Transcript 9-1 Business in a Changing World Chapter 9 Production and Operations ManagementMcGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc.

9-1
Business in a
Changing World
Chapter 9
Production and Operations
Management
2
McGraw-Hill/Irwin
Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
9-3
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.
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Operations Management
Importance of Production & 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.
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Operations Management
Operations Management (OM)
Development and administration of the activities
involved in transforming resources into goods
and services.
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Operations Management
Operations Management (OM)
•Historically called production or manufacturing
•Change to operations = focus on goods & services
•Emphasis on viewing the operations function as a whole
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Production & Operations Management
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
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Production & Operations Management
Transformation Process of operations management
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Transformation Process
Inputs –
•Labor
•Money
•Materials
•Energy
Outputs
•Goods
•Services
•ideas
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Production & Operations Management
Inputs, outputs, and transformation processes
Manufacturing Oak Furniture
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Operations Management
OM in Service Businesses
Service Businesses –
•Airlines
•Colleges
•Nonprofit organizations
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Operations Management
OM in Service Businesses
Service Businesses – 70% of all employment in
the United States; fastest growth of jobs
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Operations Management
OM in Service Businesses
Service Businesses – actions that are directed
toward consumers who use them
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Operations Management
OM in Service Businesses
Ideal Service Business - Customer contact
•High-tech
•High-touch
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Operations Management
OM in Service Businesses
Service Business Output
• Intangible
• Perishable
• Difficult to gauge demand
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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
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Planning & Designing Operations Systems
Planning the Product
Determine –
•What consumers want
•Design product to satisfy the want
•Marketing research
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Planning & Designing Operations Systems
Planning the Product
Determine –
•Types and quantities of raw materials
•Skills & quantity of labor
•Processes for transformation to outputs
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Designing the Operations Processes
Standardization – the making of identical
interchangeable components or products. Faster,
reduces production costs
•Televisions
•Ballpoint pens
•Tortilla chips
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Designing the Operations Processes
Modular Design – creation of an item in selfcontained units that can be combined or
interchanged to create different products
•Personal computers -- CPU’s, motherboards, monitors
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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
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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
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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
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Planning Facilities
Facility location
Facility layout
Technology
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Planning Facilities
Facility layout
• Fixed-Position Layout
• Project Organization
• Process Layout (intermittent
organizations)
• Product Layout (continuous
manufacturing organization)
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Planning Facilities
Fixed-Position Layout--Project organization
All resources needed for a product are brought to a
central location.
Process Layout--Intermittent organization
Layout 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.
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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.
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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.
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Facilities Planning
Robotics Industries Association –
Estimate – 160,000 robots at work in U.S.
factories – Japan #1 employer of robotics
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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
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Managing the Supply Chain
Supply chain management
Connecting and integrating all parties or
members of the distribution system in order to
satisfy customers.
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Managing the Supply Chain
Purchasing
Procurement – buying of all materials
needed by the organization.
•Desired quality
•Correct quantities
•Lowest cost
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Managing the Supply Chain
Managing Inventory
Inventory – all raw materials, components,
completed or partially completed products,
and pieces of equipment that a firm uses
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Managing the Supply Chain
Managing Inventory
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.
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Managing the Supply Chain
EOQ model
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).
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Managing the Supply Chain
JIT
Just-in-Time inventory management – eliminates
waste by using smaller quantities arriving “just in
time” for use in the transformation process.
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Managing the Supply Chain
MRP
Material-requirements planning – planning
system that schedules the precise quantity of
materials needed to make the product.
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Managing the Supply Chain
Outsourcing
Outsource aspects of operations to companies
that provide products more efficiently, at lower
cost, greater customer satisfaction.
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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.
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Managing Quality
Quality – critical element of operations
management. Degree to which a good or
service meets the demands and requirements
of customers.
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Managing Quality
Hypothetical PERT Diagram for a McDonald’s Big Mac
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Managing Quality
Quality complaints from Air Travelers -- 2007
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Managing Quality
Malcolm Baldrige National Quality Award
Criteria -•
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•
•
•
•
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Leadership
Information and analysis
Strategic planning
Human resource development
Process management
Business results
Customer focus & satisfaction
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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.
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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.
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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.
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Communications in Organizations
Informal Communication – separate from
management’s formal, official communication
channels.
•Grapevine
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