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Operations Management and Quality. Business Essentials, 7 th Edition Ebert/Griffin. Instructor Lecture PowerPoints. PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College. What Does Operations Mean Today?. Operations (Production)

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business essentials 7 th edition ebert griffin

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.

what does operations mean today
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.

creating value through operations
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.

differences between service and goods manufacturing operations
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.

operations processes
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.

business strategy as the driver of operations
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.

table 7 1 business strategies that win customers for four companies
TABLE 7.1 Business Strategies That Win Customers for Four Companies

© 2009 Pearson Education, Inc.

operations planning
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.

operations planning cont d
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.

figure 7 1 operations planning and control
FIGURE 7.1 Operations Planning and Control

© 2009 Pearson Education, Inc.

quality planning
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.

methods planning
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.

operations scheduling
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.

project scheduling
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.

figure 7 4 gantt chart
Figure 7.4 Gantt Chart

© 2009 Pearson Education, Inc.

operations control
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.

materials management
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.

lean production systems just in time operations
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.

benefits of just in time production
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.

quality control
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.

quality improvement and total quality management
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.

total quality management
Total Quality Management
  • Always Delivering High Quality
    • Planning for quality
    • Organizing for quality
    • Directing for quality
    • Controlling for quality

© 2009 Pearson Education, Inc.

tools for total quality management
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.

adding value through supply chains
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.

figure 7 5 supply chain for baked goods
FIGURE 7.5 Supply Chain for Baked Goods

© 2009 Pearson Education, Inc.

the supply chain strategy
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.