Ch. 8 - MGMT 1301

suppliers

(vendors) are selected on their ability to supply the needed quantity of materials at a reasonable price

material waste

Adds only the required amount of materials one layer at a time, so there is very little waste

materials management

One facet of production control is materials management, which includes three activities: • Purchasing • Inventory control • Work scheduling

computer aided design

creates computer models of products

computer aided manufacturing

determines steps needed to produce a component and instructs the machine designed to do the work

mass customization

fairly high volumes of customized products are made at fairly low prices Ex. Nike ID shoes; customized M&M's

ISO !4000

for environmental management

statistical process control

monitors production quality by testing a sample of output to see whether goods in process are being made according to predetermined specifications

companies

pay careful attention to supplier selection and the purchasing (procurement) process because: • Materials account for about 50% of all manufacturing costs • Materials are not cheap

operation manager main responsibilities

production planning, production control, and quality control

automation

the replacement of workers with machines • It has evolved from semi-automated assembly lines to today's modern robots

storage

Can produce small quantities, just enough to cover current sales. No need to maintain a large inventory that takes up storage space

e-procurement

Companies can interact with suppliers online through

material requirements planning

Computer program calculates material needs and determines when items should be ordered

labor

Reduces the number of workers needed to oversee the production process

prototypes

Speeds up the development of a prototype (physical model of a new product) so gets new product to market sooner

site selection

To be successful in a service industry, you need to be directly accessible to customers • For some service businesses, such as cable-TV providers, they go to their customers • For others, such as hotels, their customers come to them In selecting a site for those businesses where customers come to them, management must consider a number of factors: • Traffic count • Ease at entering and leaving the site • Parking availability • Zoning laws regarding signs • Cost of the land

transformation process

To compete with other companies, operations managers must oversee the conversion of resources (materials, labor, money, etc.) into products

operations management

all activities involved in transforming a product idea into a finished product, as well as those involved in planning and controlling the systems that produce goods and services

manufacturing resource planning

assists in material planning and Helps monitor resources in all areas of the company

benchmarking

comparing a company's own performance with that of a company that excelsin the same activity

electronic data interchange

computerized exchange of business transaction documents

mass production

high volumes of products are made at low cost and held in inventory in anticipation of future demand Ex. McDonalds' hamburgers; automobiles

production control

• Schedule and monitor the production process • Seek and respond to feedback • Manage materials

planning production process

1. Production-method decisions—determine how the goods will be produced • Make-to-order, mass production (or make-to-stock), mass customization 2. Facilities decisions—decide where production will take place • Site location of your manufacturing facilities 3. Capacity planning—calculate the capacity requirements of the facility • Number of goods that can be produced over a given period 4. Facility layouts—determine how manufacturing facilities will be laid out • Process layout, product layout, cellular layout (details in next section)

services providing sector

80% of U.S. workers are employed in the _______________________________ The primary function of both manufacturers and service providers is to satisfy customer needs though there are several important differences between the two types of operation: • Intangibility • Customization • Customer contact

managing operations

Overseeing a service operation adds special demand on managers because: • There is a high degree of contact with customers • Customers need personal attention • Customer needs must be satisfied in a timely manner • Demand can vary greatly over the course of any given day or time • Scheduling workers to handle fluctuating customer demand is vital • Inventory control is difficult—high levels cost money, low levels cost sales

manufacturers

Produce tangible products Products generally standardized Make goods and sell later Little contact with customers

production method decisions

Production Planning Decision #1—How Goods Will Be Produced: First step in production planning process—decide which type of production process best serves the needs of the company's customers Answers to the following questions will help the operations manager make this decision: • Amount of input received from a particular customer? • Are one-of-a-kind goods or standardized goods being produced? • Can customers standardize their goods to meet their needs?

facilities decisions

Production Planning Decision #2—Where Production Will Take Place: The next step in production planning is choosing a location for your facilities—factors to consider include: • Proximity to suppliers, customers, or both • Availability of skilled workers • Quality of life in the area • Reasonableness of resource costs and other expenses (land, labor, construction, utilities, etc.) • Business climate (as evidenced by factors such as tax breaks for locating in a community)

master production schedule

Production activities need to be monitored to ensure that actual performance satisfies planned performance, This is accomplished through a ___________________________________ that keeps track of :• Which goods will be produced • How many goods will be produced • When goods will be produced • Workflow of each item

3D technology

Production costs using 3D technology will be less expensive than production costs using traditional manufacturing if • Volume of units being produced is low • Product is complex with many parts • Item being made is not very large • Product is customizable

service firms

Provide intangible products Services are customized Services sold are often consumed immediately High contact with customers

just in time production

Suppliers must send materials so they arrive just in time to enter the production process

operations manager

To compete, a company must convert resources into goods or services as efficiently as possible—the person who directs this transformation process is the

ISO

When consumers want to know which companies: • Ensure their product meet quality specifications • Take steps to protect the environment They can get answers through the International Organization for Standardization, a nongovernmental agency based in Switzerland which established two sets of standards

operations planning

When starting or expanding operations, businesses in the service sector must make a number of decisions quite similar to those made by manufacturers: • What services (and perhaps what goods) to offer? • How will they provide these services? • Where will they locate their business and what will their facilities look like? • How will they forecast demand for their services?

ISO 9000

for manufacturing

gantt chart

graphical tool for determining the status of projects • Production process is fairly simple • Activities are not interrelated

process layout

groups together workers or departments that perform similar tasks Ex. At Vermont Teddy Bear Co. the workstations are fur-cutting, stuffing and sewing, dressing, and shipping

total quality management

includes all the steps that a company takes to ensure that its goods or services are of sufficiently high quality to meet customers' needs

computer integrated manufacturing

integrates various operations(ranging from design through manufacturing) with various business functions (ranging from order taking to shipping final products)

capacity planning

is more complex for service providers than for manufacturers Manufacturers can: • Produce a product • Store it in inventory • Ship it when ordered Service providers: • Cannot inventory their services • Must satisfy customers on an "as-demanded" basis Service providers must consider these variables when estimating demand and capacity: • How many customers will I have? • When will they want my services? • How long will it take to serve each customer? • How will external factors (weather, holidays, etc.) affect demand?

make to order strategy

products are made to customer specification Ex. wedding cake; signs made by print shop

product layout

products are produced by people, equipment, or departments arranged in an assembly line Ex. At Just Born, the processes are combining and whipping, sugar-added coloring, molding, detailing, and wrapping and shipping

cellular layout

small teams of workers handle all aspects of building a component, a "family" of components, or even a finished product Ex. Team members and equipment are often configured in a U shape

capacity

the maximum number of goods that a facility can produce over a given period under normal working conditions • To determine capacity, begin by forecasting demand for your product • Setting capacity too low (and so producing less than you should) means you cannot meet demand • Setting capacity too high (and so producing more than you should) wastes resources and inflates cost. • Knowing a facility's capacity lets you decide how much to invest in plant, equipment, and labor hours

pert charts

tool for diagramming the activities and time required to produce a product and organizing activities in the most efficient sequence • Schedule is complex • Time lost on critical path could delay entire job

flexible manufacturing system

uses a central computer to control equipment that can be adapted to produce a variety of goods

fixed position layout

workers and equipment move to the product, which stays in one place Ex. This arrangement is used by aircraft manufacturers and modular home manufacturers

production planning

• Decide how goods will be produced • Determine where production will take place • Decide how facilities will be laid out

quality control

• Ensure goods are made to specifications • Oversee quality standards

inventory control

• Keep costs down and remain competitive • Avoid holding too much inventory which wastes money • Avoid holding too little inventory that can result in shortages of materials • Reduce the likelihood of little or no inventory slowing down or halting production

employee involvement

• Management lets employees know quality is vital and motivates them to satisfy customers • Successful TQM requires that everyone in the organization be committed to satisfying customers

continuous improvement

• TQM committed companies seek ways to do things better • They strive to increase efficiency, reduce costs, and improve customer service and customer satisfaction

consumer satisfaction

• Without customers, a company would not exist—and customers demand quality • TQM companies build quality into every facet of their operations, from design to product planning and control, to sales and service