© Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 1 Creating Value: Producing Quality Goods and Services

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 1

Creating Value:Creating Value:Producing Quality Producing Quality

Goods and ServicesGoods and Services


What Is Production?What Is Production?

• Production Operations Management

–Planning

–Leading

–Organizing

–Controlling


What Is the Conversion What Is the Conversion Process?Process?

• Inputs

• Transformation

• Outputs


Input-Transformation-Output Input-Transformation-Output Relationships for Typical SystemsRelationships for Typical Systems

Department Store

Shoppers, stock of goods

Displays, sales clerks

Attract customers, promote products,

fill orders

Sales to satisfied customers

College or University

High School graduates, books

Teachers, classrooms

Impart knowledge & skills

Educated individuals

Automobile Factory

Sheet steel, engine parts

Tools, equipment, workers

Fabrication & assembly of cars High-quality cars

Restaurant Hungry customers, food

Chef, waitress, environment

Well-prepared & well-served food

Satisfied customers

Hospital Patients, medical supplies

MDs, nurses, equipment Health care Healthy

individuals

Typical Desired Output

Transformation Function

Transformation Components

InputsSystem


Challenges of the Service Challenges of the Service IndustryIndustry

• Customer involvement

• Delivery timing

• People-intensive activities

• Production and location

• Subjective quality


Manufacturing GoodsManufacturing Goods

• Mass production

• Mass customization


Outsourcing the Outsourcing the Manufacturing FunctionManufacturing Function• Advantages

–Capital and resources

–Economies of scale

• Disadvantages

–Job displacement

–Lost wages


Production Process Production Process DesignDesign

• Forecast demand

• Plan for capacity

• Choose facility site

• Design facility layout

• Schedule work


The Supply ChainThe Supply Chain

• Suppliers

• Manufacturers

• Distributors

• Retailers


Forecasting DemandForecasting Demand

• Customer feedback

• Market research

• Sales figures

• Industry analyses

• Educated guesses


Capacity PlanningCapacity Planning

• Level of resources

• Customer demand


Facility LocationFacility Location

• Land

• Construction

• Labor

• Local taxes

• Energy

• Living standards

• Transportation

• Raw materials


Types of Facility LayoutTypes of Facility Layout

• Process

• Product

• Cellular

• Fixed-position


Process LayoutProcess Layout

• Made-to-order products

• Process arrangement

–Specialized employees

–Specialized materials


Product LayoutProduct Layout

• Mass production of few items


–Continuous sequence


Cellular LayoutCellular Layout

• Mass customization


–Work centers

–Teamwork


Fixed-Position LayoutFixed-Position Layout

• Immovable product


–Employee go to the site

–Materials are brought to the site


Production ScheduleProduction Schedule

• Scheduling

• Dispatching

• Contingencies


The Gantt ChartThe Gantt Chart

• ID Number

• Task name

• Start date

• End date

• Duration


Program Evaluation and Program Evaluation and Review Technique (PERT)Review Technique (PERT)

1. Identify activities

2. Determine sequence

3. Establish time frame

4. Diagram activity network

5. Calculate longest completion path

6. Refine timing


PERT Time EstimatesPERT Time Estimates

• Optimistic

• Pessimistic

• Most likely

• Expected


Industrial RoboticsIndustrial Robotics

• Precision

• Diligence

• Stamina

• Speed


Computerized ProductionComputerized Production

• Computer-aided design (CAD)

• Computer-aided engineering (CAE)

• Computer-aided manufacturing (CAM)

• Computer-integrated manufacturing (CIM)


Manufacturing Manufacturing SystemsSystems

TraditionalTraditional FlexibleFlexible

Mass Production

Resistant to Change

High Set-Up Costs

Specialty Operations

Conducive to Change

Minimal Set-Up Costs


Supply Chain Data Supply Chain Data InterchangeInterchange

• Electronic Data Interchange (EDI)

• Extensible Markup Language (XML)


The Production ProcessThe Production Process

• Inventory management

• Quality assurance


Supply Chain Supply Chain CoordinationCoordination

• Inventory

• Purchasing

• Lead time

• Inventory control


Inventory ControlInventory Control

• Just-in-time (JIT)

• Materials requirements planning (MRP)


Supply Chain Supply Chain

ManagementManagement• Manage risks

• Manage relationships

• Manage trade-offs


Maintaining QualityMaintaining Quality

• Quality control

• Quality assurance


Total Quality Total Quality ManagementManagement

• Management commitment to TQM• Clear customer focus• Employee employment • Commitment to continuous

improvement• Partner with suppliers• Meaningful performance

measurements


Six-Sigma ApproachSix-Sigma Approach

• Define the problem

• Measure performance

• Analyze root causes

• Improve the process

• Control the process


Global Quality StandardsGlobal Quality Standards

• ISO 9000

• ISO 14000

Documents

© Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 1 Creating Value: Producing Quality Goods and Services