CHAPTER 9 Production and Operations Management McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc All rights reserved LEARNING OBJECTIVES Describe the current state of U.S. manufacturing and what manufacturers have done to become more competitive Describe the evolution from production to operations management Identify various production processes and describe techniques that improve productivity, including computeraided design and manufacturing, flexible manufacturing, lean manufacturing and mass customization. 9-2 LEARNING OBJECTIVES Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, justintime inventory control and quality control Explain the use of PERT and Gantt charts to control manufacturing processes 9-3 SHAHID KHAN FlexNGate • Moved from Pakistan to the U.S. at the age of 16 • After college, he got a job overseeing FlexNGate • Bought the company after two years and refined the production process • Now the company brings in over $3 billion in sales each year 9-4 NAME that COMPANY Operations management in this hotel company includes restaurants that offer the finest in service, elevators that run smoothly, and a front desk that processes people quickly. It may include freshcut flowers in the lobbies and dishes of fruit in every room Name that company! 9-5 MANUFACTURING in the U.S LO 91 • Some areas in the U.S. are experiencing economic growth while others are declining • Manufacturing in the U.S. is so productive fewer workers are needed 9-6 WHAT’S MADE in the USA? LO 91 Leading U.S. Manufactured Goods Source: Parade Magazine, www.parade.com, accessed November 2014 9-7 MASSIVE MANUFACTURERS LO 91 The Top Ten U.S. Manufacturers Source: Industry Week, www.industryweek.com, accessed November 2014 9-8 YOUR OWN FARM in a BOX • Freight Farms was developed after the founders were unsatisfied with rooftop greenhouses • Each container is 320squarefeet and can produce 900 heads of leafy greens each week • The company works with small and medium sized food distributers so local food can be enjoyed year round 9-9 TOPPAYING SERVICE JOBS LO 91 • The U.S. economy is no longer manufacturing based • 85% of jobs are in the service sector • The toppaying service jobs in the U.S. are in: - Legal services - Medical services - Entertainment - Accounting - Finance - Management consulting 9-10 PURCHASING LO 94 • Purchasing The function that searches for highquality material resources, finds the best suppliers and negotiates the best price for goods and services • The Internet has transformed purchasing 9-45 INVENTORY CONTROL LO 94 • JustinTime (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 9-46 QUALITY CONTROL LO 94 • 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. Photo Credit: Argonne National Laboratory 9-47 The SIX SIGMA PROCESS LO 94 6σ Control Improve Analyze Measure Define Source: Bloomberg Businessweek, www.businessweek.com, accessed November 2014 9-48 STATISTICAL QUALITY CONTROL & STATISTICAL PROCESS CONTROL LO 94 • 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 9-49 The BALDRIGE AWARDS LO 94 • Companies can apply for awards in these areas: - Manufacturing - Services - Small Businesses - NonProfit/Government - Education - Healthcare 9-50 THE WINNERS ARE… LO 94 2014 Baldrige Award Recipients Source: National Institute of Standards and Technology, www.quality.nist.gov, accessed November 2014 9-51 WHAT is ISO? LO 94 • 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 9-52 TEST PREP • What are the major criteria for facility location? • What’s the difference between MRP and ERP? • What’s justintime inventory control? • What are Six Sigma quality, the Baldrige Award, ISO 9000 and ISO 14000? 9-53 PERT LO 95 • Program Evaluation and Review Technique (PERT) A method for analyzing the tasks involved in completing a given project and estimating the time needed 9-54 STEPS INVOLVED in PERT LO 95 Analyzing and sequencing tasks Estimating the time needed to complete each task Drawing a PERT network illustrating the first two steps Identifying the critical path • Critical Path The sequence of tasks that takes the longest time to complete 9-55 PERT CHART for a MUSIC VIDEO LO 95 9-56 GANTT CHARTS LO 95 • Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed 9-57 GANTT CHART for a DOLL FACTORY LO 95 9-58 TEST PREP • 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? 9-59 ... GLOBAL MARKETS LO 91 • 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