Operations Production Management - 2

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Figure 1.4. Production system diagram

The central element of production management is the transformation process. It is the process of processing and transforming input factors into desired goods or services to meet the needs of society. The performance of the enterprise depends largely on the design, organization and management of this transformation process.

Input factors are very diverse, including natural resources, human resources, technology, management skills and information resources. They are necessary conditions for any production or service process. To make the production and business process of an enterprise effective, it is necessary to organize and exploit the input factors in the most reasonable and economical way.

Outputs are mainly of two types: products and services. In addition to the products and services created, after each production process, there are other types of by-products that may or may not be beneficial to production and business activities, sometimes requiring very large costs for processing and resolving them, such as waste, waste, etc.

Feedback is an indispensable part of the enterprise's production system. It is information that shows the actual implementation of the enterprise's production plan.

Random mutations can disrupt the operation of the entire production system, leading to failure to achieve the originally planned goals. For example, natural disasters, droughts, floods, wars, fires, etc.

The task of production management is to design and organize the production system to transform inputs into output factors after each transformation process, but with a larger amount than the initial investment. Added value is the most important factor, the driving force of enterprises and all organizations and individuals directly related to the production and business process of the enterprise. Added value is the source of increasing wealth and living standards of the whole society; creating a source of income for all subjects participating in the operation of the enterprise such as workers, owners, managers and is a source of reinvestment in expanded production, ensuring the long-term existence and development of the enterprise.

Production is one of the main functions of an enterprise, so production management is governed by the purpose of the enterprise. For business enterprises, the purpose is profit, for public service enterprises, the purpose is service.

Production management as an organization manages the use of input factors and provides output to serve market needs, the general goal is to ensure maximum satisfaction of customer needs on the basis of the most effective use of production factors. To achieve this goal, production management has the following specific goals:

- Ensure product and service quality according to customer requirements.

- Reduce production costs to the lowest level to create a unit of output.

- Shorten product production time or service provision.

- Build a highly flexible business production system.

It should be noted that the above objectives are often contradictory. The problem is to know how to determine the priority order of objectives to create a dynamic balance, which is the optimal balance between quality, production flexibility, delivery speed and efficiency suitable for the environmental conditions in each specific period to create a combined strength, enhancing the competitiveness of enterprises in the market.

1.1.2.3. The role and relationship of operational production management with other management functions

An enterprise is a unified system consisting of three basic subsystems: financial management, production management and marketing management. In the above activities, production is considered the decisive step in creating products or services, and added value. Only production or service activities are the source of all products and services created in the enterprise. Production development is the basis for increasing added value for enterprises, economic growth for the national economy, creating a material basis to promote social development. A well-managed production process contributes to saving necessary resources in production, reducing costs, increasing productivity and efficiency of enterprises in general. The quality of products or services is created by the production or service provision stage. Perfecting production management creates great potential for improving productivity, quality and competitiveness of enterprises.

However, assessing the decisive role of production management in creating and providing products and services to society does not mean considering it in isolation from other functions in the enterprise. Management functions are formed to achieve certain goals and are closely related to each other. Production management has an organic relationship with the main functions such as financial management, marketing management and other supporting functions in the enterprise. This relationship is both unified, creating favorable conditions to promote mutual development, and also contradictory.

Unity and coordination for development are based on the common basis of realizing the overall goals of the enterprise. Subsystems in the enterprise system are formed and organized to ensure the best implementation of the overall goals of the entire system. Marketing provides market information for production and operation planning, creating conditions to best meet market demand at the lowest cost. On the contrary, production is the only basis for creating goods and services for the Marketing function. The coordination between production management and marketing will create high efficiency in the operation process, reducing waste of resources and time.

The investment finance function ensures adequate and timely finance needed for production and operations, analyzes and evaluates investment plans for purchasing new machinery, equipment and technology, and provides cost data for operations.

The results of production management create, increase resources and ensure the implementation of financial targets set by the enterprise.

However, there are also conflicts between the above subsystems. For example, the production function and the marketing function have conflicting goals in terms of time, quality, and price. While marketing staff require high-quality products, low prices, and fast delivery times, the production process has limitations in terms of technology, production cycles, and certain cost savings. Also due to these limitations, production cannot always ensure that it meets the set financial targets, and conversely, the needs for investment in technological innovation or design organization and production rearrangement are often not provided by the finance department in a timely manner.

The above conflicts are sometimes objective, but sometimes caused by subjective factors. Therefore, the basic task is to create a smooth coordination of the above functions to ensure the implementation of the common goals of the enterprise.

1.2. Main content of operational production management

1.2.1. Forecasting product production demand

- Forecasting production demand is the first important content, the starting point of production management. To meet market demand, all activities of design, planning and organization of production system must be based on the results of production demand forecast.

- Research the market situation, forecast the demand for product production to answer the question of what products need to be produced? How many? When? What are the necessary economic and technical characteristics of the product?

- The result of forecasting the demand for production of the main product is the basis for building a production and business plan and a plan for the necessary production resources. This is the basis for determining whether to produce or not to produce. If production is carried out, how should the production system be designed to ensure that the forecasted needs are satisfied in the best way?

1.2.2. Product design and technological process

- Designing and bringing new products to market quickly is a challenge for every business, especially in increasingly competitive conditions.

- Product design aims to bring to market products that meet market requirements and are suitable for the business's production capacity.

- Each type of product requires a corresponding production method and technological process. Technological process design is the determination of necessary input factors such as

machinery, equipment, work sequence and technical requirements to be able to produce the designed product characteristics.

- Organize research activities to design products and technological processes.

Product design and technological process research activities are carried out by a specialized department in charge of product and technological design research, with the participation and coordination of managers and specialists in many different fields (to eliminate the fantasy and impracticality of new products and technologies and at the same time provide synchronous solutions).

At the same time, businesses need to establish close, regular relationships with external research organizations, provide conditions for research activities and use their research results.

1.2.3. Managing the production capacity of the enterprise

Managing the production capacity of an enterprise aims to determine the scale of the enterprise's production line capacity. This activity has a great influence on the enterprise's ability to develop in the future.

- Correctly determining production capacity enables businesses to both meet current needs and seize new business opportunities in the market to develop production.

- Determining unreasonable production capacity will cause huge waste, costly investment capital or may hinder the production process later.

- Production scale depends on demand and is also a factor that directly affects the type of production, management and production structure of enterprises.

1.2.4. Business positioning

- Business positioning is the process of choosing the area and location of the business, to ensure the implementation of the strategic business goals of the chosen business.

- Business positioning is required for newly established businesses or in cases of expanding existing production scale, needing to open new branches, production departments (transaction points, developing new network nodes, etc.).

- Business positioning is a strategic activity in production and business development, capable of creating a huge competitive advantage in both tangible and intangible factors. To determine the location of the business, it is necessary to conduct a series of analyses to evaluate the factors of the surrounding environment that affect the future operations of the business. This is a complex process that requires a close combination of both qualitative and quantitative methods. In which, qualitative methods mainly determine social factors that are difficult or impossible to quantify.

precise methods are available, while quantitative methods aim to determine the location where production and consumption costs are the lowest, especially transportation costs.

1.2.5. Production layout in the enterprise (Production layout)

Production layout is to determine the layout of the factory, technological lines, machinery and equipment in a reasonable way, to ensure quality and efficiency, while taking into account psychological and social factors.

The methods of design and selection of production layouts widely used today are still intuitive and empirical methods. Recently, people have designed separate computer software programs to identify and select the optimal layout. However, due to the requirements of technology and social psychology, the final result must also be based on qualitative criteria.

1.2.6. Resource planning

Resource planning includes determining a comprehensive plan for production needs, on that basis planning for general production resources and plans for labor arrangement, use of machinery and equipment, detailed plans for purchasing raw materials... to ensure continuous production at the lowest cost.

The need for resources needed to produce enough forecasted products or orders in each period is determined through the development of a comprehensive plan. This is a medium-term plan for the volume of products produced at the same time and converts them into the demand for raw materials and labor through the cost per hour of labor. It allows businesses to anticipate the possibility of excess or shortage production to build plans to best mobilize resources into production, especially strategies for mobilizing the use of labor and machinery. Through different methods such as visualization, graphs, mathematics or other analytical techniques, it is possible to choose the most reasonable comprehensive plan, both to complete the tasks of product production in the long-term plan, and to exploit and take advantage of existing production capacity and improve the efficiency of the business's production process.

The amount of raw materials needed to be purchased at each time is determined by the material requirements planning method (MRP - Material Requirement Planning). This is one of the methods to determine the amount of material, parts, and semi-finished products needed to be purchased or produced at each time. It is a new method that appeared in the 1970s. The main content is to use computers to determine the amount of independent needs that need to be met at the right time, in order to minimize the inventory of parts, parts, or raw materials. With the MRP method, these types of materials are only

buy or supply when needed, in the right quantity. This method brings great benefits to businesses, so it is widely used today.

1.2.7. Production coordination

Production coordination is the step of organizing the implementation of established production plans, all activities of building production schedules, coordinating and assigning work to each person, group of people, each machine and arranging the order of work at each workplace to ensure completion on schedule as determined in the production schedule on the basis of effectively using the existing production capacity of the enterprise.

Dispatching activities are closely related to the type of production arrangement. Each type of production arrangement requires a suitable dispatching method. Dispatching of intermittent production processes and technological arrangements is quite complicated due to the diverse and frequently changing nature of the workload and the flow of products. Production dispatching is the process of determining the responsibilities and functions of each person and each production stage, in order to ensure production according to the outlined plan.

For project production, due to its specific characteristics, it requires specific and effective techniques to schedule and manage the implementation process flexibly to ensure the most savings in time and cost of project implementation. The most widely used techniques are Gant charts and network diagrams.

1.2.8. Production system control

In the production system control function, the two most important contents are quality control inspection and inventory management.

Inventory is always one of the factors that accounts for a large proportion of costs in product prices. In addition, unreasonable reserves will lead to capital stagnation, reduce the coefficient of use and capital turnover or cause congestion in the production process due to insufficient raw material reserves for the production process or unsold finished products. Inventory management activities are mentioned with specific models applied to each case to find the optimal balance between inventory costs and the benefits of inventory reserves. Inventory and reserve management must ensure both physical and value aspects to ensure optimization, not separating the two flows of value and physical. Value and physical management methods will allow for strict control of inventory reserves in each period.

Quality management in production is a strategic factor in the current period. To produce products with low production costs and high quality to meet customer expectations, the production system of enterprises must be of high quality and regularly controlled. Quality management is to improve the quality of management of factors and parts of the entire production process of each enterprise. In quality management, the focus will be on solving

Basic issues of awareness and views on quality and quality management of enterprises in a market economy. Analyzing the objectives, tasks, characteristics, scope and functions of quality management in production is the scientific basis for production managers to develop quality policies and strategies for the production department. A mandatory requirement for production managers is to understand and know how to use statistical tools and techniques in quality management. The system of statistical tools and statistical techniques contributes to ensuring that the production system is tightly controlled and regularly capable of achieving the set quality goals.

1.3. History of formation and development trend of operational production management

1.3.1. History of formation and development of operational production management

Production management has actually existed since ancient times, but they were only considered "public production projects" rather than production management in a market economy.

Production management in enterprises as a unit producing goods participating in business in the market has only recently appeared. It started with the first industrial revolution in the 1770s in England. In the early period, the level of production development was low, production tools were simple, mainly manual labor and semi-mechanical. Goods were produced in small workshops. Parts were not standardized, could not be assembled. Production was slow, the production cycle was long, productivity was very low. The volume of goods produced was small. The ability to supply goods was smaller than the demand in the market.

Since the 1870s, new scientific inventions have been continuously born, during this period creating revolutionary changes in production methods and labor tools, facilitating the transition from manual labor to mechanical labor. The basic inventions were James Watt's invention of the steam engine in 1764; the technical revolution in the textile industry in 1885; then a series of discoveries and exploitation of coal and iron, providing new sources of raw materials, energy, and machinery for business production.

Along with scientific and technical inventions are new discoveries in management science, creating conditions for perfecting production organization in enterprises, speeding up the application process, and exploiting new techniques more effectively. In 1776, Adam Smith in his book "The Wealth of Nations" first mentioned the benefits of division of labor. The process of specialization was gradually organized and applied in production activities, significantly increasing labor productivity. The production process was divided into different stages assigned to individual departments.