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Global Management Studies
GMS 401
Kirk Bailey

Ch.1- Intro. To Operations Management 9/27/2011 11:52:00 AM Operations management- is the management of processes and the systems that create goods and or services.  A system is a set of interrelated parts that must work together. A process is a series of linked actions, changes, and functions bringing about a result.  3 types of processes: core, support, and managerial. o Core/operational—directly create the good o Support—supports core o Managerial—govern the system EXAMPLE- airline company  core processes include reservations, boarding and flying the planes, handling the luggage, and performing maintenance.  Support processes include forecasting, scheduling, managing inventory, and buying materials.  Managerial processes include capacity planning, locating facilities and employee motivation. Many companies use operations management strategies, tactics, and actions in order to improve their efficiency and effectiveness. Functions within an organization A typical organization has 3 basic functions: operations, finance, and marketing—all work together. Ie. For instance, unless operations and marketing work together, marketing may promote goods or services that operations cannot profitably deliver. (FIGURE 1-1 p.5) Operations function -all activities directly related to producing goods or services. Exists in fabrication and assembly. -inputs are used to obtain finished good or services using one or more transformation/ conversion process9 storing, transporting…) At various stages feedback is compared as control. Ie. inputs= raw vegetables, water, metal.. Process=cleaning, making cans output=canned vegetables. -good and services often occur jointly. Ie. House painting is a service, but the paint is a good. -essence of the operations function is to add value during the cost of inputs and the value of the output.  Non-profit organizations, value of output= their value to society (highways)  For-profit, value of outputs is meatued by the prices that customers are willing to pay. -one way businesses can be more productive- examine if operations add value- value added approach. Those that do not ad value are wasteful- eliminating these adds value. Ie. Producing something too soon means storage costs= wasteful. Finance Function -performs activities related to securing resources at favorable prices and allocating those resources throughout the organization. -cooperated with operations management by exchanging information in:  provision of funds  economic analysis of investment proposals (evaluation of alternative investments in plant and equipment requires inputs from both operations and finance people) Marketing -responsible for assessing customer wants and needs, and communicating those needs and feedback to operations people and product design people. - one important piece of information marketing needs from operations is the manufacturing or service lead time in order to give customers realistic estimates of how long it will take to fill their orders.  Lead time= time between ordering a good or service and receiving it. Other Functions -Accounting-supplies info to mgmt—costs of labor, materials and overhead. -Management information systems(MIS)-provides management with info it needs to effectively manage. -Purchasing- needs close contact with operations to ensure correct quantities and timing of purchase. -HR-motivating and hiring employees. -manufacturing engineering- responsible for design or purchase of equipment/ machines. -Maintenance- of equ and bldg. -product design -Logistics- transportation of raw materials to plant, storage and transport to warehouse, and customers. THE SCOPE OF OPERATIONS MANAGEMENT -design decisions are strategic usually long term: 1-5 years ahead -planning decisions are tactical and medium term: 1-12 months ahead -scheduling execution and control decisions are short term: 1-12 weeks ahead. -system design- involves decisions that relate to product and service design, system capacity and placement of equipment… -operational activities- management of personnel, scheduling, project management… PRODUCTS vs. SERVICES  Productions of goods ex. Manufacturing, construction, agriculture, forestry, fishing, mining. Biggest is manufacturing –includes food, clothes, furniture…  Services—ie. Government, wholesales. Retail, finance and insurance… - are similar in terms of what is done but differ in terms of how it is done. -both make decisions on location, scheduling and control of operations and allocating scarce resources. -differ in:  1. customer contact- o services involve a higher degree of customer contact. The performance of a service often occurs at point of consumption.  2. Uniformity of input-service is subject to greater variability of inputs—each auto repair presents a specific problem that must be diagnosed before it can be remedied.  3. labor content in jobs o services=higher labor content. Goods= more capital intensive  4. measurement of productivity  5. uniformity of output o ie. One doctor has a large # of routine cases, while other do not so their productivity appears to differ.  6. quality assurance o easier in goods production, errors can be corrected before the customer receives the output.. not true in service firm. -most real systems are a blend of both producing goods and providing services. Ie. Movie theatre selling popcorn. -service sector is growing and accounts for 75% of jobs in Canada. THE OPERATIONS MANAGER‘S JOB -has ultimate responsibility for the creation of goods or services -must coordinate the use of resources through the management activities of planning, organizing, directing, and controlling. From diagram 1-6 can see that operations managers don‘t like their long hours, working conditions but like the compensation, and work variety… OPERATIONS MANAGERS AND DECISION MAKING -models-simplified version of reality -qualitative approaches- attempt to obtain optimum solutions to the mathematical models o managerial problems. Often done with equations. - analysis of trade-offs- ie. In scheduling overtime to increase output, manager weighs increased output to higher costs. -systems approach- a set of interrelated parts that must work together. Emphasizes interrelationships between theses parts. Therefore, from a systems viewpoint, the output and objectives of the organization as a whole takes precedence over those of any one part. Essential when something is being designed. Ie. When deciding whether to put in anti-lock brakes designer must think about how customers will like it, instruction book, cost, chances of misuse.. Establishing Priorities- Pareto phenomenon-a few factors account for a high percentage of results achieved. Known as the 80/20 rule- meaning 20% of factors will impact 80% of results. Managers should examine each situation, searching for the few factors that will have the greatest impact, and give them the highest priority. Ethics- worker safety, product safety, environment, and closing facilities. The Historical evolution of operations management  -In early days goods were produced using craft production- system in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods. No economies of scale.  -The industrial revolution- division of labor and interchangeable parts-did not need to be custom fitted.  -Scientific management- emphasized the technical aspects of work design.  mass production- system in which lower-skilled workers use specialized machinery to produce high volumes of standardized goods.  The Human relations movement- emphasized the importance of the human element in job design—ie .motivation  The influence of Japanese manufacturers- introduced total quality management- emphasized quality and continual improvement, worker teams and empowerment, and achieving customer satisfaction. Lean production- system that uses minimal amounts of resources to produce a high-volume of high-quality goods with some variety. The skilled workers in this system are more involved in maintaining and improving the system than in mass production. They are taught to stop production if they see defects, therefore it will not occur again. They must be able to function in teams. Responsibility is greater. Look at table 1-5 p. 19 for summary of craft production, mass production and lean production. READ SUMMARY Pg. 21 & do review ch. questions Ch.2- Competitiveness, strategic planning, and productivity 9/27/2011 11:52:00 AM Competitiveness -Using teamwork and rewards, an organization can develop its capabilities(called competencies) -an organization‘s performance in the marketplace depends on the expectation of its customers for purchase of goods or services, mainly PRICE, VARIETY, and TIMELINESS- these are key purchasing criteria. Other criteria include customer service and convenient location. -In complex purchases, customers may use two categories of purchasing criteria: order qualifiers and order winners. Order qualifiers- are those purchasing criteria that customers perceive as minimum standards of acceptability for purchases. However, these may not be sufficient to get a customer to purchase from the organization. Order winners- are those purchasing criteria that cause the organization to be perceived as better than the competition.  Purchasing criteria such as price, on-time delivery, quality.. etc can be order q or order winners. Quality consistency and on-time delivery are order qualifiers for most customers. Competitive priorities from a organizations p.o.v are- cost, quality, flexibility(bin able to produce a variety of goods and services), and delivery(meeting promised dates) -if an organization wants to be more competitive it can improve many or all of its competitive priorities simultaneously. However, as it becomes more competitive, it reaches a point where one priority can be achieved only by reducing the emphasis of another priority. Strategic Planning -is a long-term plan that sets new direction for an organization. Some companies only implement new plans when they are facing crisis‘s but most do it annually. -It stats with top management evaluating current performance and doing a market study of the industry to see where it will be in the next 1-5 years. Then they change the organizations vision/mission. It does analysis- SWOT MISSION, VISION, AND VALUES -mission- where the organization is going now -vision- where the organization desires to be in the future -values- shared beliefs of the organization‘s stakeholders(customers, shareholders, owners) Strategies- companies have long-term functional strategies ie. Financial , marketing and operating strategies. Tactics- are medium-term plans sometimes used as components of a strategy. The are more specific in nature than a strategy, and they may provide guidance and direction for determining policies and carry out action plans- a medium or short-term project to accomplish a specific objective, with a deadline and the resources needed. LOOK AT figure 2-1 pg. 33 for hierarchy ---mission, goals, organizational strategy…… Operational Strategy - Deals with guiding the operations function of the organization, but should answer organizational goals. -comprises a set of well-coordinated policies, objectives, and action plans, directly affecting the operations function. -operations functions has to cooperate with all other functions of the business and monitor external markets. Ie. Mkt should be aware of competitors new products. -usually operations policies, objectives and action plans are classified as follows: (READ ABOUT THEM ON P.36) 1.facility 2. capacity 3. vertical integration 4. vendor relations 5. product ix and new products 5. process types and technology 6. HR 7. Quality 8. Operations infrastructure ad systems. READ TOP OF Pg.37 Generic Operations Strategies -are theme-based operation improvement programs ie. J-I-T delivery and total quality management/ continuous improvement. -generic bc they have are frequently used irrespective to market condition. Some popular generic operations strategies: (used in Japan in the past)  Low labor cost strategy  Scale-based strategy—capital-intensive methods to achieve higher labor productivity and lower unit costs.  Flexible factories strategy—reduced the time needed to add new product and process designs. Used flexible equipment tht allowed volume and design changes.  Continuous improvement strategy—improved products and strategy. -recent popular generic operations strategies:  Time based competition—focuses on reducing the time required to accomplish various activities(ie. Develop new products and market them, respond to changes in customer demand). Gives competitive advantage. Costs are less, and productivity and quality are higher.  Outsourcing—reduces costs and gain flexibility and take advantage of suppliers expertise. Productivity A measure of productive use of resources, usually expressed as the ratio of output to input. (output=goods. Services, input=machine, labor, materials, energy) - Productivity=output/input -Productivity growth= (Current period productivity-Previous prev.p)/pervious period productivity MEASURING PRODUCTIVITY -productivity measures can be based on a single input-partial productivity  more than one input- multifactor productivity  on all inputs- total productivity ie. of partial  labor productivity—ie. Units of output per labor hr, units of output per shift.  Machinery productivity  Material productivity-units of output per unit material input  Energy productivity -don‘t confuse productivity and efficiency  efficiency is getting the most out of a fixed set of resources  productivity is getting better use of overall resources. o Total productivity and profit are directly related. Productivity is rev/cost, profit=rev-costs -productivity measurements serve as scorecards of the efficient use of resources. Competitiveness- if 2 companies both have same output, but one needs less input bc of higher productivity, that one will be able to charge a lower price and therefore increase market share. -productivity of services—is harder to determine bc output is partially intangible. Ie . legal advice… factors affecting productivity -machinery, workers, management, technological improvements. READ CH.REVIEW and do all questions 9/27/2011 11:52:00 AM Chapter 4: Product Design 9/27/2011 11:52:00 AM product design- determines form and function  in most cases, products are redesigned to invigorate their demand and to take advantage of new technology. PRODUCT DESIGN Has 4 elements: 1. product approval committee  consists of top management. Responsible for authorizing new products and allocate resources. 2. core teams  cross-functional teams that plan from idea to commercialization. Resolve conflicts, make trade-off decisions, and directing other support to staff. Every function in the design/development team should be represented in the core team. Should not be large- ie. 8 ppl. 3. phase reviews- are milestones during a new product.  Process of he core team is reviewed by the product approval committee. The decision will be to approve, cancel, or redirect the project.  Phase reviews recognize problems earlier- saving costs… ie. Changing a sketch is easier than changing a prototype, and changing a prototype is easier than changing the first unit of production—called the escalator effect. 4. structural development process-the use of project management techniques. It involves breaking each phase/stage into steps and each into activities, determining their relationships, scheduling, and execution.  steps are planned and managed by the core team.  The usual phases are: o Idea generation and preliminary assessment. o Building a business case- what do customers want. Assess the products feasibility, establish its goals and objectives. o Develop the product and process- translate the voice of the customer into an actual product. o Testing o Launch Core team Usually consists of product manager, product designers, manufacturing representatives. The team expends during each phase of deign with mkt reps, accountants, engineers, quality control, and purchasing and supplier representatives. This team-based approach of simultaneously designing the product and process is called concurrent engineering. The new product design/ development process is a stage gate model. Scoping- preliminary market, financial , and technical assessment Building business case- determining customer requirements, competitive analysis Development-future developing the product concepts, making prototypes Testing and validating-testing and customer trials SOURCES OF IDEAS FOR PRODUCTS -ideas come from front-line employees, suppliers customers, R&D team and mkt team. - one of the strongest motivators is competitors‘ products. Reverse engineering- buying a competitors product and dismantle it to see how its components work. -Research and development- costly. KEY ISSUES IN PRODUCT DESIGN LIFE CYCLE- DEMAND (y-axis) incubation-when an item is introduced, it may be treated as a curiosity. Demand is low. Production is low. Growth-design improvements create a more reliable and less costly product. Demand grows bc of increase of awareness.higher production=lower cost. Maturity- few deisgn changes and demand levels off. Saturation- leads to a decline in demand Decline- in this stage the compny tries to prolong useful life with product improements or introducing a substitute product. ---some products do not use life cycles-ie. Pencils. ---services also use life cycles- ie bank tellers- ABM- internet banking. -life cycles vary between products- ie. Computers=1year, washing machines=longer STANDARDATION- the extnt to which there is absebce if variety in a at or product. By reducing variety, they save time and money while increasing quality an dreliability in their products. It also reduces time and cost to train employees. DESIGN FOR MASS CUSTOMIZATION - producing basically sandardizd goods or services but incorporting some degree of customiztion. Several tactivs make this possible- delayed differentiation, and modular design. Delayed differentiation- producing, but not quite completing, a product until customer preferences are known.  Moduar design- parts are grouped into modules that are easily replaced or interchanged. The product is composed of a number of modules or components instead of a collection if individual parts. o This is the reason that Dell computers can assemble and have custom-ordered computers delivered to its internet customers in a matter of days. It avoids the long customer wait that would occur if individual parts had to be assembled. RELIABILITY  Is a measure of the ability of a product to perform its intended function. Could be a failure. ROBUST DESIGN - design that can function over a broad range of conditions. Rubber boots vs. ballerina flats- rubber boots are more robust bc they can handle more weather conditions. The more robust, the less likely it is to fail. LEGAL AND ETHICAL ISSUES -ie. Food and drug acts, hadzards products act, automobile pollution standards, airbags.. etc. -should not infringe on patents, trademarks, and copyrights. -Product liability- means that a manufacturer is liable for any injuries or damages caused by a faulty product bc of poor design. –strong incentive for design improvements. DESIGN FO RENVIRONMENT -design for energy efficiency -design for hazardous material minimization -design for re-use -design for disassembly—so that used products can be easily taken apart. -design for remanufacturing  refers to refurbishing used products by replacing worn-out components and re-selling the products—printers, cars… CONCURRENT ENGINEERING Aka simultaneous development -means bringing engineering design, manufacturing engineers, and staff from marketing together early in the design phase to simultaneously develop the product and the processes from creating the product.  Traditionally, designers developed a new product without any input from manufacturing, and then turned over the design to manufacturing… this contributes to an ―us vs. then‖ mentality. COMPUTER AIDED DESIGN (CAD) -use computer graphics for product design. The designer can modify an existing design or create a new one on the screen and see it in 3D. no need for timely drawings. DESIGN FOR MANUFACTURING AND ASSEMBLY (DFM) -take into account the organizations manufacturing capabilities when designing a product. COMPONENT COMMONALITY Companies can benefit when a component can be sued in multiple products. Bc of standard training ad increased savings from buying bulk, and save on repair costs. Tool manufacturers use a design that allows tool users to attach different power tools to a common power source. DIFFERNCE IN DESIGNING SERVICES -convenience -services are normally made and delivered at the same time- less latitude in finding and correcting errors before the customer has a chance to discover them. Consequently, training, process design and customer relations are important. Quality is measured in customer satisfaction. -most services have some degree of customization, therefore there will be variability in length of the service. -services have lower barriers to exit and exit. Disadvantage- hard to measure the cost of introducing the service because of the shared resources. Location is important. Quality Function of deployment -structural approach that integrates ‗voice of the customer‖ into product design. Ie. Customers say that the blades on lawnmower should be easily adjustable. Read about house of quality metrics on pg. 131-132. Chapter 6- Process Design and Facility Layout 9/27/2011 11:52:00 AM Process design determines the form and function of how production of goods and services is to occur. It has major implications for layout.  First step in process design is to determine whether to make or buy some or all product parts. Every production process is different, even in the same industry. However, there are similarities therefore we group the processes into four categories: 1. job shop  process type used when a low quantity of high-variety customized goods or services is needed.  High flexibility of equipment and skilled workers are important.  work shift from one small job to the next, each with somewhat different requirements.  Service example is an emergency ward of a hospital that is able to process a variety of injuries and diseases. 2. batch  used when a moderate volume and variety of goods/services is desired. The equipment doesn‘t need to be as flexible as job shop, but process is still intermittent. The skill level of workers doesn‘t need to be as high as in a job shop bc there is less variety in the jobs.  Ie. Small bakeries that make bread, cake or cookies in batches.  Movie theatres that show movies to groups-batches.  Airlines  Other examples- beer, paint, ice cream clothes, magazines, and books.  The managerial challenge is scheduling batches in oder to meet planned production demand while utilizing the resources a a high level. 3. repetitive (assembly line)  higher quantities or standard goods are needed  only light flexibility is needed-equ  skill of workers is low  ie. Production and assembly lines o production line-sequence of machines that perform operations a part/product o assembly line- production line where parts are added to a product sequentially  ie. Cars computers  service ie. Carwash, cafeteria lines.  Challenges- capacity balance, technology management, quality and materials management. 4. continuous  when a high volume of highly standardized output is desired, a continuous process is used.  No variety in output therefore no need for equ flexibility.  Workers are low skilled  Ie. Steel, paper, flour, and salt.  Utilities and the internet LOOK AT FIGURE 6-1 p.172 -the idea is to have production process capabilities, such as equipment flexibility, match product requirements, such as product variety and quantity(volume). -failure to match product requirements and production process characteristics results in inefficiency.- higher costs  ie. Using batch when there is only one product Is inefficient bc the process does not use enough automation. -products often go through a life cycle that begins with low quality, which increases as the product becomes better known. Manager must shift from if job shop to batch. -processes do not always exist in ‗pure‘ format. They could be a hybrid of 2 process types. -focused factory- processes that produce high quantity of products specialize in these products. However, some companies have managed to handle high variety on the same processes. Ie ―made for you‖ by McDonals, and Dell‘s computers mass customization. AUTOMATION -key question in process design- ―should we automate?‖ and by how much? -enable a machine to operate automatically. -advantages;  low variability- whereas it is difficult for a human to perform a task in exactly the same way, rapidly.  Do not get bored, distracted, or injured. Disadvantages;  Costly, needs high volume of product to offset the high initial costs.  Less flexible than human labor  Workers fear automation bc they will lose their jobs -3 types of automation:  1. Fixed- not flexible o uses high-cost, specialized equipment for a fixed sequence of operations. Low unit costs and high volume are its primary advantages. Minimal variety and high cost of making major changes=limitations.  2. Programmable automation o high-cost, general-purpose equipment controlled bu a computer program. Changing the process is easy as changing the computer program. o Has the capability of producing a wide variety of low=volume products in small batches. o Ie. Numerically controlled machines (machines that perform operations by following mathematical processing instructions.) or robots  3. Flexible automation o uses equipment that is more flexible than programmable automation. A machine centre- is a machine capable of performing a variety of operations on part. A flexible manufacturing system (FMS) is a group of machining centres, controlled by a computer. PROCESS DESIGN -Determines the form and function of how production of goods it to occur. -identifies the activities and their sequence, resources, and controls. -also plan- order taking, planning, purchasing staffing.. Methodology for production process design 1. define the production process  determine how complete the input materials should be- make-or buy  set production objectives- capacity, costs 2. production process development  conceptualize the design  make an embodiment of the design o choose one process concept o determine the resources needed-machines, equ. o Estimate costs, and quality  Create a detailed design o Design plant layout 3. buy the machines and equipment, recruit workers and start trial runs.  Draw a process flow diagram- shows the operations and movement of material through the operations. Involves following flow of materials though the transformation process, and identifying the activities and resources required and their sequence. Service Process Fail-safeing  Similar to manufacturing, except follow customers instead of material flow.  Services are vulnerable to quality and delivery problems-bc normally performed on the spot therefore no time to correct problem.  Companies should identify potential failure points and try to strategically minimize them.  Ie. Customer calls and long wait times- solution= call-waiting system.  Customer Perception in Service process design  Since services are intangible you have to leave good impression. Suggestions:  End service positively-customers remember end more  If the service is pleasurable- divide it  If the service is painful- combine it.  Let customers control parts- ATM Types of Layout 2 types: Product layout, and process layout 1. Product (line) layout  arranges production resources linearly according to the progressive steps by which a product is made.  Standard products and standard production  Could have a Production or assembly line  Less common in services because service requirements usually have to much variability.  When lines are used, compromises are made. Ie. A very dirty car might not get cleaned as well in a car wash bc amt of soap is standard.  Work-in-progress is low bc items move quickly from operation to operation. Since operation are so closely tied, the entire system can shut down bc of mechanical failure pr absenteeism. Process (Functional) Layout -arranges production resources together according to similarity of function. It processes items that have a variety of production requirements. -the use of general-purpose equipment provides the flexibility necessary to handle a wide range of production requirements, therefore workers are skilled. -common is services. Ie. Emergency department- has a waiting room, x-ray rooms, surgery rooms. -less vulnerable to shut down bc equ is arranged by type rather than by production sequence. -disadvantage; scheduling must be done on a continual basis . Cellular Layout -a layout in which different machines are arranged in a cell that can process items that have similar processing requirements, called part families. -a cell is U shaped, permitting increased communication among workers on the line. Warehouse layout -items required cold storage are grouped, items that are ordered frequently are placed near the door, correlation between items are grouped- item a is ordered with item b. Retail layout -important to account the presence of customers and how to influence them. Office Layout -less important bc of e-mail… but trend is to make open space- less walls. Ch.7 – Design of Work Systems 9/27/2011 11:52:00 AM Work Design- Involves; -job design (content and method. Objective it is to increase long-term productivity) -determination of working conditions -work measurement (establishment of standard times) -compensation JOB DESIGN has 2 schools of thought- efficiency school and behavioral school. 1. efficiency school- systematic, logical approach to labor cost reduction.  Includes specialization(doing one thing to become proficient in it- ie. Assembly line worker), method analysis, and time standards. -the serious problems with assembly-line specialization caused job designers to seek the behavioral approach. 2. behavioral school- satisfaction of wants and needs of workers as a motivation for increased productivity. In order to make jobs interesting, job designers consider -job enlargement  giving a worker a larger portion of the total task. Goal is to make the job more interesting by increasing the variety of skills required -job rotation  workers periodically exchange jobs. Can fill in for absenteeism, prevent repetitive strain injuries. Can rotate every hr -job enrichment  increases level of responsibility for planning and coordination -self-directed team  groups who perform the same function and are empowered to make certain decisions and changes in their work. Workers who are close to their work and have the best knowledge of it, are better suited than management to make decisions. Methods Analysis -breaks down the job into a sequence of tasks and elements and improves it. Basic procedure: 1. identify job and facts about all equ used 2. discuss job with operator and supervisor 3. analyze present method 4. question present method and propose a new method. Motion Study Systematic study of the human motions used to perform a task. Purpose is to eliminate unnecessary motions for max efficiency. Working Conditions -government standards apply physical factors ie. Temperature, illumination, work breaks, safety, ergonomics.. have an impact on the productivity of a worker.  Work breaks- frequency, length and timing of breaks can have significant impact on productivity and quality of output.  Safety-accidents are exp- employer p.o.v. workers cannot be motivated if they feel they are in physical danger. #1reason for accidents= carelessness.  The enactment of Occupational and Safety regulations emphasizes the importance of safety considerations in work system design. It provides specific safety regulations with inspectors to see that they are adhered to. Ergonomics  Fitting the job to the worker‘s capabilities.  Relates to the design of equ work methods and work space to remove awkward reaching and bending heavy lifting and endless repetition of motions. WORKER MEASUREMENT/time study -determining how long it should take to do a job. Time standard- the amount of time it should take a worker to complete a task.  Stopwatch time study- used to develop a standard time for a job based on observations of one worker taken over a number of cycles. Then its applied to all other workers who perform same job.  Standard time- normal time is the length of time a worker should take to perform a job if there are no delays or rest breaks. Standard time= normal time* allowance time for rest and delay factors Limitations of stopwatch time study - only jobs that can be observed can be studied. This eliminates most managerial and creative jobs. The cost of the study rules out its use for irregular operations and infrequent occurring jobs. It also disrupts normal work routine, and workers resent it. Predetermined element times -published data based on extensive research on element times. - to use this method must divide jo into its basic elements and then refer to the appropriate table of data to get the time for that element. Then all times are added up to get a total. -high level of skill is required to generate a predetermined element time. -tables include: eye travel, leg and foot motions… Work sampling Is a technique for estimating the proportion of time that a worker spends on each activity or is idle. -does not require timing an activity. Insteadm an observer makes brief observations of a worker at random intervals and notes than nature of the activity. Ie. Secretary types and files. The resulting data are counts of the number of times each activity or idle time was observed. -used for non-repetitive jobs -establishes % of time worker does specific activity. COMPENSATION 2 basic approaches for compensating employees- time-based pay and output-based pay. Time-based pay-aka hourly pay -why do so many jobs use this instead of output based pay? Not piece rate. May be impossible to measure output. Quality is not quantity ie healthcare. Output-based pay- compensates employees on the amount of output they produce-performance. -lots of pressure -minimum wage makes it somewhat impractical to use output-based pay. Group bonus plans Stress sharing productivity gains with employees Gainsharing-reward employees for output and for reductions in costs Ch.9- Management of Quality 9/27/2011 11:52:00 AM Quality control- monitoring, testing and correcting quality problems after they occur Quality Assurance- providing confidence that a product‘s quality will be good by preventing defects before they occur. Continuous improvement- never-ending improvements to key processes as part of total quality management. Quality of goods The dimensions of quality good includes:  Performance, aesthetics, special features, safety, reliability, durability, perceived quality, service after sale, and latent. Service Quality  Tangible-the physical appearance of facility, equipment, personnel, and communication materials.  Convenience, responsiveness, time, assurance, courtesy. Determinants of quality  A products quality is determined during: design, process design, & production. o quality is what the customer requires. Quality function deployment should be used to translate the customer requirements into technical attributes f the product and their target values. o During production, conformance to design specifications refers to the degree to which the produced goods or services conform to specifications of designers. Factors affecting this is ie. Skills and training of operators, taking corrective actions. Cost of Quality 1. internal failure costs- discovered during production  incorrect machinery settings, defective material, faulty equipment.  Cost of internal failures include lost production time, possible equ damage, and possible worker injury. 2. external failure costs- discovered after delivery to customer  defective products that are sold.  Costs include warranty work, handling of complaints, replacements, liability payments to customers or discounts, loss of customer goodwill. 3. appraisal costs  relate to inspection, testing, and other activities intended to uncover defective products. They include the cost of inspectors, testing, test equipment and labs. 4. prevention costs- to prevent defects form occurring  costs- planning and administration, working with vendors, standard operating procedures, and training. -Internal and external failure costs represent costs related to poor quality, whereas appraisal and prevention costs represent investments fir achieving good quality. Ie spending $1 on prevention might save $5 on fixing failures. Quality of the source- every employee Is responsible for inspecting their own work. Zero defects- philosophy that any level of defects is too high. Management must install programs that help the organization more toward 0 defects. (according to P. Crosby) IOS 9001-the international standard for quality management system, critical to international business.  Purpose- to promote worldwide standards that will improve operating efficiency and productivity and reduce costs.  This standards is critical for countries doing business internationally, esp in Europe.  A company wanting to be certified must document its processes and procedures, and have an assessment.  Over 1 million companies are registered. Hazard analysis critical control point HACCP is a quality management system similar to ISO 9001 designed for food processors. -originated when pilsbury company needed to design and manufacture food for the NASA space mission. -meet exporters to other countries need to have HACCP certification. - Deals with food safety. -first HACCP team inspects various construction and sanitary aspects in the plant, equ and personnel. Ie. Land should have good drainage, no garbage or odor, building should have easy to clean walls, floors.. etc READ pg. 297 Canada Awards for Excellence (CAE) and Total Quality Management  CAE recognizes outstanding quality achievement by Canadian organizations.  They developed a set of criteria for business excellence. The main categories are: o 1. Leadership and governance o 2. Planning and environmental sustainability o 3. Customer/ citizen / client focus o 4. People focus and healthy workplace o 5. Process management o supplier/ partner focus  to make the implementation of the quality management system easier for organizations NQI (national quality institute) has divided the implementation into 4 stages: o 1. Foundation  developing mission statement, defining customers, planning training in management principles and practices, and performing an assessment of the above activities. o 2. Transformation  strategic planning.; identifying customer needs; HR planning, identifying, documenting, and improving key processes; and o 3. Role model  at level 3 CAE, certification, the organization demonstrates shared commitment; performs periodic planning, sets priorities, and communicates performance measures customer satisfaction and receives feedback; involves employees in health and safety… Also, all activities are continuously improved. These activities start after an o 4. World class  requirements build on the other levels, and the organization demonstrates that it has achieved good to excellent overall results and at least three years of positive trends from the improvement efforts. Total Quality Management (TQM)  An approach to quality management that involves everyone in an
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