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,Introduction to Business,9,Improving Productivity & Quality,Part III Management,92,Learning Goals,Identify the key resources used for production.Identify the factors that affect the plant site decision.Describe how various factors affect the design and layout decision.Describe the key tasks that are involved in production control.Identify the key factors that affect production efficiency.,93,Key Terms,assembly line组装线 ,流水线 automated机械化的,自动化的 benchmarking基准分析、标杆管理 break-even point收支平衡点 carrying costs存储成本 corporate anorexia公司厌食症 critical path关键路径 deintegration分拆,分散 design布局,安排,94,Key Terms,downsizing裁减(员工)人数 ,缩减开支 economies of Scale 规模经济fixed costs固定成本fixed-position layout固定位置布置 flexible manufacturing柔性生产 Gantt Chart甘特图 hotelling计算机工作站,旅馆化办公室 inventory control库存控制 just-in-time (JIT)准时生产,95,Key Terms,layout布置 ,安排 materials requirements planning(MRP)需求规划 order costs订货成本 outsourcing外包 product layout产品布置 production control生产控制 production efficiency生产效率production management生产管理production process生产过程,96,Key Terms,production schedule生产计划 program evaluation and review technique (PERT)规划评估与复核法 quality control质量控制quality control circle质量控制圈 ,品管圈 reengineering再造 restructuring重组 ,改造 routing路线 ,途径sampling取样 ,抽样 scheduling进度安排,97,Key Terms,stretch targets伸展目标 supply chain供应链total quality management (TQM)全面质量管理 variable costs可变成本 work station工作站work-in-process inventories在制品存货,98,Resources Used for Production,ProductionA series of tasks in which resources are used to produce a product or service.Production (or operations) managementFocuses on developing efficient and high-quality production process by determining the proper amount and mix of production resources to use:Human resources, materials and other assets (buildings, machinery, equipment),Resources Used for Production,Firms that produce products tend to use more materials and equipment in their production process.Firms that produce services (such as Internet firms) use more employees and information technology.,99,910,Resources Used for Production,911,Resources Used in Production,Exhibit 9.1,Human Resources,The operating expenses involved in hiring human resources are dependent both on the number of employees and on their skill levels. (e.g. Internet firms incurs much larger salary than a grocery store.),912,Materials,The materials used in the production process are normally transformed by the firms human resources into a final product.Manufactures: Tire manufacturers rely on rubber/ Automobile manufactures rely on steel/ book publishers rely on paper.Service firms: such as travel agencies and investment advisers do not rely as much on materials since they do not engage in manufacturing.,913,Other Resources,Manufacturers: factories and offices/ machinery and equipmentService providers: office or technology,914,915,Combining the Resources for Production,Combine various resources with work stations and assembly lines.Work Station an area in which one or more employees are assigned a specific task.Assembly Line a sequence of work stations in which each work station is designed to cover specific phases of the production process.Production processes are more efficient when different employees are assigned different tasks. They can specialize in what they do best.,Decision Making P276,916,Determining the Resources NeededIs there a disadvantages to Cell Ones relying on machinery for its production?Some employees suggest that Cell One should hire more people to show its support for workers. Do you think Cell One should hire more employees for this reason?,Discussion,917,What primary resources would you use for production in your business?,918,Selecting a Site,Location of a factory or officeSite location decision factorsCost of Workplace SpaceCost of LaborSupply of Labor (a location where a large supply of labor exists)Tax Incentives (e.g. tax credits)Source of Demand (cost minimized by producing at a site near the source of demand)Access to Transportation (site near interstate highways, rivers, airports, etc.),919,Evaluating Possible Sites,Evaluating Possible Sites,Labor-intensive firms would likely place a high weight on the cost of human resources.Firms that sell products or services at the site will assign a high weight to the amount of traffic. (Starbucks-downtown areas),920,Decision Making P279,Choosing the Optimal SiteWhy will the site that Cell One Company selects affect is degree of reliance on specific resources?Why would Cell Ones site selection decision be different if it needs a large space, versus a small space, for its business?,921,Discussion,Ranking the factors that affect the site decision according to your business characteristics.,922,923,Selecting the Design and Layout,DesignIndicates the eventual size and structure of the plant or officeLayoutThe arrangement of machinery and equipment within the plant or office. (e.g. IKEA)The design and layout decisions directly affectoperating expenses.,Factors Affecting Design and Layout,Design and layout decisions are influenced by the following characteristicsSite CharacteristicsProduct LineProduction ProcessDesired Production Capacity,924,925,Factors Affecting Design and Layout,Site characteristicsCost (e.g. a high rise building may be designed in an area with high land costs)The layout of the plant will then be affected by the designProduct Line -a narrow product line focus on the production of one or a few products, more specialized.-a broad product line offer a wider range of products. As market preferences changes, demand for products changes. The layout must be revised to accompany these changes.,926,Factors Affecting Design and Layout,Production processProduct layout (Tasks are positioned in the sequence that they are assigned. ) (e.g. Dominos Pizza)Fixed-position layout (Employees go to the product, rather than waiting for the product to come to them.) When a huge item is to be manufactured, the different processes of manufacturing are brought to it.( e.g. ship, aircraft or homes.)Flexible manufacturing (Process can easily be adjusted.),Factors Affecting Design and Layout,Desired Production Capacity-plan for growth by allowing flexibility to increase the production capacity overtime 1. Building design allows for additional levels to be added 2. Proper layout can open up more space to be used for increased production-layout will be ineffective if some space continues to be unused-Hotelling (just-in-time office): greater production capacity achieved without changing design and layout.,927,Decision Making P283,Determining the Optimal Design and LayoutIs there a disadvantage to Cell One of changing the design and layout of the office so that the employees work from home?Why cant the design and layout of Cell Ones production facility be eliminated in the same manner as the advertising office?,928,Discussion,What are the most important factors that influence design and layout decisions in your business?,929,930,Production Control,Once the plant and design have been selected, the firm can engage in production control, which involves the following:Purchasing materialsInventory controlRoutingSchedulingQuality control,931,Purchasing Materials,Selecting a Supplier of Materials-consider price, speed, quality, servicing, credit availability, ability for Internet interaction, etc-avoid depending on a single supplierObtaining Volume DiscountsDelegation Production to Suppliers-outsourcing reduces expenses, must be very careful when selecting the suppliersDeintegration of the production process (e.g. Ford Motor)Electronic payments for Suppliers,932,Outsourcing,Reasons for outsourcing Cost SavingsFocus on Core BusinessCost Restructuring. Outsourcing offers a move from fixed to variable cost and also makes variable costs more predictable. Criticisms of outsourcing Quality Risks Social Responsibility,933,Effects of Disintegration,Exhibit 9.3,934,Inventory Control,Inventory Control: the process of managing inventory at a level that minimizes costs. It includes the management as the following:-control of materials inventories-control of work-in process inventories-control of finished goods inventories,935,Control of Materials Inventories,Control of Materials InventoriesConsider carrying costs and order costs.Carrying costs: costs of maintaining inventories.Order costs: costs involved in placing orders for materials.- Minimize costs by:Just-in-Time (JIT) inventory: a system that attempts to reduce materials inventories to a bare minimum by frequently ordering small amounts of materials.Materials requirements planning (MRP): a process for ensuring that materials are available when needed.,Control of Work-in-Process Inventories,Firms must manage their work-in-process inventories, which are inventories of partially completed products.The consequence of a shortage in raw materials inventory or work-in-process inventory is an interruption in production, which can cause a shortage of the final product, and therefore results in forgone sales.,936,Control of Finished Goods Inventories,Monitor anticipated supply-demand differential (demand for a firms product changes over time)Inventory decisions may adjust during the year due to seasonal demand.,937,Impact of Technology on Inventory Control,Firms can use the Internet to improve their inventory control (e.g. online networks of shops).,938,939,Illustration of IBMs Efforts to Minimize Inventory,940,Routing,The sequence (or route) of tasks necessary to complete the production of a product.The routing process is evaluated to determine whether it can be improved to allow a faster or less expensive production process.,941,Scheduling,The act of setting time periods for each task in the production process.Impact of Technology on Production SchedulingERP (Enterprise Resource Planning) can connect computers from different departments to automate accounting, production, order taking and other basic processes.Advantage of ERP: Integration, high flexibility and lower costsScheduling for Special long-term Projects-Gantt chart P289-291 .-Program evaluation and review technique (PERT)Critical path,942,Example of a Gantt Chart,Exhibit 9.5,943,Determining the Critical Path Based on a Sequence of of Production Tasks,Exhibit 9.6,944,Quality Control,Quality: the degree to which a product or service satisfies a customers requirements or expectations.Quality controlA process of determining whether product quality meets the desired quality level.It can be measured by assessing the various characteristics.(how long, how easy, how well)Total quality management (TQM)The act of monitoring and improving the quality of products and services provided.,945,Quality Control,Control by Technology (using computers)Control by EmployeesControl by Sampling-Randomly selecting some products and testing them to determine whether they satisfy the quality standards.Control by Monitoring ComplaintsCorrecting Deficiencies,946,Quality Control,Correcting DeficienciesInadequate materials require the suppliers to improve quality;Inadequate quality of work by employees retain or reprimand those employees;Malfunctioning machinery or equipment replace the machinery or make repairs.,Decision Making P296,Deciding on Quality ControlWhy would Cell One rely on feedback from customers for quality control? Shouldnt it be able to catch production defects without relying on customer feedback?Why would Cell Ones decisions regarding quality control possibly affect its decisions about design and layout?,947,948,Methods to Improve Production Efficiency,Production Efficiency: the ability to produce products at a low costBenchmarking: a method of evaluating performance by comparison to some specified (benchmark) level, typically a level achieved by another company.Stretch targets: production efficiency targets or goals that cannot be achieved under present conditions.,949,Methods to Improve Product Efficiency,950,Methods to Improve Product Efficiency,Technology- AutomatedTasks are completed by machines (less costly) without the use of employees. - The InternetTo improve the flow of information and communication,951,Methods to Improve Production Efficiency,Economies of scale: as the quantity produced increase the cost per unit decreases.Fixed costs: are operating expenses that do not change in response to the number of products produced (e.g. cost of renting).Variable costs: are operating expenses that vary directly with the number of products produced (e.g. raw materials) Output increasevariable costs increasefixed costs remain sameaverage cost per unit declines,952,Relationship between Production Volume and Costs,Exhibit 9.8 P299,953,Relationship between Volume and Profitability,Exhibit 9.9,954,Methods to Improve Production Efficiency,Break-even pointReflects the total quantity of units sold at which total revenue equals total costs (fixed and variable) and profitability begins.The key measure of production efficiency is the average cost per unit.,955,Methods to Improve Product Efficiency,Restructuring- The revision of the production process in an attempt to improve efficiency. - ReengineeringThe redesign of a firms organizational structure and operations. - DownsizingCost-saving, but may be associated with training; decline morale of the remaining employees and result in low quality.,956,Integration of the Production Tasks,Supply ChainThe process from the beginning of the production process until the product reaches the
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