PRODUCTION AND OPERATIONS MANAGEMENT OBJECTIVE: DESCRIBE OPERATIONS MANAGEMENT PLANNING ISSUES INCLUDING FACILITY LOCATION, FACILITY LAYOUT, MATERIALS REQUIREMENT PLANNING, PURCHASING, JUST-IN- TIME INVENTORY CONTROL, AND QUALITY CONTROL.

FACILITY LOCATION The process of selecting a geographic location for a company’s operations. Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations.

FACILITY LOCATION Inexpensive labor Labor with the right kind of skills Availability of natural resources Access to transportation that can reduce time to market Proximity to suppliers Proximity to customers Tax rates Quality of life for employees Need to train or retrain the workforce

FACILITY LOCATION Information technology gives firms increased flexibility in terms of location. Telecommuting -- Working from home via computer. 9-4

The physical arrangement of resources, including people, to most efficiently produce goods and provide services. Service: Help customers find products Manufacturing: Improve efficiency FACILITY LAYOUT

WORKERS DO ONLY A FEW TASKS AT A TIME. ASSEMBLY LINE LAYOUT 9-6

TEAMS OF WORKERS PRODUCE MORE COMPLEX UNITS OF THE FINAL PRODUCT. MODULAR LAYOUT 9-7

SIMILAR EQUIPMENT AND FUNCTIONS ARE GROUPED TOGETHER. PROCESS LAYOUT 9-8

ALLOWS WORKERS TO CONGREGATE AROUND THE PRODUCT. FIXED-POSITION LAYOUT

Materials Requirement Planning (MRP) -- A computer-based 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. MRP AND ERP 9-10

Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services. PURCHASING 9-11

Just-in-Time (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. INVENTORY CONTROL 9-12

QUALITY CONTROL Quality control done by quality control department by testing products after production. Used more resources than necessary Incurred higher costs to correct problems Resulted in dissatisfied customers Quality -- Consistently producing what the customer wants while reducing errors before and after delivery. Never ending process Continuous improvement Measuring quality along the production process reduces the need for quality control at the end.

Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities. QUALITY CONTROL 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.

Quality in key areas:  Leadership  Strategic planning  Customer focus  Information analysis  Human Resources focus  Process management  Business results THE BALDRIGE AWARDS

The International Organization for Standardization (ISO) ISO The common name given to quality management and assurance standards. ISO A collection of the best practices for managing an organization’s impact on the environment. QUALITY CONTROL