Part 3 Managing for Quality and Competitiveness

Transcription

1 Part 3 Managing for Quality and Competitiveness 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2 8-2 CHAPTER 6 The Nature of Management CHAPTER 7 Organization, Teamwork, and Communication CHAPTER 8 Managing Service and Manufacturing Operations

3 8-3 Learning Objectives LO 8-1 LO 8-2 LO 8-3 LO 8-4 LO 8-5 LO 8-6 Define operations management and differentiate between operations and manufacturing. Explain how operations management differs in manufacturing and service firms. Describe the elements involved in planning and designing an operations system. Specify some techniques managers may use to manage the logistics of transforming inputs into finished products. Assess the importance of quality in operations management. Evaluate a business s dilemma and propose a solution.

4 8-4 Operations Management Operations Management (OM) The development and administration of the activities involved in transforming resources into goods and services Historically, OM has been called production or manufacturing limiting it to the manufacture of physical goods The change from production to operations recognizes services and ideas and views the function as a whole

5 8-5 The Nature of Operations Management Manufacturing The activities and processes used in making tangible products; also called production Production The activities and processes used in making tangible products; also called manufacturing Operations The activities and processes used in making both tangible and intangible products

6 8-6 Transformation Process At the heart of OM is the transformation process though which inputs are converted into outputs Inputs The resources such as labor, money, materials and energy that are converted into outputs Outputs The goods, services and ideas that result from conversion of inputs Operations managers control the process by: Taking measurements (feedback) and comparing them to established standards Taking corrective action for any deviation

7 8-7 The Transformation Process of Operations Management Transformation process combines inputs in predetermined ways using different equipment, administrative procedures, and technology to create a product Any deviation between actual and desired outputs Manager may take some sort of corrective actions

8 8-8 Inputs, Outputs, and Transformation Processes in the Manufacturing of Oak Furniture 1. Strip the oak trees of their bark and saw them into appropriate sizes 2. Firm dries the strips of oak lumber 3. Dried wood is routed into its appropriate shape and made smooth 4. Assemble and treat the wood pieces then stain or varnish the piece 5. Completed piece is stored until it can be shipped to customers

9 8-9 OM in Service Businesses o o o Transformation processes occur in all organizations, regardless of what they produce or their objectives Unlike tangible goods, services are actions or performances that must be directed towards the consumers who use them Significant customer-contact component to most services Strive to provide a standardized process, and technology offers an interface that creates an automatic and structured response The output is generally intangible and even perishable Few services can be saved, stored, resold, or returned

10 8-10 Manufacturers and Service Providers Differences Manufacturers and service providers differ in five basic ways: 1. Nature and consumption of output services require more customer contact and happen at the point of consumption 2. Uniformity of inputs services are more customized to each consumer 3. Uniformity of output each service is performed differently 4. Labor required services are more labor-intensive 5. Measurement of productivity intangibility of the service product makes measurement more difficult

11 8-11 Subway s Inputs and Outputs Subway s inputs are sandwich components such as bread, tomatoes and lettuce. While Subway s outputs are customized sandwiches

12 8-12 Planning the Product Operations planning involves making the following decisions: What will we produce? Who are our customers? What processes will we use? Where will we make our product? Planning the Product Marketing research helps determine the product and features customers want, gauge demand and set price Once management has a product, they must plan how to produce the product Operations managers plan for the resources needed to complete the transformation process

13 8-13 Designing the Operations Process Before beginning production, must determine the appropriate method of transforming resources into the desired product Products are manufactured using one of three processes: Standardization The making of identical interchangeable components or products Modular Design The creation of an item in selfcontained units, or modules, that can be combined or interchanged to create different products Customization Making products to meet a particular customer s needs or wants

14 8-14 Planning Capacity Capacity The maximum load that an organizational unit can carry or operate o o o The unit of measurement could be a worker or machine, a department, a branch or an entire plant Capacity can be stated in terms of inputs or outputs Planning capacity too low results in unmet demand while planning it too high results in higher costs DID YOU KNOW? Hershey s has the production capacity to make more than 80 million chocolate kisses per day

15 8-15 Planning Facility Location Facility Location Significant due to the high costs involved and complex because it involves the evaluation of many factors, some of which cannot be measured with precision Important factors to consider: Proximity to market Availability of raw materials, transportation, power and labor Climatic influences and community characteristics Taxes and inducements

16 8-16 Fixed-Position Layout Fixed-Position Layout A layout that brings all resources required to create the product to a central location Project Organizations Companies using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration

17 8-17 Process Layout Process Layout A layout that organizes the transformation process into departments that group related processes Intermittent Organizations Organizations that deal with products of a lesser magnitude than do project organizations; their products are not unique but possess a significant number of differences

18 8-18 Product Layout Product Layout A layout requiring production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line Continuous Manufacturing Organizations Companies that use continuously running assembly lines, creating products with many similar characteristics

19 8-19 Planning and Designing Operations Systems Apple stores are designed to make the most efficient use of space The layout of the stores allows customers to test its products before purchasing

20 8-20 Computer Assisted Design and Manufacturing Two developments that have strongly influenced the operations of many businesses are computers and robotics Computer-Assisted Design (CAD) The design of components, products and processes on computers instead of on paper Computer-Assisted Manufacturing (CAM) Manufacturing that employs specialized computer systems to actually guide and control the transformation processes

21 8-21 3D Printing 3D printing has become popular among businesses for the purposes of manufacturing certain items more efficiently and inexpensively It is also used to create tools needed for work or manufacturing processes The designs of the product or tool are put into a computer and printed with liquid metals or plastics A wide range of industries are taking advantage of this method from aircraft to dental product manufacturers 3D printing decreases the number of pieces in the assembly of an item making it less likely to break For example, the National Aeronautics and Space Administration (NASA) printed a fuel injector for a rocket in two pieces that once require 115 pieces for complete assembly

22 8-22 Flexible Manufacturing and Computer- Integrated Manufacturing Flexible Manufacturing The direction of machinery by computers to adapt to different versions of similar operations Computer-Integrated Manufacturing (CIM) A complete system that designs products, manages machines and materials, and controls the operations function Robots have become particularly important in industries in which human lives would otherwise be at risk

23 8-23 Sustainability and Manufacturing Urban sprawl Sustainability issues are becoming increasingly important to stakeholders and consumers Green operations and manufacturing can improve a company s reputation, increase customer and employee loyalty, leading to improved profits Protection of biodiversity Deforestation

24 8-24 Patagonia and the Greener Way Patagonia is always looking for a greener way to design, produce and recycle its products Do you think Patagonia s sustainable practices attract and/or keep consumers? Their mission statement: Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis

25 8-25 Managing the Supply Chain Supply Chain Management Connecting and integrating all parties or members of the distribution system in order to satisfy customers; also called logistics Includes: Obtaining and managing raw materials and component parts Managing finished products Packaging products Getting products to customers Integrates firms such as: Raw material suppliers Manufacturers Retailers Ultimate consumers Into a seamless flow of information and products

26 8-26 Purchasing Purchasing The buying of all the materials needed by the organization; also called procurement» Aim is to obtain items of the desired quality in the right quantities at the lowest possible cost» Companies may be able to make some component parts more economically and efficiently» Can arrange to lease the item from another company» What the firm does depends on cost, product availability, and supplier reliability

27 8-27 Managing Inventory Inventory All raw materials, components, completed or partially completed products, and pieces of equipment a firm uses Finished-goods inventory products ready for sale Work-in-process inventory products partly completed McDonald s cooked hamburger still has more stages before sold to customer Raw materials inventory all materials purchased to be used as inputs for making other products Nuts and bolts for an automobile manufacturer

28 8-28 Inventory Control Inventory Control The process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it Operations management must be closely coordinated with inventory control Each item held in inventory carries with it a cost Inventory managers try to determine the proper inventory level for each item Depends on usage rate, cost of maintaining the item in inventory, other procedures associated with ordering or making the item, and cost of the item

29 8-29 Operations Managers and Inventory Management Operations managers are concerned with managing inventory to ensure that there is enough inventory in stock to meet demand

30 8-30 Approaches to Inventory Control Economic Order Quantity (EOQ) Model A model that identifies the optimum number of items to order to minimize the costs of managing (ordering, storing and using) them Just-In-Time (JIT) Inventory Management Material- Requirements Planning (MRP) A technique using smaller quantities of materials that arrive just in time for use in the transformation process and therefore require less storage space and other inventory management expense A planning system that schedules the precise quantity of materials needed to make the product

31 8-31 Outsourcing Outsourcing refers to the contracting of manufacturing or other tasks to independent companies, usually overseas o o o Globalization requires supply chain managers improve speed and balance resources to compete Is linked with competitive advantage through: Improved product quality Customers obtain products sooner Overall supply-chain efficiencies However, outsourcing may raise negative public opinion

32 8-32 Routing and Scheduling Next, management must consider: Routing The sequence of operations through which the product must pass; sequence depends on the product specifications Once the routing is known, actual work can be scheduled: Scheduling The assignment of required tasks to departments or even specific machines, workers or teams

33 8-33 Program Evaluation and Review Technique One popular method developed for scheduling is: o o Program Evaluation and Review Technique (PERT) Identifies all the major activities or events required Arranges them in a sequence or path Determines the critical path Estimates the time required for each event The path requiring the longest time from start to finish is called the critical path as that is the minimum amount of time needed for completion

34 8-34 Hypothetical PERT Diagram A Hypothetical PERT Diagram for a McDonald s Big Mac

35 8-35 Taco Bell Drive-Thru Taco Bell s efficient drive-thru operations mirror major factory operations such as standardized procedures, elimination bottlenecks, and optimization of staff efficiency The restaurant averages 164 seconds per customer order from the time the customer arrives to departure With an assembly line of food items to construct, six different types of wrappers, and detailed procedures for every step of the process, Taco Bell is now among the top for speed, accuracy, and efficiency Employees at Taco Bell are divided into two categories: Service Champions (drive-thru) and Food Champions (food preparation) Service Champions are trained to follow a specific script as they greet customers and take orders. They enter orders into the point-of-sale system, make drinks when needed, and handle payments When processing orders for more complex menu items, Service Champions may assist Food Champions in food preparation. Beyond that, it comes down to teamwork, to everyone working together to create a seamless process free from mistakes.

36 8-36 Managing Quality Quality, like cost and efficiency, is a critical element of operations management, for defective products can quickly ruin a firm Quality reflects the degree to which a good or service meets the demands and requirements of customers Determining quality can be difficult because it depends on customers perceptions of how well the product meets or exceeds their expectations Quality is especially difficult to measure for a service A company must define important quality characteristics into measurable terms

37 8-37 J.D. Power and Associates Initial Automobile Quality Study Fuel economy or reliability of an automobile can be measured with some degree of precision Automakers use their own measures of vehicle quality Also rely on J.D. Power & Associates annual initial quality survey Confirmation of their quality assessment Consumer perceptions of quality for the industry

38 8-38 Quality Control Quality is so important, it needs examination in the context of operations management Quality Control The processes an organization uses to maintain its established quality standards Statistical Process Control A system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system

39 8-39 Total Quality Management Total Quality Management (TQM) A philosophy that uniform commitment to quality in all areas of an organization will promote a culture that meets customers perceptions of quality TQM requires constant improvements in all areas of the company as well as employee empowerment A primary tool of TQM is benchmarking, the measuring and evaluating of the quality produced by the best-performing companies in the industry Quality control is viewed as an element of the product itself

40 8-40 Product Specifications and Quality Standards Product specifications and quality standards must be set so the company can create a product that will compete in the marketplace A company must first determine what standard of quality it desires and then assess whether its products meet that standard o o For manufacturing, that could be specifications such as thickness of metal or amount of a certain material Service industries establish standards such as how long a customer waits, or how many fries are in an order Once the desired quality characteristics, specifications and standards are stated in measurable terms, inspection follows

41 8-41 International Organization for Standards ISO 9000 A series of quality assurance standards designed by the International Organization for Standardization (ISO) to ensure consistent product quality under many conditions Companies must pass a rigorous certification process but for some industries, certification is necessary to compete ISO 1400 A comprehensive set of environmental standards that encourages companies to conduct business in a cleaner, safer and less wasteful way; providing a uniform set of global standards

42 8-42 Inspection and Sampling Inspection Reveals whether a product meets quality standards Inspecting finished items determines quality level Inspecting work-inprocess items finds defects before the product is completed so corrections can be made Sampling Allows a company to pass an entire batch of products through inspection by testing a sample There is always the risk of making an incorrect conclusion based on a sample Sampling is more likely to be used when inspection tests are destructive to the product

43 8-43 Integrating Operations and Supply Chain Management Managing operations and supply chains can be complex due to the number of participants in the process Managing the various partners is important because stakeholders hold the firm responsible Companies can adopt a Global Supplier Code of Conduct and ensure its communicated Supply chain and procurement managers must work together to make operational decisions Ensure the selection of the best suppliers from an ethical and cost effective standpoint Must regularly audit its suppliers against firm s standards and take action against those found to be in violation

44 McKing Corporation operates fast-food restaurants in 50 states, selling hamburgers, roast beef and chicken sandwiches, french fries, and salads Wants to diversify into the growing pizza business Ideal pizza to sell was a 16-inch pie in three varieties: cheese, pepperoni, and deluxe (multiple toppings) Marketing and human resources personnel prepared: Training manuals for employees Advertising materials 8-44 Solve the Dilemma Planning for Pizza Rationale to present to the restaurant managers (many stores are franchised)

45 8-45 Solve the Dilemma Planning for Pizza (cont.) A problem: The drive-through windows in current restaurants are too small for a 16-inch pizza to pass through Concerned that if this aspect of operations has been overlooked perhaps the product is not ready to be launched There may be other problems yet to be uncovered Discussion Questions What mistake did McKing make in approaching the introduction of pizza? How could this product introduction have been coordinated to avoid the problems that were encountered? If you were an executive at McKing, how would you proceed with the introduction of pizza into the restaurants?

46 8-46 Discussion? In what industry would the fixed-position layout be most efficient? The process layout? The product layout? Use real examples.? Define supply chain management and summarize the activities it involves.? Compare and contrast a manufacturer versus a service provider in terms of operations management.? What criteria do businesses use when deciding where to locate a plant?