1. C HAPTER -08 P RODUCING Q UALITY G OODS AND S ERVICES Dr. Gehan Dhameeth, DBA 1

2. N ESTLE PLANS AHEAD FOR QUALITY PRODUCTION 2

3. Produces all the products its own Focus is on the suppliers New Ohio production plant High quality production methods Sustainability under the guidelines of “Ohio Green House Council” 3

4. L EARNING O BJECTIVES 4

5. 1. Explain the nature of production. 2. Outline how the conversion process transforms raw materials, labor, and other resources into finished products or services. 3. Describe how research and development lead to new products and services. 4. Discuss the components involved in planning the production process. 5. Explain how purchasing, inventory control, scheduling, and quality control affect production 6. Summarizes how productivity and technology are related

6. W HAT IS PRODUCTION ? 6

7. Operations management – all activities managers engage in to produce goods and services Operations manager- responsible for conversion process Planning- before, during, and after

8. C OMPETITION IN THE G LOBAL M ARKETPLACE 8

9. The U.S. was the most productive country after World War II Competitors in European and Asian countries eventually recovered and began to compete with the U.S. firms U.S. firms have had to refocus on quality and customer needs The most successful U.S. firms have focused on: Motivating employees to improve productivity Reducing production costs by carefully selecting suppliers Revamping their facilities with state-of-the-art equipment Using computer-aided and flexible manufacturing systems Improving control procedures to lower manufacturing costs (economies of scale) Building foreign manufacturing facilities where labor costs are lower

10. C AREERS IN O PERATIONS M ANAGEMENT 10

11. C AREERS IN O PERATIONS M ANAGEMENT Operations managers must appreciate the manufacturing process Mass and customized production processes Successful operations managers must: 1. Be able to motivate and lead people 2. Understand how technology can make a manufacturer more productive and efficient 3. Appreciate the control processes that help lower production cost and improve quality 4. Understand the relationship among customer, marketing, and production

12. T HE C ONVERSION P ROCESS 12

13. T HE C ONVERSION P ROCESS The purpose of the resources conversion process is to provide utility to customers Utility- ability of the product to satisfy a human need Four types of utility: form, place, time, and possession Form utility : is created by people converting raw materials, finances, and information into finished products

14. T HE N ATURE OF C ONVERSION Focus - the resource that makes most important input. Magnitude of change- the degree to which the resources are physically changed. Here the original resources are totally unrecognizable in the finished product Number of production processes- single or multiple production process based on number of products

15. T HE I NCREASING I MPORTANCE OF S ERVICES 15

16. T HE I NCREASING I MPORTANCE OF S ERVICES % % % Employees involvement in service industry over years in USA

17. T HE I NCREASING I MPORTANCE OF S ERVICES Service economy An economy in which more effort is devoted to services than to the production of goods The production of services varies from the production of goods 1. Services are consumed immediately and cannot be stored 2. Services are provided when and where the customer desires 3. Services are usually labor intensive 4. Services are intangible, making it difficult to evaluate customer satisfaction

18. W HERE D O N EW P RODUCTS AND S ERVICES C OME F ROM ? 18

19. W HERE D O N EW P RODUCTS AND S ERVICES C OME F ROM ? Research and Development Basic research- to uncover new knowledge Applied research- new knowledge with potential use Customers Competitors Suppliers Employees

20. W HERE D O N EW P RODUCTS AND S ERVICES C OME F ROM ? ( CONT ’ D ) Product extension and refinement Product life cycle Product refinement- new additions (black & white TV to color) Product extension- new models (Gillette Zero)

21. W HERE D O N EW P RODUCTS AND S ERVICES C OME F ROM ? ( CONT ’ D )

22. 8 | 22

23. N EW P RODUCT D EVELOPMENT P ROCESS 23

24. N EW P RODUCT D EVELOPMENT P ROCESS Idea generation Screening (market, production, and financial feasibility) Concept development (prototype development) Financial implications (break even, cost, GP, and NP) Sample development Sample testing (market research/ test marketing) Production Commercialization

25. P LANNING FOR P RODUCTION 25

26. P LANNING FOR P RODUCTION Design planning Product line Product design Capacity Use of technology Labor-intensive technology: Capital-intensive technology: 8 | 26

27. P LANNING FOR P RODUCTION ( CONT ’ D ) Facilities planning and site selection Factors influencing the location decision for a production facility Human resources Plant layout

28. O PERATIONAL P LANNING 28

29. O PERATIONAL P LANNING Four steps in operational planning Step 1: Selecting a planning horizon (time period for the plan) Step 2: Estimating market demand Step 3: Comparing market demand with capacity Step 4: Adjusting products or services to meet demand

30. O PERATIONS C ONTROL 30

31. O PERATIONS C ONTROL Purchasing Inventory control Types of inventory Costs of inventory Inventory control methods Materials requirements planning (MRP) Manufacturing resource planning (MRP II) Enterprise resource planning (ERP) Just-in-time inventory system

32. O PERATIONS C ONTROL ( CONT ’ D ) Scheduling (right place at the right time) Quality control Statistical process control (SPC) Statistical quality control (SQC) Inspection

33. O PERATIONS C ONTROL ( CONT ’ D ) Quality control (cont’d) Improving quality through employee participation Total Quality Management (TQM) Six Sigma (identify and remove causes of defects) Quality circles World quality standards: International Organization for Standardization (ISO) ISO 9000 ISO 14000

34. M ANAGEMENT OF P RODUCTIVITY AND T ECHNOLOGY 34

35. M ANAGEMENT OF P RODUCTIVITY AND T ECHNOLOGY Productivity (average level of output per worker per hour) Productivity trends

36. T HE I MPACT OF C OMPUTERS AND R OBOTICS ON P RODUCTION Automation Robotics

37. T HE I MPACT OF C OMPUTERS AND R OBOTICS ON P RODUCTION ( CONT ’ D ) Computer manufacturing systems Computer-aided design (CAD) Computer-aided manufacturing (CAM) Computer-integrated manufacturing (CIM)

38. W RITE FIVE KEY THINGS ( AREAS ) THAT YOU CAN CRITICALLY REMEMBER IN TODAY ’ S DISCUSSION 38

39. W HAT WE DISCUSSED TODAY.. 39

40. L EARNING O BJECTIVES 1. Explain the nature of production. 2. Outline how the conversion process transforms raw materials, labor, and other resources into finished products or services. 3. Describe how research and development lead to new products and services. 4. Discuss the components involved in planning the production process. 5. Explain how purchasing, inventory control, scheduling, and quality control affect production 6. Summarizes how productivity and technology are related