Management 7
chapter
Operations and
Quality
Business Essentials, 8th Edition
Ebert/Griffin
Instructor Lecture
PowerPoints
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PowerPoint Presentation prepared by
Carol Vollmer Pope Alverno College
L E A R N II N G O B J E C T II V E S
LEARN NG OBJECT VES
After reading this chapter, you should be able to:
1. Explain the meaning of the term production or
operations.
2. Describe the three kinds of utility that operations
processes provide for adding customer value.
3. Explain how companies with different business
strategies are best served by having different
operations capabilities.
4. Identify the major factors that are considered in
operations planning and in operations control.
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L E A R N II N G O B J E C T II V E S (cont.)
L E A R N N G O B J E C T V E S (cont.)
After reading this chapter, you should be able to:
5. Discuss the information contained in four kinds
of operations schedulesthe master
production schedule, detailed schedule, staff
schedule, and project schedule.
6. Identify the activities and underlying objectives
involved in total quality management.
7. Explain how a supply chain strategy differs
from traditional strategies for coordinating
operations among firms.
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Whats in It for Me?
By understanding this chapters methods for
managing operations and improving quality, you
can benefit in two ways:
1. As an employee, youll have a clearer picture of who
your customers are and what they want and how
your job depends on the services they receive from
you
2. Youll better understand how companies around you
even successful firmshave to change production
methods whenever they adopt new business goals to
remain competitive
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What Does Operations Mean Today?
Operations (Production)
All the activities involved in making products
(goods and services) for customers
Service Operations (Service Production)
Provide intangible and tangible service products
Goods Operations (Goods Production)
Produce tangible products
Operations managers create utility for customers
through production, inventory, and quality control.
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Creating Value Through Operations
Utility
The ability of a product to satisfy a want or need
Form utility
Time utility
Place utility
Operations (Production) Management
Systematic direction and control of processes that
transform resources into finished services and goods
that create value for and provide benefits to
customers
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Differences Between Service and
Goods Manufacturing Operations
Goods are produced, services are
performed
Service operations:
1.
2.
3.
4.
Involve interacting with consumers
Are sometimes intangible and unstorable
Involve a customers presence in the process
Involve certain service quality considerations
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Operations Processes
Operations Process
Methods and technologies used to produce a
good or service
Goods Production Processes
Make-to-order or make-to-stock processes
Service Production Processes
Extent of Customer Contact
Low-contact systems: low customer involvement
High-contact systems: high customer involvement
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Business Strategy as the
Driver of Operations
Companies design their operations based
on business strategy.
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TABLE 7.1 Business Strategies That Win
Customers for Four Companies
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Operations Planning
Capacity Planning
Determining the amount of a product that a
company can produce under normal conditions
Location Planning
Determining where production will happen based
on costs and flexibility
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Operations Planning (cont.)
Layout Planning
Planning for the layout of machinery,
equipment, and supplies
Determines whether a company can
respond to demand for more and different
products or it finds itself unable to match
competitors speed and convenience
Process layouts
Product layouts
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FIGURE 7.1 Operations Planning and
Control
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Quality Planning
What Is Quality?
The combination of characteristics of a
product or service that bear on its ability to
satisfy stated or implied needs (American
Society for Quality)
Begins when products are designed: goals
are set for performance and consistency
Includes deciding what constitutes a highquality product and determining how to
measure these quality characteristics
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Methods Planning
Managers identify each production step and
methods for performing it.
They reduce waste and inefficiency through
methods improvement and improving process
flows.
A detailed description, often a process flowchart,
helps managers organize and record information.
They attempt to improve customer service.
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Operations Scheduling
Operations Scheduling
Times when specific production activities will occur
Kinds of Planning Schedules
Master schedule: Shows which products will be
produced, and when
Detailed schedule: Shows day-to-day activities
Staff schedules: Show who and how many
employees will be working, and when
Project schedules: Coordinate completion of largescale projects
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FIGURE 7.3 Example Partial Master
Production Schedule (Tons of Each Product
to be Produced)
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Project Scheduling
Gantt Chart
Breaks down projects into steps to be
performed
Specifies the time required to complete each
step
A Project Manager uses the Gantt chart to:
List all activities to be performed
Estimate the time required for each step
Record the progress on the chart
Check the progress against the time scale on the
report
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Figure 7.4 Gantt Chart
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Operations Control
Operations Control
Requires managers to monitor performance by
comparing results with detailed plans and
schedules.
Follow-up: Checking to ensure that production
decisions are being implemented; critical,
ongoing facet of operations.
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Materials Management
Materials Management
The process by which managers plan, organize,
and control the flow of materials from sources of
supply through distribution of finished goods
Materials Management Activities
Supplier selection
Purchasing
Transportation
Warehousing
Inventory control
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Lean Production Systems:
Just-in-Time Operations
Lean Production Systems Goals
Smooth production flows avoid inefficiencies
Elimination of unnecessary inventories
Continuous improvement in production
processes
Just-in-Time (JIT) Production
Bringing together all needed materials only
when they are required, creating fast and
efficient responses to customer orders
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Benefits of Just-in-Time Production
1. Reduces the number of goods in process
(goods not yet finished)
2. Minimizes inventory costs
3. Reduces inventory storage space requirements
4. Replaces stop-and-go production
5. Disruptions are visible and get resolved quickly
6. Continuous improvement of the process
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Quality Control
Quality Control
Taking action to ensure that operations
produces products that meet specific quality
standards
Requires establishment of specific standards
and measurements
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Quality Improvement and Total Quality Management
Quality Improvement
Building quality into products and services rather than
trying to control quality by inspection
Total Quality Management (TQM)
All of the activities necessary for getting high-quality
goods and services into the marketplace
Quality Ownership
Quality belongs to each person who creates it while
performing a job and it requires a focus on quality by
all parts of an organization
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Total Quality Management
Always Delivering High Quality
Planning for quality
Organizing for quality
Directing for quality
Controlling for quality
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Tools for Total Quality Management
Competitive Product Analysis
Analyzing competitors products to identify
improvements
Value-Added Analysis
Eliminating wasteful and unnecessary activities
Quality Improvement Teams
Adopting quality circles
Getting Closer to the Customer
Identifying internal and external customers
ISO 9000 and ISO 14000
Ensuring certification of quality management in
processes
Business Process Reengineering
Starting over from scratch to improve processes
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Adding Value Through Supply Chains
Supply Chain (or Value Chain)
The flow of information, materials, and
services that starts with raw-materials
suppliers and continues adding value through
other stages in the network of firms until the
product reaches the end customer
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FIGURE 7.5 Supply Chain for Baked Goods
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The Supply Chain Strategy
Supply Chain Management (SCM)
Working with the supply chain to improve
overall flow by companies working together
Supply Chain Reengineering
Improving the process for better results:
Lower costs, speedier service, and coordinated
flows of information and material
Outsourcing and Global Supply Chains
Paying suppliers and distributors to perform
certain business processes or to provide
needed materials or services
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Key Terms
assembly line
business process reengineering
capacity
competitive product analysis
consistency (in quality)
detailed schedule
follow-up
Gantt chart
goods operations (goods
production)
high-contact system
inventory control
ISO 14000
ISO 9000
just-in-time (JIT) production
lean production system
low-contact system
make-to-order operations
make-to-stock operations
master production schedule
(MPS)
materials management
operations (production)
operations (production)
management
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Key Terms (cont.)
operations (production) manager
operations capability
operations control
operations process
performance (in quality)
process layout
product layout
purchasing
quality
quality control
quality improvement team
quality ownership
service operations (service
production)
staff schedule
supplier selection
supply chain (value chain)
supply chain management (SCM)
total quality management (TQM)
transportation
utility
value-added analysis
warehousing
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All rights reserved. No part of this publication may be reproduced,
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without the prior written permission of the publisher. Printed in the
United States of America.
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