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

Transcript of Achieving World-Class Operations Management CHAPTER 10 The Future of Business The Essentials 4 th...

Page 1: Achieving World-Class Operations Management CHAPTER 10 The Future of Business The Essentials 4 th Edition Gitman & McDaniel Prepared by Deborah Baker Chapter.

AchievingWorld-ClassOperations

Management CH

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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

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Jup

iterim

ages

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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?

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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

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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?

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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?

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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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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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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

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© 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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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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