Definition: Production management is a set of activities that embrace planning, coordination, supervision, control and decision-making regarding resources and outputs of a production process. It often applies to the organizational functions in charge of the entire production activities, including volume, cost and quality associated to them.
What Does Production Management Mean?
Production management is one dimension of business management. It focuses on the transformation process of inputs and raw materials into the company’s finished products, which differs from functions specialized on other dimensions such as marketing, sales, distribution, finance and information systems.
The production management should guarantee the successful implementation of the company’s production strategy which involves the application of certain technologies and achievements of pre-set goals related to production mixes, unit costs, quality and production capacity. It generally coordinates, supervises and controls persons or groups in command of production itself, machinery maintenance, quality control and inventory control.
This function should also be responsible for frequent improvement of production activities with the aim of making them more efficient. In some cases, production management could be responsible for product innovation.
Example
Craignell is a small company that manufactures plastic pieces used in home appliances. The general manager recently hired a young professional to occupy the production manager position. Four departments that are named process, quality, maintenance and planning report to the production department. When explaining his job description, the general manager was very clear about certain goals to be met at the end of the first year.
The production manager has to organize labor, material and technological resources in the most efficient way with the purpose of reducing production costs in 3%. Quality standards must be maintained. He also has to guarantee inventory levels of approximately three weeks of sales. In addition, he is in charge of designing a project to expand production capacity in 50%. The new production manager is confident he can achieve these goals by implementing certain strategies like lean manufacturing.
