Chapter

1. Chapter Production and Operations Management 9 9-1

2. From 2001 to 2009, manufacturing output in the U.S. rose 4% each year. • The U.S. is still the world’s leading manufacturer. Manufacturing in the U.S. • Almost 25% of all goods produced each year come from the U.S. 9-2

3. * What’s Made in the USA?Leading U.S. Manufactured Goods Source: Parade Magazine, www.parade.com/intel, April 19, 2009. 9-4

4. MASSIVE MANUFACTURERSThe Top Ten U.S. Manufacturers Source: Industry Week, www.industryweek.com, accessed June 2011. 9-5

5. The U.S. economy is no longer manufacturing based. • 85% of jobs are in the service sector. • The top-paying service jobs in the U.S. are in: • Legal services • Medical services • Entertainment • Accounting • Finance • Management consulting TOP-PAYING SERVICE JOBS 9-6

6. From Production to Operations Management • Production • Production Management • Operations Management (OM)

7. PRODUCTION and PRODUCTION MANAGEMENT • Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production). • Production Management -- All the activities managers do to help firms create goods. 9-9

8. Production Management • Historically been associated with manufacturing • But, because of the growth of the Service Sector…

9. Operations Management -- A specialized area in management that converts or transforms resources into goods and services. • Operations management includes: • Inventory management • Quality control • Production scheduling • Follow-up services OPERATIONS MANAGEMENT 9-11

10. The Production& Operations Process Inputs Output Conversion Process Manufacturing UB’s Dry Cleaners Service

11. Utility The want-satisfying power of a good or service

12. Form Utility • The value producers add to materials in the creation of finished goods and services. 9-15

13. Production Processes

14. PROCESS and ASSEMBLY in PRODUCTION • Process Manufacturing • The part of production that physically or chemically changes materials. 9-17

15. Process and Assembly in Production • Assembly Process • The part of the production process that puts together components.

16. Key Production Processes • Production processes are either continuous or intermittent. • Continuous Process -- Long production runs turn out finished goods over time. • Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products.

17. BASIC PRODUCTION REQUIREMENTS • To build and deliver products in response to the demands of the customer at the scheduled delivery time. • To provide an acceptable quality level. • To provide everything at the lowest possible cost. 9-20

18. DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE • Computer-aided design and manufacturing • Flexible manufacturing • Lean manufacturing • Mass customization 9-22

19. Computer-Aided Design (CAD) -- The use of computers in the design of products. • Computer-Aided Manufacturing (CAM) -- The use of computers in the manufacturing of products. COMPUTER-AIDED DESIGN and MANUFACTURING 9-23

20. Computer-Integrated Manufacturing (CIM) -- The uniting of computer-aided design with computer-aided manufacturing. • CIM is expensive but it cuts as much as 80% of the time needed to program machines to make parts. COMPUTER-INTEGRATED MANUFACTURING 9-24

21. Lean Manufacturing • Flexible Manufacturing -- Designing machines to do multiple tasks so they can produce a variety of products.

22. Designing machines to do multiple tasks so they can produce a variety of products. • Allen-Bradley uses flexible manufacturing to build motor starters. • 26 machines and robots build, test and package parts. FLEXIBLE MANUFACTURING 9-26

23. Lean Manufacturing • Lean Manufacturing -- Using less of everything than in mass production. • Compared to others, lean companies: • Take half the human effort. • Have half the defects in finished products. • Require one-third the engineering effort. • Use half the floor space. • Carry 90% less inventory.

24. Tailoring products to meet the needs of a large number of individual customers. MASS CUSTOMIZATION • More manufacturers are learning to customize. • Mass customization exists in the service sector too. 9-28

25. Operations Management • Operations management planning helps solve problems like: • Facility location • Facility layout • Materials requirement planning • Purchasing • Inventory control • Quality control

26. Facility Location • Facility Location -- The process of selecting a geographic location for a company’s operations. • Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations.

27. Future Facility Location • Information technology gives firms increased flexibility in terms of location. • Telecommuting -- Working from home via computer and modem.

28. Setting Up the Facility • Facility Layout -- The physical arrangement of resources, including people, to most efficiently produce goods and provide services. • Facility Layout depends on the processes performed: • Service: Help customers find products • Manufacturing: Improve efficiency

29. Facility Layout Options Assembly Line Layout – Workers do only a few tasks at a time. Modular Layout – Teams of workers produce more complex units of the final product. Process Layout – Similar equipment and functions are grouped together. Fixed-Position Layout – Allows workers to congregate around the product.

30. MRP • Materials Requirement Planning (MRP) – A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed.

31. PURCHASING • Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services. 9-40

32. Inventory Control • Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line. • To work effectively, the process requires excellent coordination with suppliers.

33. Quality What is it?

34. Consistently producing what the customer wants while reducing errors before and after delivery to the customer Quality

35. Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality Dimensions of Quality Source: Harvard Business Review, “Competing on the Eight Dimensions of Quality”, 12/87.

36. Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities. (getting it right 99.9997% of the time) QUALITY CONTROL Photo Courtesy of: Argonne National Laboratory 9-46

37. Statistical Quality Control -- A process used to continually monitor all phases of the production process. • Statistical Process Control -- A process of testing statistical samples of product components at each stage of production. • Measuring quality along the production process reduces the need for quality control at the end. STATISTICAL QUALITY CONTROL & STATISTICAL PROCESS CONTROL 9-47

38. Quality Control Awards

39. Quality Control Awards Malcolm Baldrige Award

40. The Baldrige Awards • Companies can apply for awards in these areas: • Manufacturing • Services • Small Businesses • Education • Healthcare • Not-for-Profits Source: NIST News Release, November 22, 2005

41. Quality Control Awards Deming Award

42. Quality Control Awards Deming Award • Japan’s national quality award for industry. It was established in 1951 by the Japanese Union of Scientists and Engineers (JUSE) and it was named after W. Edwards Deming. He brought statistical quality control methodology to Japan after W.W.II. • The Deming Prize is the world’s oldest and most prestigious of such awards.

43. Quality Control Standards

44. What is the ISO • The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies.

45. ISO Quality Standards • ISO 9000: The common name given to voluntary standards for quality management set by International Organization for Standardization (ISO) • ISO 14000: A collection of the best practices for managing an organization’s impact on the environment.

46. Control Procedures

47. PERT • Program Evaluation and Review Technique (PERT) • A method for analyzing the tasks involved in completing a given project and estimating the time needed.

48. PERT Steps • Analyzing and sequencing tasks that need to be done • Estimating the time needed to complete each task • Drawing a PERT network illustrating the information from steps 1 and 2 • Identifying the critical path - Sequence of tasks that takes the longest time to complete

49. PERT DIAGRAM

50. Gantt Chart • Named for its developer, Henry Gantt • A bar graph that clearly shows what projects are being worked on and how much has been completed at any given time