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Lecture 6

AFM 131 Lecture 6: Operations Management – Producing World-Class Goods and Services Notes

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University of Waterloo
Accounting & Financial Management
AFM 131
David H A

Operations Management – Producing World-Class Goods and Services Research and Development: • Research and Development (R&D) – work toward the innovation, introduction, and improvement of products and processes Canada’s Evolving Manufacturing and Services Base: • Strategies by Canadian manufacturers to regain a competitive edge: o Focus on customers o Maintain close relationships with suppliers and other companies to satisfy customer needs o Practice continuous improvement o Focus on quality o Save on costs through site selection o Rely on the Internet to unite companies o Adopt production techniques such as enterprise resource panning, computer- integrated manufacturing, flexible manufacturing, and lean manufacturing. From Production to Operations Management: • Production – the creation of finished goods and services using the factors of production: land, labour, entrepreneurship, and knowledge • Production Management – the term used to describe all of the activities that managers do to help their firms create goods • Operation Management – A specialized area in management that converts or transforms resources (including human resources) into goods and services Facility Location: • Facility Location – the process of selecting a geographic location for a company’s operations Facility Layout: • Facility Layout – the physical arrangement of resources (including people) in the production process Materials Requirement Planning (MRP): • Materials Requirement Planning (MRP) – a computer-based production management system that uses sale forecasts to make sure that needed parts and materials are available at the right time and place • Enterprise Resource Planning (ERP) – a computer application that enables a firm to manage all of its operations (finance, requirements planning, human resources, and other fulfillment) on the basis of a single, integrated set of corporate data Purchasing: • Purchasing – the functional area in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services Just-in-Time Inventory Control: • Just-in-Time (JIT) Inventory Control – a production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time for use on the assembly line Quality Control: • Quality – consistently producing what the customer wants while reducing errors before and after delivery to the customer • Six Sigma quality – a quality measure 3,4 defects per million events • Statistical Quality Control (SQC) – the process some mangers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning • Statistical Process Control (SPC) – the process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards ISO 9000 and ISO 14000 Standards: • 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 Supply Chain Management: • Logistics – those activities that focus on getting the right amount of the right products or services to the right place at the right time at the lowest possible cost • Supply Chain – the sequence of firms that perform activities required to create
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