Achieving World-Class Operations Management CHAPTER 10 The Future of Business The Essentials 4 th...
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Achieving World-Class Operations Management CHAPTER 10 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker Chapter 10 Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved © BananaStock / Jupiterimages
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Transcript of Achieving World-Class Operations Management CHAPTER 10 The Future of Business The Essentials 4 th...
AchievingWorld-ClassOperations
Management CH
AP
TE
R 1
0
The Future of BusinessThe Essentials 4th EditionGitman & McDaniel
Prepared byDeborah Baker
Chapter 10Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved
© B
anan
aSto
ck /
Jup
iterim
ages
2
Learning Goals
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1 Why is production and operations management important in both manufacturing and service firms?
2 What types of production processes do manufacturers and service firms use?
3 How do organizations decide where to put their production facilities? What choices must be made in designing the facility?
4 Why are resource-planning tasks like inventory management and supplier relations critical to production?
3
Learning Goals (continued)
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5 How do operations managers schedule and control production?
6 How can quality management and lean-manufacturing techniques help firms improve production and operations management?
7 What roles do technology and automation play in manufacturing and service industry operations management?
8 What key trends are affecting the way companies manage production and operations?
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Why is production and operations management important in both manufacturing and service firms?
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Production and Operations Management
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production
The creation of products and services by turning inputs into outputs, which are products and services.
operations managementManagement of the production process.
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Production and Operations Management
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Production and Operations Management Decisions
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1. Production planning
2. Production control
3. Improving production and operations
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Production Planning
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Long-TermMedium-Term
1 Year 2 Years 3-5 Years
Short-Term
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Production and Operations Management Decisions
1
Site selectionSite selection
Facility layoutFacility layout
Resource planningResource planning
Type of Production ProcessType of Production Process
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What types of production processes do manufacturers and service firms use?
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The Production Process:How Do We Make It?
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Production Process Classifications
1. How inputs are converted into outputs
2. Timing of the process
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mass productionThe ability to manufacture many identical goods at once.
mass customizationGoods are mass-produced up to a point, then custom tailored to the needs of individual customers.
customizationThe production of goods or services one at a time according to the needs of individual customers.
How Do We Make It?
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process manufacturingThe basic input is broken down into one or more outputs.
assembly processThe basic inputs are combined or transformed into the output.
Converting Inputs to Outputs
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continuous processA production process that uses long production runs without equipment shutdowns.
intermittent processA production process that uses short production runs to make batches of different products.
Production Timing
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How do organizations decide where to put their production facilities? What choices must be made in designing the facility?
3
Where Do We Make It?
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Where Do We Make It?
Marketing factorsMarketing factors
Manufacturing environmentManufacturing environment
Local incentivesLocal incentives
Availability of production inputsAvailability of production inputs
International location considerations
International location considerations
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Designing the Facility
ProductLayout
ProductLayout
Workstations or departments are arranged in a line with products
moving along the line
Workstations or departments are arranged in a line with products
moving along the line
Fixed-PositionLayout
Fixed-PositionLayout
The product stays in one place and workers and machinery
move to it as needed
The product stays in one place and workers and machinery
move to it as needed
ProcessLayout
ProcessLayout
Work flows according to theproduction process
Work flows according to theproduction process
Cellular Manufacturing
Cellular Manufacturing
Technique uses small, self-contained production units each
performing all or most of the tasks necessary
Technique uses small, self-contained production units each
performing all or most of the tasks necessary3
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Why are resource-planning tasks like inventory management and supplier relations critical to production?
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Resource Planning
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bill of materialA list of the items and the number of each required to make a given product.
purchasingThe process of buying production inputs from various sources; also called procurement.
Resource Planning
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Make-or-Buy Factors
Size of componentsSize of components
Standard or nonstandard items
Standard or nonstandard items
Quantity of items neededQuantity of items needed
Special design featuresSpecial design features
Quality and reliabilityQuality and reliability
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inventoryThe supply of goods that a firm holds for use in production or for sale to customers.
inventory managementThe determination of how much inventory a firm will keep on hand, and the ordering, receiving, storing, and tracking of inventory.
perpetual inventoryA continuously updated list of inventory levels, orders, sales, and receipts.
Inventory Management
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materials requirement planning (MRP)
A computerized system of controlling the flow of resources and inventory.
A master schedule is used to ensure that the materials, labor, and equipment needed for production are at the right places in the right amounts at the right times.
Computerized Resource Planning
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enterprise resource planning (ERP)
A computerized resource-planning system that incorporates information about the firm’s suppliers and customers with its internally generated data.
Computerized Resource Planning
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supply chain The entire sequence of securing inputs, producing goods, and delivering goods to customers.
supply chain managementThe process of smoothing transitions along the supply chain so that the firm can satisfy its customers with quality products and services; focuses on developing tighter bonds with suppliers.
Supply Chain Management
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CONCEPT check
What are the three types of decisions that must be made in production planning?
What factors does a firm consider when making a site selection decision?
How is technology being used in resource planning?
4
255
How do operations managers schedule and control production?
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Production and Operations Control
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RoutingRouting Value-stream mapping
Value-stream mapping
SchedulingScheduling
Gantt chartsGantt charts
Critical pathmethod
Critical pathmethod
PERTPERT
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Production and Operations Control
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The PERT Method
Assigns three time estimates for completion:
An optimistic time
The most probable time
A pessimistic time
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CONCEPT check
What is production control, and what are its key aspects?
How can value-stream mapping improve routing efficiency?
Identify and describe three commonly used scheduling tools.
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296
How can quality management and lean-manufacturing techniques help firms improve production and operations management?
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Improving Production and Operations
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Technology and automationTechnology and automation
Lean manufacturingLean manufacturing
Quality management techniquesQuality management techniques
Improving Production and Operations
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Putting Quality First
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Total QualityManagementTotal QualityManagement
The use of quality principles in all aspects of a company’s production and
operations.
The use of quality principles in all aspects of a company’s production and
operations.
Quality control
Quality control
The process of creating standards for quality, producing goods that meet them, and
then measuring finished products against them.
The process of creating standards for quality, producing goods that meet them, and
then measuring finished products against them.
ContinuousimprovementContinuous
improvementA commitment to constantly seek better ways
of doing things to maintain and increase quality.
A commitment to constantly seek better ways of doing things to maintain and increase
quality.
Six SigmaSix SigmaA QC process that relies on defining what
needs to be done to ensure quality, measuring and analyzing results, and ongoing
improvement.
A QC process that relies on defining what needs to be done to ensure quality, measuring
and analyzing results, and ongoing improvement.
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Malcolm Baldrige National Quality Award
Given to U.S. companies whose goods and services offer world-class quality
Established by the U.S. Congress in 1987 and named for a former secretary of commerce
Promotes awareness of quality
Allows the business community to assess effective quality control programs
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International Quality Standards
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ISO 14000ISO 14000A set of technical standards to promote clean production processes to protect the environment.
A set of technical standards to promote clean production processes to protect the environment.
ISO 9000ISO 9000
A set of five technical standards of quality management to provide a uniform way of determining whether manufacturing plants and service organizations conform to sound quality procedures.
A set of five technical standards of quality management to provide a uniform way of determining whether manufacturing plants and service organizations conform to sound quality procedures.
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Lean Manufacturing
lean manufacturing
Streamlining production by eliminating steps in the production process that do not add benefits that customers are willing to pay for.
just-in-time (JIT)A system in which materials arrive exactly when they are needed for production, rather than being stored on site.
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357
What roles do technology and automation play in manufacturing and service industry operations management?
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Technology and Automation
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Technology and Automation
Computer-aided design and manufacturing systems
Robotics
Flexible manufacturing systems
Computer-integrated manufacturing systems
7
© KIMIMASA MAYAMA / Bloomberg News / Landov
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CONCEPT check
Describe total quality management and the role that Six Sigma, ISO 9000, and ISO14000 play.
How can lean manufacturing and just-in-time inventory management help a firm improve its production and operations?
How are both manufacturing and nonmanufacturing firms using technology and automation to improve operations?
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388
What key trends are affecting the way companies manage production and operations?
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Trends in Production and Operations Management
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business process management (BPM)
A unified system that has the power to integrate and optimize a company’s sprawling functions by automating much of what it does.
Business Process Management
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CONCEPT check
Describe the impact of the anticipated worker shortage on U.S. business.
How are today’s educational trends affecting the future of manufacturing?
What is business process management (BPM) and how do businesses use it to improve operations management?
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