2. Production and Distribution
Chapter 16
Production Management and Distribution
From Idea to Product
16.1
16.2
Production and Distribution

3. Discuss how entrepreneurs develop new products.
16.1
Discuss how entrepreneurs develop new products.
Explain the product development process.
Section 16.1 From Idea to Product

4. 16.1
Entrepreneurs work with limited resources, so they must find creative ways to develop and manufacture their products, such as outsourcing.
Product development is a repetitive process based on feedback from customers who test the product.
Section 16.1 From Idea to Product

5. product development outsourcing prototype 16.1
Section 16.1 From Idea to Product

6. Product Development for Entrepreneurs
The transformation from idea to marketable product is a lengthy process.
Entrepreneurs must learn how to develop new products with limited resources.
Section 16.1 From Idea to Product

7. What Is Product Development?
Some people consider product development to be the riskiest part of start-up of a new small business.
product development the process of creating new or improved products, involving taking an idea for a product, designing it, building a model, and testing it
Section 16.1 From Idea to Product

8. Outsourcing Product Development
No matter what they are producing, entrepreneurs can use outsourcing to reduce the cost of product development.
outsourcing hiring people and other companies to handle tasks a business can not do or chooses not to do itself
Section 16.1 From Idea to Product

9. The Product Development Process
The four steps of product development are:
opportunity recognition
concept investigation
product design
prototype building and testing
Section 16.1 From Idea to Product

10. The Product Development Process
Product development is not a linear process.
An entrepreneur may start developing a product and along the way discover something new that changes the direction of development.
Section 16.1 From Idea to Product

11. The Product Development Process
A prototype may not look like the final product, but should work like the final product.
prototype a working model of a product
Section 16.1 From Idea to Product

12. Designing It Right the First Time
There are three good reasons for designing a product right the first time:
the cost of the design
the quality and marketability of the product
the time to launch
Section 16.1 From Idea to Product

13. Discuss how entrepreneurs develop new products.
16.1
Discuss how entrepreneurs develop new products.
Once entrepreneurs recognize an opportunity for a product, they study the market to make certain there is sufficient demand. They design the product on paper or on a computer, incorporating the needs and wants of potential customers and including input from the people involved in marketing, producing, and financing the product. They build a prototype to test the product with customers.
Section 16.1 From Idea to Product

14. Explain the product development process.
16.1
Explain the product development process.
Product development is not a linear process. Although it appears to move forward in a step-by-step manner, it is really a repetitive process. An entrepreneur may start developing a product and along the way discover something new that changes the direction of development.
Section 16.1 From Idea to Product

15. Explain what is involved in production management.
16.2
Explain what is involved in production management.
Describe the activities that are part of distribution management.
Section 16.2 Production and Distribution

16. 16.2
Coming up with an idea for a product or service is only a small part of creating a successful business—you have to turn that idea into reality.
Production and distribution are two ways entrepreneurs bring new products to market.
Section 16.2 Production and Distribution

17. Gantt chart PERT diagram quality control quality circle productivity
16.2
Gantt chart
PERT diagram
quality control
quality circle
productivity
automation
logistics
common carrier
contract carrier
private carrier
freight on board (FOB)
Section 16.2 Production and Distribution

18. Production Management
Once you have developed a prototype, you are ready to plan production.
Section 16.2 Production and Distribution

19. Production Management
Production management involves three functions:
Acquiring the resources needed to create a product.
Planning how to convert those resources into products.
Making sure the products meet the standards set for them.
Section 16.2 Production and Distribution

20. Areas of Production Management
Scheduling
Maintenance
Quality Control
Areas of Production Management
Automation
Productivity
Section 16.2 Production and Distribution 20

21. Scheduling Businesses plan their production by making schedules.
These schedules describe each activity that must be completed to produce goods or services.
Section 16.2 Production and Distribution

22. Scheduling
A Gantt chart is an effective way to depict basic information about a project.
Gannt chart a graphic schedule of a project’s phases, activities, and tasks plotted against a time line
Section 16.2 Production and Distribution

23. Scheduling
The longest path through a PERT diagram, the critical path, dictates the length of time needed to complete a project.
PERT diagram a project schedule that is arranged in a diagram used for scheduling complex projects
Section 16.2 Production and Distribution

24. Controlling Quality
Quality control takes time and costs money, but it is a way to ensure customer satisfaction.
quality control the process of making sure the goods or services a business produces meet certain standards, such as appearance, performance, and consistency
Section 16.2 Production and Distribution

25. Controlling Quality
A quality circle is an effective way of improving quality because it requires employees to be responsible for their work.
quality circle a small group of employees who do similar jobs and meet regularly to identify ways to improve the quality of what they do
Section 16.2 Production and Distribution

26. Managing Other Areas of Production
Businesses use productivity rates to measure and improve performance.
productivity a measure of how much a business produces in a given time, or the output of each worker per unit of time
automation the use of machines to do the work of people
Automation can cut production time, reduce errors, and simplify procedures.
Section 16.2 Production and Distribution

27. Distribution Management
Distribution management includes:
transportation
shipping and receiving
storage and warehousing
materials handling
delivery terms
Section 16.2 Production and Distribution

28. Transportation
Logistics involves figuring out how to move a product from the producer to the customer.
logistics the planning, execution, and control of the movement and placement of people and/or goods
Section 16.2 Production and Distribution

29. Transportation
A common carrier is hired by businesses to transport products.
common carrier a firm that provides transportation services at uniform rates to the general public
Section 16.2 Production and Distribution

30. Transportation A railroad is a contract carrier.
contract carrier a shipping company that transports freight under contract with one or more shippers
Section 16.2 Production and Distribution

31. Transportation
A private carrier is a privately owned and operated delivery vehicle.
private carrier a business that operates vehicles primarily for the purpose of transporting its own products and materials
Section 16.2 Production and Distribution

32. Delivery Terms
The most favorable delivery term for a small business is free on board (FOB).
free on board (FOB) a delivery term that designates a shipment as delivered for no additional charge to a buyer
Section 16.2 Production and Distribution

33. Explain what is involved in production management.
16.2
Explain what is involved in production management.
Production management has three functions: acquiring the resources needed to create a product, planning how to convert those resources into products, and making sure the products meet set standards.
Section 16.2 Production and Distribution

34. Describe the activities that are part of distribution management.
16.2
Describe the activities that are part of distribution management.
Distribution management includes transportation, shipping and receiving, storage and warehousing, materials handling, and specification of delivery terms. It controls the movement of a product from the manufacturer to customers.
Section 16.2 Production and Distribution

35. Distribution in E-Commerce
In e-commerce, as in other types of businesses, one of the most important functions is delivering the right product or service in the right place at the right time.
E-commerce channels, intermediaries, and cybermediaries are all vital parts of electronic distribution.
Section 16.2 Production and Distribution 35

36. Tech Terms cybermediary
a business that acts as a broker or agent to facilitate transactions over the Internet
disintermediation
the removal of intermediaries, such as wholesalers or retailers, from business transactions between producers and consumers
Section 16.2 Production and Distribution 36

37. Tech Terms intermediary
a business that is involved in the process of moving a product from the manufacturer to a customer or user
Web affiliate
a company that aims to drive targeted traffic to a Web site, usually an e-commerce merchant, usually for a commission for the sales they generate on the merchant site
Section 16.2 Production and Distribution 37

38. End of