MATERIALS AND PRODUCTION

MANAGEMENT
Unit V
Course Contents:

Plant Location
Plant Layout of production facilities for plants
Types of layout
What is Material Management??
 Materials management is a core function of ‘supply
chain management’

 It includes controlling and regulating the flow of

material while simultaneously assessing variables
like:

 Demand
 Price
 Availability and
 Delivery Schedules
 Materials management also involves assessing
material quality to make sure it meets customer
demands in line with a production schedule and
at the lowest cost.

 Typical roles in Materials Management include

inventory analysts, inventory control managers,
material managers, material planners, and
expediters as well as hybrid roles like
buyer/planners.
 ‘Material Managers’ determine:

 the amount of material required and held in stock

 plan for the replenishment of these stocks

 create inventory levels for each type of item (raw

material, work in progress or finished goods)

 communicate information and requirements to

procurement operations and the extended supply
chain
 Regardless of role, the main objective of Materials
Management is assuring a supply of material with
optimized inventory levels and minimum deviation
between planned and actual results.
 Five R of Materials Management
 The objectives of materials management are
sometimes referred to as the Five R of
Materials Management:

 The right material

 At the right time
 In the right amount
 At the right price
 From the right sources
What is Production Management?
 What is Production?

 Production generates goods that people want and

will pay for, which stimulates the economy and
enables producers to keep generating more and
more outputs.
 Production Management is the process of
controlling a company’s operations to provide the
services and products it wants to produce.

 It is the control and execution of the process that

converts raw resources into finished goods.

 It comprises organizing, carrying out, and managing

processes that transform raw resources into
completed products and services.
 Plant Location
 What is plant location?

 Plant location refers to the choice of region and

the selection of a particular site for setting up a
business or factory.

 Each individual plant is a case in itself.

 What is an ideal location?

 An ideal location is one where the cost of the

product is kept to minimum, with a large
market share, the least risk and the maximum
social gain.

 It is the place of maximum net advantage or

which gives lowest unit cost of production and
distribution.
 LOCATION ANALYSIS

 Location analysis is a dynamic process where

entrepreneur analyses and compares the
appropriateness or otherwise of alternative
sites with the aim of selecting the best site for a
given enterprise.
 (a)Demographic Analysis: It involves study
of population in the area in terms of total
population (in no.), age composition, per capita
income, educational level, occupational
structure etc.

 (b) Trade Area Analysis: It is an analysis of

the geographic area that provides continued
clientele to the firm. He would also see the
feasibility of accessing the trade area from
alternative sites.
 (c)
Competitive Analysis: It helps to judge
the nature, location, size and quality of
competition in a given trade area.

 (d) Traffic Analysis: To have a rough idea

about the number of potential customers
passing by the proposed site during the working
hours of the shop, the traffic analysis aims at
judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
 (e) Site Economics: Alternative sites are
evaluated in terms of establishment costs and
operational costs under this.

 Costs of establishment is basically cost incurred

for permanent physical facilities but operational
costs are incurred for running business on day
to day basis, they are also called as running
costs.
SELECTION CRITERIA
 Therefore, an appropriate location is essential
to the efficient and economical working of a
plant.

 A firm may fail due to bad location or its

growth and efficiency may be restricted.
 PLANT LAYOUT

 The efficiency of production depends on how

well the various machines; production facilities
and employee’s amenities are located in a plant.
 It may be defined as ‘a technique of locating
machines, processes and plant services within the
factory so as to achieve the right quantity and
quality of output at the lowest possible cost of
manufacturing.‘
 It involves a judicious arrangement of
production facilities so that workflow is direct.
ESSENTIALS
 IMPORTANCE

 Plant layout is an important decision as it

represents long-term commitment.

 An ideal plant layout should provide the

optimum relationship among output, floor area
and manufacturing process.
 It facilitates the production process
 minimizes material handling, time and cost
 allows flexibility of operations
 easy production flow
 makes economic use of the building
 promotes effective utilization of manpower
 provides for employee’s convenience
 Safety & comfort at work
 maximum exposure to natural light and ventilation
 TYPES OF LAYOUT
Four Main Types of Plant Layout

 Keeping in view the type of industry and volume

of production, the type of layout to be selected
is to be decided from the following:

1. Product or Line Layout

2. Process or Functional Layout
3. Fixed Position Layout
4. Combination type of Layout
 1. Product or Line Layout

 If all the processing equipment and machines are

arranged according to the sequence of operations
of the product, the layout is called product type of
layout.

 In this type of layout, only one product of one type

of products is produced in an operating area.

 This product must be standardized and produced in

large quantities in order to justify the product
layout.
 The raw material is supplied at one end of the
line and goes from one operation to the next
quite rapidly with a minimum work in process,
storage and material handling.
 Advantages offered by Product Layout:

 Lowers total material handling cost

 There is less work in processes

 Better utilization of men and machines

 Lessfloor area is occupied by material in

transit and for temporary storages
 Greater simplicity of production control

 Total production time is also minimized

 Limitations of Product Layout:

 No flexibility which is generally required

is obtained in this layout

 The manufacturing cost increases with a

fall in volume of production

 If one or two lines are running light, there

is a considerable machine idleness
A single machine break down may shut
down the whole production line

 Specialized and strict supervision is

essential
 2. Process or Functional Layout:
 The process layout is particularly useful where low
volume of production is needed.

 If the products are not standardized, the process layout

is more low desirable, because it has greater process
flexibility than other.

 In this type of layout, the machines and not arranged

according to the sequence of operations but are
arranged according to the nature or type of the
operations.
 This layout is commonly suitable for non
repetitive jobs.

 Same type of operation facilities are grouped

together such as lathes will be placed at one
place, all the drill machines are at another place
and so on.
 Advantages of Process Layout:

 There will be less duplication of machines. Thus,

total investment in equipment purchase will be
reduced.

 It offers better and more efficient supervision

through specialization at various levels.

 There is a greater flexibility in equipment and

man power thus load distribution is easily
controlled.
 Better utilization of equipment available is
possible.

 Break down of equipment can be easily handled

by transferring work to another machine/work
station.

 There will be better control of complicated or

precision processes, especially where much
inspection is required.
 Limitations of Process Layout:

 There are long material flow lines and hence

the expensive handling is required.

 Totalproduction cycle time is more owing to

long distances and waiting at various points.

 Sincemore work is in queue and waiting for

further operation hence bottle necks occur.
 Generally, more floor area is required.

 Sincework does not flow through definite lines,

counting and scheduling is more tedious.

 Specialization creates monotony and there will

be difficult for the laid workers to find job in
other industries.
 3. Fixed Position Layout:

 This type of layout is the least important for

today’s manufacturing industries.

 In this type of layout the major component

remain in a fixed location, other materials, parts,
tools, machinery, man power and other
supporting equipment’s are brought to this
location.
 The major component or body of the product
remain in a fixed position because it is too
heavy or too big and as such it is economical
and convenient to bring the necessary tools and
equipment’s to work place along with the man
power.

 This type of layout is used in the manufacture of

boilers, hydraulic and steam turbines and ships
etc.
 Advantages Offered by Fixed Position Layout:

 Material movement is reduced

 Capital investment is minimized

 Thetask is usually done by gang of operators,

hence continuity of operations is ensured
 Production centers are independent of each
other. Hence, effective planning and loading can
be made. Thus total production cost will be
reduced.

 Itoffers greater flexibility and allows change in

product design, product mix and production
volume.
 Limitations of Fixed Position Layout:

 Highly skilled man power is required

 Movement of machines equipment’s to

production centre may be time consuming

 Complicated fixtures may be required for

positioning of jobs and tools. This may increase
the cost of production
 Combination Type of Layout:

 Now a days in pure state any one form of

layouts discussed above is rarely found.

 Therefore, generally the layouts used in

industries are the compromise of the above
mentioned layouts.

 Every layout has got certain advantages and

limitations.
 Therefore, industries would like to use any type of
layout as such.

 Flexibility is a very important factory, so layout

should be such which can be molded according to
the requirements of industry, without much
investment.

 If the good features of all types of layouts are

connected, a compromise solution can be obtained
which will be more economical and flexible.
 Plant layout is applicable to all types of industries or
plants. At the end, the layout should be conducive to
health and safety of employees. It should ensure
free and efficient flow of men and materials. Future
expansion and diversification may also be
considered while planning factory layout.