Production and Operations Management PDF

Production and Operations Management Chapter-9 (William G. Nickels, James M. McHugh and Susan M. McHugh, Understanding Business, (Latest edition), McGraw-Hill Irwin, NY, USA) Manufacturing and Services in Perspective In 1953 American industry reached its postwar peak as factories employed a...

Production and Operations Management Chapter-9 (William G. Nickels, James M. McHugh and Susan M. McHugh, Understanding Business, (Latest edition), McGraw-Hill Irwin, NY, USA) Manufacturing and Services in Perspective In 1953 American industry reached its postwar peak as factories employed about 30 percent of the workforce. By 1979, nearly 20 million people worked in manufacturing. Since then, however, the number of Americans employed by factories has steadily dropped year after year. Approximately 12.82 million people worked in manufacturing in 2019. However, that same year the value of products made in the United States reached a record high. In other words, there’s never been a more productive time for American manufacturing than the present. Manufacturing and Services in Perspective Thanks to advancements in technology and automation, American factories can operate efficiently without large amounts of human labor. Whereas robots have been performing manufacturing tasks for decades, past models were so big and dangerous that people could rarely be in the same room with them. Now many factory employees work side by side with robots that can learn from and collaborate with their human colleagues. Manufacturing and Services in Perspective These advancements have drastically changed the types of jobs available at today’s factories. In the past, workers needed little more than a high school diploma to land a well paying job on an assembly line. As automation increased, though, robots began performing these repetitive tasks. For some perspective on this shift to automated labor: In 1980 factories needed 25 people to produce $1 million worth of manufacturing output. Today, it takes only 6 people. Manufacturing and Services in Perspective Employees in these positions, however, must have advanced skills in order to be hired and succeed. So rather than relying on low-skill assembly-line workers, modern factories depend on engineers and software developers to operate their cutting-edge equipment and technology. Service industry is more competitive now Becoming more efficient is key for any industry. However, improving the efficiency of services isn’t as easy it sounds. After all, would you choose a hair stylist just because he or she can give you the quickest haircut possible? Instead, companies in the service sector must focus on providing customers with quality care and attention. From Production to Operations Management Production: The creation Production Management: of finished goods and The term used to describe services using the factors all the activities managers of production: land, labor, do to help their firms capital, entrepreneurship, create goods. and knowledge. Operations Management Operations management is a term that is used in both manufacturing and service organizations. Operations management is a specialized area in management that converts or transforms resources, including human resources like technical skills and innovation, into goods and services. It includes inventory management, quality control, production scheduling, follow-up services, and more. In automobile plants such as Tesla or Ford, operations management transforms raw materials, human resources, parts, supplies, paints, tools, and other resources into automobiles. It does this through the processes of fabrication and assembly. OPERATIONS MANAGEMENT Materials Facility location Facility layout requirement planning Purchasing Inventory control Quality control Operations Management in the Service Sector Operations management in the service industry is all about creating a good experience for those who use the service. In a Hilton hotel, for example, operations management includes smooth-running elevators, fine restaurants, comfortable beds, and a front desk that processes people quickly. It may also include fresh-cut flowersin lobbies and dishes of fruit in every room. Along with these classic amenities, Hilton must also stay innovative so it can cater to the ever-changing needs of its guests. Most business travelers today expect in-room WiFi as well as updated work centers that provide all the resources of a modern office. Operations Management in the Service Sector Hilton not only provides these services and also develops new features that often become standard in their hotels. One example is keyless room entry. Rather than give guests a keycard they can easily lose, Hilton created a system that allows guests to use their smartphone to enter their room. Robots today are increasingly commonplace in hotels and other businesses. Hilton introduced a project called Connie, a two-foot-tall front-desk robot that can answer guests’ basic questions such as dining recommendations and directions. The Production Process The production process consists of taking the factors of production (land, etc.) and using those inputs to produce goods, services, and ideas. Planning, routing, scheduling, and the other activities are the means to accomplish the objective—output. The Production Process Inputs Production Control Output Land Planning Goods Labor Routing Services Capital Scheduling Ideas Entrepreneurship Dispatching Knowledge Followup Form Utility Form utility is the value producers add to materials in the creation of finished goods and services, such as by transforming silicon into computer chips or putting services together to create a vacation package. Form utility can exist at the retail level as well. For example, a butcher can produce a specific cut of beef from a whole cow, or a baker can make a specific type of cake from basic ingredients. Producing Goods Manufacturers use several different processes to produce goods. Andrew S. Grove, the late former CEO and chair of computer chip manufacturer Intel, used this analogy to explain production: “Imagine that you’re a chef... and that your task is to serve a breakfast consisting of a three-minute soft-boiled egg, buttered toast, and coffee. Your job is to prepare and deliver the three items simultaneously, each of them fresh and hot.”  Basic Requirements of Production Grove says this task encompasses the three basic requirements of production: (1) To build and deliver products in response to the demands of the customer at a scheduled delivery time, (2) To provide an acceptable quality level (3) To provide everything at the lowest possible cost Process and Assembly Process manufacturing physically or chemically changes materials. For example, boiling physically changes an egg. Similarly, process manufacturing turns sand into glass or computer chips. The assembly process puts together components (eggs, toast, and coffee) to make a product (breakfast). Cars are made through an assembly process that puts together the frame, engine, and other parts. Computer-Aided Design One development that has changed production techniques is the use of computers to design products, Called computer-aided design (CAD). Businesses ranging from construction companies to carmakers to video game designers depend on 3D modeling software to create new products. Computer-Aided Manufacturing The next step was to bring computers directly into the production process with computer-aided manufacturing (CAM). CAD/CAM, the use of both computer-aided design and computer-aided manufacturing, makes it possible to custom- design products to meet the needs of small markets with very little increase in cost. Computer-Aided Manufacturing https://youtu.be/m_QhY1aABsE?si=Oey RSHglmeTN_pEs https://youtu.be/XHSYEH133HA?si=B99 wGiM5MFe0CUBU Flexible Manufacturing Flexible manufacturing means designing machines to do multiple tasks so they can produce a variety of products. Toyota uses flexible manufacturing at one of its newer factories where capacity can be increased or decreased without affecting production costs. If the company needs to change capacity, it can be done in a weekend. Lean Manufacturing Lean manufacturing is the production of goods using less of everything than in mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. A company becomes lean by continuously increasing its capacity to produce high- quality goods while decreasing its need for resources. Technological improvements are largely responsible for the increase in productivity and efficiency of U.S. plants. Mass Customization To customize means to make a unique product or provide a specific service to specific individuals. Although it once may have seemed impossible, mass customization, which means tailoring products to meet the needs of a large number of individual customers, is now practiced widely. The National Bicycle Industrial Company in Japan made 18 bicycle models in more than 2 million combinations, each designed to fit the needs of a specific customer. Facility Location Facility Location -- The process of selecting a geographic location for a company’s operations. Nowadays, the ultimate convenience is never having to leave home to get something. That’s why services like online banking and online shopping have become so popular. Amazon conducted an extensive search for a second North America headquarters that entailed $5 billion of construction and employment of 50,000 high-tech workers. Cities across the country began a highstakes competition to land the online retailer for their community. The company finally settled on Crystal City in Arlington, Virginia Facility Location Geographic shifts in production sometimes result in pockets of unemployment in some geographic areas and tremendous growth in others. Inexpensive resources are another major reason for moving production facilities. Another way to work closely with suppliers to satisfy customers’ needs is to locate production facilities near supplier facilities. That cuts the cost of distribution and makes communication easier. Many businesses build factories in foreign countries to get closer to their international customers. That’s a major reason the Japanese automaker Honda builds cars in Ohio and the German company Mercedes builds them in Alabama. Facility Location In future Telecommuting, working from home via computer, is a major trend in business. Companies that no longer need to locate near sources of labor will be able to move to areas where land is less expensive and the quality of life may be higher. Plus, it’s never been easier to stay in touch either by computer or phone thanks to videoconferencing apps like Skype, Zoom, and Webex.  Setting Up Facility Facility layout is the physical arrangement of resources, including people, to most efficiently produce goods and provide services for customers. Layout Can be of Different types. For example, Product Layout, Process Layout, Fixed Position Layout. Product Layout Example: Cafeteria Line 29 Process Layout 30 Fixed-Position Layouts Ships, houses, and aircraft The fixed-position layout is also common for on-site services such as housecleaning services, pest control, and landscaping. Aircraft production generally takes place in a fixed position layout due to the size and complexity of assembly. Shown here is a Boeing 787 Dreamliner being outfitted. 31 MRP and ERP Materials Requirement Enterprise Resource Planning (MRP) -- A Planning (ERP) -- A newer computer-based operations version of MRP, combines management system that computerized functions into uses sales forecasts to make a single integrated software sure parts and materials are program using a single available when needed. database. INVENTORY CONTROL Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line. To work effectively, the process requires excellent coordination with suppliers. QUALITY CONTROL Quality -- Consistently producing what the Six Sigma Quality -- A quality measure that customer wants while reducing errors before allows only 3.4 defects per million and after delivery. opportunities. WHAT is ISO? The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. ISO 9000 -- The common name given to quality management and assurance standards. ISO 14000 -- A collection of the best practices for managing an organization’s impact on the environment. ISO 22000 -- Food Safety Management, ISO 26000 -- Social Responsibility, ISO/IEC 27000 -- Information Security Management The Bangladesh Standards and Testing Institution (BSTI) was established by the Government through an Ordinance passed in July 1985. BSTI is headed by a Director General (Additional Secretary to the Government). PERT Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. PERT is designed to diagram the activities required to produce a good, specify the time required to perform each activity in the process, and organize activities in the most efficient sequence. STEPS INVOLVED in PERT 01 02 03 04 05 Analyzing and Estimating the Drawing a PERT Identifying the Critical Path -- sequencing tasks time needed to network critical path The sequence of complete each illustrating the first tasks that takes task two steps the longest time to complete. GANTT CHARTS Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed. A Gantt chart, named after the designer, Henry Gantt, is an easy-to- use graphical tool that helps operations managers determine the status of projects. Gantt charts are useful when the production process is fairly simple and the activities aren’t interrelated. Gantt Chart 39 Thank you