layout is the grouping and arrangement of the personnel, machines, equipment, storage space, and other facilities, which are used in the production process, to economically produce the desired output, both qualitywise and quantitywise.

  • Material Handling

Material Handling is all about holding and treatment of material within and outside the organisation. It is concerned with the movement of material from one godown to another, from godown to machine and from one process to another, along with the packing and storing of the product.

  • Material Management

The part of management which deals with the procurement, use and control of the raw material, which is required during the process of production. Its aim is to acquire, transport and store the material in such a way to minimize the related cost. It tends to find out new sources of supply and develop a good relationship with the suppliers to ensure an ongoing supply of material.

  • Quality Control

Quality Control is the systematic process of keeping an intended level of quality in the goods and services, in which the organization deals. It attempts to prevent defects and make corrective actions (if they find any defects during the quality control process), to ensure that the desired quality is maintained, at reasonable prices.

  • Maintenance Management

Machinery, tools and equipment play a crucial role in the process of production. So, if they are not available at the time of need, due to any reason like downtime or breakage etc. then the entire process will suffer.

Hence, it is the responsibility of the operations manager to keep the plant in good condition, as well as keeping the machines and other equipment in the right state, so that the firm can use them in their optimal capacity.

Comparison of Production Management and Operations Management

Aspect Production Management Operations Management
Definition Concerned with the production of goods only. Concerned with both goods and services production.
Focus Focuses on manufacturing and tangible outputs. Focuses on overall operations including goods and services.
Scope Narrower scope; limited to production processes. Broader scope; includes production, services, and operational efficiency.
Objective To produce goods efficiently with minimal cost. To ensure effective and efficient transformation of inputs into outputs, meeting customer needs.
Nature Mainly technical and tangible. Both technical and managerial in nature; includes intangible aspects.
Resources Managed Materials, machines, and manpower for manufacturing. Materials, machines, manpower, technology, and information for operations.
Decision Areas Decisions regarding production planning, scheduling, and control. Decisions regarding production, services, quality, inventory, and process optimization.
Application Applicable primarily to manufacturing industries. Applicable to both manufacturing and service industries.
Process Type Involves a transformation process to produce goods. Involves transformation processes for both goods and services.
Performance Measurement Measured by production efficiency and output. Measured by efficiency, quality, cost, and customer satisfaction.
Quality Focus Ensures product meets technical specifications. Ensures quality of product and service, overall customer satisfaction.
Cost Focus Mainly reduces production cost. Reduces total operational cost including production, service, and logistics.
Innovation Limited to production techniques. Includes process improvement, technology adoption, and innovation in services.
Customer Orientation Indirectly focuses on customer satisfaction through product quality. Directly focuses on customer satisfaction in both goods and services.
Strategic Importance Supports production efficiency. Supports overall organizational efficiency, competitiveness, and strategic objectives.
Management Notes

Production Function, Components, Types, Applications, Limitations

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The concept of the Production Function lies at the core of production and operations management. It establishes a mathematical relationship between input factors such as labor, capital, and raw materials and the output they produce. This function is vital for understanding how resources can be efficiently utilized to maximize production while minimizing costs.

Definition and Importance of Production Function

The production function is defined as:

Q = f(L,K,R,T)

Where:

  • Q = Output (quantity of goods or services produced)
  • L = Labor (human effort)
  • K = Capital (machinery, tools, and infrastructure)
  • R = Raw materials (physical inputs)
  • T = Technology (knowledge, techniques, and processes)

This relationship helps organizations understand how inputs interact to produce desired outputs and how changes in input levels affect production.

Components of the Production Function

  • Inputs:

Inputs are the resources used in production, categorized as fixed or variable. Fixed inputs, such as machinery, remain constant in the short run, while variable inputs, such as labor and raw materials, fluctuate with production levels.

  • Outputs:

Outputs are the goods or services produced using inputs. The production function aims to maximize output for a given set of inputs or minimize inputs for a specific level of output.

  • Technology:

Technology influences the efficiency of converting inputs into outputs. Advanced technologies can increase productivity and reduce costs.

Types of Production Functions

  1. Short-Run Production Function:
    In the short run, at least one input is fixed (e.g., machinery), while others, like labor and materials, can vary.

    • Law of Diminishing Returns:

      When additional units of a variable input are added to fixed inputs, the marginal product of the variable input eventually decreases.

    Example: Adding more workers to a factory with limited machines increases output initially but leads to overcrowding and reduced efficiency over time.

  2. Long-Run Production Function:
    In the long run, all inputs are variable, and firms can adjust their production scale.

    • Returns to Scale:
      • Increasing Returns to Scale: Doubling inputs results in more than double the output.
      • Constant Returns to Scale: Doubling inputs results in double the output.
      • Decreasing Returns to Scale: Doubling inputs results in less than double the output.

Forms of Production Functions

  1. Cobb-Douglas Production Function:
    A commonly used form expressed as:

    Q=A⋅L^α⋅K^β

    Where:

    • A = Efficiency parameter
    • α and β = Output elasticities of labor and capital

    This function explains how changes in labor and capital affect production, assuming constant returns to scale (α + β = 1).

  2. Leontief Production Function:
    It assumes fixed input proportions, where inputs are used in specific ratios. Output cannot be increased by changing the proportions of inputs.

    Example: A car manufacturer needs a specific ratio of engines and chassis to produce cars.

  3. Linear Production Function:
    This function assumes perfect substitutability between inputs, where one input can replace another without affecting output.
  4. CES (Constant Elasticity of Substitution) Production Function:
    It allows flexibility in substituting inputs and is expressed as:

    Q = A[δK^ρ+(1−δ)L^ρ]^1/ρ

  5. Where ρ determines the elasticity of substitution between inputs.

Applications of Production Function:

  • Optimal Resource Allocation:

The production function helps determine the most efficient combination of inputs to achieve desired output levels.

  • Cost Minimization:

By understanding input-output relationships, firms can identify ways to reduce costs while maintaining production levels.

  • Decision-Making:

It aids in strategic decisions like scaling production, investing in new technologies, and expanding operations.

  • Efficiency Measurement:

The function evaluates productivity and efficiency, identifying areas for improvement.

  • Pricing and Profit Maximization:

Understanding production costs allows firms to set competitive prices and maximize profits.

Limitations of Production Function:

  • Simplified Assumptions:

The production function assumes ideal conditions, which may not reflect real-world complexities like supply chain disruptions or labor strikes.

  • Static Nature:

It often overlooks dynamic factors such as market trends, regulatory changes, and technological advancements.

  • Measurement Challenges:

Accurately quantifying inputs and outputs can be difficult, especially for intangible factors like innovation.

  • Applicability:

Different industries and products require customized production functions, limiting the universal applicability of standard models.

Examples of Production Function in Action

  • Manufacturing Industry:

In a factory, the production function helps optimize the use of machinery and labor to increase output while reducing costs.

  • Agriculture:

Farmers use production functions to determine the optimal combination of land, labor, and fertilizers for maximum crop yield.

  • Service Sector:

A call center analyzes its production function to balance the number of agents and call-handling software, ensuring timely customer service.

Management Notes

Systems Approach to Operations Management

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An organized enterprise does not, of course, exist in a vacuum. Rather, it is dependent on its external environment; it is a part of larger systems such as the industry to which it belongs, the economic system, and society. Thus, the enterprise receives inputs, transforms them, and exports the outputs to the environment. However, this simple model needs to be expanded and developed into a model of operational management that indicates how the various inputs are transformed through the managerial functions of planning, organizing, staffing, leading, and controlling. Clearly, any business or other organization must be described by an open system model that includes interactions between the enterprise and its external environment.

  1. Inputs and Claimants

The inputs from the external environment may include people, capital, and managerial skills, as well as technical knowledge and skills. In addition, various groups of people will make demands on the enterprise. For example, employees want higher pay, more benefits, and job security. On the other hand, consumers demand safe and reliable products at reasonable prices. Suppliers want assurance that their products will be bought. Stockholders want not only a high return on their investment but also security for their money. Federal, state, and local governments depend on taxes paid by the enterprise, but they also expect the enterprise to comply with their laws. Similarly, the community demands that enterprises become good citizens, and providing the maximum number of jobs with a minimum of pollution. Other claimants to the enterprise may include financial institutions and labor unions; even competitors have legitimate claim for fair play. It is clear that many of these claims are incongruent, and it is manager  job to integrate the legitimate objectives of the claimants.

  1. The Managerial transformation Process

It is the task of managers to transform the inputs, in an effective and efficient manner, into outputs. Of course, the transformation process can be viewed from different perspective. Thus, one can focus on such diverse enterprise functions as finance, production, personnel, and marketing. Writers on management look on the transformation process in terms of their particular approaches to management. Specially, writers belonging to the human behavior school focus on interpersonal relationships, social systems theorist analyze the transformation by concentrating on social interactions, and those advocating decision theory see the transformation as sets of decisions. Perhaps, however, the most comprehensive and useful approach for discussing the job of managers is to use the managerial functions of planning, organizing, staffing, leading, and controlling as a framework for organizing managerial knowledge.

  1. The Communication System

Communication is essential to all phases of the managerial process for two reasons. First, it integrates the managerial functions. For example, the objectives set in planning are communicated so that the appropriate organization structure can be devised. Communication is essential in the selection, appraisal, and training of managers to fill the roles in this structure. Similarly, effective leadership and the creation of an environment conductive to motivation depend on communication. Moreover, it is through communication that one determines whether events and performance conform to plans. Thus, it is communication which makes managing possible.

The second purpose of the communication system is to link the enterprise with its external environment, where many of the claimants are. For example, one should never forget that the customer, who is the reason for the existence of virtually all businesses, is outside a company. It is through the communication system that the needs of customers are identified; this knowledge enables the firm to provide products and services at a profit. Similarly, it is through an effective communication system that the organization becomes aware of competition and other potential threats and constraining factors.

  1. External Variables

Effective managers will regularly scan the external environment. While it is true that managers may have little or no power to change the external environment, they have no alternative but to respond to it.

  1. Outputs

It is the task of managers to secure and utilize inputs to the enterprise, to transform them through the managerial functions with due consideration for external variables and to outputs.

Although the kinds of outputs will vary with the enterprise, they usually include many of the following: products, services, profits, satisfaction, and integration of the goals of various claimants to the enterprise. Most of these outputs require no elaboration, only the last two will be discussed.

It must contribute to the satisfaction not only of basic material needs (for example, employees as needs to earn money for food and shelter or to have job security) but also of needs for affiliation, acceptance, esteem, and perhaps even self-actualization so that one can use his or her potential at the work-place.

Management Notes

Manufacturing System: Mass, Batch, Job-Shop and Project

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Manufacturing system

There is no single concept of a manufacturing system covering all industries in every detail. It is necessary to examine the fundamental properties and characteristics of a range of systems and to consider the way they are synthesized and operated before consolidating general conclusions. What is seen depends very much on the viewpoint and the narrowness of the focusing range. Nevertheless there is much to be gained from a fundamental study of-all aspects of manufacturing systems and their interactions since there are opportunities for technology transfer between industries

Manufacturing systems must be designed by taking into account both steady state and-dynamic performance, whilst ensuring there is an adequate number of controllable variables to compensate the effects of uncontrolled disturbances. The technological process part of the manufacturing system is synthesized from interacting unit-operation subsystems, and this itself is a subsystem of the overall business system. The business system has a complex multivariate nature and for its effective control it is important that information flows and plans or set points are well defined to allow people to be effective controllers of the system.

Types of Manufacturing Systems

  1. Custom Manufacturing Systems

Custom manufacturing is by far the oldest and most popular type of manufacturing system in existence. It also happens to be associated with both the highest-quality products and the lowest-volume efficiency.

In the custom manufacturing system, each item is produced by a single craftsperson, who works solely by hand or with the help of a machine. When machines are used, they tend to be highly specialized to their task and cannot produce more than one item at a time.

This system will tend to have the highest unit cost for the product manufactured. As a result, custom-manufactured products are of the highest quality but are also the most expensive products in the market.

  1. Intermittent Manufacturing Systems

The intermittent manufacturing system allows companies to make different types of goods using the same production line. Therefore, the manufacturing facility is designed to handle different product sizes and requirements. Generally, the goods are processed in lots to fulfill orders.

This system is commonly referred to as a “job shop” due to its popularity in countries with relatively cheap labor making products for multinationals based thousands of miles away. The goods made using this manufacturing method are produced in small quantities, so they may not be suitable for stock. Customization is typically done post-purchase.

This type of system is designed for production runs that happen intermittently, hence the name, or products that don’t require high volumes. It uses general purpose machines and requires highly skilled labor.

  1. Continuous Manufacturing Systems

Continuous manufacturing systems are designed to enable the mass production of a single product. The product goes through an assembly line with different stations where parts are added or worked on a little further. This method first arose during the Industrial Revolution and is most closely associated with the Ford Company, which employed the system to produce Model Ts in the 1920s.

This type of production system is ideal when a company has very high volume targets since it reduces the unit cost of the product. It does, however, require a massive capital injection at startup due to the investment in equipment and labor required.

  1. Flexible Manufacturing Systems

Flexible manufacturing is a modern manufacturing system that has become very popular. It involves a significant investment in machinery, although it reduces labor costs by implementing robots eschewing human labor altogether. These machines can easily be reconfigured to manufacture different products in different quantities, and the whole process is automatic.

This method is called flexible manufacturing due to the flexibility in the variety of high-volume goods it can produce. Due to the automated process, quality control is a lot easier, and unit costs are low.

CLASSIFICATION OF PRODUCTION SYSTEMS

  1. MASS PRODUCTION

Manufacture of discrete parts or assemblies using a continuous process are called Mass Production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardization exists and all outputs follow the same path.

Mass Production is characterized by

  • Standardization of product and process sequence
  • Dedicated special purpose machines having higher production capacities and output rates
  • Large volume of products
  • Shorter cycle time of production
  • Lower in process inventory
  • Perfectly balanced production lines
  • Flow of materials, components and parts is continuous and without any back tracking
  • Production planning and control is easy
  • Material handling can be completely automatic

Advantages of Mass Production

Following are the advantages of Mass Production:-

  • Higher rate of production with reduced cycle time.
  • Higher capacity utilization due to line balancing
  • Less skilled operators are required
  • Low process inventory
  • Manufacturing cost per unit is low

Limitations of Mass Production

Following are the limitations of Mass Production:-

  • Breakdown of one machine will stop an entire production line
  • Line layout needs major change with the changes in the product design
  • High investment in production facilities
  • The cycle time is determined by the slowest operation

  1. BATCH PRODUCTION

American Production and Inventory Control Society (APICS) defines Batch Production as a form of manufacturing in which the job pass through the functional departments in lots or batches and each lot may have a different routing. It is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.

Batch Production is characterized by-

  • Shorter production runs
  • Plant and machinery are flexible
  • Plant and machinery set up is used for the production of item in a batch and change of set up is required for processing the next batch
  • Manufacturing lead-time and cost are lower as compared to job order production

Advantage of Batch Production

Following are the advantages of Batch Production:-

  • Better utilization of plant and machinery
  • Promotes functional specialization
  • Cost per unit is lower as compared to job order production
  • Lower investment in plant and machinery
  • Flexibility to accommodate and process number of products
  • Job satisfaction exists for operators

Limitation of Batch Production

Following are the limitations of Batch Production:-

  • Material handling is complex because of irregular and longer flows
  • Production planning and control is complex
  • Work in process inventory is higher compared to continuous production
  • Higher set up costs due to frequent changes in set up

  1. JOB-SHOP PRODUCTION

Job-shop production are characterized by manufacturing one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products.

A job-shop comprises of general-purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence.

Job-shop Production is characterized by:-

  • High variety of products and low volume
  • Use of general purpose machines and facilities
  • Highly skilled operators who can take up each job as a challenge because of uniqueness
  • Large inventory of materials, tools, parts
  • Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities

Advantage of Job-shop Production

Following are the advantages of Job-shop Production:-

  • Because of general purpose machines and facilities variety of products can be produced
  • Operators will become more skilled and competent, as each job gives them learning opportunities
  • Full potential of operators can be utilized
  • Opportunity exists for Creative methods and innovative ideas

Limitation of Job-shop Production

Following are the limitations of Job-shop Production:-

  • Higher cost due to frequent set up changes
  • Higher level of inventory at all levels and hence higher inventory cost
  • Production planning is complicated
  • Larger space requirements

  1. PROJECT PRODUCTION

Project production is characterized by complex sets of activities that must be performed in a particular order within the given period and within the estimated expenditure. Where output of a project is a product, such products are generally characterized by immobility during transformation. Operations of such products are carried out in “fixed position assembly type of layout” which can be observed in production of ships, locomotive and aircraft, construction of roads, buildings, etc.

Characteristics of Project Production

(i) Definite beginning and definite end

Each project has a definite beginning and a definite end.

(ii) “Fixed position” layout

Where the output of a project is a product, such products are generally characterized by immobility during transformation. Operations on such products are carried out in “fixed position assembly type of layout” which can be observed in production of ships, locomotive, aircraft, construction of roads/ buildings, etc.

(iii) High cost overruns

Often delays take place in the completion of the projects. Such delays are generally very expensive due to escalation in the cost of factors of production and incident of penalties.

(iv) Personnel problems

Project production has many personnel related problems namely:-

  • When there is a fast build up, staff is either borrowed from other departments or hired for short duration. Therefore, personnel involved in the project have limited (or short lived) interest in the project.
  • Since each project has a limited duration, the staff starts spending more time forgetting prepared for the next project.
  • Site for the project may be in the underdeveloped region and it may change from project to project which causes dislocation of the normal life.

Importance of Project Production

(i) Non-uniform requirement of resources

Requirement of resources for project production is not uniform. At the end of the project, resources from the project are redeployed elsewhere in other projects. Even during the life of the project, requirement of resources is not uniform. Generally resource requirement (men, materials, money, etc.) in the beginning of the project is low which builds up fast with the progress of the project as more and more resources are absorbed, and then it levels off until there is gradual cutback as the project approaches completion.

(ii) Involvement of different agencies

A project generally involves many tasks, each having its own specialization to be performed by different agencies. The tasks generally have strict precedence (i.e. certain tasks must be completed before the next begins) amid as such co-ordination between agencies is of utmost importance.

(iii) Scheduling and control

Because of large number of activities, involvement of different agencies and strict precedence requirements, scheduling and control assumes great importance. Some network planning techniques like PERT and CPM have been found to be very useful to overcome the problems mentioned above.

Management Notes

Plant Location: Nature

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Location of an industry is an important management decision. It is a two-step decision: first, choice of general area or region and second, the choice of site within the area selected. Location decision is based on the organizations long-term strategies such as technological, mar­keting, resource availability and financial strategies.

The objective of plant location decision-making is to minimize the sum of all costs affected by location.

Plant location is important because of the following:

(i) Location influences plant layout facilities needed.

(ii) Location influences capital investment and operating costs.

Location decisions are strategic, long-term and non-repetitive in nature. Without sound and careful location planning in the beginning itself, the new facilities may create continuous operating problems in future. Location decision also affects the efficiency, effectiveness, produc­tivity and profitability.

The location decision should be taken very carefully, as any mistake may cause poor location, which could be a constant source of higher cost, higher investment, difficult marketing and transportation, dissatisfied and frustrated employees and consumers, frequent interruptions of production, abnormal wastages, delays and substandard quality etc.

Therefore, it should be based upon a careful consideration of all factors that are essentially needed in efficient running of a particular industry. The necessary factors in the selection of plant location vary among industries and with changing technical and economical conditions.

Site selection is not an easy problem because if the selection is not proper then all money spent on factory building, machinery and their installation etc., will go as waste and the owner has to suffer a great loss. Therefore, while selecting a site, owner must consider technical, commercial, financial aspects which may provide maximum advantages.

Nature of Plant Location

Plant location with thorough analysis leads the organization towards success. The basic objective of organization is to maximize the profit level. Hence, it will be beneficial for both i.e. newly established business & already established business. The profit maximization can be done by increasing sales price, increasing sales with reduced production cost, by analyzing market trend, nature & level of competition etc. Production cost can also be reduced, if firm is located at a place where all the basic requirements (that fulfill input needs) will be available easily.

Selection of appropriate location is necessary due to following reasons:

  • Plant location partially determines operating and capital cost. It determines the nature of investment.
  • Each plant location requires some basic facilities like transportation, availability of water, electricity, fuel, cheap labors etc.
  • Each prospective location implies a new allocation of capacity to respective market area.
  • Government plays an important role in the choice of the location keeping in view the national benefits.

Plant location and Layout in Production Management

Plant location or the facilities location problem is an important strategic level decision making for an organization. One of the key features of a conversion process (manufacturing system) is the efficiency with which the products (services) are transferred to the customers. This fact will include the determination of where to place the plant or facility.

The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building and machinery, equipment.

Before a location for a plant is selected, long range forecasts should be made anticipating future needs of the company. The plant location should be based on the company’s expansion plan and policy, diversification plan for the products, changing market conditions, the changing sources of raw materials and many other factors that influence the choice of the location decision. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organization.

Management Notes

Factors Considered in Location

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Location, localization and planned location of industries are often felt to be synonymous. But, the distinction among these three terms is of immense importance. Entrepreneurs locate their enterprises where the cost of production comes, the lowest at the time of establishing industries. This is known as ‘location of industries’.

The concentration of a particular industry mainly in one area, as occurred with many industries in India, for example, textile industry in Mumbai is known as ‘localization of industries’. ‘Planned location of industries’ is a term whereby the location of industries is planned to give each industrial area a variety of industries so that large industries are dispersed and not localized.

It was Alfred Weber (1929) to whom the credit of enunciating the theory of industrial location went when his magnum opus “The Theory of the Location of Industry,” was published in German in 1909 and English in 1929.

The early theories of industrial location carried out the analysis on a simple framework where the locational and special diversification was simply determined by an adjustment between location and weight distance characteristics of inputs and outputs.

The reason is that the then industrial structure was heavily dominated by the natural resource-base and consumer-oriented industries. But, over the period the very consideration for locating industries in a particular region has undergone a considerable change so the early theories of industrial location have become improper to explain location. Consideration of natural resources in the choice of industrial location has declined and the industries are likely to be established even in those areas with poor natural endowment.

This holds especially true in the case of industries which are not heavily biased in favour of raw material source for their location. It is seen that such industries are gaining increasingly greater importance in the industrial map of India during the recent decades. Concentration of IT industries in Bangalore and Hyderabad are such examples.

It is not always possible to explain industrial location independently with the help of any one factor. In fact, several factors/ considerations influence the entrepreneur’s decision in selecting the location for industry. Selection of industrial location is a strategic decision. It is a onetime decision and not be retracted again and again without bearing heavy costs.

Nonetheless, regardless of the type of business/enterprise, there are host of factors but not confined to the following only that influence the selection of the location of an enterprise:

  • Availability of Raw Materials
  • Proximity to Market
  • Infrastructural Facilities
  • Government Policy
  • Availability of Manpower
  • Local Laws, Regulations and Taxation
  • Ecological and Environmental Factors
  • Competition
  • Incentives, Land costs. Subsidies for Backward Areas
  • Climatic Conditions
  • Political conditions

  1. Availability of Raw Materials

One of the most important considerations involved in selection of industrial location has been the availability of raw materials required. The biggest advantage of availability of raw material at the location of industry is that it involves less cost in terms of ‘transportation cost.

If the raw materials are perishable and to be consumed as such, then the industries always tend to locate nearer to raw material source. Steel and cement industries can be such examples. In the case of small- scale industries, these could be food and fruit processing, meat and fish canning, jams, juices and ketchups, etc.

  1. Proximity to Market

If the proof of pudding lies in eating, the proof of production lies in consumption. Production has no value without consumption. Consumption involves market that is, selling goods and products to the consumers. Thus, an industry cannot be thought of without market.

Therefore, while considering the market an entrepreneur has not only to assess the existing segment and the region but also the potential growth, newer regions and the location of competitors. For example, if one’s products are fragile and susceptible to spoilage, then the proximity to market condition assumes added importance in selecting the location of the enterprise.

Similarly if the transportation costs add substantially to one’s product costs, then also a location close to the market becomes all the more essential. If the market is widely scattered over a vast territory, then entrepreneur needs to find out a central location that provides the lowest distribution cost. In case of goods for export, availability of processing facilities gains importance in deciding the location of one’s industry. Export Promotion Zones (EPZ) are such examples.

  1. Infrastructural Facilities

Of course, the degree of dependency upon infrastructural facilities may vary from industry to industry, yet there is no denying of the fact that availability of infrastructural facilities plays a deciding role in the location selection of an industry. The infrastructural facilities include power, transport and communication, water, banking, etc.

Yes, depending upon the types of industry these could assume disproportionate priorities. Power situation should be studied with reference to its reliability, adequacy, rates (concessional, if any), own requirements, subsidy for standby arrangements etc. If power contributes substantially to your inputs costs and it is difficult to break even partly using your own standby source, entrepreneur may essentially have to locate his/her enterprise in lower surplus areas such as Maharashtra or Rajasthan.

Similarly adequate water supply at low cost may become a dominant decisional factor in case of selection of industrial location for leather, chemical, rayon, food processing, chemical and alike. Just to give you an idea what gigantic proportions can water as a resource assumes. Note that a tone of synthetic rubber requires 60 thousand gallons, a tone of aluminum takes 3 lakhs gallons, and a tone of rayon consumes 2 lakh gallons of water.

Similarly, location of jute industry on river Hoogly presents an example where transportation media becomes a dominant decisional factor for plant location. Establishing sea food industry next to port of embarkation is yet another example where transportation becomes the deciding criteria for industrial location.

  1. Government Policy

In order to promote the balanced regional development, the Government also offers several incentives, concessions, tax holidays for number of years, cheaper power supply, factory shed, etc., to attract the entrepreneurs to set up industries in less developed and backward areas. Then, other factors being comparative, these factors become the most significant in deciding the location of an industry.

  1. Availability of Manpower

Availability of required manpower skilled in specific trades may be yet another deciding factor for the location of skill- intensive industries. As regards the availability of skilled labour, the existence of technical training institutes in the area proves useful. Besides, an entrepreneur should also study labour relations through turnover rates, absenteeism and liveliness of trade unionism in the particular area.

Such information can be obtained from existing industries working in the area. Whether the labour should be rural or urban; also assumes significance in selecting the location for one’s industry. Similarly, the wage rates prevalent in the area also have an important bearing on selection of location decision.

While one can get cheaper labour in industrially backward areas, higher cost of their training and fall in quality of production may not allow the entrepreneur to employ the cheap manpower and, thus, establish his/her enterprise in such areas.

  1. Local Laws, Regulations and Taxes

Laws prohibit the setting up of polluting industries in prone areas particularly which are environmentally sensitive. Air (Prevention and Control of Pollution) Act, 1981 is a classical example of such laws prohibiting putting up polluting industries in prone areas. Therefore, in order to control industrial growth, laws are enforced to decongest some areas while simultaneously encourage certain other areas.

For example, while taxation on a higher rate may discourage some industries from setting up in an area, the same in terms of tax holidays for some years may become the dominant decisional factor for establishing some other industries in other areas. Taxation is a Centre as well as State Subject. In some highly competitive consumer products, its high quantum may turn out to be the negative factor while its relief may become the final deciding factor for some other industry.

  1. Ecological and Environmental Factors

In case of certain industries, the ecological and environmental factors like water and air pollution may turn out to be negative factor in deciding enterprise location. For example, manufacturing plants apart from producing solid waste can also pollute water and air. Moreover, stringent waste disposal laws, in case of such industries, add to the manufacturing cost to exorbitant limits.

In view of this, the industries which are likely to damage the ecology and environment of an area will not be established in such areas. The Government will not grant permission to the entrepreneurs to establish such industries in such ecologically and environmentally sensitive areas.

  1. Competition

In case of some enterprises like retail stores where the revenue of a particular site depends on the degree of competition from other competitors’ location nearby plays a crucial role in selecting the location of an enterprise. The areas where there is more competition among industries, the new units will not be established in these areas. On the other hand, the areas where there is either no or very less competition, new enterprises will tend to be established in such areas.

  1. Incentives, Land Costs, Subsidies for Backward Areas

With an objective to foster balanced economic development in the country, the Government decentralizes industries to less developed and backward areas in the country. This is because the progress made in islands only cannot sustain for long. The reason is not difficult to seek.

“Poverty anywhere is dangerous for prosperity everywhere.” That many have-not’s will not tolerate a few haves is evidently clear from ongoing protests leading to problems like terrorism. Therefore, the Government offers several incentives, concessions, tax holidays, cheaper lands, assured and cheaper power supply, price concessions for departmental (state) purchases, etc. to make the backward areas also conducive for setting up industries.

It is seen that good number of entrepreneurs considers these facilities as decisive factor to establish industries in these locations. However, it has also been observed that these facilities can attract entrepreneurs to establish industries in backward areas provided other required facilities do also exist there.

For example, incentives and concessions cannot duly compensate for lack of infrastructural facilities like communication and transportation facilities. This is precisely one of the major reasons why people in-spite of so many incentives and concessions on offer by the Government, are not coming forward to establish industries in some backward areas.

  1. Climatic Conditions

Climatic conditions vary from place to place in any country including India. And, climatic conditions affect both people and manufacturing activity. It affects human efficiency and behaviour to a great extent. Wild and cold climate is conducive to higher productivity. Likewise, certain industries require specific type of climatic conditions to produce their goods. For example, jute and textiles manufacturing industries require high humidity.

As such, these can be established in Kashmir experiencing humidity-less climate. On the other hand, industrial units manufacturing precision goods like watches require cold climate and hence, will be established in the locations having cold climate like Kashmir and Himachal Pradesh.

  1. Political Conditions

Political stability is essential for industrial growth. That political stability fosters industrial activity and political upheaval derails industrial initiates is duly confirmed by political situations across the countries and regions within the same country. The reason is not difficult to seek.

The political stability builds confidence and political instability causes lack of confidence among the prospective and present entrepreneurs to venture into industry which is filled with risks. Community attitudes such as the “Sons of the Soil Feeling” also affect entrepreneurial spirits and may not be viable in every case.

Besides, an entrepreneur will have also to look into the availability of community services such as housing, schools and colleges, recreational facilities and municipal services. Lack of these facilities makes people hesitant and disinterested to move to such locations for work.

Very closer to political conditions is law and order situation prevalent in an area also influences selection of industrial location. Hardly any entrepreneur will be interested to establish his / her industry in an area trouble-torn by nexalites and terrorists like Jharkhand, Nagaland and Jammu & Kashmir.

People will be interested to move to areas having no law and order problem to establish their industries like Maharashtra and Gujarat. It is due to this law and order problem the Nano car manufacturing unit shifted from Nandigram in West Bengal to Gujarat.

Management Notes

Methods and Type of Areas of Plant Layout

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Methods of plant layout

  1. Process chart

It is a graph containing details regarding various activities and operations taking place in the organization from start to the last stage of the work.

  1. Process flow diagram

This is an aid to process chart. This relates to details regarding position of machines, area covered by each machine, internal transportation and other operations pertaining to production. This model diagram is prepared on the paper.

  1. Templates

The area covered by a machine is cut to scale from a thick paper to form a template. Not only machines but space covered by furniture, equipment and other components can also form a template. These can be well arranged representing the actual plan of layout to be undertaken.

  1. Models

Three dimensional wooden models of machinery, equipment and other devices and components can be prepared. By seeing these models even a layman can form an idea about the layout of the plant. But this technique is very costly and only big concern can afford to install such a measure.

  1. Drawings

Layout drawings can be got prepared by drafts men showing walls, stairways, machines and equipment etc.

  1. Machine data card

These cards are tied with different machines operating in the plant. These obtain valuable information regarding various salient features or characteristics of machines viz., efficiency, capacity space area covered by the machine and technique of operating the machine etc.

TYPES OF PLANT LAYOUT

Four Main Types of Plant Layout

  1. Product or Line Layout

If all the processing equipment and machines are arranged according to the sequence of operations of the product, the layout is called product type of layout. In this type of layout, only one product of one type of products is produced in an operating area. This product must be standardized and produced in large quantities in order to justify the product layout.

The raw material is supplied at one end of the line and goes from one operation to the next quite rapidly with a minimum work in process, storage and material handling. Fig. 1 shows product layout for two types of products A and B.

Advantages offered by Product Layout

(i) Lowers total material handling cost

(ii) There is less work in processes

(iii) Better utilization of men and machines

(iv) Less floor area is occupied by material in transit and for temporary storages

(v) Greater simplicity of production control

(vi) Total production time is also minimized

Limitations of Product Layout

(i) No flexibility which is generally required is obtained in this layout

(ii) The manufacturing cost increases with a fall in volume of production

(iii) If one or two lines are running light, there is a considerable machine idleness

(iv) A single machine break down may shut down the whole production line

(v) Specialized and strict supervision is essential

  1. Process or Functional Layout

The process layout is particularly useful where low volume of production is needed. If the products are not standardized, the process layout is more low desirable, because it has creator process flexibility than other. In this type of layout, the machines and not arranged according to the sequence of operations but are arranged according to the nature or type of the operations. This layout is commonly suitable for non repetitive jobs.

Same type of operation facilities are grouped together such as lathes will be placed at one place, all the drill machines are at another place and so on. See Fig. 8.4 for process layout. Therefore, the process carried out in that area is according to the machine available in that area.

Advantages of Process Layout

(i) There will be less duplication of machines. Thus, total investment in equipment purchase will be reduced.

(ii) It offers better and more efficient supervision through specialization at various levels.

(iii) There is a greater flexibility in equipment and man power thus load distribution is easily controlled.

(iv) Better utilization of equipment available is possible.

(v) Break down of equipment can be easily handled by transferring work to another machine/work station.

(vi) There will be better control of complicated or precision processes, especially where much inspection is required.

Limitations of Process Layout

(i) There are long material flow lines and hence the expensive handling is required.

(ii) Total production cycle time is more owing to long distances and waiting at various points.

(iii) Since more work is in queue and waiting for further operation hence bottle necks occur.

(iv) Generally, more floor area is required.

(v) Since work does not flow through definite lines, counting and scheduling is more tedious.

(vi) Specialization creates monotony and there will be difficult for the laid workers to find job in other industries.

  1. Fixed Position Layout

This type of layout is the least important for today’s manufacturing industries. In this type of layout the major component remain in a fixed location, other materials, parts, tools, machinery, man power and other supporting equipment’s are brought to this location.

The major component or body of the product remain in a fixed position because it is too heavy or too big and as such it is economical and convenient to bring the necessary tools and equipment’s to work place along with the man power. This type of layout is used in the manufacture of boilers, hydraulic and steam turbines and ships etc.

Advantages Offered by Fixed Position Layout

(i) Material movement is reduced

(ii) Capital investment is minimized.

(iii) The task is usually done by gang of operators, hence continuity of operations is ensured

(iv) Production centers are independent of each other. Hence, effective planning and loading can be made. Thus total production cost will be reduced.

(v) It offers greater flexibility and allows change in product design, product mix and production volume.

Limitations of Fixed Position Layout

(i) Highly skilled man power is required.

(ii) Movement of machines equipment’s to production centre may be time consuming.

(iii) Complicated fixtures may be required for positioning of jobs and tools. This may increase the cost of production.

  1. Combination Type of Layout

Now a days in pure state any one form of layouts discussed above is rarely found. Therefore, generally the layouts used in industries are the compromise of the above mentioned layouts. Every layout has got certain advantages and limitations. Therefore, industries would to like use any type of layout as such.

Flexibility is a very important factory, so layout should be such which can be molded according to the requirements of industry, without much investment. If the good features of all types of layouts are connected, a compromise solution can be obtained which will be more economical and flexible.

Management Notes

Plant Layout: Objective of Good Layout

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Plant Layout refers to the systematic arrangement of physical facilities such as machinery, equipment, tools, and workspace within a manufacturing or service facility to optimize efficiency and productivity. The primary goal is to ensure a smooth flow of materials, information, and workers while minimizing costs and maximizing space utilization. Types of layouts include product layout (assembly line setup), process layout (grouping similar operations), fixed-position layout (equipment moves to the worksite), and cellular layout (workstations for specific product types). A well-designed plant layout reduces delays, enhances safety, improves employee morale, and contributes to better quality and cost control.

The concept of plant layout is not static but dynamic one. It is on account of continuous manufacturing and technological improvements taking place necessitating quick and immediate changes in production processes and designs. A new layout may be necessary because of technological changes in the products as well as simple change in processes, machines, methods and materials”.

A new layout also becomes necessary when the existing layout becomes ineffective and poor or is not conducive to the changed circumstances. There are certain indications which raise alarm for immediate changes in the existing layout of plant.

These indications may be in the form of excessive manufacturing time, improper storage, lack of control over materials and employees, poor customer service, excessive work in progress and work stoppages etc.

Objectives of Good Plant layout

A properly planned plant layout aims at achieving the following objectives:

(i) To achieve economies in handling of raw materials, work in- progress and finished goods.

(ii) To reduce the quantum of work-in-progress.

(iii) To have most effective and optimum utilization of available floor space.

(iv) To minimize bottlenecks and obstacles in various production processes thereby avoiding the accumulation of work at important points.

(v) To introduce system of production control.

(vi) To ensure means of safety and provision of amenities to the workers.

(vii) To provide better quality products at lesser costs to the consumers.

(viii) To ensure loyalty of workers and improving their morale.

(ix) To minimize the possibility of accidents.

(x) To provide for adequate storage and packing facilities.

(xi) To workout possibilities of future expansion of the plant.

(xii) To provide such a layout which permits meeting of competitive costs?

Principles of a Good Plant Layout

  1. Overall integration of factors

A good layout is one that integrates men, materials, machines and supporting activities and others in a way that the best compromise is obtained. No layout can satisfy each and every principle of a good layout.  Some criterion may conflict with some other criterion and as a result no layout can be ideal it has to integrate all factors into the best possible compromise.

  1. Minimum movement

A good layout is one that permits the minimum movement between the operations.  The plant and machinery in case of product layout and departments in case of process layout should be arranged as per sequence of operations of most of the products.

  • Since straight line is the shortest distance between any two points, men and materials as far as possible should be made to move along the straight path
  • A door may be made in a wall or a hole may be drilled in a ceiling if that eliminates or reduces material handling in place of stairs or a distant door.

  1. Uni-direction flow

A good layout is one that makes the materials move only in the forward direction, towards stage of completion, with any backtracking.

  • Since straight line is the shortest distance between any two, points, materials as far as possible should be made to move on the principle of straight-line flow. And when straight line flow is not possible, other flows like U-shaped flow, circular flow or zig zag flow may be adopted, but the layout may ensure that materials move in the forward direction.
  • To ensure forward flow, equipment if necessary may be duplicated.

  1. Effective use of available space

A good layout is one that makes effective use of available space both horizontal and vertical.

  • Backtracking and duplicated movements consume more time, involve un-necessary materials handling, add to cost and lead to inefficiency.
  • Raw materials, work-in-progress and finished goods should be piled vertically one above another rather than being strewn on the floor.
  • Pallets or equivalents should be made use of to pile up several layers one above another.
  • Area below the work tables or in the cupboards built into the wall are welcome since they reduce requirement of space.

  1. Maximum visibility

A good layout is one that makes men, machines and materials ready observable at all times.

  • All departments should be smoothly integrated, convenient to service and easy to supervise.
  • Every piece of positioning or screening or partitioning should be scrutinized and carefully planned.
  • Special cupboards, enclosures, offices, partitions etc. should be avoided except when their utility is established beyond doubt.

  1. Maximum accessibility

A good layout is one that makes all servicing and maintenance point readily accessible.

  • Machines should be kept sufficiently apart and with reasonable clearance from the wall so that lubrication, adjustment and replacement of belts, removal of parts at the time of repairs etc can be done conveniently by the maintenance staff.
  • Area in front of electrical panels and fire extinguishers should be kept free from obstructions.
Management Notes

Factors Influencing Plant Layout

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Whatever be the type of layout being contemplated, the following factors are to be considered because these factors have got significant influence on the design of the layout.

  1. Man Factor

The man is very flexible element who can be made suitable for all sort of layouts.

Main considerations are as follows:-

(i) Safety and working conditions.

(ii) Man power requirements-skill level of workers, their number required and their training programme.

(iii) Man power utilization in the plant.

(iv) Human relations.

  1. Material Factor

It includes the various input materials like raw materials, semi-finished parts and materials in process scrap, finished products, packing materials, tools and other services.

The main considerations are:-

(i) Design and specifications of the product to be manufactured.

(ii) Quantity and variety of products and materials.

(iii) Physical and chemical characteristics of various input materials.

(iv) Component parts or material and their sequence of operations i.e. how they go together to generate the final product.

  1. Machinery Factor

The operating machinery is also one of the most important factors therefore all the information’s regarding equipment and the tools are necessary for inspection, processing and maintenance etc.

(i) The processes and methods should be standardized first.

(ii) Machinery and tools selections depend upon the type of process and method, so proper machinery and other supporting, equipment should be selected on the basis of volume of production.

(iii) Equipment utilization depends on the variation in production, requirements and operating balance. Machines should be used to their optimum levels of speed, feed and depth of cut.

(iv) Machinery requirement is mostly based on the process/method

(v) Maintenance of machines and replacement of parts is also important.

  1. Movement Factor

It mainly deals with the movement of men and materials. A good layout should ensure short moves and should always tend towards completion of product. It also includes interdepartmental movements and material handling equipment. This includes the flow pattern reduction of unnecessary handling, space for movement and analysis of handling methods.

  1. Waiting Factor

Whenever material or men is stopped, waiting occurs which costs money. Waiting includes handling cost in waiting area, money tied up with idle material etc.

Waiting may occur at the receiving point, materials in process, between the operations etc.

The important considerations in this case are:-

(a) Location of storage or delay points

(b) Method of storing

(c) Space for waiting

(d) Safeguard equipment for storing and avoiding delay.

  1. Service Factor

It includes the activities and facilities for personnel such as fire protection, lighting, heating and ventilation etc. Services for material such as quality control, production control, services for machinery such as repair and maintenance and utilities liked power, fuel/gas and water supply etc.

  1. Building Factor

It includes outside and inside building features, shape of building, type of building (single or multistory) etc.

  1. Flexibility Factor

This includes consideration due to changes in material, machinery, process, man, supporting activities and installation limitations etc. It means easy changing to new arrangements or it includes flexibility and expendability of layouts.

SEVEN MAJOR FACTORS AFFECTING PLANT LAYOUT

  1. Policies of management

It is important to keep in mind various managerial policies and plans before deciding plant layout.

Various managerial policies relate to future volume of production and expansion, size of the plant, integration of production processes; facilities to employees, sales and marketing policies and purchasing policies etc. These policies and plans have positive impact in deciding plant layout.

  1. Plant location

Location of a plant greatly influences the layout of the plant. Topography, shape, climate conditions, and size of the site selected will influence the general arrangement of the layout and the flow of work in and out of the building.

  1. Nature of the product

Nature of the commodity or article to be produced greatly affects the type of layout to be adopted. In case of process industries, where the production is carried in a sequence, product layout is suitable. For example, soap manufacturing, sugar producing units and breweries apply product type of layout. On the other hand in case of intermittent or assembly industries, process type of layout best suited. For example, in case of industries manufacturing cycles, typewriters, sewing machines and refrigerators etc., process layout method is best suited.

Production of heavy and bulky items need different layout as compared to small and light items. Similarly products with complex and dangerous operations would require isolation instead of integration of processes.

(4) Volume of production

Plant layout is generally determined by taking into consideration the quantum of production to be produced. There are three systems of production viz.,

(a) Job production

Under this method peculiar, special or non- standardized products are produced in accordance with the orders received from the customers. As each product is non- standardized varying in size and nature, it requires separate job for production. The machines and equipment’s are adjusted in such a manner so as to suit the requirements of a particular job.

Job production involves intermittent process as the work is carried as and when the order is received. Ship building is an appropriate example of this kind. This method of plant layout viz., Stationery Material Layout is suitable for job production.

(b) Mass production

This method involves a continuous production of standardized products on large scale. Under this method, production remains continuous in anticipation of future demand. Standardization is the basis of mass production. Standardized products are produced under this method by using standardized materials and equipment. There is a continuous or uninterrupted flow of production obtained by arranging the machines in a proper sequence of operations. Product layout is best suited for mass production units.

(c) Batch production

It is that form of production where identical products are produced in batches on the basis of demand of customers or of expected demand for products. This method is generally similar to job production except the quality of production.

Instead of making one single product as in case of job production a batch or group of products is produced at one time, It should be remembered here that one batch of products has no resemblance with the next batch. This method is generally adopted in case of biscuit and confectionary manufacturing, medicines, tinned food and hardware’s like nuts and bolts etc.

  1. Availability of floor space

Availability of floor space can be other decisive factor in adopting a particular mode of layout. If there is a scarcity of space, product layout may be undertaken. On the other hand more space may lead to the adoption of process layout.

  1. Nature of manufacturing process

The type of manufacturing process undertaken by a business enterprise will greatly affect the type of layout to be undertaken.

A brief mention of various processes is given us under:

(i) Synthetic process

Under this process two or more materials are mixed to get a product. For example, in the manufacture of cement, lime stone and clay are mixed.

(ii) Analytical process

This is just the reverse of synthetic process. Under this method different products are extracted from one material. For example, from crude oil, petroleum, gas, kerosene and coal tar etc. are extracted.

(iii) Conditioning process

Under this process the original raw material is given the shape of different products and nothing is added to it. Jute is an important example of this kind.

(iv) Extractive process

This method involves the extraction of a product from the original material by the application of heat or pressure. This involves the process of separation, for example, aluminium is separated from bauxite

  1. Repairs and maintenance of equipment and machines

The plant layout should be designed in such a manner as to take proper care with regard to repairs and maintenance of different types of machines and equipment being used in the industry. The machines should not be installed so closely that it may create the problems of their maintenance and repairs. It has been rightly said that “Not only should access to parts for regular maintenance such as oiling, be considered in layout but also access to machine parts and components when replacement and repair are fairly common”.

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