Production Management refers to the application of management principles to the production function in a factory. In other words: the application of planning, organizing, directing and controlling the production process.

The application of management to the field of production has been the result of at least three developments:

  1. First is the development of factory system of production. Until the emergence of the concept of manufacturing, there was no such thing as management as we know it. It is true that people operated business of one type or another, but for the most part, these people were owners of business and did not regard themselves as managers as well,
  2. Essentially stems from the first, namely, the development of the large corporation with many owners and the necessity to hire people to operate the business,
  3. Stems from the work of many of the pioneers of scientific management who were able to demonstrate the value, from a performance and profit point of view, of some of the techniques they were developing.

Definition of Production Management:

It is observed that one cannot demarcate the beginning and end points of Production Management in an establishment. The reason is that it is interrelated with many other functional areas of business, viz., marketing, finance, industrial relation policies etc.

Alternately, Production Management is not independent of marketing, financial and personnel management due to which it is very difficult to formulate some single appropriate definition of Production Management.

The following definitions try to explain main characteristics of production management:

(i) In the words of Mr, E.L. Brech:

“Production Management is the process of effective planning and regulating the operations of that section of an enterprise which is responsible for the actual transformation of materials into finished products.” This definition limits the scope of production management to those activities of an enterprise which are associated with the transformation process of inputs into outputs. & the definition does not include the human factors involved in a production process. It lays stress on materialistic features only.

(ii) Production Management deals with decision-making related to production process. So that the resulting goods and services are produced in accordance with the quantitative specifications and demand schedule with minimum cost.

According to this definition design and control of the production system are two main functions of production management.

(iii) Production Management is a set of general principles for production economies, facility design, job design, schedule design, quality control, inventory control, work study and cost and budgetary control. This definition explains the main areas of an enterprise where the principles of production management can be applied. This definition clearly points out that production management is not a set of techniques.

It is evident from above definitions that production planning and its control are the main characteristics of production management. In the case of poor planning and control of production activities the organization may not be able to attain its objectives and may result in loss of customer’s confidence and retardation in the progress of the establishment.

In short, the main activities of production management can be listed as:

(i) Specification and procurement of input resources namely management, material, and land, labour, equipment and capital.

(ii) Product design and development to determine the production process for transforming the input factors into output of goods and services.

(iii) Supervision and control of transformation process for efficient production of goods and services.

Functions of Production Management:

The definitions discussed above clearly shows that the concept of production management is related mainly to the organizations engaged in production of goods and services. Earlier these organizations were mostly in the form of one man shops having insignificant problems of managing the productions.

But with development and expansion of production organizations in the shape of factories more complicated problems like location and lay out, inventory control, quality control, routing and scheduling of the production process etc. came into existence which required more detailed analysis and study of the whole phenomenon.

This resulted in the development of production management in the area of factory management. In the beginning the main function of production management was to control labour costs which at that time constituted the major proportion of costs associated with production.

But with development of factory system towards mechanization and automation the indirect labour costs increased tremendously in comparison to direct labour costs, e.g., designing and packing of the products, production and inventory control, plant layout and location, transportation of raw materials and finished products etc. The planning and control of all these activities required more expertise and special techniques.

In modern times production management has to perform a variety of functions, namely:

(i) Design and development of production process.

(ii) Production planning and control.

(iii) Implementation of the plan and related activities to produce the desired output.

(iv) Administration and co-ordination of the activities of various components and departments responsible for producing the necessary goods and services.

However, the responsibility of determining the output characteristics and the distribution strategy followed by an organization including pricing and selling policies are normally outside the scope of Production Management.

Scope of Production Management:

The scope of production management is indeed vast. Commencing with the selection of location, production management covers such activities as acquisition of land, constructing building, procuring and installing machinery, purchasing and storing raw materials and converting them into saleable products. Added to the above are other related topics such as quality management, maintenance management, production planning and control, methods improvement and work simplification and other related areas.