1. Operations Management (Production)
CHAPTER NINE
Operations Management (Production)
Manufacturing
Service

2. What’s Had The Biggest Effect on Productivity?
TA 9-1 What’s Had the Biggest Effect on Productivity?
1. In working with this acetate, you might want to just show students the top part of the acetate with the question and then invite their responses. See if they agree that computers and technology have had the biggest effect on productivity.
2. Two of the categories, hiring part-time workers and downsizing can produce considerable debate depending on the demographics of the class. Last year we almost had a royal battle in some of our evening classes as students debated the benefits and shortcomings of these factors.
3. See by chance if students have anything to add to the responses listed on the acetate. Maybe someone will note the effect of teams or some other pertinent issue covered in the management sections as affecting productivity.

3. Leading U.S. Manufacturing States
New York
Illinois
Ohio
California
Pennsylvania
Texas

4. The Americans and the Japanese decided to engage in a competitive boat race.
Both teams practiced hard and long to reach their peak performance.
On the big day they felt they were ready
The Japanese won by a mile.

5. Afterwards the American team was discouraged by the loss. Morale sagged.
Corporate management decided that the reason for the crushing defeat had to be found, so a consulting firm was hired to investigate the problem and recommend corrective action

6. The consultants finding:
The Japanese team had eight people rowing and one person steering;
the American team had one person rowing and eight people steering..

7. After a year of study and millions spent analyzing the problem,
the consultant firm concluded that too many people were steering and not enough were rowing on the American team
So as race day neared again the following year, the American team’s management structure was completely reorganized.

8. The new structure:
Four steering managers, three area steering managers, and a new performance review system for the person rowing the boat to provide work incentive.
The next year, the Japanese won by TWO miles
Humiliated, the American corporation laid off the rower for poor performance and gave the managers a bonus for discovering the problem.

9. What has the US done to regain a competitive edge?
Customer focus
Cost savings through site selection
New manufacturing techniques
Reliance on the Internet
Total Quality Management
ISO 9000/ISO

10. Production Management
Using land, labor, capital, entrepreneurship, knowledge to produce goods and services.
Operations Management
Transforms resources into goods and services.
inventory management
production scheduling
quality control
follow-up services

11. The Production & Operations Process
Inputs
Conversion Process
Output
Manufacturing
TA 9-2 The Production and Operations Process
1. This acetate views the production process for manufacturing goods and services such as dry cleaning. From this acetate you can explain the differences between production and operations management.
2. It’s helpful to look at this process from a traditional perspective of input - conversion process - outputs. Some of the inputs in production can be labor, information, energy, equipment, and money. The conversion process involves planning, budgeting, scheduling, distributing, etc. Outputs, as the acetate highlights can be in the form of goods or services.
3. Ask the students to name other types of production and operations processes complete with inputs - conversion processes - outputs. See if they believe colleges put them through such a process.
UB’s Dry Cleaners
Service

12. Operations Management Functions:
1. Facility location
Near resources
Near markets
2. Facility layout
For services: customer friendly
For manufacturing
- customer focused work cells
- away from assembly lines
c. Outsourcing

13. Operations Management Functions:
3. Quality Control
Measurement of products and services against set requirements
Often at the end of the line
Now quality becomes everyone’s concern

14. Quality Control Standards
Six Sigma () Quality (3.4)
Statistical Quality Control (SQC)
Statistical Process Control (SPC)
Deming Cycle (Plan, Do, Check, Act) (Eliminate mistakes)
Quality Function Deployment (QFD) (maximize customer satisfaction)
Baldridge Award
ISO 9000/14000/9001:2002

15. Quality Standards: 1. Baldridge Awards: quality in leadership
Strategic planning
Customer and market focus
Information and analysis
Human resource focus
Process management
Business results

16. Quality Standards: 2. ISO 9000
Sets global measures for the quality of individual products
Provides a common denominator of business quality accepted around the world
3. ISO 14000
Concerns managing an organization’s environmental impact
Requires targets, policies and reviews of environmental programs

17. OM in the Service Sector
1. Measuring quality
Productivity strong in manufacturing, but weak in services
Quality versus quantity issues
2. Technological improvements
ATMs improve banking
Universal Price Codes make checkout faster
Computerized airline reservations, meal selection, and luggage handling
(finger printing foreigners)
Interactive services from banks, stockbrokers, travel agents

18. OM in the Manufacturing Sector
1. Form Utility
- the value added by the creation of finished goods and services

19. OM in the Manufacturing Sector
2. Types of Production Processes
Process manufacturing
- physically or chemically changing materials
- making steel, or cooking eggs
b. Assembly process
-putting together components
- TV, cars

20. X X X X X X X X X X X

21. OM in the Manufacturing Sector
2. Types of Production Processes
Continuous
1) one long production run turns out finished goods
2) like an assembly line
b. Intermittent
1) short production runs where machines are changed to make different products
2) custom made furniture
3) easier to respond to customer requests.

22. Materials Requirement Planning
1. Materials Requirement Planning (MRP)
a. Uses sales forecasts to make sure required parts are available when needed
b. Now outdated
2. MRPII – Manufacturing resource planning
a. involved more than just materials
b. also has been updated
3. ERP Enterprise resource planning
a. Links multiple firms.
b. Monitors quality and satisfaction as it’s happening.
c. IT has had a major influence

23. Modern Production Techniques
Just-In-Time (JIT) Inventory
Purchasing
Flexible Manufacturing
Lean Manufacturing
Mass Customizing
Competing in Time
Technology Assisted
Computer-Aided Design (CAD)
Computer-Aided Manufacturing (CAM)

24. Modern Production Techniques
Just in time inventory control (JIT)
a. Parts and supplies are delivered just as needed in the production process
b. Avoids storage charges and damages
2. Internet purchasing
a. Reduces purchasing costs
b. 3 types
1) trading exchange platforms
- assist companies in several markets
2) industry-sponsored exchanges
3) Net market makers
-host electronic marketplaces

25. Modern Production Techniques
3. Flexible Manufacturing
a. Designing machines to do multiple tasks
b. Ford makes both V-8 and V-6 engines
4. Lean Manufacturing
a. Increasing capacity to produce high-quality goods while decreasing need for resources
b. Workers perform a cluster of tasks, not one assembly line job.
5. Mass customization
- Flexible machines can produce a good as fast as mass-produced goods once could.

26. Modern Production Techniques
6. Competing in Time
a. Being as fast or faster than all competition in responding to customer want and needs
b. Essential in global marketplace
7. CAD and CAM
a. CAD – 3D designing
b. CAM – direct computer involvement in production process
c. CIM Computer Integrated Manufacturing
1) software that unites CAD and CAM
2) currently expensive
3) cuts 80% of the time needed to program machines to make parts

27. Just in time inventory control Flexible manufacturing
Mass customization
Lean manufacturing
Competing in time
The Daimler-Chrysler plant in Fenton, MO receives shipments about every 4 hours from its seat supplier, and literally hundreds of other parts continually. There is virtually no storage.
Volvo uses modular construction in their plants, where workers are grouped into autonomous teams working on mobile assembly platforms that carry the cars to the workers. Each worker has been trained to do a whole cluster of tasks. This system enabled Volvo to build quality cars with fewer workers in more space efficient plants and has reduced the number of hours to assemble a car.
Because of the increases competition from its Japanese counter-parts Xerox implemented a program designed to cut its new product development time in half
Levis markets a service which enables any customer to order a custom-made pair of jeans from any retailer at any time. The jeans cost $10 more than an “off-the-rack” pair.
At Dynalink Industries, 15 machines are used to make, test and package component parts for stereo and quadraphonic sound systems. The parts are never touched by human hands.

28. Control Procedures Program Evaluation & Review Techniques (PERT)
Critical Path Method (CPM)
Gantt Chart

29. Program Evaluation & Review Techniques (PERT)
Designing a PERT Chart
1. Analyze and sequence task that need to be done
2. Estimate the time needed to complete each task
3. Draw a PERT network illustrating the two previous steps
Identify the critical path
- the sequence that takes the longest

30. assemble eggs and toast (1 min)
PERT Breakfast
brew coffee 6 min
pour coffee (1 min)
assemble eggs and toast (1 min)
Start
cook eggs (3 min)
serve
Start
butter toast (1 min)
make toast (2 min)