MGT 3370: Ch. 14

Fixed-position layout

The product stays in a fixed spot and components produced at remote stations are brought the product for to final assembly. ----products that are complex and difficult to assemble or so large that moving them from one workstation to another would be difficult.

Production System

The system that an organization uses to acquire inputs, convert inputs into outputs, and dispose of the outputs

Efficiency

amount of inputs required to produce a given output

The Concept of Quality

applies to the products of both manufacturing and service firms

Quality

goods and services that are reliable, dependable, or psychologically satisfying

Attributes of an organization's outputs

quality, cost, and features **determined by the organization's production system**

Customer relationship management (CRM)

technique that uses IT to develop an ongoing relationship with customers to maximize the value an organization can deliver to them over time

Inventory

the stock of raw materials, inputs, and component parts that an organization has on hand at a particular time

Example of Process Layout

Custom furniture manufacturer might use a this layout so that different teams of workers can produce different styles of chairs or tables made from different kinds of woods and finishes

Example of fixed-position layout

Layout is commonly used for products such as jet airlines, mainframe computers, and gas turbines

Product layout

Machines are organized so that each operation is performed at work stations arranged in a fixed sequence.

Operations Manager

Manager who is responsible for managing an organization's production system and for determining where operating improvements might be made

Example of Product Layout

Mass production systems where workers are stationary and a belt moves work to them.

Flexible Manufacturing

Operations management techniques that attempt to reduce the setup costs associated with a production system.

Types of Facilities Layouts

Product layout, Process layout, Fixed-position layout

Process Layout

Self contained work stations not organized in a fixed sequence. **Provides flexibility in making a wide variety of products tailored to customers**

Just-in-Time (JIT) Inventory

System in which parts arrive at an organization when they are needed, not before

Improving Efficiency

The fewer the inputs required to produce a given output, the higher the efficiency of a production system

Process Reengineering (Def.)

The fundamental rethinking and radical redesign of the business process to achieve dramatic improvement in critical measures of performance such as cost, quality, service, and speed

Operations Management

The management of any aspect of the production system that transforms inputs into finished goods and services

Facilities Layout

The operations management technique whose goal is to design the machine-worker interface to increase production system efficiency.

Responsiveness to customers (Def.)

Action taken to meet the demands and needs of customers

Self-managed Work Teams

**The team takes on the role of the supervisor** -Teams boost efficiency by allowing for a flatter organization structure. -Teams working together often become very skilled at enhancing productivity.

Improving Responsiveness to Customers

**Without customers, organizations would cease to exist.** - Non-profit and for-profit firms all have customers. - Managers need to identify who the customer is and their needs.

Input Stage

*First Stage of Production System* - Raw Materials - Component Parts - Labor

Conversion Stage

*Second Stage of Production System* - skills - machines - computers

Output Stage

*Third and Final part of Production System* - Goods - Services

Improving Quality

- A firm that provides higher quality than others at the same price is more responsive to customers. - Higher quality can also lead to better efficiency through lower waste levels and operating costs.

What Customers Want

- A lower price to a higher price - High-quality products to low-quality products - Quick service to slow service - Many features over few features. - Products that are customized or tailored to their specific needs

Process Reengineering and Efficiency

- Boosts efficiency by directing efforts to activities that add value to the good or service produced - Top managers must support efficiency improvements for them to be accepted by workers

Expenses of Flexible Manufacturing

- These costs must be paid before production begins. - The more often products to be built change, the higher setup costs become.

How to reduce setup costs

- Using easily replaced manufacturing equipment - Redesigning the production system itself to be more productive.

Goals of Operations Management

1) Improve Quality 2) Improve Efficiency 3) Improve Responsiveness

Total Factor Productivity

How well an organization vitalizes all its resources to produce its output (labor, capital, materials, etc.) TFP = Outputs/All inputs

A drawback to JIT

If a firm does not maintain a large buffer stock of parts which makes the firm vulnerable to strikes or supply problems that can quickly deplete on-hand inventories.