Business in aChanging World
McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter 9Production and Operations Management
2
9-4
Goya Foods: Quality Operations and Products
Goya Foods offers a wide range of products. As their product lines have expanded, management of operations has become a major priority.
9-5
Operations Management
The planning and designing of the processes that transform resources into finished products; managing the transformation process; ensuring high quality of finished goods.
Importance of Production & Operations Management
9-6
Development and administration of the activities involved in transforming resources into goods and services.
Operations Management (OM)
Operations Management
9-7
•Historically called production or manufacturing•Change to operations = focus on goods & services•Emphasis on viewing the operations function as a whole
Operations Management (OM)
Operations Management
9-8
Manufacturing – activities and processes used in making tangible products (production)
Production – activities and processes used in making tangible products (manufacturing)
Operations – the activities and processes used in making both tangible and intangible products
Production & Operations Management
9-11
Production & Operations Management
Inputs, outputs, and transformation processes Manufacturing Oak Furniture
9-12
Operations Management
Service Businesses –•Airlines•Colleges•Nonprofit organizations
OM in Service Businesses
9-13
Operations Management
Service Businesses – 70% of all employment in the United States; fastest growth of jobs
OM in Service Businesses
9-14
Operations Management
Service Businesses – actions that are directed toward consumers who use them
OM in Service Businesses
9-15
Operations Management
Ideal Service Business - Customer contact•High-tech•High-touch
OM in Service Businesses
9-16
Operations Management
Service Business Output• Intangible• Perishable• Difficult to gauge demand
OM in Service Businesses
9-17
Operations Management
Differences in Nature & Consumption of Output (Manufacturing vs. Service Providers)
•Nature and consumption of output•Uniformity of inputs•Uniformity of outputs•Labor required•Measurement of productivity
9-18
Planning & Designing Operations Systems
Determine –•What consumers want•Design product to satisfy the want•Marketing research
Planning the Product
9-19
Planning & Designing Operations Systems
Determine –•Types and quantities of raw materials•Skills & quantity of labor•Processes for transformation to outputs
Planning the Product
9-20
Designing the Operations Processes
Standardization – the making of identical interchangeable components or products. Faster, reduces production costs•Televisions•Ballpoint pens•Tortilla chips
9-21
Designing the Operations Processes
Modular Design – creation of an item in self-contained units that can be combined or interchanged to create different products•Personal computers -- CPU’s, motherboards, monitors
9-22
Designing the Operations Processes
Customization – making products to meet a particular customer’s needs or wants•Repair services•Photocopy services•Custom artwork•Bridges•Ships•Computer software
9-23
Designing the Operations Processes
Mass Customization – making products to meet needs or wants of a large number of individual customers.•Customer selects•Model, size, color, style, design•Dell Computer•Fitness program•Travel packages
9-24
Planning Capacity
Capacity – maximum load that an organizational unit can carry or operate •Hershey’s production capacity
•33 million Hershey’s kisses per day•12 billion per year
9-26
Planning Facilities
Facility layout• Fixed-Position Layout• Project Organization• Process Layout (intermittent
organizations)• Product Layout (continuous
manufacturing organization)
9-27
Planning Facilities
Fixed-Position Layout--Project organizationAll resources needed for a product are brought to a central location.
Process Layout--Intermittent organizationLayout is organized into departments that group related processes.
Product Layout--Continuous manufacturing organization
Production is broken down into relatively simple tasks assigned to workers positioned along a line.
9-28
Planning Facilities -- Technology
Computer-assisted design (CAD) – design of components, products, and processes utilizing computers instead of paper & pencil
Computer-assisted manufacturing (CAM) – manufacturing that employs specialized computer systems to actually guide and control the transformation processes.
9-29
Planning Facilities -- Technology
Flexible manufacturing – the direction of machinery by computers to adapt to different versions of similar operations
Computer-integrated manufacturing (CIM) – a complete system that designs products, manages machines and materials, and controls the operations function.
9-30
Estimate – 160,000 robots at work in U.S. factories – Japan #1 employer of robotics
Robotics Industries Association –
Facilities Planning
9-31
Green Manufacturing
• It pays to go green– The affluent use green products as status symbols
• Smart Car’s US sales are soaring, as it has the highest mgp of any gas-powered car on the market– 95% of Smart Car buyers opt for deluxe versions over
the base model
9-32
Managing the Supply Chain
Connecting and integrating all parties or members of the distribution system in order to satisfy customers.
Supply chain management
9-33
Managing the Supply Chain
Procurement – buying of all materials needed by the organization.•Desired quality•Correct quantities•Lowest cost
Purchasing
9-34
Managing the Supply Chain
Inventory – all raw materials, components, completed or partially completed products, and pieces of equipment that a firm uses
Managing Inventory
9-35
Managing the Supply Chain
Inventory control – process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it.
Managing Inventory
9-36
Managing the Supply Chain
Economic order quantity model – a model that identifies the optimum number of items to order to minimize the costs for managing them (ordering storing, and using).
EOQ model
9-37
Managing the Supply Chain
Just-in-Time inventory management – eliminates waste by using smaller quantities arriving “just in time” for use in the transformation process.
JIT
9-38
Managing the Supply Chain
Material-requirements planning – planning system that schedules the precise quantity of materials needed to make the product.
MRP
9-39
Managing the Supply Chain
Outsource aspects of operations to companies that provide products more efficiently, at lower cost, greater customer satisfaction.
Outsourcing
9-40
Managing the Supply Chain
Routing – sequence of operations through which the product must pass
Scheduling – the assignment of required tasks to departments or specific machines, workers, or teams.
9-41
Managing Quality
Quality – critical element of operations management. Degree to which a good or service meets the demands and requirements of customers.
9-44
Managing Quality
Malcolm Baldrige National Quality Award
Criteria -- • Leadership• Information and analysis• Strategic planning• Human resource development• Process management• Business results• Customer focus & satisfaction
9-45
Managing Quality
Quality Control – processes an organization uses to maintain its established quality standards.
Total Quality Management (TQM) – philosophy that uniform commitment to quality will promote a culture that meets customers’ perceptions of quality.
9-46
Managing Quality
Statistical process control – system to collect and analyze information about production processed to pinpoint quality problems in the system.
ISO 9000 – International Organization for Standardization (ISO) system of quality management standards designed to ensure the customer’s quality standards are met.
9-47
Managing Quality
Inspection – reveals whether a product meets quality standards.
Sampling – how many items should be inspected. Depends on potential costs of product flaws in terms of human lives and safety.