© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 23 Operations and Technology Management

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Discuss the nature, meaning, and importance of operations management. Describe operations decisions and operations planning. Indicate what is involved in the management and organization of operations, and describe the relation of change to operations.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Discuss operations control in its most important forms: inventory control, quality control, scheduling control, and cost control. Identify basic operations control techniques. Discuss the nature of technology management.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Operations Management The Meaning of Operations Management – Operations management: managerial activities organization uses to transform resource inputs into products and services. – Manufacturing: form of business that combines and transforms resources into tangible outcomes that are then sold to others.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Operations Management

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Meaning of Operations Management – Service organization: Transforms resources into intangible output. Creates time or place utility for its customers. The Nature of Operations Management

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Importance of Operations Management – Direct impact on quality and productivity. – Directly influences organization’s need for capital and its overall level of effectiveness. – Affects strategy. – Hallmarks: efficiency and effectiveness. The Nature of Operations Management

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Planning for Operations Operations Decisions – Product or service line – Capacity – Planning system – Organization – Human resources – Technology – Facilities – Controls

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Planning for Operations Operations Planning – Select planning horizon. – Manager estimates demand for that period. – Compare projected demand with current capacity for each meaningful block of time. – Adjust capacity to demand.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Operations Organizing for Operations – Principal issue: where operations management function fits into structure/design of organization. – Operations management affects and is affected by all dimensions of organizational design. – Must address delegation and decentralization. Change and Operations – Technology and competition.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Operations

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Inventory Control – To make sure organization has adequate supply of raw materials to transform into products, enough finished goods to ship to customers, in-process inventory adequate to meet future needs. – Raw materials inventory: supply of materials, parts, supplies organization needs to do its work.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Inventory Control – Work-in-process inventory: parts and supplies being used to produce final products, which are still incomplete. – Finished goods inventory: products completely assembled but not yet shipped. – In-transit inventory: goods shipped from company but not yet delivered to customer.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Quality Control – Insuring inputs and outputs of organization meet desired levels of quality. – Begins with strategic planning. – Quality control systems usually parallel inventory control systems.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Quality Control – Work-in-process is time for achieving desired levels of product or service quality. – Finished goods checked for quality. – As important for a service company as it is for a manufacturer.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Scheduling Control – Having the right things arrive and depart from organization at right time. – Just-in-time method (JIT): company makes more frequent, smaller, orders of raw materials to have resources arrive just as they are needed. – Computers enhance complexity and flexibility of scheduling in a manufacturing system.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Cost Control – Costs: expenses incurred by organization as it conducts its business. – Cost control: identify areas in which costs are excessive and find ways to reduce them.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Control Techniques Process Control Charts – Visual representation of an operations function. Materials Requirements Planning (MRP) – See Table 23.1: The MRP Process. Enterprise Resource Planning (ERP) – Integrated information system that enables user to monitor all organizational processes.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technology Management Manufacturing Technology – Automation: designing work so it can be completely or almost completely performed by machines. Relies on: sensors, information, control mechanism, feedback. – Programmable automation: use of computers to control machines.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technology Management Manufacturing Technology – Conventional automation: use of mechanical or electromechanical devices to control machines. – Computer-assisted manufacturing: relies on computers to design or manufacture products. Computer-aided design (CAD) Computer-aided manufacturing (CAM) Computer-integrated manufacturing (CIM)

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technology Management Manufacturing Technology – Flexible manufacturing systems (FMS): computer- controlled transport system. – Robotics: science and technology of construction, maintenance, use of robots. – Robot: artificial device that performs functions ordinarily thought to be for human beings. Service Technology – Automated systems and procedures.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Operations management: transformation of inputs into outputs; inputs and outputs are secondary components. Operations management: critically important for strategic and operational reasons. Planning for operations first stage in effective operations management: operations decisions and planning.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Operations decisions in eight primary areas. Operations planning relates to day-to-day activities. Four basic steps in operations management. Managers decide how to organize operations function within the context of organization design.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Important link between change and operations management. Operations control four areas: – Inventories – Quality – Scheduling – Cost

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Techniques in operations management: – Process control charts. – Material requirements planning (MRP) or enterprise resource planning (ERP). – Manufacturing technology influenced by CAD, CAM, CIM, robotics. – Service technology important consideration.