1. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-1 NickelsMcHughMcHugh Nickels Cover

2. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 99 Producing World-Class Goods and Services 9-2

3. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-3 What’s Had The Biggest Effect on Productivity? Percentage of Workforce

4. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-4 Leading U.S. Manufacturing States California New York Illinois Ohio Pennsylvania Texas

5. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-5

6. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-6 The Production & Operations Process Inputs Conversion Process Output Manufacturing Service UB’s Dry Cleaners

7. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-7 Operations Management Functions  Facility Location  Facility Layout  Quality Control  Baldridge Award  ISO 9000/ISO 140000

8. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-8 Emerging Asian Industrial Producers Source: J.P. Morgan, Business Week, Bureau of Economic AnalysisSource: J.P. Morgan, Business Week, Bureau of Economic Analysis ChinaKoreaTaiwanThailandMalaysiaPhilippines

9. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-9 Dimensions of Quality PerformancePerformance FeaturesFeatures ReliabilityReliability ConformanceConformance DurabilityDurability ServiceabilityServiceability AestheticsAesthetics Perceived QualityPerceived Quality

10. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-10 Quality Control Standards Six Sigma (  ) Quality Six Sigma (  ) Quality 3.4 defects per million opportunities Statistical Quality Control (SQC) Statistical Quality Control (SQC) continual monitoring Statistical Process Control (SPC) Statistical Process Control (SPC) sampling Deming Cycle Deming Cycle SQC/SPC catch mistakes before they happen Quality Function Deployment (QFD) Quality Function Deployment (QFD) link design to customer needs Baldridge Award Baldridge Award - Must show quality in seven areas: leadership, strategic planning, customer and market focus, information and analysis, human resources, process management, business results ISO 9000/14000/19011:2002 ISO 9000/14000/19011:2002

11. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-11 Service Sector Operations Management Measuring Quality Measuring Quality Interactivity Interactivity

12. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-12 Manufacturing Sector Operations Management Form Utility Manufacturing Processes Assembly Process Continuous Process Intermittent Process Materials Requirement Planning (MRP) Manufacturing Resource Planning (MRPII) Enterprise Resource Planning IT/Customer-Relationship Marketing (CRM)

13. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-13 Modern Production Techniques  Just-In-Time (JIT) Inventory  Internet Purchasing  Flexible Manufacturing  Lean Manufacturing  Mass Customization  Competing in Time  Technology Assisted  Computer-Aided Design (CAD)  Computer-Aided Manufacturing (CAM)

14. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-14 Productivity Challenge in the Automobile Industry PRODUCERLABOR HOURS PER CAR PRODUCERLABOR HOURS PER CAR Toyota 21 Hours Toyota 21 Hours Honda22 Hours General Motors26 Hours Ford27 Hours Daimler/Chrysler31 Hours Source: Harbour & Associates, Center for Automotive Research

15. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-15 Where did Productivity Rise? Source: BusinessWeek, May 27, 2002 Growth Rate Of Output Per Hour 1990 - 2000

16. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-16 U.S. Productivity Champions 1999-2003 Industry Productivity Gain Industry Productivity Gain Consumer Electronics14.1% Computers12.6% Software 5.3% Insurance 5.0% Metals & Machinery 4.5% Banking & Finance 3.9% Source: Economy.com Inc.

17. McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 9-17 Control Procedures   Program Evaluation & Review Techniques (PERT) (see p. 288 in textbook)   Critical Path Method (CPM) sequence of tasks taking longest time to complete   Gantt Chart – Bar chart showing stages of work at any point in time