Chapter-08 Producing Quality Goods and Services

1. Chapter-08 Producing Quality Goods and Services Dr. GehanDhameeth, DBA

2. Nestle plans ahead for quality production

3. Nestle plans ahead for quality production • 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”

4. Learning Objectives

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

6. What is production?

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

8. Competition in the Global Marketplace

9. Competition in the Global Marketplace 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. Careers in Operations Management

11. Careers in Operations Management Operations managers must appreciate the manufacturing process Mass and customized production processes Successful operations managers must: Be able to motivate and lead people Understand how technology can make a manufacturer more productive and efficient Appreciate the control processes that help lowerproduction cost and improve quality Understand the relationship among customer, marketing, and production

12. The Conversion Process

13. The Conversion Process 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. The Nature of Conversion 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. The Increasing Importance of Services

16. The Increasing Importance of Services % % % Employees involvement in service industry over years in USA

17. The Increasing Importance of Services 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 Services are consumed immediately and cannot be stored Services are provided when and where the customer desires Services are usually labor intensive Services are intangible, making it difficult to evaluate customer satisfaction

18. Where Do New Products and Services Come From?

19. Where Do New Products and Services Come From? Research and Development Basic research- to uncover new knowledge Applied research- new knowledge with potential use Customers Competitors Suppliers Employees

20. Where Do New Products and Services Come From? (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. Where Do New Products and Services Come From? (cont’d)

22. Where Do New Products and Services Come From? (cont’d)

23. New Product Development Process

24. New Product Development Process • 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. Planning for Production

26. Planning for Production Design planning Product line Product design Capacity Use of technology Labor-intensive technology: Capital-intensive technology:

27. Planning for Production (cont’d) Facilities planning and site selection Factors influencing the location decision for a production facility Human resources Plant layout

28. Operational Planning

29. Operational Planning 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. Operations Control

31. Operations Control 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. Operations Control (cont’d) Scheduling (right place at the right time) Quality control Statistical process control (SPC) Statistical quality control (SQC) Inspection

33. Operations Control (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. Management of Productivity and Technology

35. Management of Productivity and Technology Productivity (average level of output per worker per hour) Productivity trends

36. The Impact of Computers and Robotics on Production Automation Robotics

37. The Impact of Computers and Robotics on Production (cont’d) Computer manufacturing systems Computer-aided design (CAD) Computer-aided manufacturing (CAM) Computer-integrated manufacturing (CIM)

38. Write five key things (areas) that you can critically remember in today’s discussion

39. What we discussed today..

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