The essence of the business is to satisfy the needs of customers through the provision of services or goods. The existence of production management at the enterprise indicates the application of the concepts of business organization and quality management when creating products. To ensure competitiveness, it is crucial for organizations to create value for customers and solve their problems. In the article we will talk about why and who needs high-quality production management at the enterprise, as well as how it indirectly affects our well-being.
Production - the creation of goods and services for subsequent consumption by society. It means transforming resources into products in accordance with the needs of society. Production management is the application of the principles of control over the production process of an enterprise. It covers all types of activities in which a set of factor components is transformed into a social product. It includes the application of planning, organization and control of the production process.
The main goal of production management is the creation of goods and services of the right quality in the required quantity with minimal cost. An effective organization is able to adequately withstand competition.
Production management ensures the full or optimal use of existing production facilities. It is responsible for making decisions related to the product manufacturing process. Thus, goods and services are produced in accordance with quantitative requirements and a demand schedule with a minimum cost.
Enterprise economics and production management are a set of general principles for saving production, designing facilities and jobs, scheduling, quality control, inventory control, cost and budget. Here, planning and control come to the fore as the main activities.
Production is a scientific process, which includes the transformation of raw materials (materials) into the desired product or service (product) by adding economic value. It can be classified into the following types:
- Production based on the separation of processes, which includes the desired result achieved by separation or extraction of the necessary substances from raw materials. A classic example is oil production and the manufacture of various petroleum products.
- Production through modification or improvement involves changing the chemical parameters of the raw material without changing the physical properties. A subject suitable for the description may be a metallurgical plant, where an annealing process or heating at high temperatures, as well as cooling of alloys, takes place.
- Production, including assembly of parts. An example of such an output is the assembly of cars or computers.
Production management at an enterprise is the work of coordinating and controlling actions that accompanies the process of creating a product. It usually includes effective control over planning, cost, productivity, quality and waste requirements.
General good practices in the production management system have remained unchanged for decades, but the systems and methods used to ensure the release of high-quality products have undergone significant changes. Systems that once seemed perfect are outdated and are now unable to cope with the growing needs of modern markets.
The purpose of the enterprise production management function is to add value to a product or service, which will create long-term relationships with customers or organizations.
Field of activity
Competitive pressure forces production managers to take a broader look at production systems. The emphasis shifts from planning to developing a production management system. And sometimes - even from internal production planning and control to interorganizational aspects. The structure of production management in the enterprise takes into account many factors. Often due to lack of time for data processing, in addition to a structured and modular approach, computerized support tools are required. Enterprise modeling is the area where simulation models are most widely known.
The field of production management is huge. It includes the choice of the location of production, the construction of buildings, the purchase and installation of equipment, the acquisition and storage of raw materials and its transformation into commercial products. To the above is added control of production, quality and maintenance, planning, optimization and automation of work.
For small enterprises working on individual orders, the production management system at the enterprise will differ from large industrial enterprises.
Production process selection
With the growth of production volumes, standardized materials and specialized equipment are used to minimize costs. Evolution in the structure of the process is often associated with the stage of the product life cycle.
The choice of the production management process of an industrial enterprise refers to strategic decisions. The management must decide what technology to use in the workshop, batch shop, on the assembly line, which machines and equipment are required, which material processing system to use.
Choosing the right production capacity
The production manager carries out competent production management at the enterprise, based on capacity indicators. Excessive production capacity will lead to downtime of machinery and equipment, and insufficient production capacity will not be able to meet demand. The production manager must determine the required level of power for both the short and long term. Power selection includes break-even analysis.
At this stage, the head of production management at the enterprise decides on routing and planning.
Routing can be defined as the process of determining the path (route) of work and the sequence of operations. This ensures smooth operation and optimal use of resources. The manager determines in advance the quantity and quality of the required raw materials, labor resources, machines and materials; types and number of processes, sequences in which operations will be organized.
Planning involves fixing the amount of work. For this, various manufacturing operations are organized in order of importance. The start and end, date and time for each operation are fixed. For this, various graphs and control methods are used.
The production manager at the plant must ensure that production plans are followed. If he finds any deviation in the production hall, he must take corrective action.
Quality and Cost Control
To remain competitive in the market, enterprises must produce products of high quality and at the lowest cost. Therefore, quality and cost control is one of the important functions of production management in the enterprise.
The final cost of the product varies depending on the optimal use of resources, the cost of inventory and the cost of storage of finished products.
The amount of product at each stage of manufacture should be evaluated in terms of procurement, storage and quality. Correct recording of information, such as the time spent on production, the level of costs and their impact on other processes in the context of different production stages, helps to identify bottlenecks and opportunities for optimization and automation.
The head of production management at the enterprise should monitor the level of stocks. Due to overstocking, the enterprise’s working capital is blocked, during the shortage of goods production schedules are violated and the quality of delivery of finished products decreases. Therefore, the production manager must maintain a certain level of stocks, which would not lead to either overstocking or shortage of products.
The concepts of Just-In-Time (JIT) and lean manufacturing are used to optimize the use of resources, as well as to minimize or eliminate inventory.
To ensure uninterrupted control of the production process, the enterprise uses machine tools, machines, equipment. At the most inopportune moment, they may fail, which will shift the delivery schedule of products, so regular scheduled maintenance is necessary. Preventative maintenance is better than breakdown, so check and repair schedules should be made. Such schedules should not affect the production schedule.
Continuous inspection (regular checks), cleaning, lubrication, maintenance, replacing old equipment parts, ordering spare parts are the tasks of the head of the production department.
Pluses for the enterprise
- Achievements of goals. The fundamentals of enterprise production management help him achieve his goals. The company produces only those products that satisfy the needs and desires of customers. If, after conducting a marketing research, the conclusions are made correctly, in the near future the company will increase sales and revenue.
- Reputation, brand and image. Production management helps the company satisfy customer needs. It indirectly enhances the reputation of the company, its perception. A good image helps the company grow and expand.
- Promoting the introduction of new products. Production management helps experiment and market new products. At an industrial enterprise, research and development (R&D) is indispensable. They help the company develop new, better products.
- Functional area support. Production management supports other functional areas in the organization, such as marketing, finance, and personnel. It will be easier for the marketing department to sell high-quality products, and the finance department will receive more funds by increasing sales. The company can issue a loan, which can be used for expansion and modernization. The human resources department will be able to effectively manage human resources if the production department is characterized by high productivity.
- Help in resisting competition. Production management helps the firm withstand market competition. This is due to the fact that thanks to it the products are produced in the required quantity and quality, and the price for it is set to that which will be interesting to the buyer.
- Optimal use of resources. Production management contributes to the optimal use of resources such as labor, machinery and raw materials. Thus, the company can achieve its goals with the effective use of production facilities. The result will be higher organization profits.
- Expansion of the enterprise. Production management helps the company grow and expand. Improving product quality and reducing costs helps the company make higher profits.
Pros for consumers and society
- Higher living standards. Production management leads to continuous research and development (R&D), in a word, to new and improved types of products. People use products and enjoy a higher standard of living.
- Increase in employment. Thanks to productive activities in the country, directly or indirectly, many different employment opportunities appear. Direct employment is characteristic of the manufacturing sector, while indirect employment is created in supporting areas: marketing, finance, customer support.
- Better quality and lower costs. Production management improves product quality because research and development is ongoing. Large-scale production, while rationalizing, is confronted with economies of scale that reduce the cost of production per unit of output. This is beneficial for the consumer, as the level of consumer prices decreases.
The management of production and sales of the company's products ensures the optimal use of resources and the efficient production of goods and services, which leads to rapid economic growth and the welfare of the nation.