FHF Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

part CHAPTER 8 Managing Service and Manufacturing Operations CHAPTER 7 Organization, Teamwork, and Communication 3 FHF 8-2 CHAPTER 6 The Nature of Management

FHF Operations Management  Development and administration of the activities involved in transforming resources into goods and services Emphasis on viewing the operations function as a whole The “core” of most organizations Manufacturing/Production Activities and processes used in making tangible products Operations The activities and processes used in making both tangible and intangible products 8-3

FHF Transformation Processes of Operations Management 8-4 …continued on next page

FHF Transformation Processes of Operations Management  Inputs  The resources (labor, materials, energy, etc.) that are converted into outputs  Outputs  The goods, services and ideas that result from the conversion of inputs 8-5

FHF OM in Service Businesses  Salons, colleges, airlines  70% of all employment in the United States; fastest growth market for jobs  Represent over 72% of GDP in U.S.  Services are actions/performances directed at consumers  Different than manufacturing that produces tangible products 8-6

FHF Services Are...  Generally intangible  Perishable  Demand can be variable  Cannot be saved, stored, resold, or packaged 8-7

FHF 8-8 ManufacturingService TangibleIntangible Uniform inputsCustomized inputs Uniform outputsCustomized outputs Less labor intensiveMore labor intensive Easy to measure productivityMore difficult to measure productivity (due to variations in demand, service, requirements and intangibility) Manufacturing and Service Compared

FHF Planning the Product What do consumers want?  Develop the product  Can be a long and expensive process  Turn product ideas into workable design  The job of engineers and research and development departments 8-9

FHF Designing Operations Process Standardization  The making of identical interchangeable components or products. Faster, reduces production costs Modular Design  Creation of an item in self-contained units that can be combined or interchanged to create different products 8-10 …continued on next page

FHF Designing Operations Process Customization  Making products to meet a particular customer’s needs or wants Mass Customization  Making products to meet needs or wants of a large number of individual customers. 8-11

FHF Planning Facilities  Facility location High costs involved Permanent  Pay attention to Proximity to market Availability of raw materials, transportation, power, labor  Climatic influences Community characteristics Taxes and inducements 8-13

FHF Facilities Layout  Fixed-Position Layout  Project Organization  Process Layout (Intermittent Organization)  Product Layout (Continuous Manufacturing Organization) 8-14 …continued on next page

FHF Facilities Layout Fixed-Position Layout (Project Organization)  All resources needed for a product are brought to a central location Process Layout (Intermittent Organization)  Layout is organized into departments that group related processes Product Layout (Continuous Manufacturing Organization)  Production is broken down into relatively simple tasks assigned to workers positioned along a line 8-15

FHF Sustainability and Manufacturing  Pressure has increased for manufacturing and production systems to reduce waste and improve sustainability  Consumers prefer to purchase goods that were manufactured in an environmentally-friendly facility 8-17

[] FHF Supply Chain Management Connecting and integrating all parties or members of the distribution system in order to satisfy customers 8-18

FHF PurchasingPurchasing Buying of all materials needed by the organization  Desired quality  Correct quantities  Lowest cost  Otherwise known as Procurement 8-19

FHF InventoryInventory All raw materials, components, completed or partially completed products, and pieces of equipment that a firm uses Inventory Control 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 8-20

FHF OutsourcingOutsourcing  Increasingly a part of supply chain management in operations  Outsource aspects of operations to companies that provide products more efficiently, at lower cost, greater customer satisfaction. 8-22

FHF Routing & Scheduling Routing  Sequence of operations through which the product must pass Scheduling  The assignment of required tasks to departments or specific machines, workers, or teams. 8-23

FHF QualityQuality Degree to which a good or service meets the demands and requirements of customers  A critical element of operations management  Determining quality can be difficult  Subjective based on consumers’ expectations and perspectives 8-25

FHF Managing Quality Quality Control  Processes an organization uses to maintain its established quality standards. Total Quality Management (TQM)  Philosophy that uniform commitment to quality will promote a culture that meets customers’ perceptions of quality Statistical Process Control  System to collect and analyze information about production processed to pinpoint quality problems in the system 8-26

FHF International Organization for Standardization (ISO) system of quality management standards designed to ensure the customer’s quality standards are met  ISO 9000 : Quality assurance standards for product quality under many conditions  ISO : Uniform environmental standards for use by global corporations to help businesses be cleaner, safer and less wasteful 8-27

FHF Inspection and Sampling Inspection  Reveals whether a product meets quality standards. Sampling  How many items should be inspected.  Depends on potential costs of product flaws in terms of human lives and safety. 8-28