Exploring Business 2.0 © 2012 Flat World Knowledge 1 Chapter 11: Operations Management in Manufacturing and Service Industries

Exploring Business 2.0 © 2012 Flat World Knowledge

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Chapter 11: Operations Chapter 11: Operations Management in Manufacturing and Management in Manufacturing and

Service IndustriesService Industries


Chapter ObjectivesChapter Objectives1. Define operations management, and discuss the

role of the operations manager in a manufacturing company.

2. Describe the decisions made in planning the production process in a manufacturing company.

3. Describe four major types of facility layouts: process, product, cellular, and fixed position.

4. Identify the activities undertaken by the operations manager in overseeing the production process in a manufacturing company.

5. Explain how to create and use both PERT and Gantt charts.

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Chapter ObjectivesChapter Objectives6. Explain how manufacturing companies use

technology to produce and deliver goods in an efficient, cost-effective manner.

7. List the characteristics that distinguish service operations from manufacturing operations.

8. Describe the decisions made in planning the product delivery process in a service company.

9. Identify the activities undertaken to manage operations in a service organization.

10.Explain how manufacturing and service companies alike use total quality management and outsourcing to provide value to customers.

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Operations Operations ManagementManagement

“…consists of all activities involved in transforming a product idea into a finished product, as well as those

involved in planning and controlling the systems that produce goods and services.”

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The Transformation The Transformation ProcessProcess

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ManufacturingManufacturing

“…manufacturers…perform the same basic function: to

transform resources into finished goods.”

Operations Management:Operations Management:

1.1. Production PlanningProduction Planning

2.2. Production ControlProduction Control

3.3. Quality ControlQuality Control6


Planning:Planning:Production Method Production Method

DecisionsDecisionsMake-To-Order

Mass Production

Mass Customization

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Facilities DecisionsFacilities Decisions• Site Selection• Close to suppliers, customers, or both• Supply of skilled workers• Quality of life• Resource costs• Business climate

• Capacity Planning• Layout Planning

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Facility LayoutFacility Layout

“…how equipment, machinery, and people will be arranged to make the

production process...efficient...”

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Process LayoutProcess Layout

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Product LayoutProduct Layout

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Cellular LayoutCellular Layout

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Materials Materials ManagementManagement

“…encompass(es)... activities: purchasing, inventory control, and

work scheduling.”

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Purchasing And Supplier Purchasing And Supplier SelectionSelection

Purchasing

Supplier Selection

E-Purchasing

Electronic Data Interchange

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Inventory Inventory ControlControl

Just-In-Time

Material Requirements Planning

Manufacturing Resource Planning

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Work SchedulingWork Scheduling

Master Production Schedule

Gantt Charts

PERT Charts

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Gantt ChartGantt Chart

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PERT ChartPERT Chart

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Technology OfTechnology OfGoods ProductionGoods Production

Computer-Aided Design

Computer-Aided Manufacturing

Computer- Integrated Manufacturing

Flexible Manufacturing Systems

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Differences BetweenDifferences BetweenManufacturers and Service Manufacturers and Service

ProvidersProviders

Intangibility

Customization

Customer Contact

Operational Efficiency...Important (to both)Operational Efficiency...Important (to both)

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Service Provider Service Provider DecisionsDecisions

• What services/goods to offer?• How to provide services?• Where to locate business and what

will it look like?• How to forecast demand for

services?

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Operations Operations PlanningPlanning

Operations Processes

• Make-To-Order

• Make-To-Stock

Facilities

• Site Selection

• Size/Layout

• Capacity Planning

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Managing Managing OperationsOperations

•Scheduling

•Inventory Control

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QualityQuality“…the characteristics of a

product or service that bear on its ability to satisfy stated or implied needs.”

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Quality ManagementQuality ManagementOr Assurance- TQMOr Assurance- TQM

Customer SatisfactionEmployee InvolvementContinuous Improvement

• Statistical Process Control

• Benchmarking

International Quality Standards• ISO 9000

• ISO 14000

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OutsourcingOutsourcing

•“…having outside vendors manufacture the actual product.”

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OutsourcingOutsourcing•Manufacturing

•Service

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Exploring Business 2.0 © 2012 Flat World Knowledge 1 Chapter 11: Operations Management in Manufacturing and Service Industries