BUSN101 - Chapter 9

Purchasing

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

Factors of moving one location to another:

- Labor costs - Availability of resources, including labor - Access to transportation that can reduce time to market - Proximity to suppliers - Proximity to customers - Crime rates - Quality of life for employees - Cost of living and the need to train or retrain the local workforce - Time-to-market - sites that allow products to move quickly, at the lowest costs

Characteristics of lean companies:

- They take half the human effort. - They have half the defects in the finished product or service. - They require one-third the engineering effort. - They use half the floor space for the same output. - They carry 90% less inventory.

ISO 14000

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

Continuous process

A production process in which long production runs turn out finished goods over time.

Intermittent process

A production process in which the production run is short and the machines are changes frequently to make different products. (ex. Manufacturers of custom-designed furniture would use)

Major developments that have made U.S. companies more competitive:

1. Computer-aided design and manufacturing 2. Flexible manufacturing 3. Lean manufacturing 4. Mass customization 5. Robotics

3 basic 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.

Operations management

A specialized area in management that converts or transforms resources (including human resources) into goods and services)...used in both manufacturing and service organizations. __________ __________ in the service industry is all about creating a good experience for those who use the service.

Flexible manufacturing

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

Critical path

In a PERT network, the sequence of tasks that takes the longest time to complete.

How do U.S. manufacturers and service organizations maintain a competitive edge

- Focusing more on customers - Maintaining closer relationships with suppliers and other companies to satisfy customer needs. - Practicing continuous improvement. - Focusing on quality. Saving on costs through site selection. - Relying on the Internet to unite companies that work together. - Adopting production techniques such as enterprise resource planning, computer-integrated manufacturing, flexible manufacturing, lean manufacturing, lean manufacturing, and robotics.

Mass customization

Tailoring products to meet the needs of individual customers.

ISO 9000

The common name given to quality management and assurance standards.

Facility location

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

The Production Process in Industry

Using basic inputs to produce outputs. Production adds value, or utility, to materials or processes.

Gantt chart

Bar graph showing production managers what projects are being worked on and what stage they are in at any given time.

Quality

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

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.

Production management

the term used to describe all the activities managers do to help their firms create goods.

In the past, products were completed first and then tested for quality. This resulted in several problems:

1. The need to inspect work required extra people and resources. 2. If an error was found, someone has to correct the mistake or scrap the product. 3. If the customer found the mistake, he or she might be dissatisfied and might even buy from another firm thereafter.

Materials requirement planning (MRP)

A computer-based operations management system that uses sales forecasts to make sure that 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.

Enterprise resource planning (ERP)

A newer version of materials requirement planning (MRP) that 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.

Just-in-time (JIT) inventory control

A production process in which a minimum of inventory is kept on the premises and parts, suppliers, and other needs are delivered just in time to go on the assembly line.

Six Sigma quality

A quality measure that allows only 3.4 defects per million opportunities.

Assembly process

That part of the product process that puts together components.

Process manufacturing

That part of the production process that physically or chemically changes materials.

Production

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

Facility layout

The physical arrangement of resources (including people) in the production process.

Statistical process control (SPC)

The process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.

Statistical quality control (SQC)

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

Lean manufacturing

The production of goods using less of everything compared to mass production.

Telecommuting

Working from home via computer.