eman chapter - 10 nunuibacud

8/3/2019 Eman Chapter - 10 NunuiBACUD

1/9

nunuiBACUD 1

Chapter 10Managing Production and Service OperationsOrganizations are designed mainly to produce products or services. If these organizations mustsurvive and grow, the operation function must be undertaken in the most economical mannerpossible. As most companies are expected to make profits, any activity, including those foroperations must be managed to contribute to the accomplishment of such objectives.WHAT OPERATION ISOperations refer to "any process that accepts inputs and uses resources to change those inputsin useful ways." The inputs include land, labor, capital, and entrepreneurship. The transformationprocess converts the inputs into final goods or services.Examples of final goods and services are as follows:

1. Industrial chemicals like methylene chloride, borax powder, hydrochloric acid, etc., whichare produced by chemical manufacturing firms.

2. services like those for the construction of ports, high rise buildings, roads, bridges, etc.,which are produced by construction firms.3. Electrical products like transformers, circuit breakers, switch gears, power capacitors,

etc., which are produced by electrical manufacturing firms;4. Electronic products like oscilloscope, microwave tests systems, transistors, cable testers,

etc., which are produced by electronics manufacturing firms;5. Mechanical devices like forklift, trucks, loaders, etc., which are produced by

manufacturing firms;6. engineering consultancy services like those for construction management and

supervision, project management services, etc., which are produced by engineeringconsultancy firms.

The Production Process

INPUTS TRANSFORMATIONPROCESS

OUTPUTS

Land EquipmentLabor P rocedures ProductsCapi ta l Technology ServicesEntreoreneurshioWHAT OPEARATIONS MANAGEMENT ISAn operation is an activity that needs to be managed by competent persons. Aldag and Stearnsaccurately defined operations management as " the process of planning, organizing, andcontrolling operations to reach objectives efficiently and effectively." As the terms "planning","organizing", and "controlling" have already been discussed in the previous chapters, elaborationson the terms "efficiency" and "effectiveness" will be made.Efficiency is related to "the cost of doing something, or the resource utilization involved." When aperson performs a job lesser cost than when another person performs the same job, he is moreefficient than the other person.

eceTI Pmanila


2/9

nunuiBACUD2

Effectiveness refers to the goal accomplishments. When one is able to reach his objectives, sayproduce la, 000 units in one month, he is said to be effective.Operations management must be performed in coordination with the other functions like thosefor marketing and finance. Although the specific activities of the operations division of firmsslightly differ from one another, the basic function remains the same, i.e., to produce products orservices.OPERATIONS AND THE MANAGERThe manager is expected to produce some output at whatever management level he is. If he isassigned as the manufacturing manager/supervisor, his function is "to determine and define theequipment, tools, and processes required to convert the design of the desired product into realityin an efficient manner."The engineer in charge of operations in a construction firm is responsible for the actualconstruction of whatever bridge or road his company has agreed to put up. He is required to do itusing the least-expensive and the easiest methods.The engineer, as operations manager is one with several years of experience in the operationsdivision and possesses an academic background in engineering.TYPES OF TRANSFORMATION PROCESSSESManu fadu rin g P ro ce ss es

1. Job shop2. Batch flow3. Worker-paced line flow4. Machine-paced line flow5. Batch/continuous flow hybrid6. Continuous flow

Service Processes1. Service factory2. Service shop3. Mass service4. professional service

Manufacturing ProcessesManufacturing Processes are those that refer to the making of products by hand or withmachinery.

J ob Sho p. A job shop is one whose production is "based on sales and orders for a variety of smalllots." Job shops are very useful components of the entire production effort, since theymanufacture products in small lots that are needed by, but cannot be produced economically bymany companies. Depending upon the customer's needs, a job shop may produce allotconsisting of 20 to 200 or more similar parts.Job shops produce custom products, in general. Products may be manufactured within a shortnotice. The equipment used are of general purpose type.

eceTI Pmanila


3/9

nunuiBACUD3

The type of layout used by job shops is the process layout, where similar machines are groupedtogether. The typical size of operation is generally small. Job shops are labor intensive andmachines are frequently idle.Process Flow Diagram for a Job Shop

Preparation andGrouping ofMaterials

Milling Inspectiont - - - . . and Chipping'------GrindingBatch Flow. The batch flow process is where lots of generally own designed products aremanufactured. It is further characterized by the following:

1. There is flexibility to produce either low or high volumes.2. Not all procedures are performed on all products.3. The types of equipment used are mostly for general purpose.4. The process layout is used.5. The operation is labor intensive, although there is less machine idleness.6. The size of operation is generally medium-sized.

Examples of factories using the large batch flow are wineries, scrap-metal reduction plants, androad-repair contractors.Worker-Paced Assembly Line. An assembly line refers to a production layout arranged in asequence to accommodate processing of large volumes of standardized products or services.The quality and quantity of output in a worker-paced assembly line depends to a great extent tothe skill of labor utilized. Examples of worker-paced assembly lines are food marts like Jollibee,McDonalds and Shakeys.The worker-paced assembly line is characterized by the following:

1. The products manufactured are mostly standardized.2. There is a clear pattern process.3. Specialized equipment is used.4. The size of operation is variable.5. The process is worker-paced.6. The type of layout used is the line flow.7. Labor is still a big cost item.

Machine-Paced Assembly Line. This type of production process produces mostly standardproducts with machines playing a significant role. Some of its features are:

1. The process is of clear, rigid pattern.2. Specialized type of equipment is used.3. The line flow layout is used.4. Capital equipment is a bigger cost item than labor.5. Operation is large.6. The process is machine-paced.

Examples of machine-paced assembly line are automobile manufacturers like General Motors andFord Motors.

eceTI Pmanila


4/9

nunuiBACUD4

Continuous Row. The continuous flow processing is characterized by "the rapid rate at whichitems move through the system." This processing method is very appropriate for producing highlystandardized products like calculators, typewriters, automobiles, televisions, cellular phone, etc.Some of its features are:

1. There is economy of scale in production, resulting to low per unit cost of production.2. The process is clear and very rigid.3. Specialized equipments are used.4. The line flow layout is used.5. Operations are highly capital intensive.6. The size of operation is very large.7. Processing is fast.

Batch/Continuous Flow Hybrid. This method of processing is a combination of the batch andcontinuous flow. Two distinct layouts are used, one for batch and one for the continuous flow.The typical size of operation is also very large giving opportunities for economies of scale.Examples of companies using batch/continuous flow hybrid are breweries, gelatin producers, andtobacco manufacturers.Batch Flow Processfor a Large Manufacturer of Suits

Reproduc ing - . . . . . . . . . Sk ir t s hopthe marker fitting~I 1/preading Coat s ho pfittingSleeves SubassemblyFronts M a jo r M a tc hin gBacks Subassembly (s leeves wi thbody)Collars OtherWe lt s, e tc . Subassembl ies

Pressingan dInspect i

WarehouseMa tc hin g o fc oa t a ndskirt

RemainingSkirtOperat ions

Pressingan dInspect ion

Todistributor

Assembly Line for Production or service

Raw Station 1 S tation 2 Sta tion 3 Sta tion 4 Finished itemma te ri al s ( or ~ Materials ------+ Materials ------+ Materials ~ Materials ~ ( or ) c ompl et edand/or and/or and/or and/or servicecustomer) labor labor labor labor

eceTI Pmanila


5/9

nunuiBACUD5

A Machine-Paced Assembly Line Process: Automobile ManufacturingT HE BOD Y

L I N EBody Assemb ly F lo or p la n, b od y s id e, ro ofp an el p os it io nin g a nd

welding Doo r hang in g Eng ine enc losu reposi ti on in g and we ld in g F ro nt -e nd a ss em b ly ( e.g .f ender s, h ood ) Meta l f in i sh ing

Various Trim LineSubassembl iesH ard T rim L in e B um pe rs a nd o th erchrome Glass V in y l t op s A i r cond it ion ing In st rum en t p an el

S oft T rim L in e Seats F lo or a nd c eilin g c ov er s

T he F in al C h as sis L in e Flu id f il ling Und er-h oo d w irin g a ndhose connect ions T es tin g o f c ars c om pu te rd ia gnos ti c s y st em Sta rt -up tes ti ng

Pa in t Shop P rim e r (E LPO b at h) F in ish coat

M isce l laneous Chass is G as ta nk a nd fu el ta nks Brak e l in e s a ssemb led1 . . 0 Fron t -end a li gnmen t Rea r a xle m o un te d Wheel mount in g

T he M oto r C ra dle L in e D re ss in g o f b as ic m o to rw ith v ario us p arts , h os es ,

a nd ha rne sse s T ran sm is s io n , f an F ro nt a xle s a nd b ra ke s M atin g o f m oto r w ith itscradle E xh au st s ys tem , r ea rw he el b ra ke lin esT HE BOD Y DRO P

Whee ls , tir es , w h ee l b ala nc e

Diagram of the Continuous Flow Process of Paper-Making Company

Wood r oomd eb ar kin g a ndchippinq

L og a nd c hipr ece iv in g andwelqhinq

Digesters I -'----------~ I B O T " ITo tempo ra rystorage

. . . .Recoveryp ro cess fo rchemicals

W et e nd :headbox ,wire

Pape r Machi neRollers,dyingbo x

C l ean in g andblending

D ry e nd :winders,slitting

eceTI Pmanila


6/9

nunuiBACUD6

A Simplified Production Process of a gelatin Manufacturing Company Using TheBatch/Continuous Flow Hybrid.---------,

ProcessFlow of a Car Repair Service Shop

Withdrawal : &L_of_p_a_rt_s ____JI------. t -----+ro m p artsdeoartment

Diagnosisofproblem

Mixedbatchacinq

Withdrawalo f p ar tsfrom p ar tsdeoartment

W ork on carby techn ic ian

Car re tu rnedan dcustomerpaymentprocessed

Papersg ath ere d o nca r a nd s en tt o ca sh ie r

Process Flow for Material Receipt and Sales Transactions in a Mass Service RetailingInstitutionI. M AT ER IA L R EC EIP T

Chec kin g o fpaperwork

II. S AL ES T RAN SACTI ON

Presen ti ng merchandi seto c us to me r a nd c lo sin gsale

S AL ES C YC LE R EP EA TE D

Reg is te r c lo se d a ndbalanced

eceTI Pmanila


7/9

nunuiBACUD7

Service ProcessesService processes are those that refer to the provision of services to persons by hand or withmachinery.Service Factory. A service factory offers a limited mix of services which results to someeconomies of scale in operations. This also affords the company to compete in terms of price andspeed of producing the service.The process layout preferred by the service factory is the rigid pattern of line flow processing.McDonalds and Jollibee are also examples of service factories.Service Shop. A service shop provides a diverse mix of services. The layout used are those forjob shops or fixed position and are adaptable to various requirements.Service shops abound throughout the Philippines. Examples are Servitek and Megashell. Amongthe services provided by these shops are car engine tune-up, wheel balancing, wheel alignment,change oil, etc.Mass Service. A mass service company provides services to a large number of peoplesimultaneously. A unique processing method is, therefore, necessary to satisfy this requirement.To be able to serve many people, mass service companies offer a limited mix of services.The process layout used is typically fixed position where customers move through the layout.Professional Services. These are companies that provide specialized services to other firms orindividuals. Examples of such firms are as follows:

1. Engineering or management consulting services which help in improving the planrt layoutor the efficiency of the company.

2. Design services which supply designs for a physical plant, products, and promotionmaterials.

3. Advertising agencies which help promote a firms products.4. Accounting services.5. Legal services6. Data processing services7. Health services

Professional service firms offer a diverse mix of services. There is a lower utilization of capitalequipment compared to the service factory and the service shop. The process pattern used isvery loose. The process used is identical to the job design.Professional service firms are, oftentimes, faced with delivery problems brought about bynonuniform demand. Strategies may be used depending on the situation are as follows:

1. The use of staggered work-shift schedules.2. The hiring of part-time staff.3. Providing the customer with opportunity to select the level of service.4. Installing auxiliary capacity or hiring subcontractors.5. Using multiskilled floating staff.6. Installing customer self-service.

eceTI Pmanila


8/9

nunuiBACUD8

IMPORTANT PARTS OF PRODUCTIVE SYSTEMSProductivesystems consist of six important activities as follows:

1. Productdesign2. Productionplanning and scheduling3. Purchasingand materials management4. Inventory control5. Work flow layout6. Quality control

Product DesignCustomersexpect that the products they buy would perform according to the assignedfunctions.A good product design assures that this will be so. Customers avoid buying products with poorproduct design. An example is that certain brand of ballpen which fail to write after one or twodays of actual use. This happens becauseof poor product design.Productdesign refers to "the processof creating a set of product specificationsappropriate to thedemands of the situation."Companies wanting to maintain or improve its market share keep a product design teamcomposedof engineers, manufacturing, and marketing specialists.Production Planning and SchedulingProduction planning may be defined as "forecasting the future sales of a given product,translating this forecast into the demand it generates for various production facilities, andarranging for the procurement of these facilities."Production planning is a very important activity because it helps management to make decisionsregarding capacity. When the right decisions are made, there will be less opportunities forwastages.Scheduling is the "phase of production control involved in developing timetables that specify howlong each operation in the production process takes." Efficient scheduling assures theoptimization of the use of human and nonhuman resources.Purchasing and Materials ManagementFirms need to purchase supplies and materials required in the various production activities. Themanagement of purchasing and materials must be undertaken with a high degree of efficiencyand effectiveness especially in firms engaged in high volume production. The wider variety ofsupplies and materials needed adds to the necessity of proper managing and purchasingmaterials.Materials management refers to "the approach that seeks efficiency of operation through theintegration of all the material acquisition, movement, and storage activities in the firm."Inventory ControlInventory control is the process of establishing and maintaining appropriate levels of reservestocks of goods. As supplies and materials are required by firms in the production process,thesemust be kept available when they are needed. Too much reserve of stocks will penalize the firm

eceTI Pmanila


9/9

nunuiBACUD9

in terms of high storage costs and other related risks like obsolescence and theft. Too littlereserves, on the other hand, may mean lost income of opportunities if production activities arehampered. A balance between the two extremes must be determined.Ways of achieving proper inventory control:

1. Determining reorder point and reorder quantity2. Determining economic order quantity3. The use of just-in-time (JIT) method of inventory control4. The use of the material requirement planning (MRP) method of planning andcontrolling inventories.

Work-Flow LayoutWork-flow layout is the process of determining the physical arrangement of the productionsystem. In the transformation process, the flow of work may be done either haphazardly orderly.The job of the operations manager is to assure that a cost-effective work-flow layout is installed.A good work-flow layout will have the following benefits:

1. Minimize investment in equipment.2. Minimize overall production time.3. Use existing space most effectively.4. Provide for employee convenience, safety, and comfort.5. Maintain flexibility of arrangement and operation.6. Minimize material handling cost.7. Minimize variation in material-handling equipment.8. Facilitate the manufacturing (or service) process.9. Facilitate the organizational structure.

Quality ControlQuality control refers to the measurement of products or services against standards set by thecompany. Certain standard requirements are maintained by the management to facilitateproduction and to keep customers satisfied.Poor quality control breeds customer complaints, returned merchandise, expensive lawsuits, andhuge promotional expenditures.QUESTIONS FOR REVIEW AND DISCUSSION

1. What is meant by "operations'? Does the term cover production of farm products?2. Why is operations management an important activity? Who are qualified to become

operations manager?3. What are the types of transformation process? In what ways are they similar and

different?4. What is a job shop? What makes it useful transformation process?5. What is the batch flow process? What possible advantages it offer?6. What is the worker-paced assembly line? Why is it called such?7. Why is the machine-paced assembly line very popular among large corporations?8. What is a service factory? Provide an example.9. What types of services are offered by professional service firms? What production

problems do these firms encounter?10. What are the important parts of productive systems? Point out the relationships between

these parts.

eceTI Pmanila

eman chapter - 10 nunuibacud

Documents