Transcript Slide 1
Chapter Twelve
Operations and Materials Management
McGraw-Hill/Irwin Introduction to Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Learning Objectives 1.
2.
3.
Describe the nature of the operations and materials management process and explain how it can create a competitive advantage for a company.
Identify the five main components of operations and materials management costs and the methods companies use to reduce them.
Differentiate between the three major kinds of operating systems companies use to produce goods and services.
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Learning Objectives
4.
5.
Understand the way total quality management can significantly improve both quality and productivity.
Describe three materials management methods companies use to improve the flow of resources into and out of production and increase operations efficiency.
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The Nature of Operations and Materials Management •
Operations
a company’s system of value-creation activities used to transform inputs into finished goods and services •
Materials management
the set of activities that control the flow of resources into and out of a firm’s operating system
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The Operations and Materials Management Process •
Input
•
Operations
•
Output 12 - 6
The Operations and Materials Management Process Figure 12.1
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Operations, Materials Management, and Competitive Advantage Figure 12.2
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Productivity
•
Quality
•
Innovation
•
Responsiveness to customers
•
Balancing costs versus revenues 12 - 9
Five Major Components of OMM Costs Figure 12.3
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Operations and Materials Management Costs •
Raw Materials and Component Costs
•
Plant Costs
•
Labor Costs
•
Inventory Costs
•
Distribution Costs 12 - 11
Question?
Which cost is the cost of getting products to customers?
A.
Plant cost B.
C.
D.
Distribution cost Inventory cost Labor cost
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Operations and Materials Management Costs •
Raw Materials and Component Costs
comprise a significant percentage of companies’ total operating costs, particularly companies that make physical products
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Operations and Materials Management Costs •
Plant Costs
cost of the machinery, computers, tools, buildings, and equipment needed to transform inputs into finished products
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Operations and Materials Management Costs •
Labor Costs
number of employees needed to produce a given quantity of outputs amount each employee must be paid health and social insurance benefits each employee is given
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Labor Costs
•
Maquiladoras
U.S. companies’ manufacturing plants in cities along the Mexican border
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Operations and Materials Management Costs •
Inventory
the resources – materials, supplies, and goods – a company holds in stock •
Work-in-process goods
the semifinished goods that move through a company’s production process
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Three Types of Inventory
Figure 12.4
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Operations and Materials Management Costs •
Distribution Costs
the cost of getting products to customers Find some small business distribution solutions at ups.com
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Types of Operating Systems
• Small-Batch Production • Mass Production • Flexible Production • Total Quality Management
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Three Types of Operating Systems Figure 12.5
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Question?
What is an operating system based on the use of automated machines and standard operating procedures?
A.
B.
Flexible production Mass production C.
D.
Small-batch production Elastic production
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Types of Operating Systems
•
Small-batch production
an operating system designed to make one-of-a-kind or small quantities of customized products •
Customized products
products designed to match the need of individual customers
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Types of Operating Systems
•
Mass production
an operating system based on the use of automated machines and standard operating procedures to make work routine and create a large number of standardized products •
Standardized products
products that are identical
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Types of Operating Systems
•
Flexible production
an advanced operating system that combines the benefits of mass production with the benefits of small-batch production
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Flexible Production
•
Computer-integrated manufacturing
a manufacturing technique that controls the changeover of machines from one operation to another via computer software
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Flexible Employees and Work Groups •
Flexible work team
a team of self-managed employees who assume responsibility for performing the operating tasks necessary to make a part, or all, of a product
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The Use of Flexible Work Teams to Assemble Cars Figure 12.6
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Flexible Employees and Work Groups •
Production layout
the way teams of employees are physically grouped into work cells or pods to assemble a product
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Improving Operations Quality
•
Total quality management
an operations technique to continuously improve the production process, increase the quality of products, and help companies lower their operating costs
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Improving Operations Quality
•
Quality control circles
team meetings in which production employees discuss ways to improve operating quality and productivity
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Advanced Materials Management Methods • Computer-Aided Materials Management • Computer-Based Global Supply Chain Management • Just-in-Time Inventory System
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Advanced Materials and Management Methods •
Computer-aided materials management
a technique that relies on computers to manage the flow of raw materials and component parts into and out of a company’s operating system
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Advanced Materials Management Methods •
Global supply chain management
the coordination of the flow of raw materials, semifinished goods, and finished products around the world
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Advanced Materials Management Methods •
Just-in-Time Inventory System
an inventory management system whereby inputs are delivered to the firm just when they are needed rather than being purchased and warehoused prior to their use
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Just-in-Time Inventory Systems
Figure 12.7
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Video: Jet Blue
• • Jet Blue defines itself as a “customer service company.” From its innovative mission statement to the teamwork displayed by its employees, Jet Blue is focused on its customers. How does Jet Blue differentiate its service from that of its competitors?
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