Business a changing world 7e by ferrell chap009

Operations ManagementThe planning and designing of the processes that transform resources into finished products; managing the transformation process; ensuring high quality of finishe

Business in a Changing World

Chapter 9

Production and Operations Management

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.

Operations Management

The planning and designing of the processes

that transform resources into finished

products; managing the transformation

process; ensuring high quality of finished

Importance of Production & Operations Management

Development and administration of the activities

involved in transforming resources into goods

and services

Operations Management (OM)

Operations Management

•Historically called production or manufacturing

•Change to operations = focus on goods & services

Operations Management (OM)

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

Production & Operations Management

Production & Operations Management

Production & Operations Management

Inputs, outputs, and transformation processes

Manufacturing Oak Furniture

Operations Management

Service Businesses – 70% of all employment in

the United States; fastest growth of jobs

OM in Service Businesses

Operations Management

Service Businesses – actions that are directed

toward consumers who use them

OM in Service Businesses

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

Planning & Designing Operations Systems

Determine –

•What consumers want

•Design product to satisfy the want

•Marketing research

Planning the Product

Planning & Designing Operations Systems

Determine –

•Types and quantities of raw materials

•Skills & quantity of labor

Planning the Product

Designing the Operations Processes

Standardization – the making of identical

interchangeable components or products Faster,

reduces production costs

•Televisions

•Ballpoint pens

•Tortilla chips

Designing the Operations Processes

Modular Design – creation of an item in

self-contained units that can be combined or

interchanged to create different products

•Personal computers CPU’s, motherboards, monitors

Designing the Operations Processes

Customization – making products to meet a

particular customer’s needs or wants

Designing the Operations Processes

Mass Customization – making products to meet

needs or wants of a large number of individual

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

Planning Facilities

Facility location

Facility layout

Technology

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

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.

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.

Estimate – 160,000 robots at work in U.S

factories – Japan #1 employer of robotics

Robotics Industries Association –

Facilities Planning

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

Managing the Supply Chain

Connecting and integrating all parties or

members of the distribution system in order to

satisfy customers.

Supply chain management

Managing the Supply Chain

Procurement – buying of all materials

needed by the organization.

•Desired quality

•Correct quantities

•Lowest cost

Purchasing

Managing the Supply Chain

Inventory – all raw materials, components,

completed or partially completed products,

and pieces of equipment that a firm uses

Managing Inventory

Managing the Supply Chain

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

Managing Inventory

Managing the Supply Chain

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).

EOQ model

Managing the Supply Chain

Just-in-Time inventory management – eliminates

waste by using smaller quantities arriving “just in

time” for use in the transformation process

JIT

Managing the Supply Chain

Material-requirements planning – planning

system that schedules the precise quantity of

materials needed to make the product.

MRP

Managing the Supply Chain

Outsource aspects of operations to companies

that provide products more efficiently, at lower

Outsourcing

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

Managing Quality

Quality – critical element of operations

management Degree to which a good or

service meets the demands and requirements

of customers.

Managing Quality

Hypothetical PERT Diagram for a McDonald’s Big Mac

Managing Quality

Managing Quality

to maintain its established quality standards

that uniform commitment to quality will promote

a culture that meets customers’ perceptions of

quality

Managing Quality

analyze information about production processed

to pinpoint quality problems in the system

International Organization for Standardization

(ISO) system of quality management standards

designed to ensure the customer’s quality

standards are met

Managing Quality

quality standards

Depends on potential costs of product flaws in

terms of human lives and safety

Communications in Organizations

management’s formal, official communication

channels

•Grapevine