1. PowerPoint Presentation by Charlie Cook Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 7 Managing Operations and Improving Quality

2. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–2 “There are many ways of going forward, but only one way of standing still.” —Franklin D. Roosevelt

3. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–3 Key Topics Operations and the utility provided by operations processes Service operations vs. goods production Operations planning Total quality management tools The supply chain strategy vs. traditional strategies for coordinating operations

4. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–4 Defining Operations Service Operations:  Produce tangible and intangible services. Goods Production:  Produces tangible products.

5. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–5 Growth in the Goods and Services Sectors 10080604020 Millions of WorkersServices Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000 $4,000$3,000$2,000$1,000(Billions)Services GoodsProduction 198419861988 1990 19921994 1996 19982000

6. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–6 Integration of Global Operations Technology has pushed operations to become cleaner, faster, and safer…on a global scale. The internet has integrated production with global suppliers and customers.

7. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–7 Products and Services Create Utility To Satisfy Human Wants Time Utility Place Utility Ownership utility Form Utility Operations managers create utility for customers through production, inventory, and quality control.

8. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–8 Operations Management: A Resource Transformation Process Inputs Transformation Activities Outputs (Goods and Services) land capital human resources material customers information land capital human resources material customers information Operations Managers plan organize schedule control

9. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–9 Operations Processes Are Methods Used in Production Goods-Manufacturing:  Analytic processes  Synthetic processes Service Delivery  High contact processes  Low contact processes

10. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–10 Service Operations Differ Markedly From Manufacturing Focus on:  Performance  Process and outcome  Service characteristics  Customer-service link  Service quality considerations

11. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–11 Layout  Process  Product  Cellular Methods Quality Location Capacity Operations Planning

12. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–12 Operations Scheduling Scheduling Goods Operations Scheduling Service Operations

13. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–13 Operations Control Monitors Results, Which Ensures Performance Materials managers plan, organize, and control the flow of materials from design through distribution. Transportation Warehousing Purchasing Supplier Selection Inventory Control

14. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–14 Tools for Operations Process Control Worker Training Just-in-time Production Systems (JIT) Material Requirements Planning Quality Control

15. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–15 Total Quality Management Always Delivering High Quality  Planning for quality  Organizing for quality  Directing for quality  Controlling for quality

16. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–16 Tools for Total Quality Management Statistical Process Control Quality/Cost Studies Getting Close to the Customer Process Reengineering ISO 9000 OutsourcingOutsourcing

17. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–17 Adding Value Through Supply Chains GrainGrainFlourBakery Packager Packaged Baked Goods WoodPulpPaper

18. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–18 The Supply Chain Strategy Supply Chain Management Working with the supply chain as a whole to improve overall flow. Supply Chain Reengineering Improving the process for better results.

19. Copyright © 2005 Prentice Hall, Inc. All rights reserved.7–19 Chapter Review Explain “operations” and the utility that operations processes provide. Distinguish service operations from goods production. Describe the five decision areas involved in operations planning. Identify the key tools for total quality management. Explain the supply chain strategy.