Chapter 9 BUS 100

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

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

Operations management - A specialized area in management that converts or transforms resources (including human resources) into goods and services

Operations management includes:

• Inventory management

• Quality control

• Production scheduling

• Follow-up services

How has manufacturing changed in the U.S. over the last few decades?

By 1979, nearly 20 million people worked in manufacturing. However, the number of Americans employed by factories has steadily dropped year after year since then. By 2016, the number dropped to 12 million people. However, the value of products made in the United States reached a record in 2016 due to advancements in technology and automation.

What must American companies do to remain competitive?

American manufacturers must keep up with the latest production techniques, no matter if they are developed in the U.S. or in another country. In the service sector, companies will need to focus on providing customers with quality care and attention and will need to maintain close relationships with suppliers

How does operations management differ between manufacturing and service sectors?

In manufacturing, operations management transforms raw materials, human resources, parts, supplies, tools, and other resources into goods. In the service sector, operations management focuses on creating a good experience for those who use the service.

Form utility - the value producers add to materials in the creation of finished goods and services.

Grove’s Basic Production Requirements:

1) to build and deliver products in response to the demands of the customer at the scheduled delivery time

2) To provide an acceptable quality level

3) To provide everything at the lowest possible cost

Process manufacturing - That part of the production process that physically or chemically changes materials

Assembly process - That part of the production process that puts together components

Continuous process- Long production runs turn out finished goods over time

Intermittent process - The production run is short and the machines are changed frequently to make different products

Slide 26) The Need to Improve Production Techniques and Cut Costs

Developments making U.S. companies more competitive

• Computer-aided design and manufacturing

• Flexible manufacturing

• Lean manufacturing

• Mass customization

• Robotics

• 3D printing

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-integrated manufacturing (CIM) - The uniting of computer-aided design with computer-aided manufacturing

Flexible manufacturing - Designing machines to do multiple tasks so that they can produce a variety of products

Lean manufacturing - The production of goods using less of everything compared to mass production

Mass customization - Tailoring products to meet the needs of individual customers

What is form utility?

>The value producers add to materials in the creation of finished goods and services. For example, when a company transforms raw steel into the body of an automobile, they are creating form utility.

Define and differentiate the following: process manufacturing, assembly process, continuous process, and intermittent process.

• Process manufacturing physically or chemically changes materials, such as turning sand into glass or computer chips.

• The assembly process puts together components to create a product. For example, cars are made through an assembly process that puts together the frame, engine, etc.

• Continuous process involves long production runs turning out finished goods over time. For example, a plant that makes plastic cups is run on a continuous process.

• Rather than using long runs, an intermittent process involves short runs that respond directly to specific customer orders. An example of this process would include manufacturers of men’s custom business suits.

What do you call the integration of CAD and CAM?

→ The integration of CAD and CAM is referred to as computer-integrated manufacturing or CIM

What is mass customization?

→ The process of tailoring products to meet the demands of a large number of individual customers. One example of this process is NIKEiD, which allows customers to design athletic shoes by choosing from a variety of colors and designs.

Slide 37) Operations management planning helps solve problems like: Facility location, Facility layout, Materials requirement planning, Purchasing, Inventory control, Quality control

Facility location - The process of selecting a geographic location for a company’s operations

Considerations for moving facilities to a new location: Labor costs, availability of resources, Access to transportation, Proximity to suppliers and customers, Crime rates, Quality of life for employees, Cost of living, and need to train or retrain local workforce

Telecommuting - Working from home via computer and modern.

Facility layout - The physical arrangement of resources (including people) in the production process

Which type of facility layout allows workers to congregate around the product?

→ Fixed positon layout

Facility layout options:

1. Assembly line layout (Product layout) - Workers do only a few tasks at a time used to produce large quantities of a few types of products.

2. Modular layout - teams of workers produce more complex units of the final product

3. Fixed-positon layout - Allows workers to congregate around the product

4. Process layout - Similar equipment and functions are grouped together

(slide 46-49)

Materials requirement planning (MRP) - A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place

Enterprise resource planning (ERP) - A newer version of MRP that combines the computerized functions of all the divisions and subsidiaries of the firm- such as finance, human resources, and order fulfillment- into a single integrated software program that uses a single database

Purchasing - The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services.

Just-in-time (JIT) inventory control - A 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.

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

Six Sigma Quality - A quality measure that allows only 3.4 defects per million opportunities (and slide 54)

Statistical quality control (SQC) - 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 beginning.

Staistical process control (SPC) - The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph.

(slide 56) Baldrige Awards

ISO 9001 - The common name given to quality management and assurance standards.

ISO 14001 - A collection of the best practices for managing an organization’s impact on the environment.

What are the major criteria for facility location?

Managers must always consider the customer and the impact on customers’ ability to use the company’s services and to communicate about their needs. Other criteria that need to be considered include labor costs, availability of resources, access to transportation, proximity to customers, suppliers, crime rates, quality of life for employees, and the cost of living, to mention but a few.

What is the difference between MRP and ERP?

Materials requirement planning (MRP) is a computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place. Enterprise resource planning (ERP), a newer version of MRP, combines the computerized functions of all divisions and subsidiaries of the firm into a single integrated software program that uses a single database.

What is just-in-time inventory control?

One major expense in the production process is the holding of parts. The goal of just-in-time inventory is to eliminate or reduce that cost. Just-in-time inventory systems keep a minimum of inventory on the premises and only deliver parts just as they are needed on the factory floor.

What are Six Sigma quality, the Baldrige Award, ISO 9001, and ISO 14001

Six Sigma is a quality-control standard that sets a benchmark of no more than 3.4 defects per million opportunities. The Bladrige Award was created in 1987 to promote a standard for overall quality in the following areas: manufacturing,services ,small business, education, and health care. The award was named after Malcolm Baldrige, the late U.S. secretary of commerce. The International Organization of Standardization, or ISO, is a worldwide federation of national standards bodies from more than 140 countries. This nongovernmental organization establishes global measures for the quality of individual products. ISO 9901 is the common name given to quality management and assurance standards, while ISO 14001 is a collection of the best practices for managing an organization’s environmental impact.

Program Evaluation and Review Technique (PERT) - A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project.

Steps involved in PERT

1. Analyzing and sequencing tasks

2. Estimating the time needed to complete each task

3. Drawing a PERT network illustrating the first two steps

4. Identifying the critical path

   • Critical path - 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 at any given time.

How could you use a Gantt chart to keep track of production?

A Gantt chart is a scheduling mechanism used by manufacturers for measuring production progress. This chart will give management a clear idea as to the status of the project and how much as been completed at any given time.