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PowerPoint Presentation by Patricia Peel, University of Guelph-Humber,Operations Management and Control Systems,10,10- 2,Looking Ahead,After studying this chapter, you should be able to: 1. Discuss the nature of the operations process for both products and services. 2. Describe the need for management control systems. 3. Explain the key elements of total quality management (TQM) programs. 4. Explain how reengineering and other methods of work improvement can increase productivity and make a firm more competitive. 5. Discuss the importance of purchasing and the nature of key purchasing policies. 6. Describe ways to control inventory and minimize inventory costs.,10- 3,The Operations Process,The Nature of the Operations Process Operations management The planning and control of the operations process Involves acquiring inputs and overseeing their transformation in products and services,10- 4,The Operations Process,Inputs,Operations,Outputs,Designing,Processing,Treating,Storing,Advising,Fabricating,Refining,Assembling,Shipping,Instructing,Clothing,Baked goods,Paint,Dry cleaning,Appliance repair,Automobile painting,Products,Services,Money,Labour,Equipment,Information,Energy,Raw,Materials,Examples:,Examples:,Figure 10-1,10- 5,Manufacturing versus Service,Manufacturing Versus Service Operations Productivity is more easily measured in manufacturing than service operations Quality is more difficult to establish in service than manufacturing operations. Customers are more involved in service than manufacturing operations. Manufacturing can produce goods for inventory; service operations cannot store or bank services.,10- 6,Types of Manufacturing,Job Shops Operations characterized by short production runs of small quantities of unique items. Repetitive Manufacturing Operations in which long production runs are used to produce a large quantity of a standardized product. Batch Manufacturing An intermediate form involving more variety in volume and products than job shops and less than repetitive manufacturing.,10- 7,Planning and Scheduling and Maintenance,Operations Planning and Scheduling Attempting to achieve the orderly, sequential flow of products to market. Production operations Service operations Plant Maintenance The role of maintenance To correct equipment malfunctions and prevent breakdowns Types of maintenance Preventive maintenance Corrective maintenance,10- 8,The Control Cycle,Control Cycle A period of time over which an activity is planned, measured, corrected, and re-planned Variance The difference between planned forecast activity and actual activity,10- 9,The Control Cycle Illustrated,Figure 10-2,10- 10,Essential Elements of Successful Quality Management,10- 11,Total Quality Management and Quality Goals of Operations Management,Total Quality Management (TQM) An aggressive, all-encompassing management approach to providing high-quality products and services. Quality The features of a product or service that enable it to satisfy customers needs. A perception of the customer as to the suitability of the product or service of a firm.,10- 12,Customer Focus on Quality Management,Customer Expectations Quality is the extent to which a product or service satisfies customers needs and expectations. Product quality Service quality Product and service quality combinations “The customer is the focal point of quality efforts.” Customer Feedback Customers are the eyes and ears of the business for quality matters.,10- 13,Benchmarking and TQM,Benchmarking The process of studying the products, services, and practices of other firms and using the insights gained to improve quality internally. Continuous Quality Improvement A constant and dedicated effort to improve quality.,10- 14,Tools and Techniques of TQM,Employee Participation Employee performance is a critical quality variable. Quality circle A group of employees who meet regularly to discuss quality-related problems.,10- 15,Tools and Techniques of TQM,The Inspection Process The examination of a product to determine whether it meets quality standards. Inspection standard A specification of a desired quality level and allowable tolerances. Attribute inspection The determination of product acceptability based on whether it will or will not work. Variable inspection The determination of product acceptability based on a variable such as weight or length.,10- 16,Attribute vs. Variable Inspections,Attribute Inspection Based on the function of the product. Results are either positive or negative. EX: A sports drink manufacturer might test its bottles periodically to see if they leak when the bottle is turned upside down.,Variable Inspection Based on a measurement of the product. Results are numbers along a continuum of possible results. EX: The sports drink company measures the volume of liquid in its bottles to ensure they are within a range of 498ml-502ml.,Quality is the extent to which a product or service satisfies customers needs and expectations. Attribute inspection is the determination of product acceptability based on whether it will or will not work Variable inspection is the determination of product acceptability based on a variable such as weight or length.,Products A. Ink Pen B. Rain Jacket C. Instant Coffee D. Kitchen Knife E. Backpack,Your group will be given a product. It is your job to come up with some quality management ideas related to that product. 1. What are three examples of needs and expectations a customer might have in relation to the product? 2. For each need or expectation, give an example of an attribute inspection or a variable inspection the manufacturer might use to ensure the quality of the product.,10- 18,Statistical Methods of Quality Control,Acceptance Sampling The use of a random, representative portion to determine the acceptability of an entire lot. Statistical Process Control The use of statistical methods to assess quality during the operations process. Control Chart A graphic illustration of the limits used in statistical process control.,10- 19,International Certification for Quality Management,ISO 9000 The standards governing international certification of a firms quality management procedures. ISO 14000 A set of generic management standards for responsible environmental management.,10- 20,Quality Management in Service Businesses,Six factors positively influence customers perception of service quality Being on target Care and Concern Spontaneity Problem Solving Follow up Recovery,10- 21,Competitive Strength Through Improved Productivity,The Importance of Improving Productivity Productivity is the efficiency with which inputs are transformed into outputs. Productivity is more difficult to increase in service industries than in manufacturing sectors.,continued,10- 22,Competitive Strength Through Improved Productivity,Reengineering for Improved Productivity Reengineering A fundamental restructuring to improve the operations process. Asking “Why?” is important in the reengineering process.,continued,10- 23,Operations Analysis Laws of motion economy Arranging work in the most cost-effective and efficient manner possible. Methods of Work Measurement Motion Study An analysis of all the motions a worker makes to complete a given job. Time Study A determination of the average time, it takes to complete,Competitive Strength Through Improved Productivity,10- 24,Avoid Failure in Process Improvement,Be customer focused Phase in improvements Involve the employees Divide the project up Communicate,10- 25,Purchasing Policies and Practices,Purchasing The process of obtaining materials, equipment, and services from outside. The Importance of Purchasing The process of acquiring quality raw material inputs affects: The timely and consistent production of quality products. Retailer sales of finished products to customers. The costs of products, their profitability and their selling prices.,10- 26,Make or Buy Decisions,Purchasing Practices and Profitability Making or buying A firms choice between producing and purchasing component parts for its products. Reasons for making: Increased utilization of plant capacity Assurance of supply of critical components Maintaining secrecy in designs and processes Saving on transportation costs and supplier profits Closer coordination and control of overall process Higher quality components for inputs,10- 27,Outsourcing and Reasons for Buying,Purchasing Practices and Profitability Outsourcing Purchasing products or services that are outside the firms area of competitive advantage. Reasons for Buying Suppliers part/service is cheaper and/or higher quality Investment savings on space, personnel, equipment Greater flexibility in matching supply and demand Increased focus on production of core product/service No risk of equipment obsolescence,10- 28,Sources of Supply,Diversifying sources of supply Reasons for having a sole supplier Outstanding supplier quality Quantity discounts for volume purchases Single orders too small to divide among suppliers Quality of supplier-customer relationship Reasons for having multiple suppliers Choice of best quality, price, and service Supplier competes for business Insurance against input interruptions,10- 29,Relationships with Suppliers,Relationships with suppliers Selecting suppliers Price and quality Location and delivery reliability Services offeredcredit, product support, promotion Building good relationships with suppliers Purchasing practices Pay bills promptly Be courteous to sales representatives Avoid abrupt cancellations of orders Maintain a professional relationship EDI,10- 30,Strategic Alliances,Developing Strategic Alliances Strategic alliance is an organizational relationship that links two independent business entities in a common endeavour. Involves close coordination of buyers and sellers to: Reduce product introduction lead time Improve product quality Engage in joint problem solving Make joint adjustments to market conditions Involve the supplier early in product development,10- 31,Inventory Management and Operations,Inventory Cost Control Economic order quantity (EOQ) The quantity to purchase in order to minimize total inventory costs.,Total inventory costs,Total ordering costs,Total carrying costs,=,+,10- 32,Objectives of Inventory Management,Figur

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