CHAPTER 8: PRODUCING QUALITY GOODS AND SERVICES
WHAT IS PRODUCTION:
OPERATIONS MANAGER: manages systems that convert resources into goods/services
OPERATIONS MANAGEMENT: all activities required to produce goods/services
PLANNING TAKES PLACE BEFORE ANYTHING IS PRODUCED AND DURING THE PRODUCTION PROCESS
HOW AMERICAN MANUFACTURERS COMPETE IN GLOBAL MARKETPLACE:
US = MOST PRODUCTIVE COUNTRY IN WORLD AFTER WWII
BAD NEWS:
Employment in manufacturing has decreased to 1/10 Americans
Jobs have been outsourced to low-wage workers in other nations
8% of current US workforce
China = largest producer putting the US at #2
GOOD NEWS:
18.6% global manufacturing output / 12% to GDP / 60% of all US exports
Cost of manufacturing is now 5% higher than China
INNOVATION: better way to produce = key factor to enabling US to compete globally
Highly skilled employees
RESHORTING (ONSHORING/INSOURCING): US manufactures bring jobs back to US
ex) Carrier/Ford/Apple/Honda/Lenovo
REASONS:
Increase labor costs and shipping costs in other nations
Better quality and safety
Faster product development
Federal and state subsidies to produce more products
GLOBAL MARKETPLACE HAS NEVER BEEN MORE COMPETITIVE:
SUCCESSFUL FIRMS WILL FOCUS ON:
1.Meeting needs of customers/improving quality
2.Motivating employees to cooperate with management and improve productivity
3.Lower costs and choose suppliers with higher quality
4.Competition aided & flex systems for higher degree of customization
5.Improve control procedures - lower manufacturing costs
6.Green manufacture to conserve natural resources and sustain the planet
CAREERS IN OPERATIONS MANAGEMENT:
MASS PRODUCTION: manufacturing process that lowers cost required to produce large # of identical/similar products over a longer period of time
ANALYTICAL PROCESS: breaks raw materials into different component parts
SYNTHETIC PROCESS: combines raw materials to create finished products
OPERATIONS MANAGERS MUST BE ABLE TO:
Motivate and lead
Understand how technology can make manufacturing more productive
Appreciate cost-control process that lowers production costs and improves quality
Understand relationships between customer - marketing - production
THE CONVERSION PROCESS:
PURPOSE OF MANUFACTURING/PRODUCTION BUSINESS = PROVIDE UTILITY
UTILITY: ability of goods/services to satisfy a human need
4 TYPES OF UTILITY:
form/place/time/possession FORM UTILITY: created by people using resources, finances, and info into finished products
OPERATIONS MANAGEMENT PRIMARILY FOCUSES ON THIS TYPE
CONVERSION PROCESS:
MANUFACTURING USING A CONVERSION PROCESS:
FOCUS/MAJOR RESOURCE:
FOCUS: resources that make up the major(input)
Financial/material/info/people
MAGNITUDE OF CHANGE: degree to which resources are physically changed
# OF PRODUCTION PROCESSES: large=multiple small=one
INCREASING IMPORTANCE OF SERVICES:
SERVICE ECONOMY: more effort devoted to the production of services rather than goods
PLANNING QUALITY SERVICES:
Production of services vs. Production of goods
1.Customer more involved in obtaining the service they want/need
2.Services = consumer immediately / goods can not be stored
3.Services provided when/where customer desires it to be
4.Services are mostly labor-intensive - HR = most important resource
5.Services = intangible - more difficult to evaluate satisfaction
6.Service = listen more carefully and respond quicker
WHERE DO NEW PRODUCTS AND SERVICES COME FROM:
START WITH AN IDEA
RESEARCH AND DEVELOPMENT: activities intended to develop ideas that have potential to result in new goods/services
1.BASIC RESEARCH: new knowledge / scientific advancement = goal - no use
2.APPLIED RESEARCH: new knowledge with some potential use
3.DEVELOPMENT/IMPLEMENTATION: knowledge to use in producing goods/services
PRODUCT EXTENSION AND REFINEMENT:
= expected results of research/development/implementation activities
Results in new product to replace/makeup for product with lower sales
HOW DO MANAGERS PLAN PRODUCTION:
DESIGN PLANNING: converting an idea into an actual product/service
PRODUCT LINE: group of similar products with relatively minor differences
Balance preferences and production requirements
Marketing wants LONG - OPMG & PROD wants SHORT
PRODUCT DESIGN: creating specifications for which a product can be produced
REQUIRED PRODUCTION CAPACITY:
CAPACITY: amount of p/s an org can produce in a period of time
USE OF TECHNOLOGY: Determine degree automation
Automation = higher initial cost / lower operating cost
Labor = lower initial cost / higher operating cost
LABOR INTENSIVE TECH: people do most of the work
CAPITAL INTENSIVE TECH: machines do most of the work
PEOPLE & TECH COMBINED = MOST EFFICIENT/COST EFFECTIVE
SITE SELECTION AND FACILITIES PLANNING:
GENERALLY CHOOSE TO PRODUCE IN EXISTING FACTORY AS LONG AS:
WHAT IS PRODUCTION:
OPERATIONS MANAGER: manages systems that convert resources into goods/services
OPERATIONS MANAGEMENT: all activities required to produce goods/services
PLANNING TAKES PLACE BEFORE ANYTHING IS PRODUCED AND DURING THE PRODUCTION PROCESS
HOW AMERICAN MANUFACTURERS COMPETE IN GLOBAL MARKETPLACE:
US = MOST PRODUCTIVE COUNTRY IN WORLD AFTER WWII
BAD NEWS:
Employment in manufacturing has decreased to 1/10 Americans
Jobs have been outsourced to low-wage workers in other nations
8% of current US workforce
China = largest producer putting the US at #2
GOOD NEWS:
18.6% global manufacturing output / 12% to GDP / 60% of all US exports
Cost of manufacturing is now 5% higher than China
INNOVATION: better way to produce = key factor to enabling US to compete globally
Highly skilled employees
RESHORTING (ONSHORING/INSOURCING): US manufactures bring jobs back to US
ex) Carrier/Ford/Apple/Honda/Lenovo
REASONS:
Increase labor costs and shipping costs in other nations
Better quality and safety
Faster product development
Federal and state subsidies to produce more products
GLOBAL MARKETPLACE HAS NEVER BEEN MORE COMPETITIVE:
SUCCESSFUL FIRMS WILL FOCUS ON:
1.Meeting needs of customers/improving quality
2.Motivating employees to cooperate with management and improve productivity
3.Lower costs and choose suppliers with higher quality
4.Competition aided & flex systems for higher degree of customization
5.Improve control procedures - lower manufacturing costs
6.Green manufacture to conserve natural resources and sustain the planet
CAREERS IN OPERATIONS MANAGEMENT:
MASS PRODUCTION: manufacturing process that lowers cost required to produce large # of identical/similar products over a longer period of time
ANALYTICAL PROCESS: breaks raw materials into different component parts
SYNTHETIC PROCESS: combines raw materials to create finished products
OPERATIONS MANAGERS MUST BE ABLE TO:
Motivate and lead
Understand how technology can make manufacturing more productive
Appreciate cost-control process that lowers production costs and improves quality
Understand relationships between customer - marketing - production
THE CONVERSION PROCESS:
PURPOSE OF MANUFACTURING/PRODUCTION BUSINESS = PROVIDE UTILITY
UTILITY: ability of goods/services to satisfy a human need
4 TYPES OF UTILITY:
form/place/time/possession FORM UTILITY: created by people using resources, finances, and info into finished products
OPERATIONS MANAGEMENT PRIMARILY FOCUSES ON THIS TYPE
CONVERSION PROCESS:
MANUFACTURING USING A CONVERSION PROCESS:
FOCUS/MAJOR RESOURCE:
FOCUS: resources that make up the major(input)
Financial/material/info/people
MAGNITUDE OF CHANGE: degree to which resources are physically changed
# OF PRODUCTION PROCESSES: large=multiple small=one
INCREASING IMPORTANCE OF SERVICES:
SERVICE ECONOMY: more effort devoted to the production of services rather than goods
PLANNING QUALITY SERVICES:
Production of services vs. Production of goods
1.Customer more involved in obtaining the service they want/need
2.Services = consumer immediately / goods can not be stored
3.Services provided when/where customer desires it to be
4.Services are mostly labor-intensive - HR = most important resource
5.Services = intangible - more difficult to evaluate satisfaction
6.Service = listen more carefully and respond quicker
WHERE DO NEW PRODUCTS AND SERVICES COME FROM:
START WITH AN IDEA
RESEARCH AND DEVELOPMENT: activities intended to develop ideas that have potential to result in new goods/services
1.BASIC RESEARCH: new knowledge / scientific advancement = goal - no use
2.APPLIED RESEARCH: new knowledge with some potential use
3.DEVELOPMENT/IMPLEMENTATION: knowledge to use in producing goods/services
PRODUCT EXTENSION AND REFINEMENT:
= expected results of research/development/implementation activities
Results in new product to replace/makeup for product with lower sales
HOW DO MANAGERS PLAN PRODUCTION:
DESIGN PLANNING: converting an idea into an actual product/service
PRODUCT LINE: group of similar products with relatively minor differences
Balance preferences and production requirements
Marketing wants LONG - OPMG & PROD wants SHORT
PRODUCT DESIGN: creating specifications for which a product can be produced
REQUIRED PRODUCTION CAPACITY:
CAPACITY: amount of p/s an org can produce in a period of time
USE OF TECHNOLOGY: Determine degree automation
Automation = higher initial cost / lower operating cost
Labor = lower initial cost / higher operating cost
LABOR INTENSIVE TECH: people do most of the work
CAPITAL INTENSIVE TECH: machines do most of the work
PEOPLE & TECH COMBINED = MOST EFFICIENT/COST EFFECTIVE
SITE SELECTION AND FACILITIES PLANNING:
GENERALLY CHOOSE TO PRODUCE IN EXISTING FACTORY AS LONG AS:
