McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-1 NickelsMcHughMcHugh Nickels Cover

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 99 Producing World-Class Goods and Services 9-2

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-3 What’s Had The Biggest Effect on Productivity? Percentage of Workforce

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-4 Leading U.S. Manufacturing States California New York Illinois Ohio Pennsylvania Texas

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-5

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-6 The Production & Operations Process Inputs Conversion Process Output Manufacturing Service UB’s Dry Cleaners

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-7 Operations Management Functions  Facility Location  Facility Layout  Quality Control  Baldridge Award  ISO 9000/ISO

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-8 Emerging Asian Industrial Producers Source: J.P. Morgan, Business Week, Bureau of Economic AnalysisSource: J.P. Morgan, Business Week, Bureau of Economic Analysis ChinaKoreaTaiwanThailandMalaysiaPhilippines

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-9 Dimensions of Quality PerformancePerformance FeaturesFeatures ReliabilityReliability ConformanceConformance DurabilityDurability ServiceabilityServiceability AestheticsAesthetics Perceived QualityPerceived Quality

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Quality Control Standards Six Sigma (  ) Quality Six Sigma (  ) Quality 3.4 defects per million opportunities Statistical Quality Control (SQC) Statistical Quality Control (SQC) continual monitoring Statistical Process Control (SPC) Statistical Process Control (SPC) sampling Deming Cycle Deming Cycle SQC/SPC catch mistakes before they happen Quality Function Deployment (QFD) Quality Function Deployment (QFD) link design to customer needs Baldridge Award Baldridge Award - Must show quality in seven areas: leadership, strategic planning, customer and market focus, information and analysis, human resources, process management, business results ISO 9000/14000/19011:2002 ISO 9000/14000/19011:2002

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Service Sector Operations Management Measuring Quality Measuring Quality Interactivity Interactivity

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Manufacturing Sector Operations Management Form Utility Manufacturing Processes Assembly Process Continuous Process Intermittent Process Materials Requirement Planning (MRP) Manufacturing Resource Planning (MRPII) Enterprise Resource Planning IT/Customer-Relationship Marketing (CRM)

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Modern Production Techniques  Just-In-Time (JIT) Inventory  Internet Purchasing  Flexible Manufacturing  Lean Manufacturing  Mass Customization  Competing in Time  Technology Assisted  Computer-Aided Design (CAD)  Computer-Aided Manufacturing (CAM)

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Productivity Challenge in the Automobile Industry PRODUCERLABOR HOURS PER CAR PRODUCERLABOR HOURS PER CAR Toyota 21 Hours Toyota 21 Hours Honda22 Hours General Motors26 Hours Ford27 Hours Daimler/Chrysler31 Hours Source: Harbour & Associates, Center for Automotive Research

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Where did Productivity Rise? Source: BusinessWeek, May 27, 2002 Growth Rate Of Output Per Hour

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved U.S. Productivity Champions Industry Productivity Gain Industry Productivity Gain Consumer Electronics14.1% Computers12.6% Software 5.3% Insurance 5.0% Metals & Machinery 4.5% Banking & Finance 3.9% Source: Economy.com Inc.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Control Procedures   Program Evaluation & Review Techniques (PERT) (see p. 288 in textbook)   Critical Path Method (CPM) sequence of tasks taking longest time to complete   Gantt Chart – Bar chart showing stages of work at any point in time