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Busn 101 Chapter 9

Busn 101 Chapter 9. Producing Goods & Services. Goals:. Many Terms Recent Evolution of production in the USA Operations management Production processes Production techniques that have improved productivity in USA CAD (Computer-aided design) CAM (Computer-aided manufacturing)

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Busn 101 Chapter 9

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  1. Busn 101 Chapter 9 Producing Goods & Services

  2. Goals: • Many Terms • Recent Evolution of production in the USA • Operations management • Production processes • Production techniques that have improved productivity in USA • CAD (Computer-aided design) • CAM (Computer-aided manufacturing) • Flexible manufacturing • Lean manufacturing • Mass customization • Operations management planning issues (manufacturing and service): • Facility location • Facility layout • Materials requirement planning • Purchasing • JIT (just-in-time inventory) control • Quality control • PERT (Planning) and Gantt (measure progress) charts to control manufacturing processes

  3. Production • The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship and knowledge.

  4. Production Management • The term used to describe all the activities managers do to help their firms create goods

  5. Operations Management • A specialized area in management that converts or transforms resources into goods and services • Includes: • Human Resources • Inventory management • Quality Control • Production Scheduling • Follow-up services

  6. What Is Operations Management Like At: • Auto Manufacturer • Operations Management take raw materials, human resources, parts, supplies, paints, tools and more to make autos • Colleges • Operations Management take information, teachers, buildings, computers, students and creates a service that transforms students into educated people • Service Sector • HotelOperations Management take rooms, food, personnel, cleaning services, internet services and create happy, feed and well rested customers.

  7. Form Utility • The value added by the creation of finished goods and services, such as: • The value added by taking silicon and making computer chips • Putting services together to create a vacation package • The value added by taking wood, paint, labor, packaging, and other costs and making a boomerang • More in chapter 15

  8. Production Process • Process Manufacturing • That part of the production process that physically or chemically changes materials • Assembly Process • The part of the production process that puts together components • Continuous Process • A production process in which long production runs turn out finished goods over time • Intermittent Process • A production process in which the production run is short and the machines are changed frequently to make different products • See Excel Sheet 

  9. Computers • CAD (Computer-aided Design) • The use of computers in the design of products • CAM (Computer-aided Manufacturing) • The use of computers in the manufacturing of products • CIM (Computer-integrated Manufacturing) • One machine that does both CAD and CAM

  10. Manufacturing • Flexible Manufacturing • Designing machines to do multiple tasks so that they can produce a variety of products • See Excel Sheet  • Lean Manufacturing • Manufacturing that uses fewer inputs (resources) to make the same number of outputs than before. Increase productivity. • See Excel Sheet  • Mass Customization • Tailoring products to meet the needs of individual customers (Dell).

  11. Operation Management Planning • Facility Location • The process of selecting a geographic location for a company’s operations • Facility Layout • The physical arrangement of resources (including people) in the production process • See Excel Sheet 

  12. Operation Management Planning • MRP (Material Requirement Planning) • A computer-based production management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place (for a single firm) • ERP (Enterprise Resource Planning) • A computer application that enables multiple firms to manage all of their operations (finance, requirements planning, human resources and order fulfillment) on the basis of a single, integrated set of corporate data

  13. Operation Management Planning • Purchasing • The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for the goods and services • JIT (Just-in-time Inventory Control) • The production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line • Example: NUMI (New United Motor Manufacturing, Inc.) joint venture between GM and Toyota • http://en.wikipedia.org/wiki/NUMMI

  14. Quality • Quality • Consistently producing what the customer wants while reducing errors before and after delivery to the customer • Six Sigma Quality (Six Standard Deviation Quality) • A quality measure that allows only 3.4 defects per million opportunities

  15. Quality • SQC (Statistical Quality Control) • The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning • SPC (Statistical Process Control) • The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from the quality standards are recognized and can be corrected if beyond the set standards.

  16. Standards • ISO 9000 • The common name given to quality management and assurance standards • ISO 14000 • A collection of the best practices for managing an organization’s impact on the environment • Baldrige Awards (since 1987) • Overall company Quality: • Leadership, Strategic planning, customer and market focus, information and analysis, human resource focus, process management and business results

  17. Charts and more… • PERT (Program Evaluation And Review Technique) • A method for analyzing that tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the project • Critical Path (P 251 Text) • In a PERT network, the sequence of tasks that takes the longest time to complete • Gantt Chart • Bar graph showing production managers what projects are being worked on and what stage they are in any given time • See Excel Sheet 

  18. Recent Evolution Of Production In The USA • USA manufacturing output rose: • 1990-1995: 3.7% 1995-2001: 5.7% 2001-2008 4% • How? • Close relationships with suppliers and other companies to meet customer’s needs • Continuous improvement • Site Selection • The Internet to unite companies • Production techniques such as: ERP, CIM, Flexible manufacturing, lean manufacturing • What can the USA do to Keep jobs in the USA? • Continue to innovate and create new jobs • New innovation in sources of energy

  19. Operations Management • The area of management that converts or transforms resources into goods and services • What kind of firms use Operations Management? • Firms in both the manufacturing and service sectors use operation managers

  20. Production Processes • Process manufacturing physically or chemically changes materials • Wood  Chair • Sewage Manure • Assembly processes puts things together • Parts  Auto • Parts  Vacation package

  21. Production Techniques That Have Improved Productivity In USA • CAD (Computer-aided design) • CAM (Computer-aided manufacturing) • CIM puts these two together and increase productivity dramatically (large initial cost) • Flexible manufacturing • Flexible machines that can produce a variety of products

  22. Production Techniques That Have Improved Productivity In USA • Lean manufacturing (always increasing productivity) • A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing its need for resources • Mass customization (Custom goods/service for many) • Think of Dell or National Bicycle Industrial Co., Japan or a travel agent

  23. Operations Management Planning (Manufacturing And Service): • Facility location • Process of selecting a geographic location for a company’s operations based on: • Labor costs • Land costs • Taxes and Regulations • Proximity to • Customers • Suppliers • Resources • Skilled workers • Transportation • What is the quality of life and education system like?

  24. Operations Management Planning Issues (Manufacturing And Service): • Facility layout • The physical arrangement of resources to produce goods and services effectively and efficiently • MRP and ERP • MRP is a computer application that uses sales forecasts to make sure that materials and parts are in the right place at the right time for a specific firm. • ERP is for when there is more than one firm and it manages all resources (finance, materials, human resources) from one data source. • Much duplication is eliminated because there is only one data source and orders and planning are done only once.

  25. Operations Management Planning Issues (Manufacturing And Service): • Purchasing • Purchasing agreements now involve fewer suppliers than in the past • Relationships are built and information is shared so that purchasing is more reliable • The internet has increase efficiency

  26. Operations Management Planning Issues (Manufacturing And Service): • JIT (just-in-time inventory) control • Have the suppliers deliver the parts/materials just in time to go to the assembly line so they do not need to be stored in warehouses • Saves with: • Obsolescence • Pilferage • Damage • Storage costs

  27. Operations Management Planning Issues (Manufacturing And Service): • Quality control • Six Sigma Quality means that the firm uses statistical techniques (testing only samples – not every product) to assure that they get 3.4 defects for every 1 million products made. • When the samples show variances (from the 3.4…), then they make corrections. • Firms check for quality control before the goods are sold to customers – it is worth the cost to not put defects into customers hands • If you can attain ISO standards and the Baldrige awards can attract customers and lift the firm’s reputation

  28. PERT And Gantt Charts To Control Manufacturing Processes • PERT charts help with planning by determining the critical path and making sure that there are no delays in the critical path • Gantt charts can measure progress for various projects

  29. Production  Service Economy • Production • Make goods like autos, food, computers • Service: • Accounting, Finance, Medical Services, Teachers… • USA has moved to a service economy • 70% GDP • 85% jobs • USA still a huge manufacturer • Insourcing • Steel and auto companies

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