1. Chapter 14 Producing Products and Services

2. Copyright © Houghton Mifflin Company14-2 The Components of Production The customers—involve them in the process Technology –Network technology to link components –Manufacturing technology –Supply-chain management technology Superior resources and processes –TQM, continuous improvement, total quality control, self-managed teams

3. Copyright © Houghton Mifflin Company14-3 The Production Process

4. Copyright © Houghton Mifflin Company14-4 Materials Requirements A function of… –Demand by the customer –Your manufacturing capability –Your company’s storage capability –Timing is everything!

5. Copyright © Houghton Mifflin Company14-5 Vendor Issues Advantages of using a single vendor –More individual attention and better service –Orders will be consolidated so you may get a discount –BUT: no back-up in case of loss

6. Copyright © Houghton Mifflin Company14-6 Questions to Ask When Choosing a Vendor Can the vendor deliver enough of what you need when you need it? What is the cost of transportation with this vendor? What services is the vendor offering? Is the vendor knowledgeable about the product line? What are the vendor’s maintenance and return policies?

7. Copyright © Houghton Mifflin Company14-7 Inventory Keep inventories low Use a just-in-time approach –Increases direct and indirect labor productivity –Increases equipment capacity –Reduces manufacturing lead-time –Reduces cost of failure –Reduces cost of purchased materials –Reduces space requirements

8. Copyright © Houghton Mifflin Company14-8 Schedule Production

9. Copyright © Houghton Mifflin Company14-9 Quality Control Reconciling product or project output with the standards set for that product or project Inspection process –Inspect during several stages of the process using random sampling Use customers, employees, and management for quality control

10. Copyright © Houghton Mifflin Company14-10 Calculating Production Costs Compare outsourcing to investment in plant, office, and equipment In a labor-intensive industry, consider manufacturing where labor costs are low Look at what others in your industry are doing

11. Copyright © Houghton Mifflin Company14-11 Product Maintenance Length of warranty—industry standards Covered components of the product or service Product/process scope—will one warranty cover all products? Market scope—same warranty in all markets? Conditions of warranty that customer must fulfill Who executes the warranty? How will customers be educated? Policies for refunds and returns

12. Copyright © Houghton Mifflin Company14-12 Take-Aways List what students took away from the discussion in real time