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