Production Management: Definition, Meaning, Function and Scope


By: Site Engineer, Staff

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Production is the word used to describe the process of producing goods from raw materials.

A look through the stores of a factory will show that these raw materials can be anything from sheet metals or cotton to nuts and bolts, electric motors or instruments as these items are often referred to as “raw material” by the firm using them.

Whether production takes place in a plant employing 500 or in a backyard where a dozen craftsmen are engaged in precision engineering, the business must be organized to produce effectively. The activities involved in the production are almost independent of the size of the undertaking. In the smaller concern, one person may carry out several functions, while in the larger one separate individual or teams may carry out each function.

Stages in Production

The following outline plan shows the steps taken before the marketing of a product:

  • Market research probes the market in an attempt to ascertain the need for a new product.
  • Research is carried out to provide information on which to base design for a prototype.
  • Design work is started which should produce a basic product.
  • Development work is carried out to develop the design.
  • Prototype Production: This stage goes hand-in-hand with design in the production of a few products, often made with parts fashioned by hand. These are used for experimental and test purposes.
  • Pre-production: The next step is to produce several items as nearly as possible under factory conditions using where possible, the tools and equipment which will be used on the production line. These samples are tested and may also be supplied to customers for their consideration. Some manufacturers supply pre-production models to regular or selected customers and invite their comments and criticisms. Market research can also be assisted here.
  • Manufacture: The product is then put into full production after an initial build-up to the final figure. This build-up allows time for the operatives to learn the new assembly cycles, etc., and ensures that the initial programs will be met in spite of the high level of rejects which may occur at the start of production. Even the pre-production stage does not iron out all the “bugs” and it is hoped that the initial low level will allow for this.

The goods then leave for the warehouse and become the responsibility of the sales organization.

Factory Site Selection

It is doubtful whether the perfect factory site is ever obtainable and even if it were, it usually becomes unsuitable in years to come for reasons of urban development or the need for expansion, for example.

Factors to consider when choosing a site are as follows:

1. Siting Factors

Advantages of Local Site

There is room for expansion, avoidance of traffic and parking problems, disposal of waste is easier, the cheapness of rent, rates, maintenance, and possibly labor may attract financial inducements offered by the government (tax-free for some years).


Remoteness from customers, business associates, and staff; difficulties of communication may still be necessary to keep a town office, possible transport for staff may have to be provided; extra training for inexperienced local labor, extra transport for goods.

2. Financial factors

  • Leasehold or freehold
  • Cost of conversion if it is an old building
  • Maintenance and running costs
  • Costs of removal
  • Labour and transport costs

Advantages of Freehold

Premises can be altered or extended, permanence and prestige can be sub-let good investment for capital (if available).


“Ties up” capital of the firm decreases flexibility e.g for moving elsewhere increases the cost of insurance and maintenance etc.

3. Suitability Factor

  • Sub-soil may need testing if building upwards.
  • Transport and materials handling.
  • Sufficient ground area (although consideration has to be single or multi-story construction).
  • Sufficient room for expansion.

Single-Storey Vs Multi-Storey Buildings

As the location of the factory will depend very greatly on the nature of the industry, so will the question of whether to have a single or multi-story factory.

In general, however, the factors to consider will be as follows:

Advantages of Single-Storey

  • Greater flexibility in plant layout.
  • The expansion more easily achieved. i.e., by building upwards.
  • Better natural light and ventilation.
  • Materials handling costs are lower (no lifts or floor-to-floor conveyors required).
  • Heavy equipment can be sited anywhere in the factory.
  • Risks of heavy fire damage are reduced.
  • The vibration of machinery is unlikely to distract others.
  • Building costs are less than for multi-story.

Advantages of Multi-Storey Building

  • Low site cost for the same manufacturing agreed (in the city, the land is expensive).
  • Less heat loss and therefore lower cost of heating in winter.
  • The more compact arrangement of the factory, therefore, easier and quicker communications.
  • Cleaner air and better light on upper floors.

Factory Layout

The layout of a factory is very important because it can affect many factors, e.g., speed of production, general communication, the morale of workers, the costs of handling materials, best use of machines. The layout will also depend on the type of goods being manufactured.

The general factors to consider when planning factory layout are:

  • The most suitable layout according to the type of production.
  • The well-designed layout of the plant so that the movement of materials and workers are reduced to a minimum i.e., establishing a smooth flow of work (scientific work-study will help decide this).
  • Adequate floor areas especially to comply with the factory Acts (operators’ space).
  • Sufficient space allowance for storage of raw materials as well as for work-in-progress and manufactured goods.
  • Provision of gangways, sufficient in number and width to allow the transport of goods.
  • Room for materials handling e.g., overheads cranes to operate with safety.
  • A layout that gives the best control overproduction.
  • The best use of floor space as well as the capital equipment.
  • The best layout to assist supervision.

Techniques of Layout

The steps to be taken in arranging the optimum layout are:

  • Calculate space requirements and numbers of machines man and materials.
  • Analyze manufacturing requirements.
  • Choose between the product or process layout to establish a smooth flow of work.
  • Prepare detailed floor plans.
  • Plan overall production areas, store areas service areas, etc.

It is usual to have either a product layout i.e., a grouping of processes and machines needed for making particular products or process layout (where machines are grouped according to the process they perform regardless of the product). To some extent, this will depend on the type of production.

Product Layout Advantages

  • Raw materials, work-in-progress and finished goods stock areas are reduced because of the balanced flow of production and there is no waiting between different processes.
  • Reduced material handling and therefore reduces handling costs.
  • Greater interest of workers who see the whole production process.
  • Easier production control; delays in manufacturing are quickly apparent.
  • Less floor space required and possibly better use of machines.

Process Layout Advantages

  • Because the greater speed of production is possible, it also means better utilization of labor employed.
  • Greater specialization and speed of production.
  • A greater margin of safety in case of breakdown of machines.
  • Better use of expensive high-capacity modem machines maximum use can be obtained.
  • Greater flexibility, e.g., if changes occur in the volume of sales of different products.
  • Easier maintenance, because the same types of machine are grouped.

Note: In practice, the layout often contains a mixture of both product and process design, in an endeavor to gain the advantages of both.

Appropriate Technology

The word, technology has been defined variously, in ordinary terms; technology is the art of know-how that implies knowledge of some type of operation or the other. It could be said to be the totality of the effort involved in the application of basic results and experimental findings to the exploitation of nature for the benefit of man. Technology has been used to improve the quality of life through the development of tools and know-how.

Appropriate technology can be defined as the application of the know-how or skill, that is one’s capability and can best be utilized in solving a specific problem. Appropriate technology also applies to relevant technologies that can be suitably engaged in for revenue generation resulting in the alleviation of poverty among the populace. There has always been needing for the provision of appropriate technology for production ventures. In 1924 the colonial government established the West African Cocoa Research Institute at Ibadan, Nigeria. The establishment of other research institutes took place in quick succession and presently, there are twenty-six research institutes in the country. These institutes were grouped into two major categories vis: agricultural and industrial research institutes.

Going by their broad mandate, the research institutes are expected to perform the following functions:

  • Collect scientific and technical publications related to its work from all over the world and provide library services to the government, scientists and industry.
  • Develop technical manpower especially in association with universities which will help to increase the technical and scientific capabilities of a country. The institutes act as training grounds for young scientists whose training and expertise will become available to research and industry for the development of the country.
  • Make scientific information available to the public educational and other institutions through its publications.
  • Assist in economic development and industrial planning by industry.
  • Support and initiate campaigns for the adoption of new practices and innovations based on new findings related to its research program. Provide liaison with and obtain the services of foreign personnel and organizations in its sphere of activities.
  • Research the specific subject, commodity or problems which it was founded.
  • Conduct technical and economic feasibility studies of proposed development projects involving its research responsibility or the materials and problems for which it was founded.
  • Build and operate pilot units or demonstration units to gather technical information for the industry concerning the material or commodity on which it is carrying out research.

The industrial research institutes established by the federal government are the sources of appropriate technologies for the small-scale business sector of the country’s economy. The agricultural research institutes also provide agricultural-related technologies for them. The breakthroughs recorded by the research institutes and the investment opportunities available therein are the basic technologies that have been perfected and made ready for commercialization.

Group Technology

This is a technique that has emanated from Russia and involves arranging the machines according to “families” of components. This allows different assemblies to be made using the same component groups. It also means organizing the component groups almost like separate factories under the same roof. They will have separate planning, supervision, control, and even production and profitability targets.

Group Technology Advantages

  • Better coordination between different manufacturing groups
  • Better control over them
  • Better costing and stores control
  • More “local” interest by workers
  • Facilities changing production while retaining the same processes

Types of Production

How production is organized to manufacture a product depends on the quantity required and on the type of product. It is usual to classify types of the product under three main headings namely, job production, flow production and an intermediate type called batch production.

  • Flow Production or Continuous Production: Where the products are required in a continuous supply the production can be arranged to “flow” from one operation to the next. The same requirements are analyzed and the production planning department will load the manufacturing department to an optimum level to be reached after an initial build-up. This build-up is required to allow the operatives to reach the budget speeds for the department and to allow time to cure the teething troubles not ironed out in the pre-production period. The program, as this loading is usually called, provides the manufacturing department with its instructions regarding levels of production. The repetitive nature of the processes greatly simplifies production control problems.
  • Job Production (Jobbing): This is the “special order” or one type. It is usually carried out by firms engaged in sub-contract work such as tool making, machining sheet-metal work and sub-assembly for larger firms concentrating on mass production or for customers requiring special equipment. Jobs are carried out to the customers’ special requirements on specifications. The selling price is usually based on experience. This usually requires a wide range of workers and labor must be fairly versatile. Since the volume of production will vary, finances must be flexible, probably product layout is advisable. Not a very efficient form of production, although it is very widespread.
  • Batch Production: When items are required in larger numbers it may be possible to look up for repetitive production. However, a fixed quantity of batch may still be required rather than a continuous supply. If a batch is required to fulfill a special order the items are usually completed in one run. A form of batch production is also used when certain machines and processes supply a variety of products to various departments or lines. In this case, a batch of, say two months’ work is made on product “A” and then the machine is changed over to product “B” to build up the stock of “Brand” and so on. Often “mass” production is organized on a batch production basis, the batches following each other continuously. The reason for this is to break up the flow of products into convenient lots for checking to cost, handling inspection operator payment, and other purposes.

Note: It is not unusual for all three types of products to be found in a single factory and the differences between the three are more apparent than real in practice.

Selection of Plant and Machinery

Where there are heavy plant and machinery much will depend on the technical requirements; on the technical knowledge of the production supervisor, and the technical development in the kind of machinery required.

Factors to be considered in general are as follows:

  • Seek for any advantage the machinery will give over trade competitors.
  • Whether the demand for the product(s) will be continuous to justify the purchase.
  • Cost of obsolescence and depreciation.
  • Quality of work produced on a machine, as well as its speed of production.
  • Maintenance costs and reliability
  • Overall costs; these include:

(a)        Labour costs-more or less with the new machine?

(b)        Material costs and scrap costs.

(c)        Indirect costs such as setting general running costs, electric power, etc.

(d)        Capital outlay and interest on capital invested.

(e)        Rental and running costs compared with purchase (tax allowance needs to be studied).

(f)        The possibility of government subsidy for such investment.

Production Planning and Control

Production planning and control are established to ensure that there is a coordinated flow of work leading to complete manufacture of the requisite number of articles required and of the required quality, before the arrival of the date promised for delivery.

Planning and control are separate aspects but in practice, they may be combined in one department often called Production Control Department (P.C.D). The production engineering department is yet another term used which is concerned with the whole sequence of operations involved in manufacturing designing the product, planning, production, purchasing and storing materials management of personal inspection and maintenance.

But the objects of the production control department are usually:

  • To meet delivery dates.
  • To ensure smooth continuous production.
  • To use manpower and equipment to the best advantage.
  • To see that raw materials work-in-progress and finished goods are kept at the optimum levels.
  • To prevent bottlenecks in production and avoid delays.

Production Planning and Scheduling

Planning the production is concerned with the making of a decision on how, where and when goods will be manufactured before a single order is issued to commence production. Planning is important although it is often neglected, and it has been said that good production planning in the first place could avoid a great deal of subsequent progress chasing.

The usual stages of production planning are:

  • Scheduling when each item has to be manufactured. It is concerned about starting and finishing times, and must always bear in mind customer delivery dates.
  • Loading of the machines on the shop floor i.e., assigning the work to machines and operators. Loading schedules must be prepared for all machines to make the maximum use of them.
  • Materials availability must be checked the right materials of the required quality and quantity must be on hand for each order. Materials must also be properly stored and handled most efficiently.
  • Dispatch is the act of putting production plans into the form of instructions. Usually, a work order is taken as the official instruction to commence manufacturing.
  • Progressing is the activity that attempts to ensure that production takes place by plans.

A considerable amount of information is required before going ahead with these stages, including:

  • Sales or contract program.
  • Approval of design for manufacture.
  • Jigs and tools for manufacture.
  • Rate-fixing and time study.
  • Estimating costs.
  • Routine and machine allocation
  • Labour requirements.
  • Budgetary and cost control.

Organization of Production Planning

The head of the department is often called Production Controller or Chief Production Engineer and may be responsible for the works manager or works director.

Department is usually divided into sections concerned with:

  • Planning and estimating.
  • Methods section (sometimes a separate work-study section is established).
  • Tool design.
  • Progress section (unless there is a separate progress department).

In some businesses, transport and stores may also be supervised by the production department (as it may be called).

Production Control

The essence of any control is the setting up of standards the comparison of physical events with those standards, and then the taking of corrective action and this also applies to production control.

It has been said that accurate sales forecasting is ninety percent of production control, and it is certain that good liaison with the sales department can avoid upset in production control.

Production control is concerned with the same things as production planning.

  • Checking the availability of raw materials work-in-progress and finished goods.
  • Checking when a job is performed.
  • Checking where i.e., on which machines it is produced.
  • Checking how much work is performed at each stage.

Whereas production planning is a static activity carried out in advance of production its control is dynamic. It is the checking of performance as soon as production is in hand and all the time it is progressing. It is concerned with materials, men, machines, time and tools.

Information Required

To carry out its function, production control requires information on:

  • Products to be made.
  • Delivery dates.
  • Quantities required.
  • Materials required for production.
  • Machine availability.
  • Availability of machine operators.
  • Machine maintenance schedule.

Reports would be submitted to the works supervisor giving information under such headings as:

  • Orders Received;
  • Goods Manufactured;
  • Orders Outstanding;
  • Percentage Machine Use;
  • Actual Costs of Materials,
  • Labour; and
  • Overheads compared with budget.

Techniques of Control

The usual technique of production control is to use various charts, showing production quantities planned and the machine loading and to have a daily return of job-tickets from which the progress of work performed is then entered on the charts for comparison purposes. As mentioned above, this comparison in itself is insufficient unless some corrective action is also taken when production is not proceeding by estimates and plans.


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