Chapter 9

Production and Operations Management

BCEN 1400Introduction to Business

Hit by the recessionHousing and manufacturing hit hardUS 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

The U.S. Economy

Developed out of productionFocused on manufacturing activities

Converts or transforms resources into goods and services

Includes inventory management, quality control, production scheduling, follow-up services, etc.

Operations Management

Adds form utility: the difference in value between raw materials and a finished product

The Production Concept

INPUTSLandLabor

CapitalEntrepreneurs

hipKnowledge

PROCESSESPlanningRouting

SchedulingDispatchingFollow-Up

OUTPUTS

Goods Services

Ideas

Process Manufacturing versus AssemblyProcess: physically or chemically changing a

materialAssembly: putting together pieces to make a

product

Intermittent versus Continuous ProductionIntermittent: production stops and starts to

make different variations of productContinuous: production continually runs to

make large batches

Types of 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

Using Technology in Production

Nissan’s Flexible Manufacturing PlantIn Canton, MS

Mass CustomizationTailoring an assembly process to customize for

individuals

Custom M&Ms

Dell Computers

Custom Nikes

Using Technology in Production

Critical Issues:Convenience for those doing business with

youCustomersSuppliers

Availability of Resources

Labor Costs

Access to Transportation

Locating Your Production Facility

Layout refers to the physical arrangement of resources and equipment to most efficiently produce the product or service

Assembly line layoutModular layoutProcess layoutFixed layout

Facility Layout

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”

Enterprise Resource Planning (ERP)

Six Sigma programsExtreme dedication to working out the

opportunities for defects within the process of production itself (BEFORE output is made)

Malcolm Baldrige awardGiven 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

Quality: A Critical Part of the Process

Production and Project ManagementPERT Charts

Program Evaluation and Review Technique

Consists of outline a project in task squares and estimating the time for completion

Gantt ChartA series of bard

representing tasks and their length for completion, as well as their estimated start dates.