1. Fourth Edition Copyright ©2003 Prentice Hall, Inc. PART 2........................ Understanding the Business of Managing

2. Copyright ©2003 Prentice Hall, Inc. 7 - 2 Chapter 7 Managing Operations and Improving Quality

3. Copyright ©2003 Prentice Hall, Inc. 7 - 3 “There are many ways of going forward, but only one way of standing still.” ~ Franklin D. Roosevelt

4. Copyright ©2003 Prentice Hall, Inc. 7 - 4 Key Topics Operations and the utility provided by operations processes Service operations vs. goods production Operations planning Total quality management tools The supply chain strategy vs. traditional strategies for coordinating operations

5. Copyright ©2003 Prentice Hall, Inc. 7 - 5 Defining Operations Service Operations: Produce tangible and intangible services. Goods Production: Produces tangible products.

6. Copyright ©2003 Prentice Hall, Inc. 7 - 6 Growth in the Goods and Services Sectors 10080604020 Millions of Workers Services Goods Production 198419861988199019921994199619982000 $4,000$3,000$2,000$1,000 (Billions) Services Goods Production 1984 1986 19881990 1992 1994 1996 19982000

7. Copyright ©2003 Prentice Hall, Inc. 7 - 7 Integration of Global Operations Technology has pushed operations to become cleaner, faster, and safer…on a global scale The internet has integrated production with global suppliers and customers

8. Copyright ©2003 Prentice Hall, Inc. 7 - 8 Products and Services Create Utility Satisfy Human Wants  Time Utility  Place Utility  Ownership utility  Form Utility Operations managers create utility for customers through production, inventory, and quality control.

9. Copyright ©2003 Prentice Hall, Inc. 7 - 9 Operations Management A Resource Transformation Process InputsTransformation Activities Outputs land capital human resources material customers information Operations Managers plan organize schedule control

10. Copyright ©2003 Prentice Hall, Inc. 7 - 10 Operations Processes Are Methods Used in Production Goods-Manufacturing: Analytic processes Synthetic processes Service Delivery High contact processes Low contact processes

11. Copyright ©2003 Prentice Hall, Inc. 7 - 11 Service Operations Differ Markedly From Manufacturing Focus on: performance process and outcome service characteristics customer-service link service quality considerations

12. Copyright ©2003 Prentice Hall, Inc. 7 - 12 Layout  Process  Product  Cellular Methods Quality Location Capacity Operations Planning

13. Copyright ©2003 Prentice Hall, Inc. 7 - 13 Operations Scheduling Scheduling Goods Operations Scheduling Service Operations

14. Copyright ©2003 Prentice Hall, Inc. 7 - 14 Operations Control Monitors Results, Which Ensures Performance Transportation Warehousing Purchasing Supplier Selection Inventory Control Materials managers plan, organize, and control the flow of materials from design through distribution

15. Copyright ©2003 Prentice Hall, Inc. 7 - 15 Tools for Operations Process Control Worker Training Just-in-time Production Systems (JIT) Material Requirements Planning Quality Control

16. Copyright ©2003 Prentice Hall, Inc. 7 - 16 Total Quality Management Always Delivering High Quality Planning for quality Organizing for quality Directing for quality Controlling for quality

17. Copyright ©2003 Prentice Hall, Inc. 7 - 17 Tools for Total Quality Management Statistical Process Control Quality/Cost Studies Getting Close to the Customer Process Reengineering

18. Copyright ©2003 Prentice Hall, Inc. 7 - 18 Adding Value Through Supply Chains ForesterFarmerCo-op Grain Storage Flour Miller Pulp Maker Paper Factory ConsumersDistributor GrainGrainFlourBakery Baking Company Rolls, bread Packager Packaged Baked Goods WoodPulpPaper Grocery Stores

19. Copyright ©2003 Prentice Hall, Inc. 7 - 19 The Supply Chain Strategy Supply Chain Management Working with the supply chain as a whole to improve overall flow Supply Chain Reengineering Improving the process for better results

20. Copyright ©2003 Prentice Hall, Inc. 7 - 20 Chapter Review Explain “operations” and the utility that operations processes provide. Distinguish service operations from goods production. Describe the five decision areas involved in operations planning. Identify the key tools for total quality management. Explain the supply chain strategy.