Intro to Business: Chapter 7 - Operations Management and Quality

Resource Transformation Process

1. bring together basic resources 2. put them into effective use in a facility where the service is provided or the physical good is produced 3. control costs, quality levels, inventory, and facilities and equipment

aspects of service opertions

1. interacting with customers 2. the intangible and unstorable nature of some services 3. the customer's presence in the process 4. service quality considerations.

four general kinds of schedules

1. master schedule 2. detailed schedules 3. staff schedules and computer based scheduling 4. project schedules

operation control includes

1. materials management 2. quality control

layout possibilities

1. process layout 2. product layout 3. fixed-position layout

Benefits of JIT Systems

1. reduces the number of goods in process 2. minimizes inventory costs 3. reduces storage space 4. save money by replacing stop-and-go production with smooth movement.

materials management activites

1. supplier selection 2. purchasing 3. transportation 4. warehousing 5. inventory control

Operations Plan

A plan outlining how the business will operate

place utility

Adding value to products by having them where people want them.

Quality Planning

Any complete plan must ensure that products are produced to meet the firm's standards of quality-the combination of characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

How does production make products available?

By converting raw materials and human skills into finished goods and services

getting closer to the customer

Customers are the driving force for all business activity; the most successful firms keep close to their customers and know what they want in the products they consume

Intangibles Count for Service Quality

Customers use different measures to judge services and goods because services include intangibles, not just physical objects. Quality of work and quality of service are not necessary the same thing.

process flowchart

Documenting current production practices by often using a diagram. It is helpful in organizing and recording information. The chart identifies the sequence of production activities, movements of materials, and work performed at each stage of the process

Special Projects

Either as new business construction project or redesigning a product.

Services Can Be Intangible and Unstorable

Intangibility refers to the untouchable value consumers receive in the form of pleasure, gratification, or a feeling of safety; unstorability refers to the idea that if a service is not used when available, it is usually wasted

fixed position layout

Is often used when size, shape, or other factors make it difficult to move the service to another production facility.

interacting with customers

Manufacturing operations focus on physical goods whereas service operations are a combination of goods and services. Service/production's workers need different skills

Reengineering Supply Chains for better Results

Process improvements and reengineering often are applied in supply chains to lower costs, speed up services, and coordinate flows of information and materials

how does a firm's production provide benefits for itself and for its customers?

Production provides businesses with economic results: profits, wages, and goods purchased from other companies. At the same time, it adds customer value by providing utility

Customer's Presence in the Operations Process

Service operations often acknowledge the customer as part of the service transaction itself.

Detailed Schedule

Shows day-to-day activities that will occur in production

Staff schedules & Computer-based Scheduling

Suited for companies such restaurants, hotels, and transportation and landscaping companies. Identify who and how many employees will be working, and when.

Quality Improvement team

TQM tool in which collaborative groups of employees from various work areas work together to improve quality by solving common shared production problems (quality circle)

make to stock examples

TVs, clothing, packaged food products

Capacity Planning

The amount of a product that a company can produce under normal conditions. A firm's capacity depends on how many people it employs and the number and size of its facilities.

computer-based scheduling

Using tools such as the ABS Visual Staff Scheduler PRO Software, can easily handle multi-shift activities for many employees - both part time and full time. It accommodates vacation times, holiday adjustments, and daily adjustments in staffing for unplanned absences and changes in production schedules.

Assembly Line Layout

a same-steps layout in which a product moves step by step through a plant on conveyor belts or other equipment until it is completed

purchasing

acquisition of the materials and services that a firm needs to produce its products

quality control

action of ensuring that operations produce products that meet specific quality standards

Make-to-order

activities for one-of-a-kind or custom-made production

make to stock

activities for producing standardized products for mass consumption

transportation

activities in transporting resources to the producer and finished goods to customers

Operations (Production)

activities involved in making products-goods and services-for customers

Service Operations (Service Production)

activities producing intangible and tangible products, such as entertainment, transportation, and education

Goods Operations (Goods Production)

activities producing tangible products, such as radios, newspapers, buses, and textbooks

Total Quality Management (TQM)

all activities involved in getting high-quality goods and services into the marketplace

Detailed short-term schedules

allow managers to use customer orders and information about equipment status to update sizes and the variety of coils to be made each day.

Supply Chain Strategy

based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit.

why do managers in the service sector give more consideration to the human element in operations?

because success or failure depends often on provider-customer contact

consumer services concentrate on

being located near customers

Planning Categories

capacity, location, layout, quality, methods

iso 14000

certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance

follow up

checking to ensure that production decisions are being implemented

Quality-Product Connection

compares how much we produce with the resources we use to produce it.

Staff Schedule

consider employees' needs and the company's efficiency and costs

Location Planning

determining where production will happen based on costs and flexibility

performance

dimension of quality that refers to how well a product does what it is supposed to do

Consistency

dimension of quality that refers to sameness of product quality from unit to unit

Operations (Production) Managers

draw up plans to transform resources into products

operations (production) managers are responsible for

ensuring that operation activities create what customers want and need

The decision to outsource

expands supply chains.

TQM

first evaluates the cost of poor quality, then identifies the sources causing unsatisfactory quality, assign responsibility for corrections, and ensures that those responsible take steps for improving quality.

The main advantage of process layouts

flexibility at any time

supply chain (value chain)

flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer

Business Process Reengineering

focuses on productivity and quality and entails rethinking each step in a process by starting over from scratch

Product Layout Disadvantages

inflexibility when changes are required

Inventory Management

is crucial for producing services. For many service firms, too, the materials stakes are high. The most important "inventory" used for many high-contact services is not physical goods but exists in the form of information about service product offering, clients, their interests, activities, and even their plans for interactions with other clients.

Product Layout Advantages

large-volume production

High-Contact System

level of customer contact in which the customer is part of the system during service delivery

Low-Contact System

level of customer contact in which the customer need not be part of the system to receive the service

classifications of goods production

make-to-order operations, make-to-stock operations

Process Layout (Custom-Product Layout)

physical arrangement of production activities that groups equipment and people according to function

Product Layout (Same-Steps Layout)

physical arrangement of production steps designed to make one type of product in a fixed sequence of activities according to its production requirements

Layout Planning

planning for the layout of machinery, equipment, and supplies

Supply Chain Management (SCM)

principle of looking at the supply chain as a whole to improve the overall flow through the system

Quality Ownership

principle of total quality management that holds that quality belongs to each person who creates it while performing a job

Competitive Product Analysis

process by which a company analyzes a competitor's products to identify desirable improvements

Value-Added Analysis

process of evaluating all work activities, materials flows, and paperwork to determine the value that they add for customers

Supplier Selection

process of finding and choosing suppliers from whom to buy

inventory control

process of receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods

utility

product's ability to satisfy a human want or need in terms of form, time and place

PERT Chart (Program Evaluation and Review Technique)

production schedule specifying the sequence of activities, time requirements, and critical path for performing the steps in a project

Gantt Chart

production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step.

Lean Production System

production system designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes

Planning for quality begins when

products are being designed.

ISO 9000

program certifying that a factory, laboratory, or office has met the quality management standards set by the International Organization for Standardization

Project Schedule

provide coordination for completing large-scale projects. Require close coordination and precise timing among many activities

Outsourcing

replacing internal processes by paying suppliers and distributors to perform business processes or to provide needed materials or services.

Operations Control

requires managers to monitor performance by comparing results with detailed plans and schedules

Master Schedule

schedule showing which products will be produced, and when in upcoming time period

Operations Process

set of methods and technologies used to produce a good or a service

Operations Capability (Production Capability)

special ability that production does especially well to outperform the competition

Warehousing

storage of incoming materials for production and finished goods for distribution to customers

Operations (Production) Management

systematic direction and control of the activities that transform resources into finished products that create value for and provide benefits to customers

Productivity

the amount of output you generate given the amount of input

Time Utility

the increase in customer satisfaction gained by making a good or service available at the appropriate time

The more we can produce while using fewer resources

the more productivity grows and the more everyone benefits.

Materials Management

the process by which managers plan, organize, and control the flow of materials from sources of supply through distribution of finished goods

Productivity refers to bother

the quantity and quality of what is produced

Form Utility

the value producers add to materials in the creation of finished goods and services

just-in-time (JIT) production

type of lean production system that brings together all materials at the precise time they are required at each production stage

Make-to-order example

unique patterns, materials, sizes, and shapes, depending on customers' characteristics. i.e., designer or tailor shop.

what does value added analysis reveal?

wasted or unnecessary activities that can be eliminated without risking customer service

what does layout planning determine?

whether a company can respond efficiently to demand for more and different products or whether it finds itself unable to match competitors' speed and convenience