Chapter 9 - Production and Operations Management PDF

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Chapter 9...

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Chapter 9 Production & Operations Management

From Production to Operations Management

Production The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge Production Management Term used to describe all the activities managers do to help their firms create goods Operations Management

and

A specialized area in management that converts or transforms resources, including human resources like technical skills and innovation, into goods services ie. Inventory management, quality control, production scheduling, etc.

Production Processes

Form Utility The value producers add to materials in the creation of finished goods and services Process Manufacturing Physically or chemically changes materials Assembly Process Puts together components to make a product Continuous Process A process in which long production runs turn out finished goods over time Intermittent Process A production process in which the production run is short and the machines are changed frequently to make different products

Several major developments have made U.S. companies more competitive 1) 2) 3) 4) 5)

Computer-aided design and manufacturing Flexible manufacturing Lean Manufacturing Mass customization Robotics

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 Computer – Integrated Manufacturing (CIM) The uniting of computer – aided design with computer – aided manufacturing Flexible Manufacturing Designing machines to do multiple tasks so that they can produce a variety of products Lean Manufacturing Production of goods using less of everything than in mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product 

A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing its needs for resources o Half the human effort o Have the defects in the finished product or service o 1/3rd the engineering effort o Half the floor space for the same output o Carry 90% less inventory

Mass Customization Tailoring products to meet the needs of a large number of individual customers

Operations Management Planning Family Location Process of selecting a geographic location for a company’s operations Telecommuting Working from home via computer and modem Facility Layout The physical arrangement of resources, including people, to most efficiently produce goods and provide services for customers Assembly-line layout Workers do only a few tasks at a time Modular (Cellular) layout Teams of workers combine to produce more complex units of the final product Fixed-position layout Allows workers to congregate around the product to be completed Process layout Layout in which similar equipment and functions are grouped together Materials Requirement Planning (MRP) A computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place Enterprise resource planning (ERP)

single

Newer version of MRP, combines the computerized functions of all divisions and subsidiaries of the firm – such as finance, HR, and order fulfillment – into a single integrated software program that uses a database     

Shorter time between orders and payment Less staff needed to do ordering and other processing Reduced inventories Better customer service Everyone else in the company can see the new order as well

Purchasing The function that searches for high-quality material resources, finds the best supplier, and negotiates the best price for quality goods and services Just-in-Time Inventory Control Keep a minimum of inventory on the premises – and deliver parts, supplies, and other needs just in time to go on the assembly line Quality Control Quality Consistently producing what the customer wants while reducing errors before and after delivery to the customer 

Products completed and then tested for quality results in several problems: o The need to inspect work required extra people and resources o If an error was found, someone had to correct the mistake or scrap the product, which of course is costly o If the customer found the mistake, he or she might be dissatisfied and might even buy from another firm thereafter Six Sigma quality Sets a benchmark of just 3.4 defects per million opportunities, detects potential problems to prevent their occurrence Statistical quality control (SQC) Process some managers use to continually monitor all phases of the production process and ensure quality is being built into the product from the beginning Statistical process control (SPC) Process of testing statistical samples of product components at each state of production and plotting the test results on a graph Deming Cycle Quality control approach that includes plan, do, check, etc (PDCA), the idea is to find potential errors before they happen

ISO 9000 and ISO 14000 Standards International Organization for Standardization (ISO) A worldwide federation of national standards bodies from more than 140 countries that set global measures for the quality of individual products

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A nongovernment organization established to promote the development of world standards to facilitate the international exchange of goods and service

ISO 9000 The common name given to quality management and assurance standards  The standards require that a company determine what customers’ needs are, including regulatory and legal requirements, and make communication arrangements to handle issues such as complaints. Other standards cover process control, product testing, storage and delivery ISO 14000 Collection of the best practices from managing an organization’s impact on the environment.  It does not prescribe a performance level. Requirements for certification include having an environmental policy, having specific improvement targets, conducting audits of environmental programs, and maintaining top management review of the processes

Certification in both ISO 9000 and ISO 14000 would show that a firm has a world-class management system in both quality and environmental standards. In the past, firms assigned employees separately to meet each set of standards. Today, ISO 9000 and 14000 standards have been blended so that an organization can work on both at once. ISO is now compiling social responsibility guidelines to go with the other standards

Control Procedures: Pert and Gantt Charts

Program evaluation and review technique (PERT) A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project The steps used in PERT are (1) (2) (3) (4)

Analyzing and sequencing tasks that need to be done Estimating the time needed to complete each task Drawing a PERT network illustrating the information from steps 1 and 2 Identifying the critical path

Critical Path The sequence of tasks that takes the longest time to complete Gantt chart A bar graph, now also prepared by computer, that clearly shows what projects are being worked on and how much has been completed at any given time

Malcolm Baldrige National Quality Award Leadership Strategic Planning Customer & Marketing Focus, Information and Analysis Human Resources Focus Process Management 7) Business Results 1) 2) 3) 4) 5) 6)...