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Chapter 8Chapter 8 AchievingAchieving

World Class OperationsWorld Class OperationsManagementManagement

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Chapter 8 Learning GoalsChapter 8 Learning Goals

Why is production and operationsWhy is production and operationsmanagement important in bothmanagement important in bothmanufacturing and service firms?manufacturing and service firms?

What types of production processes areWhat types of production processes areused by manufacturers and serviceused by manufacturers and servicefirms?firms?

How do organizations decide where toHow do organizations decide where toput their production facilities? Whatput their production facilities? What

choices must be made in designing thechoices must be made in designing thefacility?facility?

Why are resource planning tasks likeWhy are resource planning tasks likeinventory management and supplierinventory management and supplier

relations critical to production?relations critical to production?

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Chapter 8 Learning GoalsChapter 8 Learning Goals (contd.)(contd.)

How do operations managers scheduleHow do operations managers scheduleand control production?and control production?

How can quality management and leanHow can quality management and leanmanufacturing techniques help firmsmanufacturing techniques help firmsimprove production and operationsimprove production and operationsmanagement?management?

What roles do technology andWhat roles do technology andautomation play in manufacturing andautomation play in manufacturing and

service industry operationsservice industry operationsmanagement?management?

What key trends are affecting the wayWhat key trends are affecting the waycompanies manage production andcompanies manage production and

operations?operations?

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Production & OperationsProduction & Operations

ManagementManagement Production & OperationsProduction & Operations

Management are important becauseManagement are important because

Consumers demand qualityConsumers demand qualityproducts/services at reasonable pricesproducts/services at reasonable pricesin a timely fashionin a timely fashion

Consumers also demand better serviceConsumers also demand better service

and individualized attentionand individualized attention

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Production & OperationsProduction & Operations

Management, cont.Management, cont. 3 Main types of decisions3 Main types of decisions

Production PlanningProduction Planning

Production ControlProduction Control

Improving Production & OperationsImproving Production & Operations

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Production PlanningProduction Planning Find the best production methods toFind the best production methods to

meet and balance company goalsmeet and balance company goals 3 phases3 phases

Long termLong term

Medium termMedium term Short termShort term

Important decisions/elementsImportant decisions/elements Production ProcessProduction Process

Site SelectionSite Selection

Facility LayoutFacility Layout

Resource PlanningResource Planning

Supply Chain ManagementSupply Chain Management

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Production ProcessProduction Process

How should the goods be made?How should the goods be made?

Mass ProductionMass Production

Mass CustomizationMass Customization CustomizationCustomization

Job shopJob shop

How should the inputs be convertedHow should the inputs be convertedinto outputs?into outputs?

Process manufacturingProcess manufacturing

Assembly processAssembly process

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Production Process, cont.Production Process, cont.

What should the timing of theWhat should the timing of theprocess be?process be?

ContinuousProcessContinuousProcess

Intermittent ProcessIntermittent Process

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Site SelectionSite Selection

Affects operating cost, price of theAffects operating cost, price of theproduct/service, ability to competeproduct/service, ability to compete

Factors to considerFactors to consider Availability of inputsAvailability of inputs

Marketing factorsMarketing factors

Local incentivesLocal incentives

Manufacturing environmentManufacturing environment

International considerationsInternational considerations

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Good Labor Locations in theGood Labor Locations in the

US

US

States with above averageStates with above average laborlaborqualityquality and below averageand below average laborlaborcost:cost:

AlabamaAlabama

AlaskaAlaska

GeorgiaGeorgia

HawaiiHawaii

VirginiaVirginia

WyomingWyomingSource: Corporate Location, www.corporatelocation.com

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Facility LayoutFacility Layout

Determine what the most efficient &Determine what the most efficient &effective design is for the productioneffective design is for the productionprocessprocess

TypesTypes

Process layoutProcess layout

Product layoutProduct layout

Fixed Position layoutFixed Position layout

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Resource PlanningResource Planning

Make sure resources are availableMake sure resources are availablewhen neededwhen needed

Steps of resource planningSteps of resource planning

1.1. Determine which resources are neededDetermine which resources are neededand whenand when

2.2. Decide if the production materialsDecide if the production materialsshould be made or boughtshould be made or bought

3.3. Determine how much inventory toDetermine how much inventory tohave & how it should be managedhave & how it should be managed

4.4. Decide if a computerized resourceDecide if a computerized resourceplanning system is neededplanning system is needed

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Supply Chain ManagementSupply Chain Management

Supply ChainSupply Chain Secure InputsSecure Inputs Produce GoodsProduce Goods DeliverDeliver

GoodsGoods

Want a smooth transition along theWant a smooth transition along thesupply chainsupply chain

StrategiesStrategies

Create tight bonds with suppliersCreate tight bonds with suppliers Improve supplier communicationsImprove supplier communications

Internet, Electronic Data Interchange (EDI)Internet, Electronic Data Interchange (EDI)

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Production & Operations ControlProduction & Operations Control

Gaining efficiencies through theGaining efficiencies through thecoordination of materials, equipment,coordination of materials, equipment,and human resourcesand human resources

Key aspectsKey aspects

RoutingRouting determines workflowdetermines workflow

SchedulingScheduling sets time needed for each stepsets time needed for each step

Gantt ChartsGantt Charts

Critical Path MethodCritical Path Method

Program Evaluation & Review Technique (PERT)Program Evaluation & Review Technique (PERT)

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Typical Gantt ChartTypical Gantt Chart

Scheduling

Designing

Ordering

Delivering materialsMachining components

Assembling

Inspecting

Shipping

September October

8

Symbols:Symbols:

scheduled start completed work time not avail.

scheduled end review date

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Improving Production & OperationsImproving Production & Operations Improving QualityImproving Quality

Quality ControlQuality Control

Total Quality Management (TQM)Total Quality Management (TQM)

Lean ManufacturingLean Manufacturing JustJust--inin--timetime

AutomationAutomation ComputerComputer--aided systemsaided systems

RoboticsRobotics

Flexible Manufacturing SystemsFlexible Manufacturing Systems

ComputerComputer--Integrated ManufacturingIntegrated Manufacturing

OthersOthers

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Trends in ProductionTrends in Production

Modular ProductionModular Production

Decrease cost of design & developmentDecrease cost of design & development

Increases ability to meet rapidlyIncreases ability to meet rapidlychanging conditionschanging conditions

Agile ManufacturingAgile Manufacturing

Increases flexibility and speedIncreases flexibility and speed

Work Cell DesignWork Cell Design

Improves quality & efficiencyImproves quality & efficiency

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ReviewReview Production PlanningProduction Planning

Processes, Site selection, Facility layout,Processes, Site selection, Facility layout,Resource planning, Supply ChainResource planning, Supply ChainManagementManagement

Production & Operations ControlProduction & Operations Control

Routing & SchedulingRouting & Scheduling Improving Production & OperationsImproving Production & Operations

Total Quality Management, LeanTotal Quality Management, LeanManufacturing, AutomationManufacturing, Automation

TrendsTrends

Looking AheadLooking Ahead Exam Chapters 6Exam Chapters 6 -- 88