PRODUCTION MANAGEMENT CHAPTER 20 PRODUCT PLANNING AND PRODUCTION MANAGEMENT People are definitely a company’s greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps. ----Mary Kay Ash

STEPS FOR PRODUCT DEVELOPMENT 1. Develop an idea into a workable product design. 2. SURVEY to find out what consumers want. 3. Turn the idea into a workable product design. --CONSUMER PANELS to test ideas. (Cost/materials may determine ability to produce product.) 4. Be able to produce the product & make it available for consumer at a price the consumer is willing to pay. OTHER CONSIDERATIONS: DO YOU HAVE THE FACILITIES FOR PRODUCTION? ARE RAW MATERIALS EASILY OBTAINED? DO YOU HAVE TRAINED EMPLOYEES? DO YOU HAVE TRANSPORTATION?

--the process of creating or improving a product or service. PRODUCT DEVELOPMENT --the process of creating or improving a product or service. WHERE DO PRODUCT IDEAS COME FROM? “Real design is done during the unstructured, informal, noodling around that occurs before the structured and formal `design' methods are employed”

155 years young!!! 155 years young!!

TWO TYPES OF RESEARCH IN DEVELOPMENT OF NEW PRODUCT PURE RESEARCH research done with no specific product in mind. APPLIED RESEARCH --research that studies existing product problems or possible design improvements for current products.

DESIGNING NEW PRODUCTS Wayne Gretsky was once asked if there was a secret to his success as a hockey player. He simply said: ``I skate to where the puck is going to be, not where its been.'' FOUR UNITS OF BUSINESS INVOLVED IN PLANNING A NEW PRODUCT: 1) PRODUCTION 3) HUMAN RESOURCES 2) FINANCE 4) MARKETING The first question a company should ask when developing a new product or service is, "What's in it for the customer?" Unfortunately, the first question many companies ask is, "What's in it for me?" Believe it or not, entire product lines are sometimes based on that second question without ever answering the first.

WHAT CAN HAPPEN WHEN A PRODUCT IS DEVELOPED BEFORE A MARKET IS FOUND

FACTORS THAT HELP A PRODUCT SUCCEED ONCE ON THE MARKET: TIMELY INTRODUCTION SIGNIFICANT PRICE PERFORMANCE ADVANTAGE SIGNIFICANT DIFFERENCES FROM EXISTING PRODUCTS SPECIAL ATTENTION TO NEW CUSTOMERS AND THEIR NEEDS

--making a product or providing a service. PRODUCTION --making a product or providing a service. MANUFACTURING --a form of production in which raw and semi- finished materials are processed, assembled, or converted into finished products. Only a very small percentage of new product ideas are actually produced and successful on the market. 60 percent of all new products are late in launching. Even worse, an estimated 40 percent of all new products simply fail in the marketplace.

TYPES OF MANUFACTURING MASS PRODUCTION – Assembly process to produce a large number of identical products (automobiles) CONTINUOUS PROCESSING – Raw materials need processing so production runs without shutdowns (grain) REPETITIVE PRODUCTION _ Same thing over and over to produce a product – use of preassembled parts or units (modules) mobile homes INTERMITTENT PROCESSING – short production run for predetermined quantities (printing) CUSTOM MANUFACTURING – one or limited number of units (buildings.) Work with customer to develop unique product.

MANUFACTURING BUSINESS? PLANNING A MANUFACTURING BUSINESS? LOCATING THE BUSINESS --abatements—reduction or exemption of taxes for period AVAILABILITY OF RAW MATERIALS TRANSPORTATION METHODS SUPPLY AND COST OF ENERGY AND WATER LAND AND BUILDING COSTS LABOR SUPPLY LOCATION OF CUSTOMER ECONOMIC AND LEGAL FACTORS

Three steps in the PRODUCTION PLANNING: Inventory management—QUANTITY NEEDS --materials and supplies needed for production - -finished products to meet customer orders 2. Human resource planning—STAFFING NEEDS --types of jobs required for production --people/skills needed for each job 3. Production Planning —SCHEDULING --identifying steps required in manufacturing process --time required to complete each step --sequence of step.

BUILDING LAYOUT --EFFICIENT --SAFE --EASY When a new area is to be laid out and built, be sure to address not only the immediate need but also the future as well as it can be anticipated, to keep the layout effective for some time. If the budget allows, build in extra space to provide options for future actions. Be sure to plan where a major expansion will be even if it is not built until later. Then in the layout do not block later access to the expansion route with permanent facilities such as docks, rest rooms, steam generators, water treatment equipment.

MALCOLM BALDRIGE NATIONAL QUALITY AWARD DEMING PRIZE – 1950 JAPAN ONLY --QUALITY CONTROL AND QUALITY MANAGEMENT IF JAPAN CAN WHY CAN’T WE? MALCOLM BALDRIGE NATIONAL QUALITY AWARD – 1987 U.S. ONLY --QUALITY MANAGEMENT W. Edwards Deming 1900 - 1993

QUALITY MANAGEMENT --measuring results against standards. --standards for all operations and products --measuring results against standards. Key is quality – Everyone takes responsibility for identifying and correcting problems along way--No defects. ISO DEMING AWARD MALCOLM BALDRIGE AWARD

CHARACTERISTICS OF SERVICES THAT MAKE THEM DIFFERENT FROM PRODUCTS: SERVICE BUSINESSES “A business in which income is produced chiefly by personal services rendered” Employs 2/3 of US labor force Half of our consumer power CHARACTERISTICS OF SERVICES THAT MAKE THEM DIFFERENT FROM PRODUCTS: FORM AVAILABILITY QUALITY TIMING

PRODUCTS SERVICES TANGIBLE INTANGIBLE Available when purchaser wants Quality depends on manufacturing process Can be stored SERVICES INTANGIBLE Available only from person providing Service Quality depends on skill of provider Cannot be stored FORM AVAILABILITY QUALITY TIMING

``If a major project is truly innovative, you cannot possibly know its exact cost and its exact schedule at the beginning. And if in fact you do know the exact cost and the exact schedule, chances are that the technology is obsolete.''