BCEN 1400 Introduction to Business Chapter 9 Production and Operations Management

The U.S. Economy Hit by the recession Housing and manufacturing hit hard US still the largest manufacturer in the world 25% of the world’s goods! US producers still have much to learn about efficiency No longer majority-comprised of manufacturing 70% of US GDP and 85% of US jobs are in the service sector US services: legal, medical, entertainment, broadcasting, business services

Operations Management Developed out of production Focused on manufacturing activities Converts or transforms resources into goods and services Includes inventory management, quality control, production scheduling, follow-up services, etc.

The Production Concept Adds form utility: the difference in value between raw materials and a finished product INPUTS Land Labor Capital Entrepreneurship Knowledge PROCESSES Planning Routing Scheduling Dispatching Follow-Up OUTPUTS Goods Services Ideas

Types of Production Process Manufacturing versus Assembly Process: physically or chemically changing a material Assembly: putting together pieces to make a product Intermittent versus Continuous Production Intermittent: production stops and starts to make different variations of product Continuous: production continually runs to make large batches

Using Technology in Production Computer-Aided Design (CAD) Allows innovators to design products on computer (architectural designs for new buildings) Computer-Aided Manufacturing (CAM) Allows companies to produce using computer software and equipment (robots that make steel parts) Computer Integrated Manufacturing (CIM) CAD programs tell CAM programs and equipment what to make (prototypes from waterjets)

Using Technology in Production Flexible manufacturing – using machinery that can be switched out in short time to product new product on the same production line Nissan’s Flexible Manufacturing Plant In Canton, MS

Using Technology in Production Mass Customization Tailoring an assembly process to customize for individuals Custom M&Ms Dell Computers Custom Nikes

Locating Your Production Facility Critical Issues: Convenience for those doing business with you Customers Suppliers Availability of Resources Labor Costs Access to Transportation

Facility Layout Layout refers to the physical arrangement of resources and equipment to most efficiently produce the product or service Assembly line layout Modular layout Process layout Fixed layout

Enterprise Resource Planning (ERP) Seamless software system that moves an order through all of a company’s departments at once Finance, production, purchasing (very important), customer service can all know the status of an order as it moves through to being produced. Quicker invoicing (billing) Less “dropping the ball”

Quality: A Critical Part of the Process Six Sigma programs Extreme dedication to working out the opportunities for defects within the process of production itself (BEFORE output is made) Malcolm Baldrige award Given to organizations who have worked quality into their culture and procedures. High customer satisfaction is a criterion. ISO 9000 and 14000 standards for quality and environmental impact

Production and Project Management PERT Charts Program Evaluation and Review Technique Consists of outline a project in task squares and estimating the time for completion Gantt Chart A series of bard representing tasks and their length for completion, as well as their estimated start dates.