Chapter 16 Production Management and Distribution

1. Chapter 16 Production Management and Distribution Business Management Mrs. Deady

2. Objectives • Discuss how entrepreneurs develop new products • Explain the product development process • Explain what is involved in production management • Describe activities involved in distribution management

3. Definitions 16.1: From Idea to Product • Product development – the process of creating new or improved products – taking an idea, designing it, building a model and testing it. • Outsourcing – hiring people and other companies to handle tasks that a business cannot do or chooses not to do itself • Prototype – working model of a product

4. Why Outsource? What areas of product development are outsourced? You can’t be expected to do everything! • Component design • Materials specifications • Machinery to process • Ergonomic design • Packaging design • Assembly drawings and specifications • User guides and owners manuals

5. Product Development Process • Opportunity recognition • Concept investigation • Product design • Prototype building and testing

6. Why design it right the first time?? • Cost of design – a prototype allows you to test the features and functions early in order to make necessary changes • Quality and marketability of the product – is it reliable? Get customer reactions early in the design process. • Time to launch – could delay launch and cost more production money to fix later in the process

7. Definitions 16.2: Production and Distribution • GANTT chart – graphic schedule of phases, activities and tasks plotted against a time line • PERT diagram – project schedule of major activities arranged in order, to schedule more complex projects; indicates the length of time needed for each activity • Quality control – process of making sure the goods or services you produce meet certain standards • Quality Circle – small group of employees who do similar jobs and meet regularly to identify ways to improve the quality of what they do • Productivity – measure of how much a business produces in a given time

8. Definitions 16.2: Production and Distribution, cont’d • Automation – use of machines to do the work of people • Logistics – planning, execution, and control of the movement and placement of people and/or goods • Common carrier – firm that provides transportation services at uniform rates to the general public (Fed Ex and UPS) • Contract carrier – shipping company that transports freight under contract with one or more shippers (railroad) • Private carrier – business that operates its own vehicles to transport its products and materials • FOB, freight on board – shipper pays all freight costs (aka free on board)

9. Gantt Chart versus PERT Diagram • Gantt Chart is actual schedule of activities noted on a calendar • PERT diagram is a flow chart showing sequence of activities and how long they should take. 1 2 3 4 10 days 3 days 14 days 3 days

10. Quality Control • Standards set for appearance, performance, and consistency. • Test Quality through • Quality Circles • Inspection

11. Distribution Management • Transportation • Shipping and Receiving • Storage and Warehousing • Materials handling • Delivery terms