Production Production ManagementManagement

How to guide production How to guide production management for SMEs?management for SMEs?

Definition of ProductionDefinition of Production

►Process of transforming inputs into Process of transforming inputs into required outputs in form of services or required outputs in form of services or productsproducts

►So is not necessarily only manufacturingSo is not necessarily only manufacturing►Can be construction or transport, health or office Can be construction or transport, health or office

servicesservices

►Transformation requires decision makingTransformation requires decision making►QualityQuality►QuantityQuantity►CostCost►DeliveryDelivery

Three P’s of productionThree P’s of production

►Product(s)Product(s)►What is the business making?What is the business making?

►Process (or method of operation)Process (or method of operation)►Organization of workOrganization of work

►PeoplePeople►Skills level requiredSkills level required►TrainingTraining►Work safetyWork safety►MotivationMotivation

Product - partsProduct - parts

►How many parts make up the product?How many parts make up the product?►Can some parts be eliminated with better Can some parts be eliminated with better

design?design?►Remove unnecessary featuresRemove unnecessary features

►Standardization/rationalizationStandardization/rationalization► what parts can be used in other products?what parts can be used in other products?►Use of jigs, tools & fixturesUse of jigs, tools & fixtures

►Replacement of partsReplacement of parts►Use cheaper partsUse cheaper parts►Same performanceSame performance

Product - machineryProduct - machinery►Matching product with machineryMatching product with machinery

►Dimensions, precision, productivity & costDimensions, precision, productivity & cost

►Utilization of materialsUtilization of materials►Main materials used in productMain materials used in product►Packaging materialsPackaging materials►Fuel & lubricantsFuel & lubricants►PaintPaint

►Waste & improving yieldWaste & improving yield►Re-working wasteRe-working waste►Utilization of by-productsUtilization of by-products►Selling waste & scrapSelling waste & scrap

Product – quality assuranceProduct – quality assurance

►Product qualityProduct quality► Appropriateness of tolerance levels setAppropriateness of tolerance levels set► Frequency of inspectionFrequency of inspection

Identify new pointsIdentify new points Abolish points which do not make senseAbolish points which do not make sense

► Sampling methods & sampling adequacySampling methods & sampling adequacy►Quality consciousness Quality consciousness ► Training in Quality AssuranceTraining in Quality Assurance

Product - SafetyProduct - Safety►Does your product meet international Does your product meet international

safety standards?safety standards?►Can you get it certified?Can you get it certified?►Does it meet food safety & hygiene Does it meet food safety & hygiene

standards?standards?►Is it electrically & mechanically compliant?Is it electrically & mechanically compliant?►If machinery, are moving parts guarded?If machinery, are moving parts guarded?►Is it free from toxic chemicals?Is it free from toxic chemicals?►Does it comply with environment standards?Does it comply with environment standards?

►Do your production methods comply with Do your production methods comply with international standards?international standards?

►Are safety interests of workforce considered?Are safety interests of workforce considered?

Product - planningProduct - planning

►Long range planningLong range planning► Establish objectives – determineEstablish objectives – determine what what is to is to

be accomplished.be accomplished.►Programme – determine Programme – determine howhow objectives objectives

should be accomplishedshould be accomplished►Schedule – determine Schedule – determine whenwhen each activity in each activity in

plan should be doneplan should be done►Budget – determine Budget – determine howhow much manpower, much manpower,

money & resources needed & money & resources needed & howhow supplied supplied

Process – work flowProcess – work flow

►Work flow & plant layoutWork flow & plant layout► Bulky items versus smaller or lighter itemsBulky items versus smaller or lighter items► Working space – cramped or wasted spaceWorking space – cramped or wasted space► Backtracking or cross flowsBacktracking or cross flows► Congestion points or bottlenecksCongestion points or bottlenecks► Housekeeping – tidy workspaceHousekeeping – tidy workspace►Clearly marked aisle & lanes with flowClearly marked aisle & lanes with flow► Stores & over head utilization of spaceStores & over head utilization of space

►Cost savingsCost savings► in space, labour & equipmentin space, labour & equipment

Process - handlingProcess - handling

►Materials HandlingMaterials Handling► Degree of manual handling & re-handlingDegree of manual handling & re-handling► Temporary or disorderly storageTemporary or disorderly storage► Damage or breakage through handlingDamage or breakage through handling

►Commercial ConsiderationsCommercial Considerations► item size & speed of handlingitem size & speed of handling► versatility of equipment useversatility of equipment use► use of gravityuse of gravity

Process - maintenanceProcess - maintenance►MaintenanceMaintenance

► Basic maintenance frequencyBasic maintenance frequency► Planned maintenance & inspection schedulesPlanned maintenance & inspection schedules► Repairs & cost estimate schedulesRepairs & cost estimate schedules►Machine down timeMachine down time

►Emergency MaintenanceEmergency Maintenance► frequency – increasing or decreasing?frequency – increasing or decreasing?► Machinery component re-designMachinery component re-design

►Off-line maintenanceOff-line maintenance► Company closureCompany closure►Seasonality of product demandSeasonality of product demand

Process – work studyProcess – work study

► Job & work methodsJob & work methods► Study of performance of methods usedStudy of performance of methods used► Use of computerization & chartsUse of computerization & charts

operation operation flow chartsflow charts man-machinery man-machinery activity activity

►Critical path analysisCritical path analysis► Suggestion boxSuggestion box

Use of operators ideasUse of operators ideas

Process - performanceProcess - performance

► Performance StandardsPerformance Standards► Work samplingWork sampling►Stop-watch time & motion study (Methods-Stop-watch time & motion study (Methods-

time measurement (MTM)time measurement (MTM)►Predetermined time standards (PTS)Predetermined time standards (PTS)

►Production planningProduction planning► Production lineProduction line► Batch productionBatch production► JobbingJobbing

Process - inventoryProcess - inventory

► Inventory ControlInventory Control► 20/80 principle20/80 principle

Few items but higher valueFew items but higher value

► Ordering strategiesOrdering strategies Minimum stock levelsMinimum stock levels Two - bin approach versus computerized ordering Two - bin approach versus computerized ordering Opportunity cost of lost salesOpportunity cost of lost sales Cost of holding stockCost of holding stock

People – environmentPeople – environment

► Physical working conditionsPhysical working conditions► Consider working environmentConsider working environment

Temperature & humidityTemperature & humidity Noise & lighting levelsNoise & lighting levels Dust & dirtDust & dirt Chemical usageChemical usage Machine guardsMachine guards Electrical & fire safetyElectrical & fire safety

► Health careHealth care Drinking water & sanitationDrinking water & sanitation First Aid pointsFirst Aid points Health education (HIV/AIDS awareness)Health education (HIV/AIDS awareness)

For further information use Bureau of Safe Work (BSW) Checklists – BSPS Component 2.1

People - safetyPeople - safety

►Know the Occupational Health & Know the Occupational Health & Safety (OHS) regulationsSafety (OHS) regulations

►These are mandatoryThese are mandatory►Try to achieve more than mandatory Try to achieve more than mandatory

standardsstandards

►Workers safety makes senseWorkers safety makes sense►Protects workforceProtects workforce►Maintains healthy & safe working environmentMaintains healthy & safe working environment►Improves workers morale & motivationImproves workers morale & motivation►Increases production, reduces down timeIncreases production, reduces down time

For further information read: MoLISA: Policy Development & Implementation of Labour Protection in SMEs. Bureau of Safe Work (BSW) Checklists - BSPS Component 2.1

People – Safety (People – Safety (contcont))

►Owners & managers must comply with Owners & managers must comply with national & international standardsnational & international standards

►Many just assume (hope) they complyMany just assume (hope) they comply

►Must have OSH Policy & Must have OSH Policy & de facto de facto action action planplan

► Developed jointly by management & workforceDeveloped jointly by management & workforce►protects health & safety of workers & staffprotects health & safety of workers & staff►Complies with OSH laws & regulationsComplies with OSH laws & regulations►Follows codes of conductFollows codes of conduct

For further information read: MoLISA: Policy Development & Implementation of Labour Protection in SMEs. Bureau of Safe Work (BSW) Checklists - BSPS Component 2.1

People - motivationPeople - motivation

►Productivity factors which contribute Productivity factors which contribute to work satisfactionto work satisfaction

►Process designProcess design►Method of workMethod of work►Arrangement of work spaceArrangement of work space►OrganizationOrganization of work groupsof work groups

► Job enlargement & job enrichmentJob enlargement & job enrichment► Making jobs more enjoyableMaking jobs more enjoyable► Less tediousLess tedious

For further information use Bureau of Safe Work (BSW) Checklists – BSPS Component 2.1

People - involvementPeople - involvement

►More people involved the better the More people involved the better the productivityproductivity

►Joint OHS action planJoint OHS action plan ►Joint diagnosis of problems & solutionsJoint diagnosis of problems & solutions► Extensive consultation with workforceExtensive consultation with workforce

Production “Audit”Production “Audit”

►All businesses need to be efficient & All businesses need to be efficient & effectiveeffective

►Maximum Maximum utilization & efficiencyutilization & efficiency of of labour, machinery & resourceslabour, machinery & resources

►Maximum Maximum quality standardsquality standards with zero with zero rejects & customer complaintsrejects & customer complaints

►Minimal Minimal waste waste of materials & of materials & componentscomponents

►These need to be measurableThese need to be measurable►To be managedTo be managed

Measurement of Production Measurement of Production ManagementManagement

►A well managed production unit A well managed production unit requires standards forrequires standards for

►Labour & machinery utilization & Labour & machinery utilization & productivityproductivity

► material quantities & rejectsmaterial quantities & rejects► workshop space utilizationworkshop space utilization

Production ratiosProduction ratios►UtilizationUtilization

►EfficiencyEfficiency

labour or machine time__________________

total production time available

space utilized__________________

total space available

units produced__________________

time available

sales per salesperson__________________

standard sales

Production ratiosProduction ratios►QualityQuality

►WastageWastage

units rejected__________________

total units produced

number of returns/complaints

__________________

total sales

material used__________________

materials bought

goods sold__________________

goods bought

Potential Production Potential Production ProblemsProblems

poor layout

machine breakdown

old technology

poor materials

poor supervision

poor flexibility

inadequate reward

lack of training

LOWMORALE

poor OHS

poor poor planningplanning

poor poor product mixproduct mix

poorpoorstock controlstock control

Problem identificationProblem identification

► Is the problem being addressed the Is the problem being addressed the real problem?real problem?

► Is problem cause or affect of poor Is problem cause or affect of poor production?production?

►There is likely more than one causeThere is likely more than one cause►Beware not to solve a problem that Beware not to solve a problem that

does not existdoes not exist►but solution is your speciality!but solution is your speciality!

Discussion PointsDiscussion Points

►Which of the 3 Ps of production Which of the 3 Ps of production management do you make a priority?management do you make a priority?

►How much time and budget do you How much time and budget do you allocate to OSH?allocate to OSH?

►How do you recruit, motivate and retain How do you recruit, motivate and retain your skilled workforce?your skilled workforce?

►How important is skills training?How important is skills training?►What role should government play in What role should government play in

labour policies related to skills?labour policies related to skills?►What role should trade unions play?What role should trade unions play?►What is the most effective measure of What is the most effective measure of

production performance?production performance?