Chapter 20 Managing Operations, Quality, and Productivity

computer-aided manufacturing (CAM)

the use of computers in the manufacturing of products. It is usually combined with CAD to ensure that the design moves smoothly to production

Fixed position layout

A physical configuration of facilities arranged around a single work area; used for the manufacture of a large and complex products such as airplanes

Increasing Employee Involvement

-Increased individual worker's voices in how jobs are done, formal agreements between management and labors, and total involvement throughout the organization -Increase flexibility of an organization's workforce by training employees to do a number of different jobs -Rewards are essential to making employee involvement work. Firms must reward people for learning new skills and using them proficiently

What are the levels of productivity?

1. Aggregate Productivity: the total level of productivity achieved by a country 2. Industry Productivity: the total productivity achieved by all the firms in a particular industry 3. Company productivity: the level of productivity achieved by an individual company 4. Unit and Individual productivity: productivity achieved by a unit or department within an organization and the level of productivity attainted by a single person

What are the three specific reasons that quality is an important concern for individual managers and organizations?

1. Competition: quality has become a business point; some businesses focus even more attention on service quality as a competitive advantage 2. Productivity: quality and productivity are related 3. Costs: improved quality also lowers costs; poor quality results in higher returns and loss in revenue

What are the four basic types of inventory and what are their purposes?

1. Raw materials: provide the materials needed to make the product 2. Work in process: enable overall production to be divided into stages of manageable size 3. Finished goods: provide ready supply or products on customer demand and enable long, efficient production runs 4. In transit (pipeline): distribute to customers

What three things are likely to result from a quality enhance program?

1. number of defects goes down, causing fewer returns 2. resources (materials and people) dedicated to reworking flawed output will decrease 3. the organization can products more units with fewer resources

Manufacturing

A form of business that combines and transforms resource inputs into tangible outcomes. Manufacturing once dominated the US industry and the entire operations management used to be called "production management."

Process layout

A physical configuration of facilities arranged around the process; used in facilities that create or process a variety of products. Each type of conversion task is centralized in a single workstation or department.

Product Layout

A physical configuration of facilities arranged around the product; used when large quantities of a single product are needed. Several different workstations may perform the same operation.

Cellular layouts

A physical configuration of facilities used when families of products can follow similar flow paths

ISO 9000:2000

A set of quality standards created by the international organization for standardization and revised in 2000

Statistical Quality Control (SQC)

A set of specific statistical Techniques that can be used to monitor quality; includes acceptance sampling and in-process sampling

ISO 14000

A set of standards for environmental performance. Firms must document how they are using raw materials more efficiently, managing pollution, and reducing impact on the environment

Total Quality Management (TQM)

A strategic commitment by top management to change its whole approach to business in order to make quality a guiding factor in everything it does

Computer assisted manufacturing

A technology that relies on computers to design or manufacture products

Productivity

An economic measure of efficiency that summarizes what is produced relative to resources used to product it.

Just-in-Time (JIT) Method

An inventory system that has necessary materials arriving as soon as they are needed (just in time) so that the production process is not interrupted. The JIT approach requires high levels of coordination and cooperation.

Service Organization

An organization that transforms resources into an intangible output and creates time or place utility for its customers

Total Factor Productivity

An overall indicators of how well an organization uses all of its resources to create all of its products and services. The bigger problem is that it is expressed in dollars and some resources can't be measured that way

Robot

Any artificial device that is able to perform functions ordinarily thought to be appropriate for human beings

Quality

As defined by the American Society for Quality Control, the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs. Quality is both absolute and relative.

Manufacturing Today: Automation

Automation: -helps to improve products and services; it fosters innovation -relies on feedback, information, sensors, and a control mechanism -can mean the losing of jobs short-term but in the long run create more jobs

The Role of Operations in Organizational Strategy

Beyond its direct impact on such factors as competitiveness, quality, and productivity, it also directly influences the organization's overall level of effectiveness. Just as strategy affects operations management, so too, does operations management affect strategy.

Purchasing Management

Buying materials and resources needed to produce products and services; also known as procurement. purchasing is at the very heart of the supply chain management. The manager must buy materials and ensure they are of good quality as well.

computer-integrated manufacturing (CIM)

CAD and CAM are linked together and computer networks automatically adjust machine placements and settings to enhance both the complexity and the flexibility of scheduling.

The Importance of Productivity

Firm productivity is a primary determinant of an organization's level of profitability and of its ability to survive. Productivity also partially determines people's standard of living within a particular country.

Product-service Mix

How many and what kinds of products or services (or both) to offer. Decisions about this also have to be made regarding the level of quality desired, the optimal cost of each product or service, and exactly how each is to be designed

Methods

Improved methods can improve product and service quality. Methods are operating systems used by the organization during the actual transformation process

Costs

Improved quality also lowers costs. Organizations with quality problems often have to increase inspection expenses just to catch defective products

How does business or industry improve its productivity?

Improving operations and increasing employee involvement

Technology

Investing in higher-grade machines capable of doing jobs more precisely and reliably often improves quality

In-Process Sampling

Involves evaluating products during production so that needed changes can be made

Capacity Decision

Is high-risk because of the uncertainties of future product demand and the large monetary stakes involved. The major consideration in determining capacity is demand.

Inventory Control

Managing the organization's raw materials, work in process, finished goods, and products in transit; also called materials control. it is essential for effective operations management.

Materials

Many firms have increase the quality requirements they impose of their suppliers as a way of improve the quality of their own products

Malcolm Baldrige Award

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

Improving operations

One way a company can improve is by spending more on research and development. R&D helps identify new products and new methods for making products. US continues to be world leader in R&D. Another way could be through reassessing and revamping their transformation facilities

Operations Management as Control

One way of using operations management as control is to coordinate it with other functions. Misplaces accountability results in ineffective organizational control. Operations managers are accountable for different kinds of results. Managerial control ensures that resources and activities achieve primary goals.

The importance of Operations

Operations management creates value and utility of one type or another, depending on the nature of the firm's products or services

Labor Productivity Formula

Outputs/Direct Labor = Labor Productivity

Total Factor Productivity Formula

Outputs/Inputs = Productivity

What are the eight dimensions of quality?

Performance, Features, Reliability, Conformance, Durability, Serviceability, Aesthetics, Perceived quality

Robotics

Refers to the science and technology of the construction, maintenance, and use of robots. Welding was one of the first applications of robotics and it continues to be the area for most application. The use of robots in inspection work is increasing

Acceptance sampling

Sampling finished goods to ensure that quality standards have been met. Acceptance sampling is effective only when the correct percentage of products that should be tested is determined

Service Technology

Service technology is changing rapidly and is too moving more and more toward automated systems and procedures. We see this in electronic banking, universities (zoom, bookstore, etc.), hospitals, and restaurants

Strategic commitment

Starting point for TQM. It is important because (1) the organization culture must change to recognize that quality is not just an ideal but an objective goal that must be pursued (2) a decision to pursue the goal of quality carries with it some real costs

Outsourcing

Subcontracting services and operations to other firms that can perform them more cheaply or better. Firms must be careful with outsourcing decisions because service or delivery problems can lead to major complications

Six Sigma

The Six Sigma method tries to eliminate mistakes. Six Sigma is obtained when a firm produces 3.4 mistakes per million

Cycle Time

The Time needed by the organization to accomplish activities such as developing, making, and distributing products or services. If a business can reduce its cycle time, quality will often improve.

Productivity Trends

The US has one of the highest levels of productivity in the world. Important factor that has hurt US productivity indices has been the tremendous growth of the service sector in the US. Service sector grew, productivity did not. Some believe that productivity will continue to improve

Capacity

The amount of products, services, or both that can be produced by an organization.

Value-Added Analysis

The comprehensive evaluation of all work activities, materials flows, and paperwork to determine the value that they add for customers. Such an analysis often reveals wasteful or unnecessary activities that can be eliminated

Layout

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

Facilities

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

Location

The physical positioning or geographic site of facilities and must be determined by the needs and requirements of the organization.

Automation

The process of designing work so that is can be completely or almost completely performed by machines.

Benchmarking

The process of learning how other firms do things in an exceptionally high-quality manner. Some approaches are simple and straightforward, while others are more indirect.

Supply chain management

The process of managing operations control, resource acquisition, and inventory so as to improve overall efficiency and effectiveness

Operations Management

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

Computer aided design (CAD)

The use of computers to designs parts and complete products and to stimulate performance so that prototypes need not be constructed.

Operation Systems through Supply Chain Management

Their basic functional purpose is to control transformation processes to ensure that relevant goals are achieved in such areas as quality and costs.

Labor Productivity

This method has two advantages: 1. It is not necessary to transform the units of input into some other unit 2. This method provides managers with specific insights into how changing different resource inputs affects productivity

Service Operations

Today the service sectors accounts for nearly 80% of the private-sector gross domestic product and provides 90 million jobs. Managers have come to use factory methods in service sectors now.

Flexible manufacturing systems (FMS)

Usually have robotic work units or workstations, assembly lines, and robotic carts or some other form of computer-controlled transport system to move material as needed from one part of the system to another

Employee Involvement

Virtually all successful quality enhancement programs involve making the person responsible for doing the job responsible for making sure it is done right