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Significance of Manufacturing

Significance of Manufacturing. Manufacturing supplies the products which satisfy our basic needs, maintain our good health and insure our safety and prosperity. Manufacturing industry employs 3 out of 4 scientists and engineers.

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Significance of Manufacturing

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  1. Significance of Manufacturing • Manufacturing supplies the products which satisfy our basic needs, maintain our good health and insure our safety and prosperity. • Manufacturing industry employs 3 out of 4 scientists and engineers. • Manufacturing industry spends 73% of all private R&D expenditures in the U.S. • In 1996, manufacturing accounted for 21% of Gross Domestic Product in the U.S.1 1 Includes construction, Bureau of Economic Analysis, 1997.

  2. Manufacturing • Coined from two Latin words manus (hand) + factus (make) • Technologically: “it is the application of physical and chemical processes to alter the geometry, appearence or properties of materials to make products”1 • Economically: “it is the transformation of materials into items of greater values by means of some processing or assembly operations”1 1 From: Grover, M. P., “Fundamentals of Modern Manufacturing,” Prentice-Hall, 1966, p. 3.

  3. Manufacturing Industry • Industry is a collection of organizations that produce or supply goods and services. • Industry groups: • Primary (raw materials): agriculture, forestry, fishing and mining • Secondary (manufacturing): • Durable goods: construction, machinery, electronic equipment, automotive, fabricated metal products, lumber and furniture • Nondurable goods: food, tobacco, chemicals, printing, rubber, apparel, textiles, paper • Tertiary (services): • financial: banks, insurance, securities, real estate, • transportation and utilities: trucking, communications, electric utilities • services: retail/wholesale, health, legal, business, education, entertainment • government: federal, state and local

  4. Primary Secondary Tertiary Agriculture Aerospace Banking Forestry Apparel Communications Fishing Automotive Education Livestock Basic metals Entertainment Quarries Beverages Financial Services Mining Building materials Government Petroleum Chemicals Health and Medical Computers Hotel Construction Information Consumer appliances Insurance Electronics Legal Fabricated metals Real estate Food Processing Repair and maintenance Glass, ceramics Restaurant Heavy machinery Retail trade Paper Tourism Petroleum refining Transportation Pharmaceuticals Wholesale trade Plastics Power utilities Publishing Textiles Tire and Rubber Wood and furniture

  5. Gross Domestic Product by Industry Groups in 19961 1 U. S. Bureau of Economic Analysis, 1997.

  6. ISAT 211 Issues in Modern ManufacturingModule 1: Introduction to POM • This module explores: • Definition and overview of operations management (OM) • Key functions in a production system • Transformation processes in a production system • Brief history of operations management • Current trends and challenges in OM

  7. Operations ManagementTerminology • Operations Management (OM) is the process of designing, operating, and improving of the systemwhich produces products andservices. • A related field, Industrial Engineering (IE) deals with many issues in OM, but OM has a major managementaspect that distinguishes it from both IE and Operations Research (OR). • Operations Research (OR) uses quantitative techniques, such as simulation and optimization to help plan and control production.

  8. Market Place Customers (markets) shape corporate strategy How firm plans to beat the competition Corporate Strategy How firm uses resources to support corporate strategy Operations Strategy Controls direct resources of firm Operations Management When Planning and Control Systems Means of managing resources People Plants Parts Processes How What Where Who Operations Management (OM) Process Five P's of OM

  9. Production System Inputs Output Parts & materials Products or services System consists of transformation processes involving resources, such as machines, workers and tools. Physical: Manufacturing Location: Transportation/storage Exchange: All services, such as retailing Physiological: Health care Informational: Telecommunications Production Operations:System Model Transformation Types:

  10. Hospital Restaurant Automobile factory University Distribution Center Transformations in Production System:Examples System Patients Doctors, nurses, supplies Physiological or physical Healthy persons Hungry customers Food, chef, servers, ambiance Physical or exchange Satisfied customers Parts and materials Machines, people & tools Physical Finished automobiles Eager students Teachers, books, labs Exchange or inform-ational Educated students Goods, cargo Shelves, fork lifts, warehouse Vocation On-time shipment Primary Inputs Components Typical Transformation Output

  11. Inputs Output Sales Orders Marketing Capital & Equipment Finance Products & Services Materials & Supplies R & D Purchasing Human Resources Labor Shipping Technical Core Boundary functions Functional Groups in OM Production Operations Perform activities which transform the inputs

  12. Lower Management Typical Organizational Chart:Manufacturing Firm Upper Management Middle Management

  13. Typical Organizational Chart:A Major Branch of A Large National Bank

  14. Operations Management Objectives The specific objectives may include: • Maintain appropriate production level • Control materials and labor costs • Utilize resources (labor and equipment) effectively • Maintain process and product quality • Insure on-time delivery • Adapt to changes in products and demand levels • The general objective is: • To produce on time and at minimum cost

  15. Key Historical Development of OM • Principles of Scientific Management • Frederick W. Taylor (1911) • Scientific laws govern how much a worker can produce. • Moving Assembly Line • Henry Ford (1913) • Introduced standardized and repetitive production • Hawthorne Studies • Elton Mayo (Western Electric, 1927-1933) • Worker motivation and technical aspects of work affected productivity

  16. Key Historical Development of OM (continued) • Management Science • Operations Research groups (1950’s, 60’s and 70’s) • Quantitative techniques for improving operations • Quality revolution • Edward Demming (1970’s in Japan) • Process focus, lean production and continuous improvement • Computer automation and integration • Many companies (1980’s) • Computer-based integration of islands of automation

  17. Current OM Challenges • Shortening time-to-market • Developing competitive production systems for customization of products and services • Managing global production channels • Developing and integrating new process technologies into existing production systems

  18. Current Challenges in OM (Continued) • Achieving high quality quickly and maintaining it in the face of restructuring • Managing an increasingly diverse workforce • Conforming to regulatory requirements • Tight integration between key functional groups in an enterprise (marketing, product development and production)

  19. Production System Inputs Output Parts & materials Products or services System consists of transformation processes involving resources, such as machines, workers and tools. Production Operations:System Model Transformation Types: Physical: Manufacturing Locational: Transportation/storage Exchange: All services, such as retailing Physiological: Health care Informational: Telecommunications

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