The POM function in an organization is responsible for the processes that transform inputs into useful outputs as well as for the overall operation of the business. Because of the breadth and variety of POM functions, you see only four here: in-house logistics and materials management, planning production and operation, computer-integrated manufacturing (CIM), and product life cycle management (PLM). The POM function is also responsible for managing the organization’s supply chain.

In-House Logistics and Materials Management

Logistics management deals with ordering, purchasing, inbound logistics (receiving), and outbound logistics (shipping) activities. Related activities include inventory management and quality control.

Inventory Management

As the name suggests, inventory management determines how much inventory an organization should maintain. Both excessive inventory and insufficient inventory create problems. Overstocking can be expensive, because of storage costs and the costs of spoilage and obsolescence. However, keeping insufficient inventory is also expensive, because of last-minute orders and lost sales.

Operations personnel make two basic decisions: when to order and how much to order. Inventory models, such as the economic order quantity (EOQ) model, support these decisions. A large number of commercial inventory software packages that automate the application of these models are available.

Many large companies allow their suppliers to monitor their inventory levels and ship products as they are needed. This strategy, called vendor-managed inventory (VMI), eliminates the need for the company to submit purchasing orders.

Quality Control

Quality-control systems used by manufacturing units provide information about the quality of incoming material and parts, as well as the quality of in-process semifinished and finished products. These systems record the results of all inspections and compare the actual results to established metrics. They also generate periodic reports containing information about quality for example, the percentage of products that contain defects or that need to be reworked. Quality control data, collected by Web-based sensors, can be interpreted in real time. Alternatively, they can be stored in a database for future analysis.

Planning Production and Operations

In many firms, POM planning is supported by IT. POM planning has evolved from material requirements planning (MRP), to manufacturing resource planning (MRP II), to enterprise resource planning (ERP). Inventory systems that use an EOQ approach are designed for items for which demand is completely independent-for example, the number of identical personal computers a computer manufacturer will sell. In manufacturing operations, however, the demand for some items is interdependent.

Computer-Integrated Manufacturing

Computer-integrated manufacturing (CIM; also called digital manufacturing) is an approach that integrates various automated factory systems. CIM has three basic goals: (1) to simplify all manufacturing technologies and techniques, (2) to automate as many of the manufacturing processes as possible, and (3) to integrate and coordinate all aspects of design, manufacturing, and related functions via computer systems.

Product Life Cycle Management

Even within a single organization, designing and developing new products can be expensive and time consuming. When multiple organizations are involved, the process can become very complex. Product life cycle management is a business strategy that enables manufacturers to share product-related data that support product design and development and supply chain operations. PLM applies Web-based collaborative technologies to product development. By integrating formerly disparate functions, such as a manufacturing process and the logistics that support it, PLM enables these functions to collaborate, essentially forming a single team that manages the product from its inception through its completion.