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PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookCopyright © 2005 Prentice Hall, Inc.Copyright © 2005 Prentice Hall, Inc.
All rights reserved. All rights reserved.
Chapter 7Chapter 7
Managing Managing Operations and Operations and
Improving QualityImproving Quality
““There are many There are many ways of going ways of going
forward, but only forward, but only one way of one way of
standing still.”standing still.”——
Franklin D. RooseveltFranklin D. Roosevelt
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–2
Key Topics
• Operations and Utility Creation
• Service operations vs. goods production
• Operations planning
• The supply chain strategy
• Quality management
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–3
The Management Process
• Planning – What are we going to do?
• Organizing – How are we going to do it?
• Directing – Get it done!
• Controlling – How well did we do?
• Operations touches on all areas, especially the middle two.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–4
Organization Chart with Operations
As of May 2005
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–5
What should operations do?
Operations oversees the processes that transform Operations oversees the processes that transform resources (inputs) into services and goods (outputs) resources (inputs) into services and goods (outputs) that create value & benefits (utility) for customers.that create value & benefits (utility) for customers.
Operations oversees the processes that transform Operations oversees the processes that transform resources (inputs) into services and goods (outputs) resources (inputs) into services and goods (outputs) that create value & benefits (utility) for customers.that create value & benefits (utility) for customers.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–6
Operations Create Utility to Satisfy
FormForm
TimeTime
PlacePlace
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–7
What shouldn’t Operations do?
Operations managersOperations managers should eliminate non-should eliminate non-essential processes which do not add utility for the essential processes which do not add utility for the customer.customer.
Operations managersOperations managers should eliminate non-should eliminate non-essential processes which do not add utility for the essential processes which do not add utility for the customer.customer.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–8
Key Topics
• Operations and Utility Creation
• Service operations vs. goods production
• Operations planning
• Total quality management tools
• The supply chain strategy
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–9
Defining Operations
• Service: Performing tangible and
intangible services. High contact Low contact
• Goods Production: Producing tangible
products. Analytic (break down) Synthetic (build up)
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–10
Services in depth
• Focus on:Performance vs productionProcess and outcome both involve customerService characteristics
Intangible, Customized, UnstorableCustomer-service link
The customer is more a part of the processService quality considerations
What else is important to the customer? Modern day feedback
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–11
Growth in the Goods and Services Sectors
100100
8080
6060
4040
2020
Millions of Workers
ServicesServices
Goods ProductionGoods Production
198
4
198
6
198
8
199
0
199
2
199
4
199
6
199
8
200
0
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–12
What’s Had The Biggest Effect on Productivity?
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–13
Integration of Global Operations & the Effect on Production• Technology has pushed operations
to become better and faster globally.
• The internet has integrated production with global suppliers and customers.
• As technology further evolves, fewer services are naturally protected.
• Bonus: If you can figure out how to build a strength, you can capture the world.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–14
Key Topics
• Operations and Utility Creation
• Service operations vs. goods production
• Operations planning
• Total quality management tools
• The supply chain strategy
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–15
Resource Transformation Process
Figure 7–1
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–17
Operations Planning and Control
Figure 7–2
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–18
Layout Process Product Cellular
Methods
(Processes)
QualityLocation
Capacity
Operations Planning Topics
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–19
Methods Planning: Process Flow Chart
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–21
Operations Scheduling
• Gantt chart• Pert chart
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–22
Gantt Charting Demonstration
• Identify the activity to be planned
• Set a deadline & time scale (hours, days, months, etc.)
• Identify steps needed to complete the task Use scratch paper first!
• Identify time needed for each step
• Is the schedule RUMBA? Reasonable? Understandable? Measurable? Believable? Achievable?
• THEN build the Gantt chart
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–23
Gantt Charting Activity
• Pick a business task of moderate complexity (>5 steps).
• Set a deadline & time scale (hours, days, months, etc.)
• Identify steps needed to complete the task Use scratch paper first!
• Identify time needed for each step
• Is your schedule RUMBA? Reasonable? Understandable? Measurable? Believable? Achievable?
• THEN fill in chart
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–24
Gantt Charting Activity – Controlling
• Is your schedule Reasonable? Achievable? Measurable?
• Where do you need the most follow-up attention?Think: Where will a slow down cause a deliverable
delay?
• How will you manage a crisis?• What are your contingency plans?
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–25
PERT Chart Project Scheduling
Figure 7–5
: A delay here delays the final project deliverable.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–26
Gantt Chart
Figure 7–4
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–27
Managing Several Projects with Gant Charts:• Master Chart• Subsidiary Charts
Gantt Chart for:_Director of facilities___________________________________________________________________________________
Time Series April April April April May May May May June June June JuneEvent Stage Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4
1 Open New warehouse
2 Refurbish forklifts
3 Hire 25 new workers
4 Redecorate Classroom
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–30
Layout Process Product Cellular
Methods
(Processes)
QualityLocation
Capacity
Operations Planning Topics
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–32
Quality Management: Ensuring quality throughout the business
• Total Quality Management
Start with customers
Team approach
Measurement
Continual improvement
Quality: The combination of characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–33
Tools for Total Quality Management
Statistical Statistical Process Process ControlControl
Statistical Statistical Process Process ControlControl
Quality Quality improvement improvement
teamsteams
Quality Quality improvement improvement
teamsteams
Getting Close Getting Close to the to the
CustomerCustomer
Getting Close Getting Close to the to the
CustomerCustomer
Process Process improvement improvement
vs vs ReengineeringReengineering
Process Process improvement improvement
vs vs ReengineeringReengineering
ISO ISO CertificationCertification
ISO ISO CertificationCertification
Value-Added Value-Added AnalysisAnalysis
Value-Added Value-Added AnalysisAnalysis
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–34
Process Improvement Management using TQM
• Results: Top down control → Focus at end “J” curve
• Process: Delegated control Focus on determinants of
goal - processes Constant improvement
Time in Quarters
90%
80%
70%
60%
100%
0 1 2 3 4
Usa
ble
Pro
duct
ion
Time in Quarters
90%
80%
70%
60%
100%
0 1 2 3 4
Usa
ble
Pro
duct
ion
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–35
Process Control Chart at Honey Nuggets Cereal
Figure 7–6
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–36
Shipping Errors
-10
-5
0
5
10
15
29-Dec 8-Jan 18-Jan 28-Jan 7-Feb 17-Feb 27-Feb 9-Mar
Day of the month
Nu
mb
er
of sh
ipp
ing
err
ors
s
What can you tell about this firm?
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–37
Supply Chain ManagementSupply Chain Management
Managing the supply chain as a whole to maximize customer value and reduce waste.
Value Chain ManagementAll factors related to the value received by
the customer.
Expanding scope of management
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–38
Supply Chain for Baked Goods
Figure 7–7
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–39
Process Management Diversion
Copyright © 2005 Prentice Hall, Inc. All rights reserved. 7–40
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 supply chain management.