The management of business processes that create physical goods is called production management. Small business production management of processes that mainly create services may be called operations management.
Both production and operations management are concerned with product design, inspection, and quality control, the improvement of work methods, and the maintenance of facilities.
Production management decisions must be suitable to the business process being carried on. The industrial processes are extractive, analytical, fabrication synthesis, and assembly. Some non-manufacturing processes are warehousing, retailing and whiling, transportation, and direct service operations.
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The word product focuses on the physical or functional characteristics of a good or service. In its broader view, product means physical or functional attributes capable of satisfying certain wants of customers.
That means the product must be wanted in the market i.e. production is not for the purpose of production only- it is for sales.
As such, the small entrepreneur must take reasonable care to select the rejected product which will be demanded by the target clients. He should follow some steps in development; These are:
- Explore idea
- Survey needs
- Plan product
- Establish price
- Assess feasibility
- Make prototype
- Produce limited quantities
- Produce product
- Merchandise product
- Re-evaluate and research constantly
- Test product
- Test market
Production flow process of small business production
The production process may continuous as well as intermittent This may be seen from the figure as under:
Figure showing continuous production
Figure showing intermittent production
In the case of a continuous production process, regular manufacturing of produces goes on until the manufacturer thinks otherwise or any uncontrollable events halt the process. Here, the specifications, quality standards, and contents remain the same.
Prices of such products change for zones considering place movement factors. On the other hand, in the case of the intermittent production process, specifications, quality standards, and contents vary with orders. An order is served, and the production process is stopped. It again starts if another order is accepted.
Production Elements and Plan
Converting inputs into outputs requires some characteristic elements. Before starting production of anything the small business entrepreneur or the manager to whom the responsibility is entrusted should proceed carefully following a plan prepared earlier.
How can the production methodology used by industrial firms be applied to all types of small businesses? The processes of changing inputs to outputs have some characteristics which are common to all situations, and have the following common elements:
- Systems transform the input to form, place, or time.
- A sequence of steps or operations to convert the inputs into outputs.
- Some time frame in which the work is to be done.
- Instructions to identify the work to be performed and the units being produced.
- Special skills and often tools, machinery, or equipment to make the transformation or conversion.
Some alternative production plans (PP) which you may consider are:
PP-1: Produce what is demanded by your customers at the time they need the goods.
PP-2: Produce at a constant level equal to the average monthly demand for the year. Inventories will increase when the volume of demand is Icier than the production volume and will decrease when demand is higher.
PP-3: Produce complementary products that balance out increases and decreases in the volume of demand for individual products. The sum of the monthly demands should result in a constant production level.
PP-4: Subcontract production which is in excess of a certain level.
PP – 5: Decide not to expand production to meet demand.
PP – 6: Have special sales inducements, perhaps extra advertising and lower prices, when your sales volume is expected to be below.
Example of Production Systems
The production process differs depending on the type of product or service. We have presented below the impels of wholesale trade, retail service, needle trade, and that of a laundry:
Figure showing production processing of different types of products/ services
It can be gauged from the above that steps of production/service are not uniform. These vary according to I the line of activity and code of production. The personnel involved and the techniques used in ermine the number of be used in the processes of production.
Production Control Process
A small entrepreneur needs to proceed to produce a product or render a service following the junctions:
- Planning: Determining what machinery, employees, raw materials, supplies, and other resources are needed to produce the customer’s order.
- Follow-up: Checking each workstation to determine if the work was accomplished and rescheduling if it was not completed
- Routing: Determining the sequence of production operations through which the work must progress.
- Determining when operations will start and stop at each workstation
- Issuing orders to each work station telling them when to start on the order
If an order is accepted for profit after carefully assessing the cost-benefit of the same, the small business owner plans for the inputs both variable & fixed making a sequence of processing the order, and finally in order to save rejections checks the work till the product/service is delivered.
Production Materials Management
The purchase, movement, use, and storage of production materials are fundamental management concerns in any manufacturing process. The basic task of production materials management is to determine at what rate and in what sequence workers and equipment will be used to convert materials into goods to fill sales orders.
Production managers try to make the best use of facilities and money through careful scheduling of the sequence and timing of work and through efficient control of buying, using, and storing materials. The most commonly recognized functions in production materials management are:
(a) Planning and scheduling of the production function,
(b) Controlling the inventory of materials and finished goods,
(c) Purchasing materials, equipment, and supplies, and
(d) Moving and storing materials and finished products within the production plant.
Inspection and Quality Control
The main goal of inspection and quality control is to ensure that products going out to consumers meet specifications. With physical goods, quality control tries to make sure that products conform to established standards for size, shape, weight, durability, strength, color, texture, taste, or any other characteristics that are important to the product’s function.
Quality control for services measures effectiveness, timeliness, and other indications of acceptable performance.
Work Methods Improvement
One way to increase profits is to produce more goods or services by using facilities and workers as efficiently as possible. For this reason, much thought has been given to how workers and machinery can be made more productive. Three major approaches have been used:
Job design and redesign concentrate on getting the most out of the work that people do. It tries to minimize the effort and time needed the perform a certain activity. Work effectiveness has often been improved as a result of time and motion studies.
These studies record every physical movement made by a production movement made a production worker when doing a job and the length of time taken by each movement.
This information is then used to choose the best layout for the work facility to train workers to eliminate wasted effort.
Work simplification employs both job and process redesign to make work methods as orderly and simple as possible.
Standard procedures reduce the effort needed for day-to-day activities, allow personnel to devote more time and energy to handling exceptional situations effectively, and make job training easier.
Work simplification often requires considering departments, divisions, or the whole company as systems.
Process redesign concentrates more on the methods and equipment used than on the activities of workers. Its goal is to increase production efficiency by studying and improving the manufacturing process, which is usually the concern of manufacturing or industrial engineers.
This might change the sequence in which operations are carried out, substitute a different kind of machine for one presently used, move storage areas, changes the physical layout of the production line, introduce new equipment for moving materials between machines, or make other changes that would improve production.
Maintenance and housekeeping
Maintaining modern equipment is a complex specialty of plant engineering. Maintenance usually has three requirements:
(a) Timely and reliable repair procedures must be available
(b) Back-up or substitute equipment should be kept ready for critical operations, and
(c) Routine preventive maintenance schedules must be established and followed to minimize equipment failure
Management of production and operations includes product design, production materials management, inspection and quality control, work methods improvement, and maintenance and housekeeping.
The physical layout of business facilities must be designed to promote the orderly flow of materials and activities and to aid in the smooth interaction of different parts of the business process.
Production management must, in addition, find effective ways to plan and control the use of physical materials in the manufacturing process. Many of the concerns of non-manufacturing operations, such as retail stores, are similar to those of manufacturers.
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