Understanding business 11th by mchugh nickels CHAPTER 9

CHAPTER 9 Production  and  Operations  Management McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc All rights reserved 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 9-2 WHAT’S MADE in the USA? LO 9­1 Leading U.S. Manufactured Goods Source: Parade Magazine, www.parade.com, accessed November 2014 9-3 MASSIVE MANUFACTURERS LO 9­1 The Top Ten U.S. Manufacturers Source: Industry Week, www.industryweek.com, accessed November 2014 9-4 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  9-5 REMAINING COMPETITIVE in  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 - Practicing continuous improvement - Focusing on quality - Saving on costs through site selection - Relying on the Internet to unite companies - Adopting new production techniques 9-6 PRODUCTION and  PRODUCTION MANAGEMENT LO 9­2 • Production ­­ The creation of goods using land,  labor, capital, entrepreneurship and knowledge (the  factors of production) • Production  Management ­­ All the  activities managers do to  help firms create goods 9-7 OPERATIONS MANAGEMENT LO 9­2 • 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 - Follow­up services 9-8 OPERATIONS MANAGEMENT in the SERVICE SECTOR LO 9­2 • All about creating a good experience for those  who use the service • In hotels, like Ritz­ Carlton, operation  management  includes fine dining,  fresh flowers, and  training for every  employee 9-9 TEST PREP • 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? 9-10 MRP and ERP LO 9­4 • Materials Requirement Planning (MRP) ­­ A  computer­based 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 9-32 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 9-33 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 9-34 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 9-35 The BALDRIGE AWARDS LO 9­4 • Companies can apply for awards in these areas: - Manufacturing - Services - Small Businesses - Non­Profit/Government - Education - Healthcare  9-36 THE WINNERS ARE… LO 9­4 2014 Baldrige Award Recipients  Source: National Institute of Standards and Technology, www.quality.nist.gov, accessed November 2014 9-37 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 9-38 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? 9-39 Control Procedures McGraw-Hill/Irwin Understanding 9-40 © 2005 The McGraw-Hill Companies, Inc., All Rights PERT • Program Evaluation and Review  Technique (PERT) A method for analyzing the tasks  involved in completing a given project  and estimating the time needed McGraw-Hill/Irwin Understanding 9-41 © 2005 The McGraw-Hill Companies, Inc., All Rights PERT Steps Analyzing and sequencing tasks that need to be done Estimating the time needed to complete each task Drawing a PERT network illustrating the information from steps and Identifying the critical path - Sequence of tasks that takes the longest time to complete McGraw-Hill/Irwin Understanding 9-42 © 2005 The McGraw-Hill Companies, Inc., All Rights PERT DIAGRAM McGraw-Hill/Irwin Understanding 9-43 © 2005 The McGraw-Hill Companies, Inc., All Rights Gantt Chart • Named for its developer, Henry Gantt • A bar graph that clearly shows what projects are being worked on and how much has been completed at any given time McGraw-Hill/Irwin Understanding 9-44 © 2005 The McGraw-Hill Companies, Inc., All Rights GANTT CHART for a  DOLL FACTORY LO 9­5 9-45 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? 9-50 ... management rather than production? 9- 10 The PRODUCTION PROCESS LO 9 3 9- 11 FORM UTILITY  LO 9 3 • Form Utility ­­ The value  producers add to materials  in the creation of finished  goods and services.  9- 12 PROCESS and ASSEMBLY in ... and the producer adjusts machines frequently to  make different products 9- 14 MINUTE MADE LO 9 3 Production of Some of America’s Favorite Products 9- 15 DEVELOPMENTS MAKING U.S.  COMPANIES MORE COMPETITIVE LO 9 3 Computer­aided design  and manufacturing... 9- 2 WHAT’S MADE in the USA? LO 9 1 Leading U.S. Manufactured Goods Source: Parade Magazine, www.parade.com, accessed November 2014 9- 3 MASSIVE MANUFACTURERS LO 9 1 The Top Ten U.S. Manufacturers