Business Essentials, 7 th Edition Ebert/Griffin

1. Operations Management and Quality Business Essentials, 7th EditionEbert/Griffin Instructor Lecture PowerPoints PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College © 2009 Pearson Education, Inc.

2. What Does Operations Mean Today? • Operations (Production) • All the activities involved in making products—goods and services—for customers • Service Operations (Service Production) • Provide intangible and tangible service products • Goods Operations (Goods Production) • Produce tangible products • Operations managers create utility for customers through production, inventory and quality control. © 2009 Pearson Education, Inc.

3. Creating Value Through Operations • Utility • The ability of a product to satisfy a want or need • Form utility • Time utility • Place utility • Operations (Production) Management • The systematic direction and control of processes that transform resources into finished services and goods that create value for and provide benefits to customers © 2009 Pearson Education, Inc.

4. Differences Between Service and Goods Manufacturing Operations • Goods are produced, services are performed • Service operations differ from manufacturing operations in that service operations: • Involve interacting with consumers. • Are sometimes intangible and unstorable. • Involve a customer’s presence in the process. • Involve certain service quality considerations. © 2009 Pearson Education, Inc.

5. Operations Processes • Operations Process • A set of methods and technologies used to produce a good or a service • Goods Production Processes • Make-to-order processes • Make-to-stock processes • Service Production Processes • Extent of Customer Contact • Low-contact systems: low customer involvement • High-contact systems: high customer involvement © 2009 Pearson Education, Inc.

6. Business Strategy as the Driver of Operations • Businesses with contrasting business strategies choose different operations capabilities—the activities or processes that production must perform especially well, with high proficiency © 2009 Pearson Education, Inc.

7. TABLE 7.1 Business Strategies That Win Customers for Four Companies © 2009 Pearson Education, Inc.

8. Operations Planning • Capacity Planning • Capacity: The amount of a product that a company can produce under normal conditions • Planning deals with determining how much can be produced • Location Planning • Location affects production costs and flexibility • Planning deals with determining where it will be produced © 2009 Pearson Education, Inc.

9. Operations Planning (cont’d) • Layout Planning • The layout of machinery, equipment, and supplies determines whether a company can respond efficiently to demand for more and different products or whether it finds itself unable to match competitors’ speed and convenience • Planning deals with determining how the product will be produced • Process layouts • Product layouts © 2009 Pearson Education, Inc.

10. FIGURE 7.1 Operations Planning and Control © 2009 Pearson Education, Inc.

11. Quality Planning • What Is Quality? • The combination of “characteristics of a product or service that bear on its ability to satisfy stated or implied needs” (American Society for Quality) • Quality planning begins when products are designed: goals are set for performance and consistency • Quality planning includes deciding what constitutes a high-quality product and determining how to measure these quality characteristics © 2009 Pearson Education, Inc.

12. Methods Planning • Managers identify each production step and methods for performing it. • They reduce waste and inefficiency by examining procedures in an approach called methods improvement. • They reduce waste and inefficiency by improving process flows. • A detailed description, often a process flowchart, helps managers organize and record information. • They attempt to improve customer service. © 2009 Pearson Education, Inc.

13. Operations Scheduling • Operations Scheduling • Identifying times when specific production activities will occur • Kinds of Planning Schedules • Master schedule: Shows which products will be produced, and when, in upcoming time periods • Detailed schedule: Shows day-to-day activities that will occur in production • Staff schedules: Show who and how many employees will be working, and when • Project schedules: Coordinate completion of large-scale projects © 2009 Pearson Education, Inc.

14. FIGURE 7.3 Example Partial Master Production Schedule (Tons of Each Product to be Produced) © 2009 Pearson Education, Inc.

15. Project Scheduling • Gantt Chart • Breaks down projects into steps to be performed • Specifies the time required to complete each step • A Project Manager uses the Gantt chart to: • List all activities to be performed • Estimate the time required for each step • Record the progress on the chart • Check the progress against the time scale on the report © 2009 Pearson Education, Inc.

16. Figure 7.4 Gantt Chart © 2009 Pearson Education, Inc.

17. Operations Control • Operations Control • Requires managers to monitor performance by comparing results with detailed plans and schedules. • Follow-up: Checking to ensure that production decisions are being implemented—is a key and ongoing facet of operations. © 2009 Pearson Education, Inc.

18. Materials Management • Materials Management • The process by which managers plan, organize, and control the flow of materials from sources of supply through distribution of finished goods • Materials Management Activities • Supplier selection • Purchasing • Transportation • Warehousing • Inventory control © 2009 Pearson Education, Inc.

19. Lean Production Systems: Just-in-Time Operations • Lean Production Systems Goals • Smooth production flows avoid inefficiencies • Elimination of unnecessary inventories • Continuous improvement in production processes • Just-in-Time (JIT) Production • Bringing together all needed materials only when they are required, creating fast and efficient responses to customer orders © 2009 Pearson Education, Inc.

20. Benefits of Just-in-Time Production • Reduces the number of goods in process (goods not yet finished) • Minimizes inventory costs • Reduces inventory storage space requirements • Replaces stop-and-go production with smooth movement • Disruptions are more visible and get resolved more quickly • Continuous improvement of the process © 2009 Pearson Education, Inc.

21. Quality Control • Quality Control • Taking action to ensure that operations produces products that meet specific quality standards • Requires establishment of specific standards and measurements © 2009 Pearson Education, Inc.

22. Quality Improvement and Total Quality Management • Quality Improvement • Building quality into products and services rather than trying to control quality by inspection • Total Quality Management (TQM) • All of the activities necessary for getting high-quality goods and services into the marketplace • Quality Ownership • Quality belongs to each person who creates it while performing a job and it requires a focus on quality by all parts of an organization © 2009 Pearson Education, Inc.

23. Total Quality Management • Always Delivering High Quality • Planning for quality • Organizing for quality • Directing for quality • Controlling for quality © 2009 Pearson Education, Inc.

24. Tools for Total Quality Management • Competitive Product Analysis • Analyzing competitors’ products to identify improvements • Value-Added Analysis • Eliminating wasteful and unnecessary activities • Quality Improvement Teams • Adopting quality circles • Getting Closer to the Customer • Identifying internal and external customers • ISO 9000 and ISO 14000 • Ensuring certification of quality management in processes • Business Process Reengineering • Starting over from scratch to improve processes © 2009 Pearson Education, Inc.

25. Adding Value Through Supply Chains • Supply Chain (or Value Chain) • The flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer © 2009 Pearson Education, Inc.

26. FIGURE 7.5 Supply Chain for Baked Goods © 2009 Pearson Education, Inc.

27. The Supply Chain Strategy • Supply Chain Management (SCM) • Working with the supply chain as a whole to improve overall flow through a system composed of companies working together • Supply Chain Reengineering • Improving the process for better results: • Lower costs, speedier service, and coordinated flows of information and material • Outsourcing and Global Supply Chains • Paying suppliers and distributors to perform certain business processes or to provide needed materials or services © 2009 Pearson Education, Inc.