PRODUCTION & BUSINESS OPERATIONS
CHAPTER 13 PRODUCTION & BUSINESS OPERATIONS 13.1 Objectives Describe the role of producers in the economy and the forms of production Differentiate among the various types of manufacturing Production in the economy
Economy begins with production Consumers need products/services to satisfy their needs and wants Role of producers 3 categories of products used by people
Natural resources Raw materials supplied by nature Agricultural products Crops and animals raised by farmers Processed goods Products whose forms have been changed to increase their value and usefulness to people Role of producers (cont.)
4 types of businesses that are responsible for production of goods/services Producers Develop products to sell to other businesses or consumers Extractors Find natural resources like water, oil, coal, timber from the earth to be processed and used Farmers Tend land to grow crops and livestock that are later sold and processed Manufacturers Get materials from other producers and convert them into products for sale to consumers Forms of production Forms of production are All needed to make
Extraction & cultivation Processing Manufacturing All needed to make products for customers Extraction & cultivation
Products are obtained from nature Makes sure that there is always an available supply of natural resources Also makes sure that crops, livestock, fish are available at all times Most basic form of production processing Changing & improving the form of a product
Not many products are used exactly how they are found in nature Most are processed before being used Water, Cotton, Timber, Oil, Cows manufacturing Combines raw materials and processed goods into finished products Businesses and consumers use these Can be simple (cabinetmaking) or complex (designing a computer microchip) Manufacturing examples
One manufacturer might use steel and plastic to make many parts for a snowmobile Another may purchase meat, vegetables and fruit from farms to create frozen TV dinners Another might take timber from a forest and process it into lumber and plywood for a construction company to buy to build houses with Manufacturing processes
Usually, several manufacturers are a part of the total activity needed to produce goods that we buy EX: a textile mill in North Carolina buys cotton from an Alabama farm. It spins the cotton into yarn and makes the yarn into fabric.A plant in Boston then colors and prints the cloth.A clothing manufacturer in New York then buys the cloth and makes it into jeans Working together is what fulfills consumer needs Types of manufacturing procedures
3 main types of Manufacturing procedures Mass production Custom manufacturing Materials processing Mass production An assembly process that makes a large number of identical products using a continuous, efficient procedure Sometimes called repetitive production EX: automobile or bottling plants Every employee has a specific task Training costs are lower and quality is higher Can also be boring and decrease motivation Machines now assist with many assembly lines Custom manufacturing Manufacturers make products to meet specific needs and standards of customers/businesses Products range from dentures to concert halls Building a product for a specific use Work closely with the customer to plan and design product to fit their requests May call for unique materials/special process EX: bridges, buildings, piece of airplane, special running shoe for particular athlete Materials processing Changing the form of raw materials so they can be consumed or used to make other products EX: oil companies refine oil to form gasoline; mills process grain into flour and cereal; digital editors convert audio/video files into films/CDs 2 types Continuous processing Raw materials always move through equipment to change them into a specific product to buy EX: milk Intermittent processing Uses short production times to produce a certain amount of change to a product. Machines are reset after each set. EX: printer for special stationary ANSWER #1-4 ON PAGE 322 BEFORE CONTINUING NOTES
13-1 assessment ANSWER #1-4 ON PAGE 322 BEFORE CONTINUING NOTES 13.2 objectives Identify the activities involved in production planning Describe how manufacturing is organized Production activities
Production processes are very complex Involves careful planning and coordination Before a company can manufacture a product, it must have the facilities and equipment to carry out the production It must hire enough people to complete jobs It also must check all finished products for quality and store them until they are sold Product development Before production planning can happen, the company decides what products it will produce You cant expect to sell the same thing every year; New products will have to be developed Product planning has 2 steps: New product research New product design New product research Goal is to develop new products that customers will like, meet their customer needs, and improve current products offered Companies perform 2 types of research: Applied research Studies existing products to develop improvements or new uses of the product EX: auto manufacturers improve fuel efficiency Pure research Research done with no product in mind; instead, wanting to discover new solutions to problems EX: scientists researching for cures to diseases New product design Turning an idea into a product a company can sell and make a profit from Designs are tested and best ones are chosen After engineers build and test a model, the business determines all parts/materials needed for final product Financial experts decide on what price to set Make sure company makes money AND customers can afford it Production planning If a company develops and tests a new product idea, and they decide they want to proceed, they will then develop plans to produce it Production planning includes 3 activities: Develop a production process Collect production resources Select and prepare production personnel Develop the production process
Consists of the activities, equipment and resources needed to manufacture a product If you are going to use mass production, this is where you organize the assembly line Figure out which method you are going to use is a key part of this step Collect production resources
Order machines, tools required for production Business must locate and organize a space to perform production activities Can either buy a new building or remodel their current space to make bigger and better Determine where materials will be coming from Identify suppliers and make sure materials are delivered on time and at the right price production personnel Estimates the number of employees needed to complete production activities Determines skills required of each employee Company will check their own employees first, then hire and train new ones if needed Inventory management Inventory is a detailed list of a companys materials, supplies and finished products. Inventory management keeps track of the inventory & resources needed for production Very important to manufacturing because you cant produce products without your inventory Managers keep a record of the supply and costs of resources used in production After product is assembled, extra resources are moved into storage or sold to customers Manufacturing procedures
Todays assembly line is quite different than it used to be Employees work in teams Parts move along conveyor belts Products move quickly through process Employees check products for quality at several points When completed, products are packaged, labeled and moved to a loading area for shipment Organizing the work area
The type of product will determine how the work area is organized Mass production requires a large building There must be space for assembly line, equipment, tools, employee work stations and storage areas for parts used The smaller the product, the larger amount of workspace each employee will have Improving manufacturing
Today there are higher costs, more competition, and more customer demands Challenges today are: faster production, increased quality of products, reduced costs Companies are coming out with improved procedures, better training for employees and a higher level of quality for products Continuous Process Improvement (CPI)has been addedincreases the quality of work by reducing errors and waste.Processes are reviewed instead of waiting until a problem comes up. Cpi-Continuous Process Improvement
STEP 1: Involve Everyone STEP 2: Identify process activities STEP 3: Establish quality performance standards STEP 4: Select measurement tools STEP 5: Monitor performance continuously STEP 6: Improve process quality Cpi (cont.) Designed to help an organization achieve its goals by improving the quality of work Standards are developed for quality performance Standards are based on benchmarks (best practices among all competitors) Based on these results, employees look for ways to improve work procedures so all products can improve as well ANSWER #1-4 ON PAGE 328 BEFORE CONTINUING NOTES
13-2 assessment ANSWER #1-4 ON PAGE 328 BEFORE CONTINUING NOTES 13.3 objectives Discuss the importance of effective business operations Describe tools used to manage business operations The importance of business operations
How a business operates day-to-day can determine if it succeeds or fails Work procedures may not be efficient Security issues may result in thefts Lack of maintenance could lead to expensive repairs Bad work environment can lead to unhappy employees Types of business operations
Some operations are specific to the type of business Most common types of business operations: Facilities management Logistics Scheduling Safety and security Facilities management
Buildings are one of the largest investments of a business They provide space for all of the business operations and all storage Management begins with deciding on the building that will be needed (new or existing) Management also deals with maintenance and repairs needed to make building better Management also keeps energy/utility costs under controlbe as green as possible logistics Managing the movement and storage of supplies, materials and finished products in a business A newer term for logistics is: supply chain management Major logistic duties: Locating/purchasing where to get supplies from Transportation of supplies, materials and products Communicating with everyone in supply chain JUST-IN-TIME: when goods arrive just in time for production or to sellinstead of just sitting in storage scheduling Determining the activities that need to be completed, who will complete the work, and the resources needed to complete the task in time Factories must maintain the right inventory to fill each order or customers will wait too long to receive merchandise Employee scheduling is importantfull-time, part-time and temporary employees Company must have the right number of people scheduled to complete the work needed Safety and security Protecting people and property
Damage/injury can happen due to Crime Accidents Natural disasters (tornados, earthquakes) Security employees study activities of business to identify possible security problems then come up with a way to prevent them They also try to minimize the amount of accidents and injuriesgive safety training classes and hang safety posters in employee areas Information management
Uses technology to access & exchange information to complete the work of an organization 4 goals: Collect, organize & maintain needed information Provide instant access to information required to perform work and make decisions Prevent access to unauthorized users Use technology to improve communication Types of information used in business: text, data, graphics, pictures, and videos Oral (telephone, voic , meetings) Written (letters, memos, reports,s) Information management (cont.)
Information managers are responsible for designing, purchasing, installing and maintaining the many types of technology used in business They must develop procedures for collecting, storing and using the information They make sure the information collected is easy to get to, yet still safe and secure The internet makes it more difficult to safeguard against hackers worldwide Tools for business operations
Management Tools Operational plan: identifies how work will be done, who will do it and what resources will be needed Operating budget: detailed financial plan for a specific area of the business Schedule: time plan for completing activities Procedure: list of steps to be followed for performing a work activity Standard: specific measurement against which an activity or result is judged. Must be clear and realistic (EX: the number of customers that should be served in a fast food restaurant at one time) Tools for business operations
Technology Tools So many common business operations can be completed using computer software like: Project management Budgeting Scheduling Inventory Computer security Document management New types of software are available to help with logistics: supply chain management software and collaboration software (pg 336) ANSWER #1-3 ON PAGE 336 BEFORE COMPLETING OTHER CHAPTER ACTIVITIES
13-3 assessment ANSWER #1-3 ON PAGE 336 BEFORE COMPLETING OTHER CHAPTER ACTIVITIES CHAPTER 13: extra chapter assignments
Chapter 13 Assessment #11-26 (write definition and word) Page 341: Decision Making Strategies #32-33 Chapter 13: Study Guide Handout