Producing quality goods and services

Operations management

All activities required to produce goods and services.

If market demand and capacity are ___, the facility should be operated at full capacity.

Equal

For most ___, extensions and refinement are expected results of their research, development, and implementation activities.

Firms

One of the ___ steps needed to improve quality is employee participation. Successful firms encourage employees to accept full responsibility for the quality of their work.

First

What are the Four type of utilities?

Form Place Time Possession

Operations management focuses primarily on ___.

Form utility

The application of the principles of operations management to the production of services has coincided with a dramatic ___ in the number and diversity if service businesses.

Growth

___ managers are involved to recruit employees with the appropriate skills and make sure that local suppliers are complying with the u.s. company's human rights policies, applicable national and local wage, and hour laws.

Human Resources

Today, business firms use three general types of R&D activities:

Basic research Applied Research Development and implementation

If a firms sells only one product or service, when customers quit buying the product or service, the firm will die. To stay in ___, the firm must find ways to refine or extend the want-satisfying capability of its product or service.

Business

___ systems allows manufacturers to become much more productive. Not only are a greater number of products produced, but speed and quality also increase.

CAM

Standardization is achieved through ___ agreements between national delegations representing all the economic stake holders - suppliers, customers, and often governments.

Consensus

Manufactures and service providers must___resources whenever possible. Efforts to reduce waste and sustain the planet can often improve a firm's bottom-line profit amount.

Conserve

Managers also must concern themselves with the ___ to ensure that the organization's goals are achieved.

Control of operations

___ can be used to produce services, The conversion process converts ideas and resources into useful goods and services.

Conversion process

Innovation and research and development efforts to ___ new products and services must be increased in order for U.S. firms to compete in the global marketplace.

Create

No firm can produce a product or service until it has an ___. Then assuming the idea has potential, a company's research and development activities turn the idea into a reality.

Idea

Facilities planning

Identifies a site where the good or service can be produced

Operational planning

Decides on the amount of goods or services that will be produced within a specific time period.

Flexible manufacturing is sometimes referred to as an ___ process.

Intermittent

Each type of ___ has a holding cost, or storage cost, and a stock-out cost (the cost of running out of inventory).

Inventory

During the design planning stage, management must determine the ___ to which automation and technology will be used to produce a product or service. Here, there is a trade-off between high initial costs and low operating costs (for automation) and low initial costs and high operating costs (for human labor).

Degree

The major decisions involved in ___ deal with product line, required capacity, and use of technology.

Design planning

The company with purchasing needs and suppliers must ___ a working relationship built on trust.

Develop

Marketing personnel want a "___" product line with more options to give customers greater choice.

Long

Elected officials in Washington are taking a renewed interest in preserving existing ___ jobs and creating incentives for manufacturing firms to "do business in America."

Manufacturing

Sales projections developed by ___ managers are the basis for market-demand estimates.

Marketing

Six sigma often has ___ top-level support, much more teamwork, and a new corporate attitude or culture.

More

Each refinement or extensions results in an essentially "___" product whose sales make up for the declining sales of a product that was introduced earlier.

New

Although certification is ___ a legal requirement to conduct business globally, ISO standards are so prevalent around the globe that many customers refuse to do business with noncertified companies.

Not

If market demand and capacity are ___, adjustments may be necessary.

Not equal

Common panning horizon for production plans is ___.

One year

The objective of ___ is to decide on the amount of products or services each facility will produce during a specific period of time. Four steps are required.

Operational planning

___ are responsible for producing tangible goods and service that customers want.

Operations manager

___ takes place both before anything is produced and during the production process.

Planning

Purchasing personnel should constantly be on the lookout for new or backup suppliers, because ___ such as strikes and equipment breakdowns can cut off the flow of purchased materials from primary supplier at any time.

Problems

The need for a complete ___ is fairly obvious; products that work cannot be manufactured without it. But services should be designed carefully as well- and for the same reason.

Product design

An important issue in deciding on the ___ is to balance customer preferences and production requirements.

Product line

Many companies believe that purchasing is one area where they can ___ diversity.

Promote

Without ___ inventory control, it is impossible for operations managers to schedule the work required to produce goods and services that can be sold to customers.

Proper

The objective of ___ is to ensure that required materials are available when they are needed, in the proper amounts, and at minimum cost.

Purchasing

JIT system helps to ___ cost and improve profitability.

Reduce

___ are especially effective in tedious, repetitive assembly-line jobs, such as in handling hazardous materials.

Robots

The biggest reason for changes to a firm's production ___ is changes in the amount of products or services that a company sells to its customers.

Schedule

The American economy is now characterized as a ___.

Service economy

Compared with manufacturers, ___ often listen more carefully to customers and respond more quickly to the market's changing needs.

Service firms

Service business must plan, design, execute, evaluate, improve, and redesign their services in order to provide the ___ that their customers want.

Services

Operations managers and production personnel generally want a "___" product line with few options because productions are easier to produce.

Short

___ are expensive because costs such as wages, rent, utilities, insurance, and other expenses still must be paid.

Shutdowns

If a firm has ___ capacity, additional capacity may have to be added later when it is much more expensive than in the initial building stage.

Too little

If a firm has ___ capacity, valuable resources(plant, equipment, and money) will lie idle.

Too much

The primary reason why ___ are "coming back home" include increasing labor costs in foreign nations, higher shipping costs, significant quality and safety issues, faster product development when goods are produced in the United States, and federal and state subsidies to encourage manufacturers to produce products in the United states.

U.S. firms

Product layout(assembly line)

Used when all products undergo the same operations in the same sequence. Workstations are arranged to match the sequence of operations, and work flows from station to station.

The purpose of a manufacturing or service business is to provide ___ to customers.

Utility

Computer-integrated manufacturing (CIM)

a computer system that not only helps to design products but also controls the machinery needed to produce the finished product.

Lean Manufacturing

a concept built on the idea of eliminating waste from all of the activities required to produce a product or service.

Six sigma

a disciplined approach that relies on statistical data and improved methods to eliminate defects for a firm's products and services.

Continuous process

a manufacturing process in which a firm produces the same product(s) over a long period of time.

Intermittent process

a manufacturing process in which a firm's manufacturing machines and equipment are changed to produce different products.

International organization for standardization (ISO)

a network of national standards institutes and similar organizations from over 160 different countries that is charged with developing standards for quality products and services and environmental standards for global manufacturers and producers.

Operations manager

a person who manages the systems that convert resources into goods and services.

Labor-intensive technology

a process in which people must do most of the work.

Flexible manufacturing system (FMS)

a single production system that combines electronic machines and CIM.

Just-in-time inventory (JIT) system

a system designed to ensure that materials or supplies arrive at a facility just when they are needed so that storage and holding costs are minimized.

Quality circle

a team of employees who meet on company time to solve problems of product quality.

Today's successful operations managers must:

1. Be able to motivate and lead people. 2. Understand how technology can make a manufacturer more productive. 3. Appreciate the cost-control processes that help lower production costs and improve product quality 4. Understand the relationship between the customer, the marketing if a product, and the production of a product.

Evaluating the quality of a firms services: The production of services is very different from the production of manufactured goods in the following five ways:

1. Customers are much more involved in obtaining the service they want or need. 2. Services are consumed immediately and cannot be stored. 3. Services are provided when and where the customer desires the service. In many cases, customers will not travel as far to obtain a service. 4. Services are usually labor-intensive because the human resource is often the most important resource used in the production of services. 5. Services are intangible, and it is therefore more difficult to evaluate customer satisfaction.

Before making a final decision about where a proposed plant will be located and how it will be organized two factors should be examined:

1. Human resources 2. Plant layout

The global marketplace has never been more competitive and successful U.S. firms will focus on the following:

1. Meeting the needs of customer and improving product quality. 2. Motivating employees to cooperate with management and improve productivity. 3. Reducing costs by selecting suppliers that offer higher-quality raw materials and components at reasonable prices. 4. Using computer-aided and flexible manufacturing systems that allow a higher degree of customization. 5. Improving control procedures to help ensure lower manufacturing costs. 6. Using green manufacturing to conserve natural resources and sustain the planet.

Four steps in operational planning include:

1. Selecting a planning Horizon 2. Estimating Market demand 3. Comparing market demand with capacity 4. Adjusting products or services to meet demand

Generally, a business will choose to produce products in an existing factory as long as:

1. The existing factory has enough capacity to handle increased customer demand for established products and any new products the firm would like to begin manufacturing 2. The cost of refurbishing an existing factory is less than the cost of building a new one.

Materials requirements planning(MRP)

A computerized system that integrates production planning and inventory control.

Product Line

A group of similar products that differ only in relatively minor characteristics.

Analytical process

A process in operations management in which raw materials are broken down into different component parts.

Synthetic process

A process in operations management in which raw materials or components are combined to create a finished product.

Capital-intensive technology

A process in which machines and equipment do most of the work.

Research and development (R&D)

A set of activities intended to identify new ideas that have the potential to result in new goods and services.

Number of production processes

A single firm may employ one production process or many, whereas larger firms that make a variety of products use multiple production processes.

Reshoring (onshoring or insourcing)

A situation in which U.S. manufacturers bring manufacturing jobs back to the United States.

Purchasing

all activities involved in obtaining required materials, supplies, components(subassemblies), and parts from other firms.

Reliability

an agreement to purchase high-quality materials at a low price is the purchaser's dream. However, the dream becomes a nightmare if the supplier does not deliver.

Malcom Baldrige National Quality Award

an award given by the president of the United States to organizations judged to be outstanding in specific managerial tasks that lead to improved quality for both products and services.

Service Economy

an economy in which more effort is devoted to the production of services than to the production of goods.

price

comparing prices offered by different suppliers is always an essential part of selecting a supplier

Basic research

consists of activities aimed at uncovering new knowledge. The goal of basic research is scientific advancement, without regards for its potential use in the development of foods and services.

Applied Research

consists of activities geared toward discovering new knowledge with some potential use.

Finished-goods inventory

consists of completed goods

Raw materials inventory

consists of materials that will become part of the product during the production process.

Work-in-process inventory

consists of partially completed products.

Total quality management (TQM)

coordinates the efforts directed at improving customer satisfaction, increasing employee participation, strengthening supplier partnerships, and facilitating an organizational atmosphere of continuous quality improvement.

Customer-driven production

described a manufacturing system that is driven by customer needs and what customers want to buy.

Development and implementation

involves research activities undertaken specifically to put new or existing knowledge to use in producing goods and services.

Mass production

is a manufacturing process that lowers the cost required to produce a large number of identical or similar products over a long period of time.

Advantage of MRP system is:

its ability to juggle delivery schedules and lead time effectively.

Follow-up

monitoring schedules to ensure that the work flows according to the schedule.

Quality

purchasing specialists always try to buy materials at a level of quality in keeping with the type of product being manufactured. The lowest acceptable quality is usually specified by product designers.

Credit terms

purchasing specialists should determine whether the supplier demands immediate payment or will extend credit.

Timing

specifies when the materials will arrive at each station and how long they will remain there.

Utility

the ability of a good or service to satisfy a human need.

Sustainability

the ability to maintain or improve standards of living without damaging or depleting natural resources for present and future generations.

Capacity

the amount of products or services that an organization can produce in a given time.

Plant layout

the arrangement of machinery, equipment, and personnel within a production facility.

Productivity

the average level of output per worker per hour.

Magnitude of change

the degree to which the resources are physically changed.

Design planning

the development of a plan for converting an idea into an actual product or service.

Inspection

the examination of the quality of work-in-process.

Planning horizon

the period during which an operational plan will be in effect.

Product design

the process of creating a set of specifications from which a product can be produced

Quality control

the process of ensuring that goods and services are produced in accordance with design specifications.

Scheduling

the process of ensuring that materials and other resources are at the right place at the right time.

Inventory control

the process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs.

Market demand

the quantity of a product that customers will purchase at the going price. This quantity must be estimated for the time period covered by the planning horizon.

Shipping costs

the question of who pays the shipping costs should be answered before any suppliers is chosen.

Focus

the resource or resources(financial, material, information, and people) that makeup the major or most important input.

Routing

the sequence of workstations that the materials will follow.

Automation

the total or near-total use of machines to do work.

Computer-aided design (CAD)

the use of computers to aid in the development of products.

computer-aided manufacturing (CAM)

the use of computers to plan and control manufacturing processes.

Robotics

the use of programmable machines to perform a variety of tasks by manipulating materials and tools.

Fixed-position layout

used when a very large product is produced. The product remains stationary, and people, parts, and equipment are moved as needed to assemble the product.

Process layout

used when different operations are required for creating small batches of different products or working on different parts of a product. The plant is arranged so that each operation is performed in its own particular area.

form untility

utility created by people Coverting raw materials, finances, and information into finished products.

Benefits of lean manufacturing include:

• A reduction in the amount of resources required to produce a product or service. • More efficient use of employee time. • Improved quality • Increased profits

Good news for manufactures:

• Although the number of manufacturing jobs has declined, productivity has increased • At least two very important factors account for increases in productivity: 1. Innovation - finding a better way to produce products-is the key factor that has enabled American manufacturers to compete in the global market place. 2. Highly skilled workers

The third step in operational planning is to compare the estimated market demand with the facility's capacity to satisfy that demand. One of three outcomes may result:

• Demand may exceed capacity • Capacity may exceed demand • Capacity and demand may be equal

Once a new idea for a product or service has been identified, planning for production involves three different phases:

• Design planning • Facilities planning • Operational planning

Planning quality services steps:

• For service firm, planning often begins with determining who the customer is and what needs the customer has. • After customer needs are identified, the next step is to develop a plan that will enable the firm to deliver the services that their customers want or need. • Once the firms provides a service to customer, successful firms evaluate the way they operated and measure customer satisfaction. ○ If necessary, redesign their services to improve the customer's experience.

Advantages of CIM include:

• Improved flexibility • More efficient scheduling • Higher product quality

Options for when capacity exceeds market demand:

• Lay off workers • Operate on a shorter-than-normal workweek • Shift excess capacity of manufacturing facility to the production of other goods or services. • Sell unused manufacturing facilities.

In determining where to locate production facilities, management must consider a number of variables, including the following:

• Location of major customers and suppliers • Availability and cost of skilled and unskilled labor. • Quality of life for employees and management in the proposed location. • The cost of land and building costs. • Local and state taxes, environmental regulations, and zoning laws. • The amount of financial support and subsides, if any, offered by local and state governments. • Special requirements, such as great amounts of energy or water used in the production process.

To produce a product or services successfully, a business must perform a number of specific activities such as:

• Marketing research • Planning • Control of operations ○ Product quality ○ Performance standards ○ Inventory ○ Production costs

The choice of suppliers should result from carefully analysis of a number of factors. The following are especially critical:

• Price • Quality • Reliability • Credit terms • Shipping costs

Three types of plant layout include:

• Process layout • Product layout • Fixed-position layout

Four aspects of operations control include:

• Purchasing • Inventory control • Scheduling • Quality control

Operations managers are concerned with three types of inventories:

• Raw materials inventory • Work-in-process inventory • Finished-goods inventory

Three major activities involved in operations management include:

• Research and development • Planning for production • Operations control

Options for when a market demand exceeds capacity:

• Start a second or third work shift • Expand the current facility or build another facility

Bad News for Manufactures:

• The number of Americans employed in the manufacturing sector has decreased. • Most of the U.S. manufacturing jobs that were lost were outsourced to low-wage workers in nations where there are few labor, safety, and environmental regulations. • Manufacturing accounts for only 8% of the current U.S. workforce. • Experts predict that U.S. employment in the manufacturing sector will continue to decline. • As a result of the decline, China is now the largest manufacturing nation in the world.

Over the years, more and more managers have realized that quality is an essential "ingredient" of the good or service being produced. This view of quality provides several benefit including:

• The number of defects decreases, which cause profits to increase. • Making products or completing services right the first time reduces many of the rejects and much of the rework.

Other factors must be considered if U.S. firms are going to increase productivity and their ability to compete in global marketplace:

• The united states must stabilize its economy • There must be more emphasis on satisfying customer's needs with quality goods and services. • Managers and executives must cooperate with employees to increase employee motivation and participation in the workplace. • Examine the existing work flow in the firm's manufacturing facility and find ways to decrease waste and inefficient in the workplace. • Monitor financial and customer satisfaction data to determine if there are ways to improve both financial performance and customer satisfaction. • All government policies must be examined to ensure that unreasonable regulations that may be hindering productivity growth are eliminated. • Increased use of automation, robotics, and computer manufacturing systems must be used to lower production costs.