chapter 7

• Operations (Production)


  Activities involved in making products — goods and services — for customers
• Service Operations

  Activities producing intangible and tangible products, such as entertainment, transportation, and education
• Goods Production/operations


  Activities producing tangible products, such as radios, newspapers, buses, and textbooks
• Utility


  Product's ability to satisfy a human want or need (form, time, place)
• Operations (Production) Management


  Systematic direction and control of the activities that transform resources into finished products that create value for and provide benefits to customers
• Operations (Production) Managers


  Managers responsible for ensuring that operations activities create value and provide benefits to customers
• Resource Transformation Process


  1. Inputs

  2. Transformation

  3. Outputs
• Differences between Service and Goods Manufacturing Operations

  • Interacting with customers
  • The intangible and unstorable nature of some services
  • The customer's presence in the process
  • Service quality considerations
• Operations Process


  Set of methods and technologies used to produce a good or a service
• Goods Production Processes


  • Make-to-Order Operations
  • Make-to-Stock Operations
• Service Production Processes


  • Low-Contact System
  • High-Contact System
• Business Strategy


  Determines Operations Capabilities
• Operations Capability (Production Capability)


  An activity or process that production does especially well to outperform the competition
• Top-priority operations capabilities


  • Quality
  • Low price
  • Flexibility
  • Dependability
• Operations Planning


  1. Capacity Planning

  2. Location Planning

  3. Layout Planning
• Process Layout (Custom-Product Layout)

  Physical arrangement of production activities that groups equipment and people according to function
• Product Layout (Same-Steps Layout)

  Physical arrangement of production steps designed to make one type of product in a fixed sequence of activities according to its production requirements (often using an assembly line)
• Fixed position layout


  A fixed-position layout is necessary when, because of size, shape, or any other reason, managers cannot move the service to another production facility
• Process Layout for a Service Provider
• Product Layout for Goods Production
• Operations Planning cont'd


  Quality Planning
• Quality

  Combination of "characteristics of a product or service that bear on its ability to satisfy stated or implied needs"
• Performance


  Dimension of quality that refers to how well a product does what it is supposed to do
• Consistency


  Dimension of quality that refers to sameness of product quality from unit to unit
• Operations Control


  1. Materials management

  2. Quality Control
• Materials management


  The process by which managers plan, organize, and control the flow of materials from sources of supply through distribution of finished goods
• Quality Control


  Action of ensuring that operations produce products that meet specific quality standards
• Total Quality Management (TQM)


  All activities involved in getting high-quality goods and services into the marketplace (consider all aspects of business: care about customers, employees, suppliers etc.)
• TQM evaluates the costs of poor quality, identifies the sources causing unsatisfactory quality, assigns responsibility for corrections, and ensures that those who are responsible take steps for improving quality
• Supply Chain (Value Chain)

  Flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the network of firms until the product reaches the end customer
• Supply Chain Management (SCM)


  Principle of looking at the supply chain/value chain as a whole to improve the overall flow through the system