© 2012 Cengage Learning. All Rights Reserved. Objective 2.03 Understand production and operations Objective 2.00 Understand the nature of business

© 2012 Cengage Learning. All Rights Reserved. What are the types of production? How do manufacturing procedures differ? What are the types of manufacturing procedures? What is involved in production and manufacturing planning? What are the types of business operations? Objective 2.03 Essential Questions

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE Types of Production Production Planning Planning and Managing Business Operations 13 C H A P T E R Production and Business Operations

© 2012 Cengage Learning. All Rights Reserved Types of Production Goal 1Describe the role of producers in the economy and the forms of production. Goal 2Differentiate among the various types of manufacturing.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 5 KEY TERMS ●extraction and cultivation ●processing ●manufacturing ●mass production ●custom manufacturing ●materials processing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Role of Producers 3 Categories of Products ●Natural Resources ●Raw materials supplied by nature ●Agricultural Products ●Crops and animals grown by farmers ●Processed Goods ●Products that have been changed in form to increase their value and usefulness 4 Types of Businesses ●Producers ●Develop products to sell to other businesses or consumers ●Extractors ●Obtain natural resources, such as water, oil, coal, and timber, from the earth for processing and use ●Farmers ●Tend land and other natural resources to grow crops and livestock that are later sold and processed ●Manufacturers ●Obtain materials from other producers and convert them into products for sale to consumers and other businesses SLIDE 6

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Forms of Production Extraction and cultivation ●Basic form of production ●Ensures there is an available supply of: ●natural resources ●Crops ●Livestock ●Fish and ●Other agricultural products ●Obtaining products from nature ●Obtaining products that are grown using natural resources ●Example: chicken, tomatoes, and broccoli SLIDE 7

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Forms of Production ●Few products are used EXACTLY as they are found in nature or grown on farms ●Most products go through a change before they are used in the creation of other products ●Example: honey, mango, and soil ●This involves changing and improving the form of another product ●Example: ●Water ●Filtered and treated with chemicals before consumption ●Timber ●Cut and formed into lumber or the sheet of paper you’re writing on. SLIDE 8 Processing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Forms of Production ●Combining raw materials and processed goods into finished products ●Consumers and other businesses can use the finished products ●Meeting the demand of a consumer determines the complexity of the process ●Building kitchen cabinets ●Designing a microchip for a high-speed rail system ●Examples: cosmetics, china, and shoes SLIDE 9 Manufacturing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 10 Checkpoint ●What are the three forms of production? ●Extraction and cultivation ●Processing ●Manufacturing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Think Critically ●Describe a process that farmers must use to turn a material into a saleable good. ●Write/Answer on page 64 in your notebook. SLIDE 11

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 MANUFACTURING A Manufacturing Process ●How many manufacturers play a part in the production of jeans? ●Several manufacturers ●Alabama farmer ●North Carolina textile mill ●New England dye plant ●New York clothing manufacturer SLIDE 12

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 13 MANUFACTURING ●Types of manufacturing procedures ●Mass production ●is the process of using assembly activities to produce large quantities of identical products. ●i.e. Krispy Kreme donuts, Maybelline lipstick, and Nike sneakers ●Custom manufacturing ●is the process of producing a specific and exclusive product for a customer. ●i.e. ceramics, prosthetic limb, signs ●Materials processing ●is the process of changing raw materials to another form in order to be consumed or used to make other products. ●i.e. Oil refinery, lumber yard processing trees, mills processing flour, cereal, and feed.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 14 Checkpoint ●What is the difference between custom manufacturing and materials processing? ●Custom manufacturing is building a unique product to meet the needs of one customer. ●Materials processing is changing the form of raw materials so they can be used to make other products. ●Custom manufacturing involves a smaller amount of materials; materials processing involves larger quantities.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Think Critically ●What kinds of everyday products are often custom made? ●Write/Answer on page 64 in your notebook. SLIDE 15

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 Homework 03/23/ Think Critically Activities ●Pg. 64 in your notebook. ●Write a paragraph using complete sentences Assessment ●Pg. 320 ●Key Concepts ●#1-4 SLIDE 16

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 17

© 2012 Cengage Learning. All Rights Reserved Production Planning Goal 1Identify the activities involved in production planning. Goal 2Describe how manufacturing is organized.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 19 KEY TERMS ●applied research ●pure research ●production process ●continuous process improvement ●benchmarks

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 20 PRODUCTION ACTIVITIES ●Product development ●Product research ●Companies carry out two types of research to discover new product ideas ●Applied Research ●Pure Research ●Product design ●From ideas to products

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 21 PRODUCTION ACTIVITIES ●Production planning ●Production process ●Activities, equipment, and resources needed to manufacture a product ●Production resources ●Company orders or builds machines, tools, and other equipment needed for the production processes ●Must locate and organize adequate space to perform production activities ●Determine the sources of the raw materials, parts, and supplies needed to produce the product ●Personnel ●Company estimates the amount of employees needed ●Determine the skills required to perform the job

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 22 PRODUCTION ACTIVITIES ●Inventory management ●Maintains the supply of all resources needed for production and the products produced ●Vital manufacturing activity

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 23 Checkpoint ●Describe the three activities that are a part of production planning. ●Developing a production process ●Obtaining production resources ●Identifying and preparing production personnel

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 24 MANUFACTURING PROCEDURES ●Organizing the work area ●Organizing the work area depends on the product and production process. There must be access for parts and materials needed for production, as well as an area for finished products. ●Improving manufacturing ●Improving manufacturing may include attention to quality, a change in the production process, or lowering costs of production.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 25 CONTINUOUS PROCESS IMPROVEMENT ●Involve everyone. ●Identify process activities. ●Establish quality performance standards. ●Select measurement tools. ●Monitor performance continuously. ●Improve process quality.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 26 Checkpoint ●Why have manufacturers implemented continuous process improvement (CPI)? ●Manufacturers have implemented CPI because it can help meet the need for faster production, increased quality, and reduced costs. ●CPI increases the quality of work by reducing errors, inefficiencies, and waste.

© 2012 Cengage Learning. All Rights Reserved Planning and Managing Business Operations Goal 1Discuss the importance of effective business operations. Goal 2Describe tools used to manage business operations.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 28 KEY TERMS ●logistics ●just-in-time ●operational plan ●schedule ●standard

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 29 THE IMPORTANCE OF BUSINESS OPERATIONS ●Types of business operations ●Facilities management ●Begins with making economic decisions about the buildings needed ●Building maintenance and repair is a vital task ●Must maintain a professional appearance for visitors and employees ●Energy and environmental management is another key area ●Energy cost is a rapidly growing expense

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 30 THE IMPORTANCE OF BUSINESS OPERATIONS ●Types of business operations ●Logistics ●Managing the acquisition, movement, and storage of supplies, materials, and finished products in a business ●Very important part of business operations ●AKA Supply Chain Management

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 31 THE IMPORTANCE OF BUSINESS OPERATIONS ●Types of business operations ●Scheduling ●Involves determining the activities that need to be completed, the people who will complete the work, and the resources needed for the task ●Safety and security ●Security procedures protect people and property ●Maintain a safe work area and work procedures ●Companies provide safety training

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 32 THE IMPORTANCE OF BUSINESS OPERATIONS ●Information management ●Uses technology to access and exchange information to complete work of an organization ●Four goals ●To collect, organize, and securely maintain all needed information ●To provide instantaneous access to information required to perform work and make decisions ●To prevent access to information by those unauthorized to use it ●To use technology to improve communication and information sharing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 33 Checkpoint ●Identify four important types of business operations. ●Facilities management ●Logistics ●Scheduling ●Safety and security

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 34 TOOLS FOR BUSINESS OPERATIONS ●Management tools ●Operational plan ●Identifies how work will be done, who will do it, and what resources will be needed ●Schedule ●Time plan for completing activities ●Standard ●Specific measurement against which an activity or result is judged

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 35 TOOLS FOR BUSINESS OPERATIONS ●Using technology to manage operations ●Makes planning and decision-making more accurate, rapid, and timely ●Easier to access and exchange information

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 36 COMMON TYPES OF OPERATIONS SOFTWARE ●Project management ●Budgeting ●Scheduling ●Inventory ●Computer security ●Document management ●Manufacturing automation

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 13 SLIDE 37 Checkpoint ●What are the benefits of using technology to help manage business operations? ●Technology makes planning and decision- making more accurate, rapid, and timely.