© prentice hall, 2007excellence in business, 3echapter 9 - 1 producing quality goods and services
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© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 1
Producing Quality Producing Quality Goods and ServicesGoods and Services
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 2
What Is Production?What Is Production?
LeadingLeading
Plan
ning
Plan
ning
Organizing
Organizing
Production OperationsProduction OperationsManagement Management
(POM)(POM)
Production OperationsProduction OperationsManagement Management
(POM)(POM)
ControllingControlling
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 3
The Conversion The Conversion ProcessProcess
TransformationTransformation OutputsOutputsInputsInputs
Analytic Systems
The Value Chain
Synthetic Systems
TangibleGoods
IntangibleServices
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 4
Input-Transformation-Output Input-Transformation-Output Relationships for Typical SystemsRelationships for Typical Systems
Department Store
Shoppers, stock of goods
Displays, sales clerks
Attract customers, promote products,
fill orders
Sales to satisfied customers
College or University
High School graduates, books
Teachers, classrooms
Impart knowledge & skills
Educated individuals
Automobile Factory
Sheet steel, engine parts
Tools, equipment, workers
Fabrication & assembly of cars High-quality cars
Restaurant Hungry customers, food
Chef, waitress, environment
Well-prepared & well-served food
Satisfied customers
Hospital Patients, medical supplies
MDs, nurses, equipment Health care Healthy
individuals
Typical Desired Output
Transformation Function
Transformation Components
InputsSystem
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 5
Challenges of Challenges of the Service Industrythe Service Industry
People-IntensivePeople-IntensiveActivitiesActivities
People-IntensivePeople-IntensiveActivitiesActivities
ProductionProductionand Locationand Location
ProductionProductionand Locationand Location
SubjectiveSubjectiveQualityQuality
SubjectiveSubjectiveQualityQuality
CustomerCustomerInvolvementInvolvement
CustomerCustomerInvolvementInvolvement
DeliveryDeliveryTimingTiming
DeliveryDeliveryTimingTiming
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 6
Manufacturing Manufacturing GoodsGoods
Mass Customization
Mass Production
Customized Production
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 7
DisadvantagesDisadvantagesDisadvantagesDisadvantagesAdvantagesAdvantagesAdvantagesAdvantages
Outsourcing the Outsourcing the Manufacturing FunctionManufacturing Function
Capital and ResourcesCapital and ResourcesCapital and ResourcesCapital and Resources
Economies of ScaleEconomies of ScaleEconomies of ScaleEconomies of Scale
Quality and CostQuality and CostQuality and CostQuality and Cost
Privacy IssuesPrivacy IssuesPrivacy IssuesPrivacy Issues
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 8
Production Process Production Process DesignDesign
Forecast Demand
Plan for Capacity
Identify Supply Chain
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 9
Production Process Production Process DesignDesign
Choose Facility Site
Design Facility Layout
Schedule Work
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 10
Establish Establish the Supply Chainthe Supply Chain
Suppliers
Manufacturers
Distributors
Retailers
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 11
Forecast DemandForecast Demand
CustomerCustomerFeedbackFeedback
MarketMarketResearchResearch
SalesSalesFiguresFigures
IndustryIndustryAnalysesAnalyses
EducatedEducatedGuessesGuesses
BusinessBusinessResourcesResources
PlanningPlanning BudgetingBudgetingSchedulingScheduling
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 12
Capacity PlanningCapacity Planning
CustomerCustomerDemandDemand
Level ofLevel ofResourcesResources
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 13
Facility LocationFacility LocationEnergyEnergy
TransportationTransportation
LandLand
Living Living StandardsStandards
ConstructionConstruction
RawRawMaterialsMaterials
Local TaxesLocal Taxes
LaborLabor
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 14
Facility LayoutFacility Layout
Product
Cellular
Fixed-Position
Process
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 15
Process LayoutProcess Layout
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 16
Product LayoutProduct Layout
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 17
Cellular LayoutCellular Layout
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 18
Fixed-Position LayoutFixed-Position Layout
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 19
Production ScheduleProduction Schedule
SchedulingScheduling
DispatchingDispatching
ContingenciesContingencies
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 20
The Gantt ChartThe Gantt Chart
ID Task Name Start Date End Date DurationAugust September
2006
1 Make legs 8/1/06 8/28/06 20d
2 Cut tops 8/22/06 8/28/06 5d
3 Drill 8/29/06 9/4/06 5d
4 Sand 9/5/06 9/11/06 5d
5 Assemble 9/12/06 9/25/06 10d
6 Paint 9/19/06 9/25/06 5d
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 21
Program Evaluation and Program Evaluation and Review Technique (PERT)Review Technique (PERT)
1. Identify activities
2. Determine sequence
3. Establish time frame
4. Diagram activity network
5. Calculate longest completion path
6. Refine timing
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 22
PERT Time PERT Time EstimatesEstimates
OptimisticOptimistic
PessimisticPessimistic
Most LikelyMost Likely
ExpectedExpected
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 23
Simplified PERT Diagram for Store Simplified PERT Diagram for Store OpeningOpening
15 Days
24 Days
3 Days
4 Days
21 Days
21 Days
TrainingCompleted
TrainingCompleted
MerchandiseReceived
MerchandiseReceived
StaffingCompleted
StaffingCompleted
MerchandiseOrdered
MerchandiseOrdered
Staffing PlanStaffing Plan
MerchandisePlan
MerchandisePlan
Ads PlacedAds PlacedAds CreatedAds CreatedPromotionPlan
PromotionPlan
Project Launch
Project Launch
5 Days
5 Days
14 Days
7 Days
OpeningDay
OpeningDay
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 24
Industrial RoboticsIndustrial Robotics
Stamina Stamina Stamina Stamina
Diligence Diligence Diligence Diligence
SpeedSpeedSpeedSpeed
PrecisionPrecisionPrecisionPrecision
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 25
Computerized ProductionComputerized Production
Computer-AidedComputer-AidedManufacturing (CAM)Manufacturing (CAM)
Computer-AidedComputer-AidedManufacturing (CAM)Manufacturing (CAM)
Computer-IntegratedComputer-IntegratedManufacturing (CIM)Manufacturing (CIM)
Computer-IntegratedComputer-IntegratedManufacturing (CIM)Manufacturing (CIM)
Product LifecycleProduct LifecycleManagement (PLM)Management (PLM)
Product LifecycleProduct LifecycleManagement (PLM)Management (PLM)
Computer-AidedComputer-AidedDesign (CAD)Design (CAD)
Computer-AidedComputer-AidedDesign (CAD)Design (CAD)
Computer-AidedComputer-AidedEngineering (CAE)Engineering (CAE)
Computer-AidedComputer-AidedEngineering (CAE)Engineering (CAE)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 26
Manufacturing Manufacturing SystemsSystems
TraditionalTraditional FlexibleFlexible
Mass ProductionMass Production
Resistant to ChangeResistant to Change
High Set-Up CostsHigh Set-Up Costs
Specialty OperationsSpecialty Operations
Conducive to ChangeConducive to Change
Minimal Set-Up CostsMinimal Set-Up Costs
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 27
Supply Chain Supply Chain Data InterchangeData Interchange
Electronic DataInterchange (EDI)
Extensible Markup Language (XML)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 28
The Production ProcessThe Production Process
TransformationTransformation OutputsOutputsInputsInputs
Operations Managers
CoordinatingThe Supply Chain
AssuringProduct Quality
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 29
Supply Chain Supply Chain CoordinationCoordination
InventoryInventoryInventoryInventory
PurchasingPurchasingPurchasingPurchasing
Lead TimeLead TimeLead TimeLead Time
Inventory ControlInventory ControlInventory ControlInventory Control
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 30
Inventory ControlInventory Control
Just-In-Time (JIT)
Material RequirementsPlanning (MRP)
ManufacturingResource Planning (MRP)
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 31
Supply Chain Supply Chain ManagementManagement
ImprovedImprovedQualityQuality
Manage RisksManage Risks
Manage RelationshipsManage Relationships
Manage Trade-OffsManage Trade-Offs
IncreasedIncreasedSalesSales
CostCostSavingsSavings
ReducedReducedInventoryInventory
FasterFasterDeliveryDelivery
ImprovedImprovedServiceService
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 32
Assuring Product QualityAssuring Product Quality
Quality AssuranceQuality AssuranceQuality ControlQuality Control
Establishing StandardsEstablishing Standards
Measuring QualityMeasuring Quality
Minimizing DefectsMinimizing Defects
Statistical Quality ControlStatistical Quality Control
Statistical Process ControlStatistical Process Control
Continuous ImprovementContinuous Improvement
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 33
Total Quality Total Quality ManagementManagement
• Management commitment to TQM
• Clear customer focus
• Employee involvement
• Continuous improvement
• Partnering with suppliers
• Meaningful performance standards
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 34
The Six Sigma The Six Sigma ApproachApproach
Define the Problem
Measure Performance
Analyze Root Causes
Improve the Process
Control the Process
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 35
Global Quality Global Quality StandardsStandards
ISO 9000ISO 9000
ISO 14000ISO 14000
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