PRODUCTION

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PRODUCTION OPERATIONS MANAGEMENT
Lokesh Garments, India
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NATURE OF OPERATIONS MANAGEMENT

• Factors of production
• Production fundamentals
• Transformation process
• Measuring productivity manufacturing service
• Synthetic analytic techniques

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Who Makes the Best Products? Survey says...
Survey of 20,000 customers in 20 countries
38.5
Japan
Germany
36
United States
34.3
Britain
21.9
France
20.6
18.3
Canada
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PRODUCTION IS THE CREATION OF GOODS SERVICES
USING THE FACTORS OF PRODUCTION
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The Factors of Production

• Land
• Labor
• Capital
• Entrepreneurship
• Information

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Production Fundamentals

• Form Utility - raw materials, labor and other
  inputs are used to create goods and services (see
  p. 280)
• Production - a broad term to describe the
  creative process of industries producing goods
  and services
• Manufacturing - is the process of making goods
  using labor and/or machines

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The Production and Operations Process
Metal
Manufacturing
Plastics
Wire
Wire
Service
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MEASURING PRODUCTIVITY IN THE SERVICE SECTOR

• Services are labor intensive
• Difficult to measure productivity
• Belief productivity is rising but behind
  manufacturing productivity
• Trend toward automation of services
• Examples banking, grocery checkout, airline
  reservation processing

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Synthetic and Analytic Production Systems
Automobiles
Pizza
Jeans
Timber
Meat packing
Crude Oil
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PLANNING DESIGNING OPERATIONS SYSTEMS

• Planning the product
• Designing the operations process
• Standardization
• modular design
• customization
• Planning capacity

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PLANNING FACILITIES

• Facility Location
• Facility Layout
• Fixed-position layout (project organization)
• Process layout (intermittent organization)
• Product layout (continuous manufacturing
  organizations
• Technology

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Modern Production Techniques

• Just-In-Time (JIT) Inventory Control - working
  with suppliers to reduce Inventory
• Flexible Manufacturing - using machines that can
  do multiple tasks report of other half of class
• Lean Manufacturing - using less raw material
• Mass Customization - tailoring products to the
  customer
• Competing in Time - shorter delivery times
• Computer Aided Design and Manufacturing - design
  and manufacture products more cheaply
• Computer Integrated Manufacturing - robotics is
  cheaper

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MANAGING LOGISTICS

• Purchasing
• Managing inventory finished goods,
  work-in-progress raw materials inventory
• Inventory control EOQ, JIT, MRP
• Routing scheduling

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SCHEDULING TECHNIQUES

• PERT Program Evaluation Review Technique
  critical path analysis
• The Gantt Chart bar graph

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A Hypothetical PERT Diagram for a McDonalds Big
Mac
9-13
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MANAGING QUALITY

• Traditional view complex process sampling
  viewed as control system
• Contemporary view defined as measure of
  consumer satisfaction over lifetime of the
  product quality control circles common
• Commitment to quality recognition that
  productivity quality go hand in hand total
  quality management

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RELATIONSHIP PRODUCTIVITY QUALITY

• Can an enterprise concentrate on both
  productivity quality?
• Definition of productivity measure of output
• Definition of quality measure of the consistency
  with which the manufacturing process meets a
  specified target or standard

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EXAMPLE OF RELATIONSHIP
DEFINITION OF PRODUCTIVITY P O TRADITIONAL
VIEW P-Q O-1 CONTEMPORARY VIEW P Q O 1
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Total Quality Management (TQM)

• All levels must be involved and committed
• Doing it right the first time to lower costs
• Employees must cooperate to develop a new
  Corporate Culture
• Demands commitment to Continuous Improvement (CI)
• Involve suppliers and distributors

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SOLVE THE DILEMMA PLANNING FOR PIZZA

• What mistake did McKing make in approaching the
  introduction of pizza?
• How could this product introduction have been
  coordinated to avoid the problems that were
  encountered?
• If you were an executive at McKing how would you
  proceed with the introduction of pizza into the
  restaurants?

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VIDEODIAMONDS ON ICE
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QUESTIONS FOR DISCUSSION

• What are the planning considerations that were
  required in the building of the Diavik Diamond
  Mine?
• What ethical questions social responsibility
  considerations do you find in the Diavik Diamond
  project as reported in the video?

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SITUATION IN CANADA
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Canadas Manufacturing Sector

• Manufacturing is an important sector of our
  economy
• Countries with high standards of living have
  strong manufacturing sectors
• Our manufacturing sector is involved in fierce
  international competition
• Our manufacturing sector must adopt the latest
  technologies to compete in the new global economy

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CHARACTERISTICS OF CANADIAN INDUSTRY

• Types of industries processes
• Extractive industries, analytic process,
  fabricating process, synthetic process, assembly
  process
• Location of goods-producing industries
• Concentrated in southern Ontario and Quebec near
  the St. Lawrence river
• Factors general (proximity to raw materials,
  markets, labor energy specific vicinity or
  community (tax structures, regulations, commuting
  services) plant location itself (cost of land,
  adequacy of all utilities)

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MAJOR CHALLENGE TO CANADA

• Past resources automotive sectors kept Canada
  competitive
• Present no longer the case
• Problems to overcome brain drain to the States,
  branch plant economy (inhibits RD), inadequate
  training
• 2006 report companies not doing enough to
  raise productivity little spent on new
  machinery and equipment

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Our Challenge - To Become More Competitive

• Reduce the Cost of Inputs
• Reduce the Amount of Inputs
• Increase the Value of Outputs
• Increase the Amount of Outputs

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Reducing Inputs

• New technology
• Better management of resources
• Site selection - closer to cheap labor, closer to
  customers, closer to cheap raw materials, moving
  to a lower tax jurisdiction
• Better materials handling
• Reducing and improving inventory handling

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Increasing the Value or Volume of Outputs

• Efficient design and engineering
• Improved marketing - better and more saleable
  products
• Well-motivated workforce that is more productive
• Research and Development
• Restructuring the Organization

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Current and Future Trends

• The labor intensive service sector begins to
  automate - ATMs at banks
• Job Descriptions - less rigid so that the company
  can be more flexible
• More Hi-Tech workers - IT skills are in short
  supply
• More Participative Management style will require
  more people skills of managers

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COVERAGE FOR 15/3/2006

• TOPIC Motivating the Work Force
• Reading chapter 9
• Class Activities
• Solve the Dilemma Motivating to Win, p. 236
• Build Your Skills Motivating, p. 243
• Video Loyalty in the Workplace, p. 244