1. Producing Goods & Services
Busn 101 Chapter 9
Producing Goods & Services
Chapter 09 Busn 100

2. Goals: Many Terms Recent Evolution of production in the USA
Operations management
Production processes
Production techniques that have improved productivity in USA
CAD (Computer-aided design)
CAM (Computer-aided manufacturing)
Flexible manufacturing
Lean manufacturing
Mass customization
Operations management planning issues (manufacturing and service):
Facility location
Facility layout
Materials requirement planning
Purchasing
JIT (just-in-time inventory) control
Quality control
PERT (Planning) and Gantt (measure progress) charts to control manufacturing processes

3. Production
The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship and knowledge.

4. Production Management
The term used to describe all the activities managers do to help their firms create goods

5. Operations Management
A specialized area in management that converts or transforms resources into goods and services
Includes:
Human Resources
Inventory management
Quality Control
Production Scheduling
Follow-up services

6. What Is Operations Management Like At:
Auto Manufacturer
Operations Management take raw materials, human resources, parts, supplies, paints, tools and more to make autos
Colleges
Operations Management take information, teachers, buildings, computers, students and creates a service that transforms students into educated people
Service Sector
Hotel Operations Management take rooms, food, personnel, cleaning services, internet services and create happy, feed and well rested customers.

7. Form Utility
The value added by the creation of finished goods and services, such as:
The value added by taking silicon and making computer chips
Putting services together to create a vacation package
The value added by taking wood, paint, labor, packaging, and other costs and making a boomerang
More in chapter 15

8. Production Process Process Manufacturing Assembly Process
That part of the production process that physically or chemically changes materials
Assembly Process
The part of the production process that puts together components
Continuous Process
A production process in which long production runs turn out finished goods over time
Intermittent Process
A production process in which the production run is short and the machines are changed frequently to make different products
See Excel Sheet 

9. Computers CAD (Computer-aided Design)
The use of computers in the design of products
CAM (Computer-aided Manufacturing)
The use of computers in the manufacturing of products
CIM (Computer-integrated Manufacturing)
One machine that does both CAD and CAM

10. Manufacturing Flexible Manufacturing See Excel Sheet 
Designing machines to do multiple tasks so that they can produce a variety of products
See Excel Sheet 
Lean Manufacturing
Manufacturing that uses fewer inputs (resources) to make the same number of outputs than before. Increase productivity.
Mass Customization
Tailoring products to meet the needs of individual customers (Dell).

11. Operation Management Planning
Facility Location
The process of selecting a geographic location for a company’s operations
Facility Layout
The physical arrangement of resources (including people) in the production process
See Excel Sheet 

12. Operation Management Planning
MRP (Material Requirement Planning)
A computer-based production management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place (for a single firm)
ERP (Enterprise Resource Planning)
A computer application that enables multiple firms to manage all of their operations (finance, requirements planning, human resources and order fulfillment) on the basis of a single, integrated set of corporate data

13. Operation Management Planning
Purchasing
The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for the goods and services
JIT (Just-in-time Inventory Control)
The production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line
Example: NUMI (New United Motor Manufacturing, Inc.) joint venture between GM and Toyota

14. Quality Quality Six Sigma Quality (Six Standard Deviation Quality)
Consistently producing what the customer wants while reducing errors before and after delivery to the customer
Six Sigma Quality (Six Standard Deviation Quality)
A quality measure that allows only 3.4 defects per million opportunities

15. Quality SQC (Statistical Quality Control)
The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning
SPC (Statistical Process Control)
The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from the quality standards are recognized and can be corrected if beyond the set standards.

16. Standards ISO 9000 ISO 14000 Baldrige Awards (since 1987)
The common name given to quality management and assurance standards
ISO 14000
A collection of the best practices for managing an organization’s impact on the environment
Baldrige Awards (since 1987)
Overall company Quality:
Leadership, Strategic planning, customer and market focus, information and analysis, human resource focus, process management and business results

17. Charts and more… PERT (Program Evaluation And Review Technique)
A method for analyzing that tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the project
Critical Path (P 251 Text)
In a PERT network, the sequence of tasks that takes the longest time to complete
Gantt Chart
Bar graph showing production managers what projects are being worked on and what stage they are in any given time
See Excel Sheet 

18. Recent Evolution Of Production In The USA
USA manufacturing output rose:
: 3.7% : 5.7% %
How?
Close relationships with suppliers and other companies to meet customer’s needs
Continuous improvement
Site Selection
The Internet to unite companies
Production techniques such as: ERP, CIM, Flexible manufacturing, lean manufacturing
What can the USA do to Keep jobs in the USA?
Continue to innovate and create new jobs
New innovation in sources of energy

19. Operations Management
The area of management that converts or transforms resources into goods and services
What kind of firms use Operations Management?
Firms in both the manufacturing and service sectors use operation managers

20. Production Processes
Process manufacturing physically or chemically changes materials
Wood  Chair
Sewage Manure
Assembly processes puts things together
Parts  Auto
Parts  Vacation package

21. Production Techniques That Have Improved Productivity In USA
CAD (Computer-aided design)
CAM (Computer-aided manufacturing)
CIM puts these two together and increase productivity dramatically (large initial cost)
Flexible manufacturing
Flexible machines that can produce a variety of products

22. Production Techniques That Have Improved Productivity In USA
Lean manufacturing (always increasing productivity)
A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing its need for resources
Mass customization (Custom goods/service for many)
Think of Dell or National Bicycle Industrial Co., Japan or a travel agent

23. Operations Management Planning (Manufacturing And Service):
Facility location
Process of selecting a geographic location for a company’s operations based on:
Labor costs
Land costs
Taxes and Regulations
Proximity to
Customers
Suppliers
Resources
Skilled workers
Transportation
What is the quality of life and education system like?

24. Operations Management Planning Issues (Manufacturing And Service):
Facility layout
The physical arrangement of resources to produce goods and services effectively and efficiently
MRP and ERP
MRP is a computer application that uses sales forecasts to make sure that materials and parts are in the right place at the right time for a specific firm.
ERP is for when there is more than one firm and it manages all resources (finance, materials, human resources) from one data source.
Much duplication is eliminated because there is only one data source and orders and planning are done only once.

25. Operations Management Planning Issues (Manufacturing And Service):
Purchasing
Purchasing agreements now involve fewer suppliers than in the past
Relationships are built and information is shared so that purchasing is more reliable
The internet has increase efficiency

26. Operations Management Planning Issues (Manufacturing And Service):
JIT (just-in-time inventory) control
Have the suppliers deliver the parts/materials just in time to go to the assembly line so they do not need to be stored in warehouses
Saves with:
Obsolescence
Pilferage
Damage
Storage costs

27. Operations Management Planning Issues (Manufacturing And Service):
Quality control
Six Sigma Quality means that the firm uses statistical techniques (testing only samples – not every product) to assure that they get 3.4 defects for every 1 million products made.
When the samples show variances (from the 3.4…), then they make corrections.
Firms check for quality control before the goods are sold to customers – it is worth the cost to not put defects into customers hands
If you can attain ISO standards and the Baldrige awards can attract customers and lift the firm’s reputation

28. PERT And Gantt Charts To Control Manufacturing Processes
PERT charts help with planning by determining the critical path and making sure that there are no delays in the critical path
Gantt charts can measure progress for various projects

29. Production  Service Economy
Make goods like autos, food, computers
Service:
Accounting, Finance, Medical Services, Teachers…
USA has moved to a service economy
70% GDP
85% jobs
USA still a huge manufacturer
Insourcing
Steel and auto companies