Chapter 9: Production and Operations Management

The International Organization for Standardization (ISO)

- A worldwide federation of national standards bodies from more than 170 countries that set global measures for the quality of individual products - A nongovernmental organization established to promote the development of world standards to facilitate the international exchange of goods and services

3D Printing

- Also known as additive manufacturing - A product is created one layer at a time by a nozzle similar to those found in inkjet printers

Enterprise Resource Planning (ERP)

- 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 - Result is shorter time between orders and payment, less staff needed to do ordering and order processing, reduced inventories, and better customer service

Operations Management Planning

- Helps solve many of the problems in the service and manufacturing sectors - Facility location, facility layout, materials requirement planning, purchasing, inventory control, and quality control

Just-In-Time (JIT) Inventory Control

- Systems that keep a minimum of inventory on the premises, and deliver parts, supplies, and other needs just in time to go on the assembly line - Requires an accurate production schedule (using ERP) and excellent coordination with carefully selected suppliers, who are usually connected electronically so they know what will be needed and when

Facility Layout

- The physical arrangement of resources, including people, to most efficiently produce goods and provide services for customers - Depends greatly the processes that are to be performed (ex. retail: layout is designed to help the consumer find and buy things)

Lean Manufacturing

- The production of goods using less of everything than in mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product - A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing its needs for resources

Computer-Integrated Manufacturing (CIM)

- The uniting of computer-aided design with computer-aided manufacturing - Software is expensive, but can drastically reduce the time needed to program machines to make parts

CAD/CAM

- The use of both computer-aided design and computer-aided manufacturing - Makes it possible to custom-design products to meet the needs of small markets with very little increase in cost

Steps Used in PERT

1. Analyzing and sequencing tasks that need to be done 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the information from steps 1 and 2 4. Identifying the critical path

3 Requirements of Production

1. To build and deliver products in response to the demands of the customer at a scheduled delivery time 2. To provide an acceptable quality level 3. To provide everything at the lowest possible cost

Gantt Chart

A bar graph, now prepared by a computer, that clearly shows what projects are being worked on and how much has been completed at any given time.

ISO 14001

A collection of the best practices for managing an organization's impact on the environment

Material Requirement Planning (MRP)

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.

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.

Operations Management

A specialized area in management that converts or transforms resources, including human resources like technical skills and innovation, into goods and services.

Fixed-Position Layout

Allows workers to congregate around the product to be completed (used when working on a major project).

Quality

Consistently producing what the customer wants while reducing errors before and after delivery.

Flexible Manufacturing

Designing machines to do multiple tasks so they can produce a variety of products.

Operations Management includes:

Inventory Management, Quality Control, Production Scheduling, Follow-Up Services, etc.

Continuous Process

Long production runs turn out finished goods over time (a chemical plant).

Six Sigma Quality

Modern quality-control standard that sets a benchmark of just 3.4 defects per million opportunities, and detects potential problems to prevent their occurrence.

Process Layout

One in which similar equipment and functions are grouped together.

Assembly Process

Puts together components to make a product (cars are made through this process that puts together the frame, engine, and other parts).

Mass Customization

Tailoring products to meet the needs of a large number of individual customers (practiced widely).

Modular Layout

Teams of workers combine to produce more complex units of the final product.

Production Management

The activities that help firms create goods.

ISO 9001

The common name given to quality management and assurance standards.

Production

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

Purchasing

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

Process Manufacturing

The part of the production process that physically or chemically changes materials (turning sand into glass or computer chips).

Facility Location

The process of selecting a geographic location for a company's operations.

Statistical Process Control (SPC)

The process of testing statistical samples of product components at each stage of production and plotting the test results on a graph; managers can see and correct any deviation from quality standards.

Statistical Quality Control (SQC)

The process some managers use to continually monitor all phases of the production process and ensure quality is being built into the product from the beginning.

Intermittent Process

The production run is short and the producer adjusts machines frequently to make different products (manufacturers of custom-designed furniture would).

Critical Path

The sequence of tasks that takes the longest time to complete; a delay anywhere along this path will cause the project or production run to be late.

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.

Form Utility

The value producers add to materials in the creation of finished goods and services (transforming silicon into computer chips or putting services together to create a vacation package; can exist at the retail level as well).

Assembly-Line Layout

Workers only do a few tasks at a time.

Telecommuting

Working from home via computer.