MNGT Chapter 20- Exam 2

FALL 25

operations management

the set of managerial activities used by an organization to transform resource inputs into products, services, or both

• is necessary for competitiveness and overall organization performance

• creates value and utility through the production of products and services

importance of excellence in operations

manufacturing organization

a form of business that combines and transforms resource inputs into tangible outcomes that are then sold to others

service organization

an organization that transform resources into an intangible output and creates time and place utility for its customers

Operations management has a direct impact on competitiveness, quality, productivity, and effectiveness.

role of operations in organizational strategy:

Operations management and organizational strategy have reciprocal effects on each other.

role of operations in organizational strategy:

Strategic goals cannot be met if there are deficiencies and insufficiencies in operations resources.

role of operations in organizational strategy:

determining product service mix

involves deciding how many and what kinds of products to offer in the marketplace

capacity decisions

• involve choosing amount of products, services, or both that can be produced by an organization.

• Can be high-risk decisions due to uncertainty about future product demand and incurred costs of additional, possibly excess, capacity.

facilities

are the physical locations where products or services are created, stored, and distributed

location

the physical positioning or geographic site of facilities

layout

the physical configuration of facilities, the arrangement of equipment within facilities, or both

product layout

facilities arranged around the product; used when large quantities of a large quantities of a single product are needed

ex. products go in exact same order in the station

process layout

facilities arranged around the process; used in facilities that create or process a variety of products

ex. custom item; variety of products

fixed posiiton layout

facilities arranged around a single work area; used for the manufacture of large and complex products

• product is stationary

cellular layout

a configuration of facilities used when families of products can follow similar paths.

technology

the set of processes and systems used by organizations to convert resources into products or services

automation

the process of designing work so that it can be completely or almost completely performed by machines

robot

any artificial device that can perform functions ordinarily thought to be appropriate for human beings.

services

are rapidly moving toward automated systems and procedures

ex. automated teller machines and room reservations

supply chain management

the process of managing operations control, resource and inventory acquisition and purchasing, and thus improving overall efficiency and effectiveness

Coordinating operations management with other functions helps insure the system focuses on critical elements crucial to goal attainment.

Coordinating operations management with other functions helps insure the system focuses on critical elements crucial to goal attainment.

purchasing management (procurement)

Controlling the buying of the materials and resources is at the heart of effective supply chain management

inventory control (materials control)

managing the organization’s raw materials, work in process, finished goods, and products in transit

just in time (JIT) method

An inventory system than has necessary materials arriving as soon as they are needed (just in time) so that the production process is not interrupted.

quality

The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs

• both a relative and absolute concept

• relevant to both products and services

Malcolm baldrige award

Named after a former secretary of commerce, this award is given by the Commerce Department to firms that achieve major quality improvements.

competition

Quality has become one of the most important competitive points in business today.

productivity

Quality enhancement programs decrease defects, reduce rework, and eliminate the need for inspectors as employees assume responsibility for quality

costs

Improved quality reduces costs from customer returns, warranty, and lawsuits for faulty products, and lost sales to future customers.

performance

a products primary operating characteristics; automobile acceleration and television’s picture daily

features

supplements to a products basic functioning characteristics, such as power windows on a car

reliability

a probability of not malfunctioning during a specified period

conformance

the degree to which a products design and operating characteristics meet established standards

durability

a measure of product life

serviceability

the speed and ease of repair

benchmarking

The process of learning how and what other firms do in an exceptionally high-quality manner.

ex. chicken finger place: Gurthries? Foosacklys?

outsourcing

Subcontracting operations/services to those who can do them cheaper and/or better

• changing strategy of a part you are weak at

acceptance sampling

testing a part of the finished product thereby destroying the finished product

in process sampling

very diff from accept sampling; sampling all along the way. If go to winery, huge barrels, has plastic plug, testing the wine color, taste, smell. if they dont like what they see, they are going to add something

productivity

An economic measure of efficiency that summarizes the value of outputs relative to the value of the resources used to produce them.

levels of productivity

The unit of analysis used to calculate or define productivity

aggregate productivity

the total level of productivity for a country.

industry productivity

the total productivity of all the firms in an industry.

ex. oil and gas

company productivity

the level of productivity of a single company.

unit productivity

the productivity level of a unit or department

ex. strategic unit, department, division

individual productivity

the productivity attained by a single person individual productivity example: a test or exam

start from scratch- it is usually easier than trying to

do what the organization does now faster

guide for increasing speed of operations:

(1)

minimize the number of approvals need to do something: the fewer people who have to approve something, the faster approval will get done

guide for increasing speed of operations:

(2)

use work teams as a basis for organization

guide for increasing speed of operations:

(3)

develop and adhere to a schedule- a properly designed schedule ca n greatly increase speed

guide for increasing speed of operations:

(4)

do not ignore distribution- making something faster is

only part of the battle

guide for increasing speed of operations:

(5)

integrate speed into the organization's culture- if everyone understands the importance of speed, things will naturally get done more quickly

guide for increasing speed of operations:

(6)

Improving Operations

• Spending more resources on research and development helps

identify new products, new uses for existing products, and new

methods for making products.

• Reworking transformation processes and facilities can boost

productivity.

Increasing Employee Involvement

• Increased employee participation can increase both quality and

productivity.

• Cross-training of employees allows firms to function with fewer

workers.

• Rewards are essential to success in improving productivity.