1. PRODUCTION & BUSINESS OPERATIONS
CHAPTER 13
PRODUCTION & BUSINESS OPERATIONS

2. 13.1 Objectives
Describe the role of producers in the economy and the forms of production
Differentiate among the various types of manufacturing

3. Production in the economy
Economy begins with production
Consumers need products/services to satisfy their needs and wants

4. Role of producers 3 categories of products used by people
Natural resources
Raw materials supplied by nature
Agricultural products
Crops and animals raised by farmers
Processed goods
Products whose forms have been changed to increase their value and usefulness to people

5. Role of producers (cont.)
4 types of businesses that are responsible for production of goods/services
Producers
Develop products to sell to other businesses or consumers
Extractors
Find natural resources like water, oil, coal, timber from the earth to be processed and used
Farmers
Tend land to grow crops and livestock that are later sold and processed
Manufacturers
Get materials from other producers and convert them into products for sale to consumers

6. Forms of production Forms of production are All needed to make
Extraction & cultivation
Processing
Manufacturing
All needed to make
products for customers

7. Extraction & cultivation
Products are obtained from nature
Makes sure that there is always an available supply of natural resources
Also makes sure that crops, livestock, fish are available at all times
Most basic form of production

8. processing Changing & improving the form of a product
Not many products are used exactly how they are found in nature
Most are processed before being used
Water, Cotton, Timber, Oil, Cows

9. manufacturing
Combines raw materials and processed goods into finished products
Businesses and consumers use these
Can be simple (cabinetmaking) or complex (designing a computer microchip)

10. Manufacturing examples
One manufacturer might use steel and plastic to make many parts for a snowmobile
Another may purchase meat, vegetables and fruit from farms to create frozen TV dinners
Another might take timber from a forest and process it into lumber and plywood for a construction company to buy to build houses with

11. Manufacturing processes
Usually, several manufacturers are a part of the total activity needed to produce goods that we buy
EX: a textile mill in North Carolina buys cotton from an Alabama farm. It spins the cotton into yarn and makes the yarn into fabric. A plant in Boston then colors and prints the cloth. A clothing manufacturer in New York then buys the cloth and makes it into jeans
Working together is what fulfills consumer needs

12. Types of manufacturing procedures
3 main types of Manufacturing procedures
Mass production
Custom manufacturing
Materials processing

13. Mass production
An assembly process that makes a large number of identical products using a continuous, efficient procedure
Sometimes called repetitive production
EX: automobile or bottling plants
Every employee has a specific task
Training costs are lower and quality is higher
Can also be boring and decrease motivation
Machines now assist with many assembly lines

14. Custom manufacturing
Manufacturers make products to meet specific needs and standards of customers/businesses
Products range from dentures to concert halls
Building a product for a specific use
Work closely with the customer to plan and design product to fit their requests
May call for unique materials/special process
EX: bridges, buildings, piece of airplane, special running shoe for particular athlete

15. Materials processing
Changing the form of raw materials so they can be consumed or used to make other products
EX: oil companies refine oil to form gasoline; mills process grain into flour and cereal; digital editors convert audio/video files into films/CDs
2 types
Continuous processing
Raw materials always move through equipment to change them into a specific product to buy
EX: milk
Intermittent processing
Uses short production times to produce a certain amount of change to a product. Machines are reset after each set.
EX: printer for special stationary

16. ANSWER #1-4 ON PAGE 322 BEFORE CONTINUING NOTES
13-1 assessment
ANSWER #1-4 ON PAGE 322 BEFORE CONTINUING NOTES

17. 13.2 objectives
Identify the activities involved in production planning
Describe how manufacturing is organized

18. Production activities
Production processes are very complex
Involves careful planning and coordination
Before a company can manufacture a product, it must have the facilities and equipment to carry out the production
It must hire enough people to complete jobs
It also must check all finished products for quality and store them until they are sold

19. Product development
Before production planning can happen, the company decides what products it will produce
You can’t expect to sell the same thing every year; New products will have to be developed
Product planning has 2 steps:
New product research
New product design

20. New product research
Goal is to develop new products that customers will like, meet their customer needs, and improve current products offered
Companies perform 2 types of research:
Applied research
Studies existing products to develop improvements or new uses of the product
EX: auto manufacturers improve fuel efficiency
Pure research
Research done with no product in mind; instead, wanting to discover new solutions to problems
EX: scientists researching for cures to diseases

21. New product design
Turning an idea into a product a company can sell and make a profit from
Designs are tested and best ones are chosen
After engineers build and test a model, the business determines all parts/materials needed for final product
Financial experts decide on what price to set
Make sure company makes money AND customers can afford it

22. Production planning
If a company develops and tests a new product idea, and they decide they want to proceed, they will then develop plans to produce it
Production planning includes 3 activities:
Develop a production process
Collect production resources
Select and prepare production personnel

23. Develop the production process
Consists of the activities, equipment and resources needed to manufacture a product
If you are going to use mass production, this is where you organize the assembly line
Figure out which method you are going to use is a key part of this step

24. Collect production resources
Order machines, tools required for production
Business must locate and organize a space to perform production activities
Can either buy a new building or remodel their current space to make bigger and better
Determine where materials will be coming from
Identify suppliers and make sure materials are delivered on time and at the right price

25. production personnel
Estimates the number of employees needed to complete production activities
Determines skills required of each employee
Company will check their own employees first, then hire and train new ones if needed

26. Inventory management
Inventory is a detailed list of a company’s materials, supplies and finished products.
Inventory management keeps track of the inventory & resources needed for production
Very important to manufacturing because you can’t produce products without your inventory
Managers keep a record of the supply and costs of resources used in production
After product is assembled, extra resources are moved into storage or sold to customers

27. Manufacturing procedures
Today’s assembly line is quite different than it used to be
Employees work in teams
Parts move along conveyor belts
Products move quickly through process
Employees check products for quality at several points
When completed, products are packaged, labeled and moved to a loading area for shipment

28. Organizing the work area
The type of product will determine how the work area is organized
Mass production requires a large building
There must be space for assembly line, equipment, tools, employee work stations and storage areas for parts used
The smaller the product, the larger amount of workspace each employee will have

29. Improving manufacturing
Today there are higher costs, more competition, and more customer demands
Challenges today are: faster production, increased quality of products, reduced costs
Companies are coming out with improved procedures, better training for employees and a higher level of quality for products
Continuous Process Improvement (CPI)has been added—increases the quality of work by reducing errors and waste. Processes are reviewed instead of waiting until a problem comes up.

30. Cpi-Continuous Process Improvement
STEP 1: Involve Everyone
STEP 2: Identify process activities
STEP 3: Establish quality performance standards
STEP 4: Select measurement tools
STEP 5: Monitor performance continuously
STEP 6: Improve process quality

31. Cpi (cont.)
Designed to help an organization achieve its goals by improving the quality of work
Standards are developed for quality performance
Standards are based on benchmarks (best practices among all competitors)
Based on these results, employees look for ways to improve work procedures so all products can improve as well

32. ANSWER #1-4 ON PAGE 328 BEFORE CONTINUING NOTES
13-2 assessment
ANSWER #1-4 ON PAGE 328 BEFORE CONTINUING NOTES

33. 13.3 objectives
Discuss the importance of effective business operations
Describe tools used to manage business operations

34. The importance of business operations
How a business operates day-to-day can determine if it succeeds or fails
Work procedures may not be efficient
Security issues may result in thefts
Lack of maintenance could lead to expensive repairs
Bad work environment can lead to unhappy employees

35. Types of business operations
Some operations are specific to the type of business
Most common types of business operations:
Facilities management
Logistics
Scheduling
Safety and security

36. Facilities management
Buildings are one of the largest investments of a business
They provide space for all of the business operations and all storage
Management begins with deciding on the building that will be needed (new or existing)
Management also deals with maintenance and repairs needed to make building better
Management also keeps energy/utility costs under control—be as “green” as possible

37. logistics
Managing the movement and storage of supplies, materials and finished products in a business
A newer term for logistics is: supply chain management
Major logistic duties:
Locating/purchasing where to get supplies from
Transportation of supplies, materials and products
Communicating with everyone in supply chain
JUST-IN-TIME: when goods arrive just in time for production or to sell—instead of just sitting in storage

38. scheduling
Determining the activities that need to be completed, who will complete the work, and the resources needed to complete the task in time
Factories must maintain the right inventory to fill each order or customers will wait too long to receive merchandise
Employee scheduling is important—full-time, part-time and temporary employees
Company must have the right number of people scheduled to complete the work needed

39. Safety and security Protecting people and property
Damage/injury can happen due to
Crime
Accidents
Natural disasters (tornados, earthquakes)
Security employees study activities of business to identify possible security problems then come up with a way to prevent them
They also try to minimize the amount of accidents and injuries—give safety training classes and hang safety posters in employee areas

40. Information management
Uses technology to access & exchange information to complete the work of an organization
4 goals:
Collect, organize & maintain needed information
Provide instant access to information required to perform work and make decisions
Prevent access to unauthorized users
Use technology to improve communication
Types of information used in business: text, data, graphics, pictures, and videos
Oral (telephone, voic , meetings)
Written (letters, memos, reports, s)

41. Information management (cont.)
Information managers are responsible for designing, purchasing, installing and maintaining the many types of technology used in business
They must develop procedures for collecting, storing and using the information
They make sure the information collected is easy to get to, yet still safe and secure
The internet makes it more difficult to safeguard against hackers worldwide

42. Tools for business operations
Management Tools
Operational plan: identifies how work will be done, who will do it and what resources will be needed
Operating budget: detailed financial plan for a specific area of the business
Schedule: time plan for completing activities
Procedure: list of steps to be followed for performing a work activity
Standard: specific measurement against which an activity or result is judged. Must be clear and realistic (EX: the number of customers that should be served in a fast food restaurant at one time)

43. Tools for business operations
Technology Tools
So many common business operations can be completed using computer software like:
Project management
Budgeting
Scheduling
Inventory
Computer security
Document management
New types of software are available to help with logistics: supply chain management software and collaboration software (pg 336)

44. ANSWER #1-3 ON PAGE 336 BEFORE COMPLETING OTHER CHAPTER ACTIVITIES
13-3 assessment
ANSWER #1-3 ON PAGE 336 BEFORE COMPLETING OTHER CHAPTER ACTIVITIES

45. CHAPTER 13: extra chapter assignments
Chapter 13 Assessment #11-26 (write definition and word)
Page 341: Decision Making Strategies #32-33
Chapter 13: Study Guide Handout