Production planning and control

1. Production planning and control

2. Production : A process or procedure of converting a set of inputs, namely men, capital, information and energy into finished products or services. • Production planning : Production process of looking ahead, anticipating possible difficulties and deciding in advance as to how to produce the products. • Production Control : Making sure that production is constantly maintained to produce the products of given specifications.

3. Requirements for production • 1) Money • 2) Material • 3) Machine • 4) Men • 5) Method The above are also called as (5Ms) essential for production.

4. Organizational chart for P.P.C department

5. Points while purchasing • Right source • Right quality • Right quantity • Right price • Right time • Right place of delivery • Right mode of transportation

6. Purchasing-Centralized and Decentralized Purchasing is an activity directed towards securing the materials, supplies, equipment and services required in the operations of an enterprise. Purchase manager is responsible for the effective, efficient and economic operations of the department. Functions of Purchasing Department 1) Ordering section places orders with the vendors. 2) Service section follows the progress of the purchase orders, its shipment by the vendor and its final receipt by the company. 3) Records-section maintains all records of quotations, costs, purchases etc.

7. Centralized purchasing : When the company is small, purchasing activities are normally concentrated at one place. If a company has production operations at different places and if the nature of operations is similar, then centralized purchasing is preferred. • Centralized purchasing is invariably an efficient system. • It permits a greater degree of specialization for buying. • Bargaining capabilities are better. • Procuring becomes uniform and consistent materials are procured without price anomalies. • Duplication of efforts is eliminated • Purchasing procedures and payment of invoices become simple.

8. Decentralized purchasing : When different branches of a large organization require different types of materials, decentralized purchasing is preferred . When a branch requires large volumes of bulky items, this system of purchasing is adopted. • Advantages : • Purchasing system, purchasing becomes more flexible and efficient. • Procurement is faster • When purchases are made in a local place, it promotes better public relations. • Control over purchases is no longer remote. • Disadvantages : • Quantity of discounts offered is less. It is also involves duplication of efforts. • Advantages of one approach become the disadvantage of the other. A third type partly decentralization and partly centralization is the one on which the management should make a policy decision.

9. Price is defined as the amount of money at which a thing is valued or the value that a seller sets on his goods in the market. Price is the greatest variable in purchasing. Buying Techniques : Quotations : It is an inquiry to know whether the vendor can supply the desired material and if so, by what price • Spot quotations • Floating a limited enquire Price of the material Material Specifications Place of delivery Delivery period Taxes Terms of payment Validity of tender Guarantee period etc. Tenders : It is written letter or a published document (In newspaper) that is aimed at finding the price for procuring certain materials or for getting a particular job done within the desired period and under specified conditions. Single tender Open tender or Press tender Closed tender or limited tender

10. Negotiations : It may be defined as an art of arriving at a common understanding through bargaining on the essentials of a contract such as delivery, specifications, prices and terms. Negotiations with the concerned vendors are often necessary before finalizing a purchase contract. The purpose is for fixing and finalizing prices of materials, terms and conditions. Need for negotiations : • Prices are related to large volumes or to a large value. • Terms and conditions are required for large volumes • contract is desired for a longer period • Variations in quantity to be purchased are possible. • Changes in drawings and specifications are necessary • Changes in transportation, packaging and delivery points are to be decided. • When supplies or services can be obtained from only one source • When no acceptable quotations are received from the responding vendors.

11. Purchasing cycle and procedure 1) Recognition of need and receipt 2) Selection of potential sources of supply 3) Making request for quotations 4) Receipt and analysis of quotations 5) Selection of right source of supply 6) Issuing the purchase order 7) Follow-up of the order 8) Receipt of materials, reports and analysis 9) Checking and approving of vendor’s invoice for payment 10) Closing of completed orders 11) Maintenance of records and files

12. Purchasing cycle

13. Quality is a Lousy Idea- If it’s Only an Idea

14. Definition of Quality: • Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. • Some goals of quality programs include: • Fitness for use. (Is the product or service capable of being used?) • Fitness for purpose. (Does the product or service meet its intended purpose?) • Customer satisfaction. (Does the product or service meet the customer's expectations?) • Conformance to the requirements. (Does the product or service conform to the requirements?)

15. Quality Planning • The process of identifying which quality standards are relevant to the project and determining how to satisfy them. • Input includes: Quality policy, scope statement, product description, standards and regulations, and other process Output. • Methods used: benefit / cost analysis, benchmarking, flowcharting, and design of experiments • Output includes: Quality Management Plan, operational definitions, checklists, and Input to other processes.

16. Quality Control • The process of monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance. • Input includes: work results, Quality Management Plan, operational definitions, and checklists. • Methods used include: inspection, control charts, pareto diagrams, statistical sampling, flowcharting, and trend analysis. • Output includes: quality improvements, acceptance decisions, rework, completed checklists, and process adjustments

17. What is quality control? • Quality Control is concerned with the product being developed • Quality control system provides routine checks to ensure that the product is being developed correctly without errors. • The Quality Control system identifies and addresses product errors/defects. • Quality Control ensures that the final product is error free and satisfactory. • Quality Control (QC) is often referred to as testing

18. Quality Control • Quality control is a set of “activities” that need to be performed in order to detect problems during production and before the product goes live. • These activities ensure that final deliverable meets the specifications and quality standards set by the organization. • QC often includes peer reviews, “testing”, code reviews etc.

19. Quality Control • In theory, quality control can be achieved with minimal testing. • For example, a thorough review of source code and checks for known previously problems can reduce the possibility of defects and might be enough to meet the quality standards set by the organization. • However in most cases, testing is the most important activity for quality control, but it is not the ‘only’ activity.

20. Quality Control • Quality control is extremely important for ensuring that applications are bug free and meet the specifications and requirements, but QC might not always be the most efficient ways of ensuring quality. • This is where Quality Assurance plays its role. But it is a concept that is often misunderstood by even the most experienced professions

21. Productivity • Productivity may be defined as the ratio of output to input. Output means number of units produced. Inputs are various resources employed. Productivity can be considered as increased, if more goods are produced from the same amount of resources.

22. Reasons for increasing productivity For Management : To sell more and earn good profits To clear the debts or loans acquired from different sources To establish better position in market For Workers : To get higher wages and standard of living To work in better working conditions To attain job security and satisfaction For Consumers : To Obtain articles at reduced price.

23. 10 steps to improve productivity 1. Management commitment. 2. Training and empowerment 3. Fabric saving 4. Work Study 5. Times and methods 6. Measuring performance 7. Line Balancing 8. Quality 9. Personnel Management 10. Better equipment

24. Store • Store is a place where excess material is kept which will be used as and when required. Loss of items, deterioration, obsolescence and inadequacy [of what is stored to what is needed] are treated as ‘part of life’.

25. Store management • Store management is “ to receive materials, to protect them while in storage from damage & unauthorized removal, to issue the material in the right quantities, at the right time to the right place and to provide these service promptly and at least cost”.

26. Objectives of store • Minimizing cost of production through minimizing cost on materials • Maintaining the value of materials • Service to user departments • Establishing Co-ordination with other departments • Advising materials Manager

27. Functions of Stores • Receipt • Storage • Retrieval • Issue • Records • Housekeeping • Control • Surplus management • Verification • Interaction & coordination

28. Receipt • Any item of goods or material that enters the organization always enters through the stores. Similarly, every item unless specifically excluded, has to leave through the store. Stores is the final account keeper of all materials. • Material sent by any supplier after the security clearance comes to the stores. Stores check the document carried by the carrier, known as Delivery Challan, against the copy of the Purchase Order placed on the supplier by the organization.

29. Receipt • Once the adequacy is established and quantity is verified the material is sent for testing for quality parameters. • Some times quality control tests are elaborate and time consuming. If the policy of receipt is to unload the material subject to quality control acceptance, it is cleared for unloading. • Unloaded material is kept on the hold if it not yet cleared by quality control department. If the material is rejected it is sent back to the supplier after clear documentation.

30. Storage • Once the unloaded material is approved by the quality control department, as per the quality plan in the quality system, it is moved to a specific place in the stores layout. • The material is so stored that it becomes easy to retrieve and issue subsequently. • Storage should also ensure protection against deterioration, damage and pilferage.

31. Storage • Detailed system is adopted for location and labeling of items while in storage. Storage plan is made keeping in mind, • nature of the product- physical state, toxicity, inflammability and other hazards • volume and weight- heavy or light • movement frequency- fast moving or slow moving • point of use

32. Retrieval • Easy and quick retrievability of items that are demanded by the internal customers. • Easy identification, maximum space utilization and minimum handling are key factors to retrieval functions. • It is common knowledge in many of the companies that after hours of searching for the item is declared to be out of stock. This causes hold up of production process and avoidable urgent purchase of out of stock material. This function takes place as per established retrieval system.

33. Issue • Fulfilling customer demand for the item in minimum time, keeping quality high and cost minimum is issue. • An internal customer doesn’t pay the price but he has to fulfill requirement of authorization for the demand. • A duly authorized indent or requisition for the item is the key

34. Records • Maintaining records of receipt and issue. • Updating the stock levels as per movement of materials. • Basic records of store are bin card and stock register. • Bin card is placed on the bin in which items are stored. This gives information about receipt, issue and balance. • stock register gives all the information in the bin card and also the value.

35. Housekeeping • Maintenance of spic and span cleanliness in the store and ensuring principle of Place for Everything and Everything in its place is fully implemented. • Good housekeeping ensures satisfactory work practices

36. Control • Taking measures to ensure material plan is being adhered to. • Any changes in consumption pattern or replenishment pattern are closely monitored for corrective action. • Material movement is watched to identify nonmoving material for disposal. Effective control puts into effect management objective of ‘no shortage and no excess’.

37. Surplus management • Effective disposal system for unneeded material to reduce inventory cost and proactive measures to eliminate deterioration and obsolescence. • Obsolete items are good in all respect but have no useful role in the company due to changes that have occurred in the course of time.

38. Surplus management • Surplus items are those that have accumulated due to faulty planning, forecasting and purchasing. Hence a usage value is associated with these items. • Scrap is wastage generated due to processes like turning, boring drilling etc. and also due to bad manufacturing. it is said that in India nearly Rs. 2500 crores are tied up as obsolete, surplus and scrap items.

39. Verification • Stock verification to eliminate gap between information and physicalstock. In stores some items are maintained as stock items. The stores triggers the procurement cycle for such items when a predetermined reorder level is reached. Hence correct stock position through verification is critical to ensure ‘no shortage and no excess’ for the item.

40. Interaction & coordination • Very close interaction between Purchasing, production, quality control and engineering functions is obviously needed in the discharge of the functions discussed so far. It also becomes necessary to coordinate the flow of material samples and information through a network of departments for performance of stores functions. Besides, every management function being an internal customer interaction is very important.

41. Types of Stores • Centralized store • Decentralized store

42. Centralized or decentralized stores organization • Centralized stores concept is to store all items at a central place and control materials movement from this central place. Whereas • Decentralization concept is moving the material to the respective consumer function or directly to the points of use.

43. Centralized Store Figure

44. Features of centralized stores organization 1.      Effective supervision and control. 2.      Issue at single point reduces cost of issue 3.      Reduced personnel requirement 4.      Efficient layout for stores 5.      Better handling technology 6.      Better inventory checks 7.      Maintenance of optimum stores 8.      Elaborate documentation

45. Advantages of centralized store • The variety of goods can be supplied to all users from one small location. • Less manpower will be required. • Better control of materials is possible. • Material handling will be easy. • Wastage and deterioration of materials will be less.

46. Disadvantages of centralized store • It may not be suitable for large manufacturing concern. • More staff will be required for shifting & transportation of the materials to various production units. • Record keeping is difficult.

47. Decentralized Stores Figure

48. Features ofdecentralized stores organization 1.      Reduced handling 2.      Customer friendly 3.      Fewer production stoppages 4.      Visual management is easier

49. Advantages of decentralized stores • Reduced material handling and associated cost. • Less chances of bottlenecks and delays. • Convenient for every department to draw materials. • Less transportation time.

50. Disadvantages of decentralized stores • Coordination and control of all decentralised store is a challenge to management. • Labor utilization may suffer due to low store activity level.