Upload
darcy-sanders
View
215
Download
1
Embed Size (px)
Citation preview
Business Policy & Strategy: Chapter Nine
Production
Murdick, Moor, Babson & Tomlinson Sixth Edition, 2000
Production Vs. Productivity
Production is the transformation of organizational resources into products.
Productivity is how efficient you are at transforming the resources.
Strategies for increasing Production
DETERMINE IF LONG TERM or SHORT TERM DEMAND EXISTS
Hire more qualified employees (if long term);
add shifts for short term increases or hire temporary workers
Training Make products easier to assemble Upgrade equipment/build plants Automation and robotics
Production/Operations Management
Selecting, designing, operating, controlling and updating of production systems.
Capacity, location, product, process, layout, and human resources.
JIT inventory controls, maintenance, costs, materials, master scheduling and aggregate planning.
THE BIG IDEA
To get out the right quantity of the product at the right time at the lowest cost.
For global firms, economies of scale is a primary factor locating near low cost labor, or raw materials.
Economies of Scale
If you increase the volume produced, the fixed costs which are constant are spread over a greater number of units, therefore the total cost per unit drops as you remember that TC=FC+VC. With a lower cost per unit, firms can increase market share by lowering price or increase profits by matching other prices!
Policies
Plant location, additions, renovations Equipment purchases Purchasing policies Transportation costs of raw materials
and finished goods should be analyzed
Inventory policy for finished goods Quality levels to be maintained
Typical Production Problems
Absenteeism & Turnover Bottlenecks Floor plan Equipment Sales fluctuate Quality
Typical Production Problems
Sales dept. requesting immediate production on items with long lead time
Lack of time-studies and methods
Special Orders
Five Major Systems of Analysis
Manufacturing Organization Production Planning Production Operation Production Control Relationship with Other
Components
Manufacturing Organization
P rod uc t E n g in ee ring
S h op W o rker
F ore pe rson
G en era l F ore pe rson
S up er in te nd en t M an a ge r F ac i lit ies
M an a ge r M a n ufac tu r ing
Production Planning and Control
E q u ip m e nt an d p roce ssesT im e e stim a ti ingS ch ed u lingO pe ra tio ns la you t a nd R o uting
P rodu ction P lan n ing
D ispa tch ingP rog re ss m o n ito r ingC o rre ctiv e a ction
P rod u ction C o n tro l
S to re M a na ge m e ntP urcha sin g an d S ta nd ard iza tionR e ce iv ing
In ve n to ry C o n tro l
M an ag e r P ro du ctio n P la nn ing an d C o ntro l
Types of Production
Product based- equipment and people are fixed according to operations (old automotive plants)
Process based- goods in process transported to proper department.(Employee and machine grouping -petroleum refining)
Material based- materials do not move. People and machines brought to work in progress. (e.g. Shaft Nursery Lawn care)
Checklist for Analysis
Demand Plant Equipment Layout Procurement H.R.
Methods Maintenance Planning/
Scheduling Assigning Work Inventory Control Housekeeping
Demand
Constant, seasonal, irregular Sales forecasts- are they
constantly too high or too low? Production Vs. Sales- is production
department second guessing the sales department?
Plant
Centralized- to suppliers, market, transportation etc.?
Expansion- is there room? Storage- appropriate? Conditions- security, roads, waste
etc. Climate- general livability Underutilized? Adequate- in another
five years?
Equipment
Specifications Maintenance- periodic,
breakdown,continuous Size of maintenance
crew/downtime Safety equipped OSHA requirements
Layout
Minimize handling Space utilization efficiency (SUE) Aisle space problems Storage space problems Safety problems Compliance with laws Temperature, light, noise, facilities
Procurement
Minimize inventory levels-holding costs, carrying costs, shortage costs and quantity discounts
Lead-time constant and short Control of quality and quantity of
incoming supplies Purchase Order Requisition System
Human Resource Management
Clearly stated policies- hiring, layoff, disciplinary action, promotions
Turnover rate All employees treated equally Incentive plans
Work Methods and Measurement
Methods developed for each operation
Type of measurement employed Union attitude towards methods of
measurement
Maintenance/Replacement
Policy for equipment maintenance Records maintained Balanced against downtime
Production Planning & Scheduling
Formal system in place Rush/Priority Orders Smooth Demand Eliminate Bottlenecks Maintain High
Productivity
Assigning/Dispatching Work
Assigned in accordance with availability
Priorities Indicated Formal system of
communication with forepersons
Controlling Inventories
Economic order EOQ
Economic runs- just the right amount and time
High cost items
Consumer returns excessive?
Incentive for cost reductions
Service level in-house or outsourced?
Housekeeping
Painted regularly Windows and floor cleaned
daily Warning signs clear Roads and parking maintained