NETA PowerPoint Presentations to accompany The Future of Business Fourth Edition Adapted by Norm Althouse, University of Calgary Copyright © 2014 by Nelson Education Ltd.

Achieving World-Class Operations Management Chapter 15 Copyright © 2014 by Nelson Education Ltd.Chapter 15

Copyright © 2014 by Nelson Education Ltd. Making the Connection

Learning Outcomes 1. Discuss why production and operations management are important in both manufacturing and service companies. 2. List the types of production processes used by manufacturers and service companies. 3. Describe how organizations decide where to put their production facilities and what choices must be made in designing the facility. 4. Explain why resource-planning tasks like inventory management and supplier relations are critical to production. 5. Discuss how operations managers schedule and control production. Copyright © 2014 by Nelson Education Ltd.4

Learning Outcomes (cont’d) 6. Evaluate how quality management and lean- manufacturing techniques help companies improve production and operations management. 7. Identify the roles that technology and automation play in manufacturing and service industry operations management. 8. List some of the trends affecting the way companies manage production and operations. Copyright © 2014 by Nelson Education Ltd.5

Discuss why production and operations management are important in both manufacturing and service companies. Copyright © 2014 by Nelson Education Ltd.6

Basic Terms Copyright © 2014 by Nelson Education Ltd.7 Production – Creation of products by turning inputs into outputs, which are goods and services. Operations management – Management of the production process. Production planning – Aspect of operations management in which the company considers its resources and its own strategic goals to determine the best production methods.

Exhibit 15.1: Production Process for Products and Services Copyright © 2014 by Nelson Education Ltd.8

Production and Operations Management Copyright © 2014 by Nelson Education Ltd.9 Decisions Production Planning Production Control Improving Production and Operations

Production Planning Copyright © 2014 by Nelson Education Ltd.10 1 year2 years3 – 5 years Short-TermMedium-TermLong-Term Type of Production Process Site Selection Facility Layout Resource Planning Planning Decisions

List the types of production processes used by manufacturers and service companies. Copyright © 2014 by Nelson Education Ltd.11

Exhibit 15.2: Classification of Production Types Copyright © 2014 by Nelson Education Ltd.12

Converting Inputs to Outputs Copyright © 2014 by Nelson Education Ltd.13 Production involves converting inputs (raw materials, parts, human resources) into outputs (products and services). Process Manufacturing Assembly Process Basic input is broken down into one or more outputs. Basic inputs are combined or transformed into the output.

Exhibit 15.3: Converting Inputs to Outputs Copyright © 2014 by Nelson Education Ltd.14

Production Timing Copyright © 2014 by Nelson Education Ltd.15 Continuous Process Intermittent Process Long production runs without equipment shutdown. Short production runs to make batches of different products.

Describe how organizations decide where to put their production facilities and what choices must be made in designing the facility. Copyright © 2014 by Nelson Education Ltd.16

Location, Location, Location Copyright © 2014 by Nelson Education Ltd.17  Availability of production inputs.  Marketing factors.  Manufacturing environment.  Local incentives.  International location considerations.

Designing the Facility Copyright © 2014 by Nelson Education Ltd.18 See Exhibit 15.4 in the textbook. Process Layout Product Layout Work flows according to the process. Workstations/departments arranged in a line, with products moving along the line. Fixed-Position Layout Product stays in one place. Cellular Manufacturing Small, self-contained production units.

Explain why resource-planning tasks like inventory management and supplier relations are critical to production. Copyright © 2014 by Nelson Education Ltd.19

Resource Planning Copyright © 2014 by Nelson Education Ltd.20 Make or Buy Inventory Management Computerized Resource Planning Manufacturing Resource Planning (MRP)

Make or Buy Decisions Copyright © 2014 by Nelson Education Ltd.21 Some of the factors would include:  quantity of items needed.  standard or nonstandard items.  size of components.  special design features.  quality and reliability of suppliers.

Inventory Management Copyright © 2014 by Nelson Education Ltd.22 Inventory Inventory Management Perpetual Inventory Supply of goods a company holds for use in production or for sale. Determines how much inventory a company will keep on hand and the ordering, receiving, storing, and tracking of inventory. Continuous updated list of inventory levels, orders, sales, and receipts.

Computerized Resource Planning Copyright © 2014 by Nelson Education Ltd.23 Materials Requirement Planning (MRP) computerized system of controlling the flow of resources and inventory Manufacturing Resource Planning II (MRPll) complex computerized system that integrates data from many departments to allow managers to forecast and assess the impact of production plans on profitability more accurately Enterprise Resource Planning (ERP) computerized resource-planning system incorporates information about the company’s suppliers and customers with its internally generated data

Supply Chain Management Copyright © 2014 by Nelson Education Ltd.24 Supply Chain Supply Chain Management Entire sequence of securing inputs, producing goods, and delivering them to the customers. Process of smoothing transitions along the supply chain to satisfy customers and develop tighter bonds with suppliers. Goal: Satisfy customers with quality products and services.

Discuss how operations managers schedule and control production. Copyright © 2014 by Nelson Education Ltd.25

Production Control Copyright © 2014 by Nelson Education Ltd.26 Routing Scheduling Value-Stream Mapping Gantt Chart Critical Path Method (CPM) PERT

Exhibit 15.5: A Typical Gantt Chart Copyright © 2014 by Nelson Education Ltd.27

Exhibit 15.6: A CPM Network for Building a House Copyright © 2014 by Nelson Education Ltd.28

Evaluate how quality management and lean- manufacturing techniques help companies improve production and operations management. Copyright © 2014 by Nelson Education Ltd.29

Improving Production and Operations Copyright © 2014 by Nelson Education Ltd.30 Quality Quality Control Total Quality Management Continuous Improvement

Putting Quality First Copyright © 2014 by Nelson Education Ltd.31 Six Sigma Defining what needs to be done to ensure quality; measure and analyze results and ongoing improvement. ISO 9000 Set of five technical standards of quality management to provide a uniform way of determining whether there is conformity to sound quality procedures. ISO 1400 Set of technical standards to promote clean production processes to protect the environment.

Lean Manufacturing Copyright © 2014 by Nelson Education Ltd.32 Lean Manufacturing Streamlining production – eliminating steps that do not add benefits for end users. Just-in-Time (JIT) Materials arrive exactly when they are needed for production, rather than being stored on site.

Identify the roles that technology and automation play in manufacturing and service industry operations management. Copyright © 2014 by Nelson Education Ltd.33

Technology and Automation at Your Service Copyright © 2014 by Nelson Education Ltd.34 Computer-Aided Design and Manufacturing Systems Robotics Flexible Manufacturing Systems Computer-Integrated Manufacturing POS, ATMs, and so on

List some of the trends in trends affecting the way companies manage production and operations. Copyright © 2014 by Nelson Education Ltd.35

The Future of Production and Operations Management Copyright © 2014 by Nelson Education Ltd.36  Asset management.  Modular production.  Designing products for production efficiency.