chap009
DESCRIPTION
TRANSCRIPT
![Page 1: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/1.jpg)
Production and
Operations Management
Chapter 09
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
![Page 2: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/2.jpg)
1. Describe the current state of U.S. manufacturing and what manufacturers have done to become more competitive.
2. Describe the evolution from production to operations management.
3. Identify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible manufacturing, lean manufacturing and mass customization.
LEARNING GOALSChapter Nine
9-2
![Page 3: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/3.jpg)
4. Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control and quality control.
5. Explain the use of PERT and Gantt charts to control manufacturing processes.
LEARNING GOALSChapter Nine
9-3
![Page 4: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/4.jpg)
Profile
• Palmisano, CEO and President of IBM, started in the company in 1973.
• The company’s earnings have quadrupled under Palmisano.
SAMUEL J. PALMISANOIBM
• Switching the company’s focus from production to service, Palmisano led IBM to enter the emerging global market.
9-4
![Page 5: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/5.jpg)
This company’s robots manufacture, test, and package motor starters - all untouched by human hands. The machines can fill special orders, even for a single item, without slowing down the process.
Name that company!
NAME that COMPANYChapter Nine
9-5
![Page 6: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/6.jpg)
Manufacturing and Services in Perspective
• The U.S. is still the world’s leading manufacturer.
• Manufacturing has continued to grow since 1970. In fact, U.S. manufacturing is 2x bigger than in 1970.
MANUFACTURING in the U.S.
• Almost 25% of all goods produced each year come from the U.S.
LG1
9-6
![Page 7: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/7.jpg)
Source: Parade Magazine, www.parade.com, accessed June 2011.
WHAT’S MADE in the USA?Leading U.S. Manufactured GoodsLG1
Manufacturing and Services in Perspective
9-7
![Page 8: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/8.jpg)
Source: CNBC, www.cnbc.com, accessed June 2011.
Exporters ExtraordinaireTop Ten States that Manufacture Goods for ExportLG1
Manufacturing and Services in Perspective
9-8
![Page 9: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/9.jpg)
Source: Industry Week, www.industryweek.com, accessed June 2011.
MASSIVE MANUFACTURERSThe Top Ten U.S. ManufacturersLG1
Manufacturing and Services in Perspective
9-9
![Page 10: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/10.jpg)
• The market for new green products and services is almost endless.
• Given the rate of population growth, it’s important to plan ahead for a world with limited resources.
• Companies like DuPont, Michelin, Chevron and Nokia are working on sustainability projects.
• Procter & Gamble and Kaiser Permanente issue their own mandatory sustainability scorecards to their supply chains.
KEY WORD:SUSTAINABILITY
(Thinking Green)
9-10
![Page 11: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/11.jpg)
• The U.S. economy is no longer manufacturing based.
• 85% of jobs are in the service sector.
• The top-paying service jobs in the U.S. are in:- Legal services
- Medical services
- Entertainment
- Accounting
- Finance
- Management consulting
TOP-PAYING SERVICE JOBSLG1
Manufacturing and Services in Perspective
9-11
![Page 12: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/12.jpg)
Manufacturers and Service Organizations Become More Competitive
• U.S. is still the leader in nanotechnology and biotechnology.
• How can U.S. businesses maintain a competitive edge?
- Focusing on customers
- Maintaining close relationships with suppliers
- Practicing continuous improvement
- Focusing on quality
- Saving on costs through site selection
- Relying on the Internet to unite companies
- Adopting new production techniques
REMAINING COMPETITIVE in GLOBAL MARKETSLG1
9-12
![Page 13: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/13.jpg)
• Ten years ago, Germany’s economy was much like ours today.
• Stihl invested in highly trained workers.
LEARNING from GERMANY(Reaching Beyond Our Borders)
• Stihl remained competitive in the manufacturing world.
• German companies poured money into research and stayed away from high tech products.
9-13
![Page 14: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/14.jpg)
From Production to Operations Management
• Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).
PRODUCTION and PRODUCTION MANAGEMENT
• Production Management -- All the activities managers do to help firms create goods.
LG2
9-14
![Page 15: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/15.jpg)
• Operations Management -- A specialized area in management that converts or transforms resources into goods and services.
• Operations management includes:- Inventory management- Quality control- Production scheduling- Follow-up services
OPERATIONS MANAGEMENTLG2
From Production to Operations Management
9-15
![Page 16: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/16.jpg)
• All about creating a good experience for those who use the service.
OPERATIONS MANAGEMENTin the SERVICE SECTORLG2
Operations Management in the Service Sector
• In hotels, like Ritz-Carlton, operation management includes fine dining, fresh flowers, and training for every employee.
9-16
![Page 17: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/17.jpg)
Source: Entrepreneur, February 2011.
THERE’S an APP for THATTop Productivity Apps for iPadLG2
Operations Management in the Service Sector
9-17
![Page 18: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/18.jpg)
Progress Assessment
• What have U.S. manufacturers done to regain a competitive edge?
• What must U.S. companies do to continue to strengthen the country’s manufacturing base?
• What led companies to focus on operations management rather than production?
PROGRESS ASSESSMENT
9-18
![Page 19: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/19.jpg)
Production Processes The PRODUCTION PROCESS
LG3
9-19
![Page 20: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/20.jpg)
• Form Utility -- The value producers add to materials in the creation of finished goods and services.
FORM UTILITY LG3
Production Processes
9-20
![Page 21: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/21.jpg)
1. To build and deliver products in response to the demands of the customer at the scheduled delivery time.
2. To provide an acceptable quality level.
3. To provide everything at the lowest possible cost.
GROVE’S BASIC PRODUCTION REQUIREMENTSLG3
Production Processes
9-21
![Page 22: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/22.jpg)
• Process Manufacturing -- The part of production that physically or chemically changes materials.
• Assembly Process -- The part of the production process that puts together components.
PROCESS and ASSEMBLY in PRODUCTIONLG3
Production Processes
9-22
![Page 23: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/23.jpg)
• Production processes are either continuous or intermittent.
• Continuous Process -- Long production runs turn out finished goods over time.
• Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products.
KEY PRODUCTION PROCESSESLG3
Production Processes
9-23
![Page 24: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/24.jpg)
MINUTE MADEProduction of Some of America’s Favorite ProductsLG3
Production Processes
9-24
![Page 25: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/25.jpg)
The Need to Improve Production Techniques and Cut Costs
DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE
1. Computer-aided design and manufacturing
2. Flexible manufacturing
3. Lean manufacturing
4. Mass customization
LG3
9-25
![Page 26: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/26.jpg)
Computer-Aided Design and Manufacturing
COMPUTER-AIDED DESIGN and MANUFACTURING
• Computer-Aided Design (CAD) -- The use of computers in the design of products.
• Computer-Aided Manufacturing (CAM) -- The use of computers in the manufacturing of products.
LG3
9-26
![Page 27: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/27.jpg)
Computer-Aided Design and Manufacturing
COMPUTER-INTEGRATED MANUFACTURING
• Computer-Integrated Manufacturing (CIM) -- The uniting of computer-aided design with computer-aided manufacturing.
• CIM is expensive but it cuts as much as 80% of the time needed to program machines to make parts.
LG3
9-27
![Page 28: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/28.jpg)
Flexible Manufacturing FLEXIBLE MANUFACTURING
• Flexible Manufacturing -- Designing machines to do multiple tasks so they can produce a variety of products.
• Allen-Bradley uses flexible manufacturing to build motor starters.
• 26 machines and robots build, test and package parts.
LG3
9-28
![Page 29: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/29.jpg)
Lean Manufacturing LEAN MANUFACTURING
• Lean Manufacturing -- Using less of everything than in mass production.
• Compared to others, lean companies:- Take half the human effort.
- Have half the defects in finished products.
- Require one-third the engineering effort.
- Use half the floor space.
- Carry 90% less inventory.
LG3
9-29
![Page 30: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/30.jpg)
Mass Customization MASS CUSTOMIZATION
• Mass Customization -- Tailoring products to meet the needs of a large number of individual customers.
LG3
• More manufacturers are learning to customize.
• Mass customization exists in the service sector too.
9-30
![Page 31: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/31.jpg)
MASS CUSTOMIZATION of CANDY
(Spotlight on Small Business)
• Chocomize lets customers customize their chocolate bars.
• Co-founder, Eric Heinbockel, sought funding help from his family.
• Chocomize now has three full-time chocolate makers and is expected to be a success.
9-31
![Page 32: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/32.jpg)
Progress Assessment
• What’s form utility?
• Define and differentiate the following: process manufacturing, assembly process, continuous process and intermittent process.
• What do you call the integration of CAD and CAM?
• What’s mass customization?
PROGRESS ASSESSMENT
9-32
![Page 33: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/33.jpg)
Operations Management Planning
• Operations management planning helps solve problems like:
- Facility location
- Facility layout
- Materials requirement planning
- Purchasing
- Inventory control
- Quality control
OPERATIONS MANAGEMENTLG4
9-33
![Page 34: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/34.jpg)
Facility Location
• Facility Location -- The process of selecting a geographic location for a company ’s operations.
FACILITY LOCATION
• Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations.
LG4
9-34
![Page 35: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/35.jpg)
• Potential of low-cost labor is very attractive to companies hoping to remain competitive.
• However, shuttering operations and moving can often cause severe economic problems in dependent areas.
• What would you do if you were the CEO of ChildrenWear Industries faced with this problem?
STAY or LEAVE(Making Ethical Decisions)
9-35
![Page 36: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/36.jpg)
Taking Operations Management to the Internet
• Sometimes businesses outsource engineering, design and manufacturing to other companies.
• Often these relationships are managed through the Internet.
• Many companies are developing Internet-focused strategies.
OPERATIONS MANAGEMENT on the INTERNETLG4
9-36
![Page 37: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/37.jpg)
Facility Location in the Future
• Information technology gives firms increased flexibility in terms of location.
• Telecommuting -- Working from home via computer.
FUTURE FACILITY LOCATIONLG4
9-37
![Page 38: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/38.jpg)
Facility Layout
• Facility Layout -- The physical arrangement of resources, including people, to most efficiently produce goods and provide services.
• Facility layout depends on the processes performed:
- Service: Help customers find products
- Manufacturing: Improve efficiency
SETTING UP the FACILITYLG4
9-38
![Page 39: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/39.jpg)
1. Assembly Line Layout – Workers do only a few tasks at a time.
2. Modular Layout – Teams of workers produce more complex units of the final product.
3. Fixed-Position Layout – Allows workers to congregate around the product.
4. Process Layout – Similar equipment and functions are grouped together.
FACILITY LAYOUT OPTIONSLG4
Facility Layout
9-39
![Page 40: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/40.jpg)
ASSEMBLY LINE LAYOUTLG4
Facility Layout
9-40
![Page 41: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/41.jpg)
MODULAR LAYOUTLG4
Facility Layout
9-41
![Page 42: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/42.jpg)
PROCESS LAYOUTLG4
Facility Layout
9-42
![Page 43: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/43.jpg)
FIXED-POSITION LAYOUTLG4
Facility Layout
9-43
![Page 44: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/44.jpg)
Materials Requirement Planning
• Materials Requirement Planning (MRP) -- A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed.
• Enterprise Resource Planning (ERP) -- A newer version of MRP, combines computerized functions into a single integrated software program using a single database.
MRP and ERPLG4
9-44
![Page 45: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/45.jpg)
Purchasing
• Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services.
• The Internet has transformed purchasing.
PURCHASINGLG4
9-45
![Page 46: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/46.jpg)
Just-in-Time Inventory Control
• Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line.
• To work effectively, the process requires excellent coordination with suppliers.
INVENTORY CONTROLLG4
9-46
![Page 47: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/47.jpg)
Quality Control
• Quality -- Consistently producing what the customer wants while reducing errors before and after delivery.
• Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities.
QUALITY CONTROLLG4
Photo Courtesy of: Argonne National Laboratory
9-47
![Page 48: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/48.jpg)
• Statistical Quality Control -- A process used to continually monitor all phases of the production process.
• Statistical Process Control -- A process of testing statistical samples of product components at each stage of production.
• Measuring quality along the production process reduces the need for quality control at the end.
STATISTICAL QUALITY CONTROL & STATISTICAL PROCESS CONTROLLG4
Quality Control
9-48
![Page 49: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/49.jpg)
The Baldrige Awards
• Companies can apply for awards in these areas:
- Manufacturing
- Services
- Small Businesses
- Non-Profit/Government
- Education
- Healthcare
The BALDRIGE AWARDSLG4
9-49
![Page 50: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/50.jpg)
Source: National Institute of Standards and Technology, www.quality.nist.gov, accessed June 2011.
THE WINNERS ARE…2010 Baldrige Award Recipients LG4
The Baldrige Awards
9-50
![Page 51: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/51.jpg)
ISO 9000 and ISO 14000 Standards
• The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies.
• ISO 9000 -- The common name given to quality management and assurance standards.
• ISO 14000 -- A collection of the best practices for managing an organization’s impact on the environment.
WHAT is ISO?LG4
9-51
![Page 52: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/52.jpg)
Progress Assessment
• What are the major criteria for facility location?
• What’s the difference between MRP and ERP?
• What’s just-in-time inventory control?
• What are Six Sigma quality, the Baldrige Award, ISO 9000 and ISO 14000?
PROGRESS ASSESSMENT
9-52
![Page 53: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/53.jpg)
Control Procedures: PERT and Gantt Charts
• Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed.
PERTLG5
9-53
![Page 54: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/54.jpg)
1. Analyzing and sequencing tasks
2. Estimating the time needed to complete each task
3. Drawing a PERT network illustrating the first two steps
4. Identifying the critical path
• Critical Path -- The sequence of tasks that takes the longest time to complete.
STEPS INVOLVED in PERTLG5
Control Procedures: PERT and Gantt Charts
9-54
![Page 55: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/55.jpg)
PERT CHART for a MUSIC VIDEOLG5
Control Procedures: PERT and Gantt Charts
9-55
![Page 56: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/56.jpg)
• Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed.
GANTT CHARTSLG5
Control Procedures: PERT and Gantt Charts
9-56
![Page 57: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/57.jpg)
GANTT CHART for a DOLL FACTORYLG5
Control Procedures: PERT and Gantt Charts
9-57
![Page 58: Chap009](https://reader033.vdocuments.us/reader033/viewer/2022061219/54b9c46d4a795976118b4668/html5/thumbnails/58.jpg)
Progress Assessment
• Draw a PERT chart for making breakfast of three-minute eggs, buttered toast and coffee. Define the critical path.
• How could you use a Gantt chart to keep track of production?
PROGRESS ASSESSMENT
9-58