Transcript Slide 1
Chapter 09
Production and Operations Management
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Nine
LEARNING GOALS
1. Describe the current state of U.S. manufacturing and what manufacturers have done to become more competitive.
2. Describe the evolution from production to operations management.
3. Identify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible manufacturing, lean manufacturing and mass customization. 9-2
Chapter Nine
LEARNING GOALS
4. Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control and quality control.
5. Explain the use of PERT and Gantt charts to control manufacturing processes.
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Profile
SAMUEL J. PALMISANO
IBM • • Palmisano, CEO and President of IBM , started in the company in 1973.
The company’s earnings have quadrupled under Palmisano.
• Switching the company’s focus from production to service, Palmisano led IBM to enter the emerging global market.
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Chapter Nine
NAME that COMPANY
This company ’ s robots manufacture, test, and package motor starters - all untouched by human hands. The machines can fill special orders, even for a single item, without slowing down the process.
Name that company!
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Manufacturing and Services in Perspective
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MANUFACTURING in the U.S.
• The U.S. is still the world ’ s leading manufacturer.
• Manufacturing has continued to grow since 1970. In fact, U.S. manufacturing is 2x bigger than in 1970.
• Almost 25% of all goods produced each year come from the U.S.
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Manufacturing and Services in Perspective
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WHAT
’
S MADE in the USA?
Leading U.S. Manufactured Goods
Products Chemicals –
Pharmaceuticals, cosmetics, soaps, paints, fertilizers
Transportation Equipment –
Cars, planes, trains, ships
Processed Foods, Beverages and Tobacco –
Cookies, coffee, cigarettes, prepared meals
Computers and Electronics –
Computers and communication equipment
Value
$250 Billion $195 Billion $175 Billion $146 Billion
Number of Employees
830,000 Americans Over 1.4 Million Americans 1.7 Million Americans 1.2 Million Americans Source: Parade Magazine, www.parade.com
, accessed June 2011.
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Manufacturing and Services in Perspective
Exporters Extraordinaire
Top Ten States that Manufacture Goods for Export
LG1 Rank
1 2 3 4 5 6 7 8 9 10
State
California Texas New York Michigan Washington Illinois Ohio Florida New Jersey Pennsylvania Source: CNBC, www.cnbc.com
, accessed June 2011.
Amount Exported
$142.61 billion $130.66 billion $72.58 billion $67.94 billion $61.99 billion $57.92 billion $42.59 billion $41.58 billion $36.77 billion $34.57 billion 9-8
Manufacturing and Services in Perspective
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MASSIVE MANUFACTURERS
The Top Ten U.S. Manufacturers
Rank
1 2 3 4 5 6 7 8 9 10
Company
Exxon Mobil Chevron General Electric ConocoPhillips Ford Motor Company Hewlett-Packard IBM Procter & Gamble Archer-Daniels-Midland Boeing
Industry
Petroleum and Coal Petroleum and Coal Electrical Equipment and Appliances Petroleum and Coal Automobiles Computers Computers Chemicals Food Aerospace Source: Industry Week, www.industryweek.com
, accessed June 2011.
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KEY WORD: SUSTAINABILITY
(Thinking Green) • • • The market for new green products and services is almost endless.
Given the rate of population growth, it ’ s important to plan ahead for a world with limited resources.
• Companies like DuPont , Michelin , Chevron and Nokia are working on sustainability projects.
Procter & Gamble their supply chains.
and Kaiser Permanente issue their own mandatory sustainability scorecards to 9-10
Manufacturing and Services in Perspective
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TOP-PAYING SERVICE JOBS
• • • The U.S. economy is no longer manufacturing based.
85% of jobs are in the service sector.
The top-paying service jobs in the U.S. are in: Legal services Medical services Entertainment Accounting Finance Management consulting 9-11
Manufacturers and Service Organizations Become More Competitive
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REMAINING COMPETITIVE in GLOBAL MARKETS
• U.S. is still the leader in nanotechnology and biotechnology.
• How can U.S. businesses maintain a competitive edge?
Focusing on customers Maintaining close relationships with suppliers Practicing continuous improvement Focusing on quality Saving on costs through site selection Relying on the Internet to unite companies Adopting new production techniques 9-12
LEARNING from GERMANY
(Reaching Beyond Our Borders) • • • • Ten years ago, Germany ’ s economy was much like ours today.
Stihl invested in highly trained workers.
Stihl remained competitive in the manufacturing world.
German companies poured money into research and stayed away from high tech products.
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From Production to Operations Management
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PRODUCTION and PRODUCTION MANAGEMENT
•
Production --
The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).
•
Production Management --
All the activities managers do to help firms create goods.
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From Production to Operations Management
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OPERATIONS MANAGEMENT
•
Operations Management --
A specialized area in management that converts or transforms resources into goods and services.
• Operations management includes: Inventory management Quality control Production scheduling Follow-up services 9-15
Operations Management in the Service Sector
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OPERATIONS MANAGEMENT in the SERVICE SECTOR
• All about creating a good experience for those who use the service.
• In hotels, like Ritz Carlton, operation management includes fine dining, fresh flowers, and training for every employee.
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Operations Management in the Service Sector
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THERE
’
S an APP for THAT
Top Productivity Apps for iPad
App
Dropbox ServiceMax Keynote Penultimate ZigZag Board
What it Does
Syncs and backs up files Helps field employees with data management Use to create and show slide presentations Note taking made easier An easy-to-carry whiteboard
Price
Free Free $9.99
$3.99
$4.99
Source: Entrepreneur, February 2011.
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Progress Assessment
PROGRESS ASSESSMENT
• What have U.S. manufacturers done to regain a competitive edge?
• What must U.S. companies do to continue to strengthen the country ’ s manufacturing base?
• What led companies to focus on operations management rather than production?
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Production Processes
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The PRODUCTION PROCESS
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Production Processes
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FORM UTILITY
•
Form Utility --
The value producers add to materials in the creation of finished goods and services.
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Production Processes
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GROVE
’
S BASIC PRODUCTION REQUIREMENTS
1. To build and deliver products in response to the demands of the customer at the scheduled delivery time.
2. To provide an acceptable quality level.
3. To provide everything at the lowest possible cost. 9-21
Production Processes
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PROCESS and ASSEMBLY in PRODUCTION
•
Process Manufacturing --
The part of production that physically or chemically changes materials.
•
Assembly Process --
The part of the production process that puts together components.
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Production Processes
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KEY PRODUCTION PROCESSES
• Production processes are either continuous or intermittent.
•
Continuous Process --
Long production runs turn out finished goods over time .
•
Intermittent Process --
Production runs are short and the producer adjusts machines frequently to make different products.
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Production Processes
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MINUTE MADE
Production of Some of America ’ s Favorite Products
Product
Krispy Kreme Doughnuts Chips Ahoy! Cookies Twinkies Jello Boxes LifeSavers
Number of Items Made in a Minute
5,208 4,000 972 764 100 rolls 9-24
The Need to Improve Production Techniques and Cut Costs
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DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE
1. Computer-aided design and manufacturing 2. Flexible manufacturing 3. Lean manufacturing 4. Mass customization 9-25
Computer-Aided Design and Manufacturing
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COMPUTER-AIDED DESIGN and MANUFACTURING
•
Computer-Aided Design (CAD) --
The use of computers in the design of products.
•
Computer-Aided Manufacturing (CAM) --
The use of computers in the manufacturing of products.
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Computer-Aided Design and Manufacturing
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COMPUTER-INTEGRATED MANUFACTURING
•
Computer-Integrated Manufacturing (CIM) --
The uniting of computer aided design with computer aided manufacturing.
• CIM is expensive but it cuts as much as 80% of the time needed to program machines to make parts.
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Flexible Manufacturing
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FLEXIBLE MANUFACTURING
•
Flexible Manufacturing --
Designing machines to do multiple tasks so they can produce a variety of products.
• Allen-Bradley uses flexible manufacturing to build motor starters.
• 26 machines and robots build, test and package parts.
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Lean Manufacturing
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LEAN MANUFACTURING
•
Lean Manufacturing --
than in mass production.
Using less of everything
• Compared to others, lean companies: Take half the human effort.
Have half the defects in finished products.
Require one-third the engineering effort.
Use half the floor space.
Carry 90% less inventory.
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Mass Customization
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MASS CUSTOMIZATION
•
Mass Customization --
Tailoring products to meet the needs of a large number of individual customers.
• More manufacturers are learning to customize.
• Mass customization exists in the service sector too.
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MASS CUSTOMIZATION of CANDY
(Spotlight on Small Business) • Chocomize lets customers customize their chocolate bars.
• Co-founder, Eric Heinbockel, sought funding help from his family.
• Chocomize now has three full-time chocolate makers and is expected to be a success.
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Progress Assessment
PROGRESS ASSESSMENT
• What ’ s form utility?
• Define and differentiate the following: process manufacturing, assembly process, continuous process and intermittent process.
• What do you call the integration of CAD and CAM?
• What ’ s mass customization?
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Operations Management Planning
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OPERATIONS MANAGEMENT
• Operations management planning helps solve problems like: Facility location Facility layout Materials requirement planning Purchasing Inventory control Quality control 9-33
Facility Location
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FACILITY LOCATION
•
Facility Location --
The process of selecting a geographic location for a company
’
s operations.
• Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations.
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STAY or LEAVE
(Making Ethical Decisions) • Potential of low-cost labor is very attractive to companies hoping to remain competitive.
• However, shuttering operations and moving can often cause severe economic problems in dependent areas.
• What would you do if you were the CEO of ChildrenWear Industries faced with this problem?
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Taking Operations Management to the Internet
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OPERATIONS MANAGEMENT on the INTERNET
• Sometimes businesses outsource engineering, design and manufacturing to other companies.
• Often these relationships are managed through the Internet.
• Many companies are developing Internet-focused strategies.
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Facility Location in the Future
FUTURE FACILITY LOCATION
LG4
• Information technology gives firms increased flexibility in terms of location.
•
Telecommuting --
computer.
Working from home via
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Facility Layout
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SETTING UP the FACILITY
•
Facility Layout --
The physical arrangement of resources, including people, to most efficiently produce goods and provide services.
• Facility layout depends on the processes performed: Service: Help customers find products Manufacturing: Improve efficiency 9-38
Facility Layout
FACILITY LAYOUT OPTIONS
LG4
1. Assembly Line Layout
– Workers do only a few tasks at a time.
2. Modular Layout
– Teams of workers produce more complex units of the final product.
3. Fixed-Position Layout
– Allows workers to congregate around the product.
4. Process Layout
– Similar equipment and functions are grouped together.
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Facility Layout
ASSEMBLY LINE LAYOUT
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Facility Layout
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MODULAR LAYOUT
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Facility Layout
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PROCESS LAYOUT
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Facility Layout
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FIXED-POSITION LAYOUT
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Materials Requirement Planning
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MRP and ERP
•
Materials Requirement Planning (MRP) --
A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed.
•
Enterprise Resource Planning (ERP) --
A newer version of MRP, combines computerized functions into a single integrated software program using a single database.
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Purchasing
PURCHASING
LG4
•
Purchasing --
The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services.
•
The Internet has transformed purchasing.
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Just-in-Time Inventory Control
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INVENTORY CONTROL
•
Just-in-Time (JIT) Inventory Control --
The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line.
• To work effectively, the process requires excellent coordination with suppliers.
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Quality Control
QUALITY CONTROL
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•
Quality --
Consistently producing what the customer wants while reducing errors before and after delivery.
•
Six Sigma Quality --
A quality measure that allows only 3.4 defects per million opportunities.
Photo Courtesy of: Argonne National Laboratory 9-47
Quality Control
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STATISTICAL QUALITY CONTROL & STATISTICAL PROCESS CONTROL
•
Statistical Quality Control --
A process used to continually monitor all phases of the production process.
•
Statistical Process Control --
A process of testing statistical samples of product components at each stage of production.
• Measuring quality along the production process reduces the need for quality control at the end.
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The Baldrige Awards
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The BALDRIGE AWARDS
• Companies can apply for awards in these areas: Manufacturing Services Small Businesses Non-Profit/Government Education Healthcare 9-49
The Baldrige Awards
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THE WINNERS ARE…
2010 Baldrige Award Recipients
Company
MEDRAD Nestlé Purina PetCare Freese and Nichols K & N Management Studer Group Advocate Good Samaritan Hospital Montgomery County Public Schools
Category
Manufacturing Manufacturing Small Business Small Business Small Business Healthcare Education
Where from?
Warrendale, PA St. Louis, MO Ft. Worth, TX Austin, TX Gulf Breeze, FL Downers Grove, IL Rockville, MD Source: National Institute of Standards and Technology, www.quality.nist.gov
, accessed June 2011. 9-50
ISO 9000 and ISO 14000 Standards
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WHAT is ISO?
• The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies.
•
ISO 9000 --
The common name given to quality management and assurance standards.
•
ISO 14000 --
A collection of the best practices for managing an organization
’
s impact on the environment.
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Progress Assessment
PROGRESS ASSESSMENT
• What are the major criteria for facility location?
• What ’ s the difference between MRP and ERP?
• What ’ s just-in-time inventory control?
• What are Six Sigma quality, the Baldrige Award, ISO 9000 and ISO 14000?
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Control Procedures: PERT and Gantt Charts
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PERT
•
Program Evaluation and Review Technique (PERT) --
A method for analyzing the tasks involved in completing a given project and estimating the time needed.
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Control Procedures: PERT and Gantt Charts
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STEPS INVOLVED in PERT
1. Analyzing and sequencing tasks 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the first two steps 4. Identifying the critical path •
Critical Path
--
The sequence of tasks that takes the longest time to complete.
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Control Procedures: PERT and Gantt Charts
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PERT CHART for a MUSIC VIDEO
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Control Procedures: PERT and Gantt Charts
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GANTT CHARTS
•
Gantt Chart –
A bar graph that shows what projects are being worked on and how much has been completed.
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Control Procedures: PERT and Gantt Charts
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GANTT CHART for a DOLL FACTORY
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Progress Assessment
PROGRESS ASSESSMENT
• Draw a PERT chart for making breakfast of three minute eggs, buttered toast and coffee. Define the critical path.
• How could you use a Gantt chart to keep track of production?
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