MGMT Chapter 20 EXAM 2

• Two forms of technology not considered by Woodward are:

Automation Computer Assisted Manufacturing Robotics

• Operations Management -

Set of managerial activities used by an organization to transform resource inputs into products and services EX: Dell Computer → buys electronic components and assembles them into PCs then ships to customers • Pizza Hutt → orders food and paper products and then makes pizzas with resources

• One central element of effective operations management is

technology

• Layout -

the choice of physical configuration of facilities is closely related to other operations decisions

• Service technology is changing rapidly - EXAMPLE

• Ex: Banking - automated teller machines and easier to move funds o Hotels - increasing technology to accept and record room reservations • You can check in online, stop by and get key o Universities - online books, scientific journals, gov reports, articles o Hospitals - new forms of service technology to manage patient records, dispatch ambulances and monitor vitals o Restaurants - record and fill customers orders, order food and supplies, prepare food

Facilities Decisions FAcilities -

• Facilities are the physical locations where products or services are created, store and distributed • Major decisions pertain to facilities location and layout

The Importance of Operations -

• Operations is an important functional concern for organizations because efficient and effective management of operations goes a long way toward ensuring competitiveness and overall organizational performance, as well as quality and productivity • In an economic sense, operations management creates value and utility ofo ne type or another, depending on the nature of the firm's products or services o Harley Davidson → their operations creates value and provides form utility by combining many dissimilar inputs (rubber, metal and paint) to make something (motorcycle) that is more valuable than the actual costs of the inputs o Delta Airlines → create value and provide time and place utility through its services o Coors Beer & Zara create value an provide place and possession utility by bringing together the customer and products made by others

o Computer Assisted Manufacturing

• Technology that relies on computers to design or manufacture products • Ex: Computer-aided design (CAD) - the use of computers to design parts and complete products and to simulate performance so that prototypes need not be constructed- Boeing uses this to study hydraulic tubing in commercial aircrafts, Japan automotive industry uses it to speed up car design, GE to change design of circuit breakers and Benetton to design new styles and products • CAD is usually combnes with CAM (computer-aided manufacturing to ensure the design moves smoothly to production, CIM (computer integrated manufacturing) • CAD, CAM, CIM are all linked together computer networks automatically adjust machine placements and settings to enhance both the complexity and flexibility of scheduling • Flexible Manufacturing Systems (FMS) usually have robotic work unites or workstations, assembly lines, and robotic carts or some other form of computer controlled transport system to move material as needed from one part of the system to another • FORD was able to keep the plant open and running continuously while new equipment was being installed and its workers were being retained in small groups - when FORD transformed an English factory producing low cost ford escorts into a jaguar making plant o Because they represented fundamental change, they also generate resistance • CAD systems are not always reliable • CIM is very expensive & raise breakeven point for firms using them which means the firm must operate at high levels of production and sales to be able to afford the systems FMS

Capacity Decisions

• This decision involves choosing the amount of products, services, or both that can be produced by the organization o Determining whether to build a factory capable of making 5,000 or 8,000 units per day is a capacity decision • It is a truly high risk decision because of the uncertainties of future product demand and the large monetary stakes involves • A major consideration in determining capacity is demand o EXAMPLE: A company operating with fairly constant monthly demand might build apant cpable of producing an amount each month roughly equivalent to its demand, but if its market is characterized by seasonal fluctuations, building a small plant to meet normal demand and then adding extra shifts staffed with temp workers or paying permanent workers extra to work more hours during peak times might be most effective

• The entire area of operations management used to be called -

"production management"

Purchasing Management is also called

Procurement is concerned with buying the materials and resources needs to create products and services

• Manufacturing

is a form of business that combines and transforms resources into tangible outcomes that are then sold to others o EXAMPLE: Goodyear Tire and Rubber Co is a manufacturer because it combines rubber and chemical compounds and used blending equipment and molding machines to create tired • Broyhill→ buys wood and metal components, pads, and fabric and then combines them into furniture o 1970s → Manufacturing hit a long period of decline in the US because of foreign competition • EXAMPLE: Steel companies in the far east were able to produce high-quality steel for much lower prices than were US companies like Bethlehem Steel and US steel o In the last decade their efforts have started to pay dividends, as US businesses have regained their competitive positions in many different industries

• Many companies are reducing their number of suppliers and negotiating special production- delivery arrangements EXAMPLES

o EXAMPLE: Honda plant in Marysville, Ohio, found a local business owner looking for a new opportunity o They negotirated where the business owner would start a new company to mount car stereo speakers ito pastic moldings - delivers finished goods to plant three times a day and Honda buys all he can manufacture o He has a stable sales base, Honda has a local and reliable supplier and both companies benefit

• Operations Management is very important to organizations - EXAMPLE

o EXAMPLE: The deceptively simple strategic decision of whether to stress high quality regardless of cost, lowest possible cost regardless of quality, or some combination of the two has many important implications • Highest possible quality strategy will dictate state of the art technology and rigorous control of product design and material specifications • A combination strategy might call for lower grade technology and less concern about product design and materials specifications

• 3 entirely different layout alternatives:

o Product Layout - (cars/computers) (assembly line) • Appropriate when large quantities of a single product are needed • Makes sense to custom-design a straight line flow of work for a product when a specific task is performed at each workstation as each unit flows past • Most assembly lines use this format • Dell's personal computer factories use a product layout o Process Layout - (patients in a hospital or custom furniture) • Used in operations settings that create or process a variety of products • EX: Auto repair shops & healthcare clinics • Each car and client are separate products • Each type of conversion task is centralized in a single workstation or department • Several different work stations (different from Product layout) may have Welding stations, x-rays that are done in one designated shop location o Fixed-Position Layout - (locomotives and bridges) • Used when the organization is creating a few very large and complex products • Aircraft manufacturers - (Boeing and shipbuilders/New Port News) people and machines have to move around it as it is assembled o Cellular Layout - • Relatively new approach to facilities design • Used when families of products can follow similar flow paths • Clothing manufacturer - cells designated to specific equipment and development then delivered to different product layout assembly areas

• 3 forms of technology identified by Woodward:

o Unit or small batch o Large batch or mass production o Continuous process

• Service Organization →

one that transforms resources into an intangible output and creates time or place utility for its customers o EXAMPLE: Merrill Lynch makes stock transactions for its customers, Avis leases cars to its customers & local hairdressers cut hair

• The most basic issues and decisions that must be addressed for designing Operations Systems are -

product-service mix, capacity and facilities

• Location

the physical positioning or geographic site of facilities and must be determined by the needs and requirements of the organization o EXAMPLE: A company that relies heavily on railroads for transportation needs to be located close to rail facilities o GE decided it didn't need six plants and closed the other five o Different organizations in the same industry may have different facilities requirements • Benetton uses only one distribution center for entire world, Walmart has several centers in the US alone

• Supply chain management

the process of managing operations control, resource acquisition and purchasing and inventory so as to improve overall efficiency and effectiveness

• Technology

the set of processes and systems used by organizations to convert resources into products or services

o Robotics

• Any artificial device that can preform functions ordinarily thought to be appropriate for human beings is a Robot • Robotics refers to the science of technology of the construction, maintenance, and use of robots • The use of industrial robots has steadily increased since 1980 and is expected to continue to increase slowly as more companies recognize the benefits • Welding is one of the first applications for robots • Close second is materials handling & others include machine loading/unloading, painting and finishing, assembly, casting and such machining applications as cutting, grinding, polishing, drilling, sanding, buffing, and deburring • Daimler-Benz replaced 200 welders with 50 robots on assembly line and increased productivity by 20% • Robots are beginning to move from the factory floor to other applications • Dallas Police - used a robot to catch a suspect who barricaded himself in an apartment building, smashed window and scared suspect outside • At the Long Beach Memorial Hospital in California brain surgeons are assisted by a robot arm that drills into patients skull with extreme precision • Newer applications involve remote work o EXAMPLE: Robot submersibles controlling from the surface can help divers in remote locations • Surveillance robots fitted with sensors to see and do things human guards cant do • Automated farming • Robots are also used by small manufacturers o One robot slices carpeting to fit the inside of custom vans in an upholstery shop o Another stretches balloons flat so they can be spray painted with slogans o Jewelry co - robots hold class rings while engraved o Thy are lighter faster stronger and more intelligent than those used in heavy manufacturing and will be used more in the future

Automation -

• The process of designing work so that it can be completely or almost completely performed by machines • They increase the amount of work that can be done • Helps improve products and services and fosters innovation • Most recent development of machines and machine controlling devices • Been around since 1700s (James Watt) • It relies on feedback (flow of information from the machine back to the sensor), information, sensors (parts of the system that gather information and compare it to present standards) and a control mechanism (sends instructions to the automatic machine) • EX: Thermostat • The big move to automate factories began during WWII • The shortage of skilled workers and the development of high speed computers combined to bring about a tremendous interest in automation • It's the computerized, or programmable, automation that presents the greatest opportunities and challenges for management today • The automobile industry began to use automatic machines for a variety of jobs - term came to use in 1950s in automobile industry • The impact of automation n people in the workplace is complex • Short Term: peoples whose jobs are automated may find themselves without a job • Long Term: more jobs are created than are lost o Coal industry: automation has been used in mining; the demand for coal has decreased and productivity gains resulting from atomization have lessened the need for miners o Electronics Industry: the rising demand for products has led to increasing employment opportunities despite the use of atomization

Determining Product Service Mix

• This is the natural starting point in designing operations systems • This decision flows from corporate, business, and marketing strategies • Managers have to make a number of decisions about their products and services, starting with how many and what kinds to offer o EXAMPLE : Proctor and Gamble → makes regular, whitening and other kinds of crest toothpaste in different flavors, packages and dispensers ALSO like Subway and making a sandwich • Decisions have to be made regarding the level of quality desired, the optimal cost of each product or service and exactly how each is to be designed o EXAMPLE: General Electric figured out how to reduces the number of parts in its industrial circuit breakers from 28,000 to 1,275, It was achieved by carefully analyzing product design and production methods