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Chapter 10 Production and Operation Management.docx

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Rotman Commerce
Michael Nijhawan

      Chapter 10 Production and Operation Management   Utility—the want-satisfying power of a good or service  Businesses can create or improve four basic kinds of utility: time , place , ownership and form  What is production?  Uses resources ,including workers and machinery, to convert materials into finished goods and services  What is production and operations management?  Is to oversee the firm’s production process by managing the people and machinery that convert materials and resources into finished goods and services.  Production and manufacturing is not the same thing  Production is used in both manufacturing and nonmanufacturing industries.  The production process can result in a tangible good.  Both production processes create a useful good or service.  This chapter describe the process of producing goods and services.  The importance of production and operations management  New technology  Tasks of production and operation managers  The importance of quality  Methods businesses use to ensure high quality 17.1 The Strategic importance of production Production is a vital business activity   Lower a firm’s production cost ; increase the quality of goods and services; allow it to be dependable when meeting customers’ needs ; enable it to renew itself by providing new products  Three kinds of production:  Mass production  A system for manufacturing products in large quantities by using effective combinations of employees with specialized skills ,mechanization and standardization.  Mass production begins with the specialization of labour, by dividing work into the simplest forms so that each worker can focus on one task.  Standardization, the third element of mass production, involves producing identical, interchangeable goods and parts  Three principles specialization, mechanization and standardization led to the development of the assembly line.  Moves the product along a conveyor belt past many workstations, where workers perform specialized tasks  Created by Henry Ford  High efficient for producing large amount of goods  Highly inefficient when producing small batches of different items  Repeat the boring jobs  Flexible production and customer-driven production lead to improve product quality and greater job satisfaction. ( may improve mass production as well)  Flexible production  It is usually more cost- effective for producing small runs.  It has many forms, generally it use three sources  Information technology to share the details of customer orders  Programmable equipment to fill the orders  Skilled people to carry out the tasks needed to complete an order  Even work better if combined with lean production methods that use automation( 自自) and information technology to reduce the need for workers and inventory.  Needs lots of communication between every one in the organization.  Now widely used in the auto industry : :  Produce different kinds of cars in the same plant Eg. Honda in NA  Customer-driven production  Assesses customer demands to make a connection between the products that are manufactured and the products people want to buy  One method: to set up computer links between factories and retailers’ scanners  Are used to create short-term forecasts and design production schedules to meet those forecasts.  Another approach to meet customer-driven production system is to wait until a customer orders a product and then produce it – whether it is a taco or a computer  Custom- design products 17.2 Production processes  Production processes use either an analytic or a synthetic system  Time requirements use either a continuous or an intermittent process  Analytic system Reduce a raw material to its components , or individual, parts to extract one or more  marketable products.  Eg. Petroleum, corn ( can be made into all kinds of finished goods)  Synthetic system  REVERSE OF analytic system  Combine two or more raw materials or parts, or transforms raw materials, to produce finished goods (Eg. Canon camera etc.)  Continuous system  Creates finished goods over a long period of time  Steel industry  Costly outcome if shutdown  Intermittent system  Creates products in short production runs  Can be shut down frequently  Most services results from intermittent systems  Eg. Accountants  Do not have a standardized services because customer want various services  However some offered ( for efficiency and cost-effectiveness)  Fast food chain ( McDonald ) ( advance technology create food more quickly) 10.3 Technology and the production process  Production changed rapidly  Nowadays many manufacturing plants are completely automated; available jobs in manufacturing less and less  It also means that companies can design, produce and adapt products more quickly to meet customers’ changing needs.  Green manufacturing process  Investing resources into developing processes that result in less wastes, lower energy use , and little or no pollution ( Green)  Sustainable manufacturing  Seventh Generation (Example) ; Environmentally friendly  Firms are thinking to build new construction or new buildings or new plants are turning their attention to LEED (Leadership in Energy and Environmental Design) certification  It is a voluntary certification program which is offered by Canadian Green Building Council( CaGBC)  Aimed to promoting the most sustainable construction processes available  Meeting standards in energy savings, water efficiency, carbon dioxide( CO2) emissions reduced ,improved indoor environmental quality ( including air and natural light) and other categories.  Robots  Boring and dangerous jobs replaced with robots  A robot is a machine that can be programmed to perform tasks that require the repeated use of materials and tools.  Works much quicker than humans ( Eg, Consolidated Technologies)  Robots are popular used in production line  Field robots assist people in nonmanufacturing and dangerous environment  Computer aid design and manufacturing  CAD Computer aid design Is a process used by engineers to design parts and entire products on the computer   Work faster and fewer mistake  Make major or minor design changed  Car Manufacturing and Dentistry used it  CAM computer aided manufacturer  Picks up where the CAD system leaves off  Use CAM to analyze the steps a machine must take to produce a needed product or part  These so-called CAD/CAM systems are linked electronically so they can automatically transfer computerized designs to the production facilities.  Flexible Manufacturing system  Is a production facility that workers can quickly change to manufacture different products  Are controlled electronically  Have improved by powerful new software that allows machine tools to be reprogrammed while they are running.  Eg. Nissan expanded its foreign markets  Computer –integrated manufacturing  Use computers to help workers design products, controls machines, handle materials and control the production function.  The key to CIM is a centralized computer system running software that integrates and controls separate processes and functions.  Adv: increased productivity, decreased design costs, increased equipment utilization and improved quality.  Widely used in printing industry  Save costs and combine jobs into one larger job 10.4 The location Decision  Depends on transportation, human factors and physical factors  Transportation  Closeness to the market  Closeness to the raw material  Availability of transportation options  PHYSICAL factors  Water supply  Energy  Hazardous wastes ( weather )  A manufacturing business that wants to locate near a community must prepare an environmental impact study  HUMAN factors  Labour supply ( Eg. qualified skilled people to do )  Local zoning regulations  Community living conditions  Taxes A production and operation manager always choose from the following condition:  Closeness to suppliers ,warehouses and service operations  Costs of insurance and taxes  Availability of employee needs Sizes, skills ,and costs of the local labour force   Enough space for current and future needs of the firm  Distance to the market for goods  Receptiveness of the community  Economical transportation for incoming materials and supplies and for outgoing finished goods  Climate change and environment that matched the industry’s needs and employees’ lifestyle  Amount and cost of energy services  Government incentives The recent trend is to bring production facilities closer to the final markets where the goods will be sold. ( for timesaving and culture reasons)  Governments sometimes offer incentives to businesses that are willing to locate in their region.  In forms of tax breaks, agreements to improve infrastructure , and similar activities. 10.5 The Jobs of production manager   Managers perform 4 major tasks: ( in an order)  Planning the overall production process  Begins with choose the goods and services offer to customer   Machinery purchases, pricing decisions, and selection of retail outlets etc.  Satisfied customer & be produced as efficient and inexpensive as possible  Focus on the planning the production process in two ways  By converting original product ideas into final specifications  Designing the most efficient facilities to produce those products   Need to understand how a project fits into the company's structure ( because it can affect the  success of the project )   More companies are moved to team­oriented structure. ( eliminate internal conflict)  The two approaches have two major difference:   All workers on the team are responsible for their output , and  teamwork  avoids  competitiveness between managers often found in traditional structures.  ( only one  manager which is the p
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