1. Production Systems
Chapter 9

2. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives
Explain the systems perspective and identify seven principles of systems thinking that can improve your skills as a manager
Describe the value chain and value web concepts and discuss the controversy over offshoring
Define supply chain management and explain its strategic importance
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3. Learning Objectives (cont.)
Identify the major planning decisions in production and operations management
Explain the unique challenges of service delivery
Define quality, explain the challenge of quality and product complexity, and identify four major tools and strategies for ensuring product quality
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4. The Systems View of Business
An interconnected and coordinated set of elements and processes that converts inputs to desired outputs
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5. From Point to Line to Circle: The Systems View
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6. Managing Systems for Peak Performance
Help everyone see the big picture
Understand how individual systems really work and how they interact
Understand problems before you try to fix them
Understand the potential impact of solutions before you implement them.
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7. Managing Systems for Peak Performance (cont.)
Don’t just move problems around—solve them
Understand how feedback works in the system
Use mistakes as opportunities to learn and improve
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8. Value Chains and Value Webs
All the elements and processes that add value as raw materials are transformed into the final products made available to the ultimate customer
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9. Business Transformation Systems
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10. Redefining Organizations with Value Webs
Outsourcing
Contracting out certain business functions or operations to other companies
Value Webs
Multidimensional networks of suppliers and outsourcing partners
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11. The Offshoring Controversy
Transferring a part or all of a business function to a facility (a different part of the company or another company entirely) in another country
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12. The Offshoring Controversy
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13. Supply Chain Management
A set of connected systems that coordinates the flow of goods and materials from suppliers all the way through to final customers
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14. Supply Chain Management (cont.)
Supply chain management (SCM)
The business procedures, policies, and computer systems that integrate the various elements of the supply chain into a cohesive system
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15. Strategic Impact of SCM
Managing risks
Managing relationships
Managing trade-off
Promoting sustainability
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16. Supply Chain Systems and Techniques
Inventory
Goods and materials kept in stock for production or sale
Inventory Control
Determining the right quantities of supplies and products to have on hand and tracking where those items are
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17. Supply Chain Systems and Techniques (cont.)
Procurement
The acquisition of the raw materials, parts, components, supplies, and finished products required to produce goods and services
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18. Supply Chain Systems and Techniques (cont.)
Material requirements planning (MRP)
Manufacturing resource planning (MRP II)
Enterprise resource planning (ERP)
Material requirements planning (MRP). MRP helps a manufacturer get the correct
materials where they are needed, when they are needed, and without unnecessary stockpiling.
Manufacturing resource planning (MRP II). MRP II expands MRP with links to a company’s financial systems
and other processes.
Enterprise resource planning (ERP). ERP extends the scope of resource planning and
management even further to encompass the entire organization.
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19. Production and Operations Management
Overseeing all the activities involved in producing goods and services
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20. Production and Operations Management (cont.)
Facilities location and design
Forecasting and capacity planning
Scheduling
Lean systems
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21. Production and Operations Management (cont.)
Capacity Planning
Establishing the overall level of resources needed to meet customer demand
Critical Path
In a PERT network diagram, the sequence of operations that requires the longest time to complete
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22. Gantt Charts for Project Management
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23. Simplified PERT Diagram for a Store Opening
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24. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Lean Systems
Productivity
The efficiency with which an organization can convert inputs to outputs
Lean Systems
Systems (in manufacturing and other functional areas) that maximize productivity by reducing waste and delays
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25. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Lean Systems
Just-in-Time (JIT)
Inventory management in which goods and materials are delivered throughout the production process right before they are needed
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26. Mass Production, Customized Production, and Mass Customization
The creation of identical goods or services, usually in large quantities
Customized Production
The creation of a unique good or service for each customer
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27. Mass Production, Customized Production, and Mass Customization (cont.)
A manufacturing approach in which part of the product is mass produced and the remaining features are customized for each buyer
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28. The Unique Challenges of Service Delivery
Perishability
Location constraints
Scalability challenges
Performance variability and perceptions of quality
Customer involvement
Service provider interaction.
Scalability The potential to increase production by expanding or replicating its initial production capacity
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29. Product and Process Quality
The degree to which a product or process meets reasonable or agreed-upon expectations
Quality Control
Measuring quality against established standards after the good or service has been produced and weeding out any defective products
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30. Product and Process Quality (cont.)
Quality Assurance
A more comprehensive approach of companywide policies, practices, and procedures to ensure that every product meets quality standards
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31. Product and Process Quality (cont.)
Statistical Process Control (SPC)
The use of random sampling and tools such as control charts to monitor the production process
Six Sigma
A rigorous quality management program that strives to eliminate deviations between the actual and desired performance of a business system
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32. The DMAIC Process in Six Sigma Quality Management
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33. Product and Process Quality
ISO 9000
A globally recognized family of standards for quality management systems
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34. Applying What You’ve Learned
Explain the systems perspective and identify seven principles of systems thinking that can improve your skills as a manager
Describe the value chain and value web concepts and discuss the controversy over offshoring
Define supply chain management and explain its strategic importance
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

35. Applying What You’ve Learned (cont.)
Identify the major planning decisions in production and operations management
Explain the unique challenges of service delivery
Define quality, explain the challenge of quality and product complexity, and identify four major tools and strategies for ensuring product quality
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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