CHAPTER 13 PRODUCTION & BUSINESS OPERATION
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Transcript CHAPTER 13 PRODUCTION & BUSINESS OPERATION
CHAPTER 13
PRODUCTION & BUSINESS OPERATIONS
13.1 OBJECTIVES
Describe the role of producers in the economy
and the forms of production
Differentiate among the various types of
manufacturing
PRODUCTION IN THE ECONOMY
Economy begins with production
Consumers need products/services to satisfy
their needs and wants
ROLE OF PRODUCERS
3 categories of products used by people
Natural
Raw
resources
materials supplied by nature
Agricultural
Crops
products
and animals raised by farmers
Processed
Products
goods
whose forms have been changed to increase
their value and usefulness to people
ROLE OF PRODUCERS (CONT.)
4 types of businesses that are responsible for
production of goods/services
Producers
Develop
products to sell to other businesses or consumers
Extractors
Find
natural resources like water, oil, coal, timber from the
earth to be processed and used
Farmers
Tend
land to grow crops and livestock that are later sold and
processed
Manufacturers
Get
materials from other producers and convert them into
products for sale to consumers
FORMS OF PRODUCTION
Forms of production are
Extraction
& cultivation
Processing
Manufacturing
All needed to make
products for customers
EXTRACTION & CULTIVATION
Products are obtained from nature
Makes sure that there is always an available
supply of natural resources
Also makes sure that crops, livestock, fish are
available at all times
Most basic form of production
PROCESSING
Changing & improving the form of a product
Not many products are used exactly how they
are found in nature
Most are processed before being used
Water, Cotton, Timber, Oil, Cows
MANUFACTURING
Combines raw materials and processed goods
into finished products
Businesses and consumers use these
Can be simple (cabinetmaking) or complex
(designing a computer microchip)
MANUFACTURING EXAMPLES
One manufacturer might use steel and plastic
to make many parts for a snowmobile
Another may purchase meat, vegetables and
fruit from farms to create frozen TV dinners
Another might take timber from a forest and
process it into lumber and plywood for a
construction company to buy to build houses
with
MANUFACTURING PROCESSES
Usually, several manufacturers are a part of the
total activity needed to produce goods that we buy
EX: a textile mill in North Carolina buys cotton from
an Alabama farm. It spins the cotton into yarn and
makes the yarn into fabric. A plant in Boston then
colors and prints the cloth. A clothing
manufacturer in New York then buys the cloth and
makes it into jeans
Working together is what fulfills consumer needs
TYPES OF MANUFACTURING PROCEDURES
3 main types of Manufacturing procedures
Mass
production
Custom manufacturing
Materials processing
MASS PRODUCTION
An assembly process that makes a large number
of identical products using a continuous, efficient
procedure
Sometimes called repetitive production
EX: automobile or bottling plants
Every employee has a specific task
Training costs are lower and quality is higher
Can also be boring and decrease motivation
Machines now assist with many assembly lines
CUSTOM MANUFACTURING
Manufacturers make products to meet specific
needs and standards of customers/businesses
Products range from dentures to concert halls
Building a product for a specific use
Work closely with the customer to plan and design
product to fit their requests
May call for unique materials/special process
EX: bridges, buildings, piece of airplane, special
running shoe for particular athlete
MATERIALS PROCESSING
Changing the form of raw materials so they can be
consumed or used to make other products
EX: oil companies refine oil to form gasoline; mills
process grain into flour and cereal; digital editors
convert audio/video files into films/CDs
2 types
Continuous processing
Raw
materials always move through equipment to change
them into a specific product to buy
EX: milk
Intermittent processing
Uses
short production times to produce a certain amount of
change to a product. Machines are reset after each set.
EX: printer for special stationary
13-1 ASSESSMENT
ANSWER #1-4 ON PAGE 322 BEFORE
CONTINUING NOTES
13.2 OBJECTIVES
Identify the activities involved in production
planning
Describe how manufacturing is organized
PRODUCTION ACTIVITIES
Production processes are very complex
Involves careful planning and coordination
Before a company can manufacture a product,
it must have the facilities and equipment to
carry out the production
It must hire enough people to complete jobs
It also must check all finished products for
quality and store them until they are sold
PRODUCT DEVELOPMENT
Before production planning can happen, the
company decides what products it will produce
You can’t expect to sell the same thing every
year; New products will have to be developed
Product planning has 2 steps:
New
product research
New product design
NEW PRODUCT RESEARCH
Goal is to develop new products that customers
will like, meet their customer needs, and improve
current products offered
Companies perform 2 types of research:
Applied research
Studies
existing products to develop improvements or new
uses of the product
EX: auto manufacturers improve fuel efficiency
Pure research
Research
done with no product in mind; instead, wanting to
discover new solutions to problems
EX: scientists researching for cures to diseases
NEW PRODUCT DESIGN
Turning an idea into a product a company can
sell and make a profit from
Designs are tested and best ones are chosen
After engineers build and test a model, the
business determines all parts/materials
needed for final product
Financial experts decide on what price to set
Make sure company makes money AND
customers can afford it
PRODUCTION PLANNING
If a company develops and tests a new product
idea, and they decide they want to proceed,
they will then develop plans to produce it
Production planning includes 3 activities:
Develop
a production process
Collect production resources
Select and prepare production personnel
DEVELOP THE PRODUCTION PROCESS
Consists of the activities, equipment and
resources needed to manufacture a product
If you are going to use mass production, this is
where you organize the assembly line
Figure out which method you are going to use is
a key part of this step
COLLECT PRODUCTION RESOURCES
Order machines, tools required for production
Business must locate and organize a space to
perform production activities
Can either buy a new building or remodel their
current space to make bigger and better
Determine where materials will be coming from
Identify suppliers and make sure materials are
delivered on time and at the right price
PRODUCTION PERSONNEL
Estimates the number of employees needed to
complete production activities
Determines skills required of each employee
Company will check their own employees first,
then hire and train new ones if needed
INVENTORY MANAGEMENT
Inventory is a detailed list of a company’s
materials, supplies and finished products.
Inventory management keeps track of the
inventory & resources needed for production
Very important to manufacturing because you
can’t produce products without your inventory
Managers keep a record of the supply and costs of
resources used in production
After product is assembled, extra resources are
moved into storage or sold to customers
MANUFACTURING PROCEDURES
Today’s assembly line is quite different than it
used to be
Employees work in teams
Parts move along conveyor belts
Products move quickly through process
Employees check products for quality at several
points
When completed, products are packaged, labeled
and moved to a loading area for shipment
ORGANIZING THE WORK AREA
The type of product will determine how the
work area is organized
Mass production requires a large building
There must be space for assembly line,
equipment, tools, employee work stations and
storage areas for parts used
The smaller the product, the larger amount of
workspace each employee will have
IMPROVING MANUFACTURING
Today there are higher costs, more competition,
and more customer demands
Challenges today are: faster production, increased
quality of products, reduced costs
Companies are coming out with improved
procedures, better training for employees and a
higher level of quality for products
Continuous Process Improvement (CPI)has been
added—increases the quality of work by reducing
errors and waste. Processes are reviewed instead
of waiting until a problem comes up.
CPI-CONTINUOUS PROCESS IMPROVEMENT
STEP 1: Involve Everyone
STEP 2: Identify process
activities
STEP 3: Establish quality
performance standards
STEP 4: Select
measurement tools
STEP 5: Monitor
performance continuously
STEP 6: Improve process
quality
CPI (CONT.)
Designed to help an organization achieve its
goals by improving the quality of work
Standards are developed for quality
performance
Standards are based on benchmarks (best
practices among all competitors)
Based on these results, employees look for
ways to improve work procedures so all
products can improve as well
13-2 ASSESSMENT
ANSWER #1-4 ON PAGE 328 BEFORE
CONTINUING NOTES
13.3 OBJECTIVES
Discuss the importance of effective business
operations
Describe tools used to manage business
operations
THE IMPORTANCE OF BUSINESS OPERATIONS
How a business operates day-to-day can
determine if it succeeds or fails
Work
procedures may not be efficient
Security issues may result in thefts
Lack of maintenance could lead to expensive
repairs
Bad work environment can lead to unhappy
employees
TYPES OF BUSINESS OPERATIONS
Some operations are specific to the type of
business
Most common types of business operations:
Facilities
management
Logistics
Scheduling
Safety
and security
FACILITIES MANAGEMENT
Buildings are one of the largest investments of
a business
They provide space for all of the business
operations and all storage
Management begins with deciding on the
building that will be needed (new or existing)
Management also deals with maintenance and
repairs needed to make building better
Management also keeps energy/utility costs
under control—be as “green” as possible
LOGISTICS
Managing the movement and storage of supplies,
materials and finished products in a business
A newer term for logistics is: supply chain
management
Major logistic duties:
Locating/purchasing where to get supplies from
Transportation of supplies, materials and products
Communicating with everyone in supply chain
JUST-IN-TIME: when goods arrive just in time for
production or to sell—instead of just sitting in storage
SCHEDULING
Determining the activities that need to be
completed, who will complete the work, and the
resources needed to complete the task in time
Factories must maintain the right inventory to
fill each order or customers will wait too long to
receive merchandise
Employee scheduling is important—full-time,
part-time and temporary employees
Company must have the right number of people
scheduled to complete the work needed
SAFETY AND SECURITY
Protecting people and property
Damage/injury can happen due to
Crime
Accidents
Natural disasters (tornados, earthquakes)
Security employees study activities of business to
identify possible security problems then come up
with a way to prevent them
They also try to minimize the amount of accidents
and injuries—give safety training classes and hang
safety posters in employee areas
INFORMATION MANAGEMENT
Uses technology to access & exchange information
to complete the work of an organization
4 goals:
1.
2.
3.
4.
Collect, organize & maintain needed information
Provide instant access to information required to
perform work and make decisions
Prevent access to unauthorized users
Use technology to improve communication
Types of information used in business: text, data,
graphics, pictures, and videos
Oral (telephone, voicemail, meetings)
Written (letters, memos, reports, emails)
INFORMATION MANAGEMENT (CONT.)
Information managers are responsible for
designing, purchasing, installing and
maintaining the many types of technology used
in business
They must develop procedures for collecting,
storing and using the information
They make sure the information collected is
easy to get to, yet still safe and secure
The internet makes it more difficult to
safeguard against hackers worldwide
TOOLS FOR BUSINESS OPERATIONS
Management Tools
Operational plan: identifies how work will be done, who
will do it and what resources will be needed
Operating budget: detailed financial plan for a specific
area of the business
Schedule: time plan for completing activities
Procedure: list of steps to be followed for performing a
work activity
Standard: specific measurement against which an
activity or result is judged. Must be clear and realistic
(EX: the number of customers that should be served in
a fast food restaurant at one time)
TOOLS FOR BUSINESS OPERATIONS
Technology Tools
So
many common business operations can be
completed using computer software like:
Project
management
Budgeting
Scheduling
Inventory
Computer security
Document management
New
types of software are available to help with
logistics: supply chain management software and
collaboration software (pg 336)
13-3 ASSESSMENT
ANSWER #1-3 ON PAGE 336 BEFORE
COMPLETING OTHER CHAPTER ACTIVITIES
CHAPTER 13: EXTRA CHAPTER ASSIGNMENTS
Chapter 13 Assessment #11-26 (write
definition and word)
Page 341: Decision Making Strategies #32-33
Chapter 13: Study Guide Handout