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Management (MGT)

Chapter 1 – Producing Goods and Services Service Operations – Production activities that yield intangible services Goods Production – Production activities that yield tangible products Production – Making of physical goods, now also services The Growth of Global Operations - Reshaped production into a faster-paced, more complex business activity - Production operations have become more environmentally friendly - Firms face constant change o New technologies to run more cleanly, quickly and safely Creating Value through Production - Products provide o Economic results: Profits, wages, goods purchased from other companies o Non-Economic results: New technology, innovations, pollution - Operations (Production) Management o Systematic direction and control of the processes that transform resources into finished goods - Production Managers o Ensuring that operations processes create value and provide benefits o Ultimately responsible for creating utility for customers o Bring raw materials, equipment, and labour together under a production plan that effectively uses all the resources available in the production facility o Control work to produce demanded and control costs, quality, inventory, equipment Operations Processes - Set of methods and technologies used in the production of a good or a service Goods-Producing Process - Whether their operations process combines resources or breaks them into component parts - All good manufacturing processes can be classified in two ways: 1) Type of transformation technology that transforms raw materials into finished goods  Chemical Processes: raw materials are chemically altered (eg. Steel)  Fabrication Processes: mechanically alter the basic shape or form of a product. (eg. Metal forming, woodworking, textile)  Assembly Processes: put together various components (eg. Electronics)  Transport Processes: goods acquire place utility by being moved from one location to another (eg. Trucks)  Clerical Processes: transform information (eg. Combining data, compiling inventory) 2) Analytic or synthetic nature of the transformation process  Analytic Process: any production process in which resources are broken down  Synthetic Process: any production process in which resources are combined Service-Providing Processes - Classified according to the extent of customer contact - High-Contact Processes: service cannot be provided without the customer being physically in the system (eg. Transit system) - Low-Contact Processes: service can be provided without the customer being physically in the system (eg. Lawn care) Differences between Service and Manufacturing Operations - Both transform raw materials into finished products - Service inputs are people who choose among sellers because they have either unsatisfied needs or possessions for which they require care or alteration Focus on Performance - Goods produced , services performed - Unique link between production and consumption – between process and outcome - Services are intangible and more customized and less storable than goods - Quality considerations must be defined and managed Focus on Process and Outcome - Service operations are combinations of goods and services - Focus on both transformation process and its outcome (eg. Pizza and delivery) Focus on Service Characteristics - Intangibility - Customization - Unstorability Focus on the Customer-Service Link - Customers have a unique ability to affect that process Focus on Service Quality Considerations - Consumers use different criteria to judge services and goods - Quality of work and quality of service are not necessarily synonymous o eg. Flawlessly repaired car but picking up later than promised Operations Planning - Business plans and Forecasts o Estimates of future demand for both new and existing products - Long-Range Operations plan o Capacity/Location/Layout/Quality/Methods Planning - Operations Schedule o Master production schedule/detailed schedules - Operations Control o Quality Control/Materials Management) - Output to Customers Capacity Planning - Amount of a good that a firm can produce under normal working conditions - Number of employees and size of its facility, Account both current and future capacity - Goods: Ensuring that a manufacturing firm’s capacity slightly exceeds normal demand - Services: o Low-Contact: maintaining inventory allows managers to set capacity at average demand o High-Contact: managers must plan capacity to meet peak demand Location Planning - Affects its production costs and flexibility - Goods: proximity to raw materials, markets, availability of labour, energy and transportation costs, regulations and taxes, community living conditions - Services: o Low-Contact: have options to be near suppliers, labour, customers, transportation o High-Contact: more restricted to be near customers part of the system Layout Planning - Layout of machinery, equipment and supplies determines whether a company can respond quickly and efficiently to customer requests for more and different products or finds itself unable to match competitors’ production speed or convenience of service - Goods: o Types of Spaces: 1) Productive facilities: workstations and equipment for transforming raw materials 2) Non-Productive facilities: storage and maintenance areas 3) Support facilities: offices, restrooms, parking lots etc. o Alternatives for layouts:  Process layout – way of organizing production activities such that equipment and people are grouped together according to their function  Cellular layout – used to produce foods when families of products can follow similar flow paths  Product layout – way of organizing production activities such that equipment and people are set up to produce only one type of good  Assembly line – type of product layout in which a partially finished product moves through a plant on a conveyer belt or other equipment - Services: o Low-contact: arranged to enhance the production of the service (ie. Mailing) o High-contact: arranged to meet customer needs and expectations (ie. Piccadilly Cafeterias) Quality Planning - Ensuring that goods produced meet firm’s quality standards Methods Planning - Clearly identify every production step and specific methods for performing them - Method Improvement: Reduce waste, inefficiency and poor performance - Services Flow Analysis – shows the process flows that are necessary to provide a service to customers; it allows managers to determine which processes are necessary Operations Scheduling - Develop timetables for acquiring resources for production - Goods: o Master Production Schedule – shows which products will be produced, when production will occur, and what resources will be used during specified time periods - Services: o Low-contact: work scheduling may be based on desired completion dates or on the time of order arrivals o High-contact: work scheduling may not be possible but must accommodate the customers - Tools: o Gantt Chart – production schedule diagramming the steps in a project and specifying the time required o PERT Chart – Program Evaluation and Review Technique – production schedule specifying the sequence and critical path for performing the steps in a project Operation Control - Managers monitor production performance by comparing results with plans and schedules - Follow-up: checking to ensure that production decisions are being implemented - Ensure that schedules are met and that production goals are fulfilled in quality and quantity Materials Management - Planning, organizing, and controlling the slow of materials from purchase through distribution of goods - Standardization – using standard and uniform components in the production process - Major areas: 1) Transportation – transporting resources to the company and finished goods to buyers 2) Warehousing – storage of both incoming materials for production and finished goods for physical distribution to customers 3) Inventory Control – materials management, receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods 4) Purchasing – acquisition of all the raw materials and services that needed to produce its products Purchasing Process - Holding costs – costs of keeping extra supplies or inventory on hand - Lead Times – gap between the customer’s placement of order and the seller’s shipment of merchandise - Supplier Selection – finding and determining suppliers to buy from Tools for Operations Process Control - Worker training - Just-in-Time (JIT) Production System – method of inventory control in which materials are acquired and put into production just as they are needed Chapter 2 – Increasing Productivity and Quality The Productivity – Quality Connection - Productivity – measure of efficiency that compares how much is produced with the resources used to produce it - Quality – product’s fitness for use in terms of offering the features that consumers want Responding to the Productivity Challenge - International and domestic ramifications - Four factors: customers, quality, productivity and profits Measuring Productivity - Labour productivity – o OECD – Organization for Economic Co-operation and Development Domestic Productivity - Improve its ability to make something out of its existing resources can increase the wealth of all its inhabitants - ↑ productivity → ↑ wages → ↑ profits → ↑investors → ↑customers (stable price) Manufacturing vs. Service Productivity - Baumol’s Disease – service focused more on hands-on activity that machines couldn’t replace, it would be more difficult to increase productivity - Use of modern information technology (eg. Automated check-in kiosks) Industry Productivity - Industries within these sectors differ vastly in terms of productivity o eg. Agriculture in Canada die to more sophisticated technology and superior natural resources - labour unions need to take it into account in negotiating contracts o highly productive industries can give raises more easily than less productive industries Company Productivity - high productivity gives a competitive edge b/c its costs are lower = lower prices or greater profits Total Quality Management Managing for Quality - Total Quality Management (TQM or Quality Assurance) o Concept that emphasizes that no defects are tolerable and that all employees are responsible for maintaining quality standards Planning for Quality - Performance Quality – overall degree of quality ; how well the features of a product meet consumers’ needs and how well the product performs - Quality Reliability – consistency of quality from unit to unit of a product Organizing for Quality - Producing quality goods and services requires effort from all parts of the organization Leading for Quality - Quality Ownership – concept that quality belongs to each employee who creates or destroys it in producing a good or service; idea that all workers must take responsibility for producing a quality product Controlling for Quality - Establish specific quality standards and measurements Process Re-engineering - Redesigning of business processes to improve performance, quality and productivity - The process: 1) Statement of benefits envisioned for customers 2) Identify business activity that will be changed 3) Evaluate information and human resources to see if they can meet the requirements for change 4) Diagnose current process to identify its strengths and weaknesses 5) Create the new process design 6) Implement the new design Adding Value through Supply Chain - Supply Chain: Flow of information, materials, and services that starts with raw materials suppliers and continues through other stages in the operations process until the product reaches the end customer The Supply Chain Strategy - Members of the chain working as a coordinated unit will gain competitive advantage - Each company looks out for its personal interests, it works closely with suppliers and customers throughout the chain; focus on the entire chain or relationships rather than on just the next stage in the chain Supply Chain Management (SCM) - Principle of looking at the chain as a whole to improve the overall flow through the system - Customers ultimately get better value, SCM gains competitive advantage for each supply-chain management - Reduce unwanted inventories, avoids delays, and cuts supply times, materials move faster to business customers and individual consumers - SCM means faster delivery and lower costs than customers could get if each member acted only according to its own operation requirements Chapter 3 – Managing Information Systems and Communication Technology Information Management - Information managers: responsible for the activities needed to generate, analyze, and disseminate information that a company needs to make good decisions - Information management: internal operation that arranges the firm’s information resources to support business performance and outcomes - Data: raw facts and figures - Information: meaningful, useful interpretation of data - Information System (IS): organized method of transforming data into information that can be used for decision making - Electronic Information Technologies (EIT): IS applications based on telecommunications technologies - Groupware: system that allows two or more individuals to communicate electronically between desktop PCs Data Communication Networks - Global networks that permit users to send electronic messages quickly and economically - Internet: gigantic networks that serves millions of computers, offers information on business, science, and government, and provides communication flows among more than 170,000 separate networks around the world - Internet Service Provider (ISP): commercial firm that maintains a permanent connection to the internet and sells temporary connections to subscribers - World Wide Web: system with universally accepted standards for storing, retrieving, formatting, and displaying information on the internet - Web Servers: dedicated workstations – large computers – that are customized for managing, maintaining, and supporting websites - Browser: software that enables a user to access information on the web - Directories: features that help people find the content they want in the web. The user types in keywords and the directory retrieves a list of websites with titles containing those words. - Search Engine: software for searching webpages that does not pre-classify them into a directory - Intranet: company’s private network that is accessible only to employees via entry through electronic firewalls - Firewall: hard/software security systems that ensure that internal computer systems are not accessible to outsiders - Extranet: network that allows outsiders limited access to a firm’s internal information system - Mass-Customization: producing large volumes of products or services, but giving customers the choice of features and options they want - Enterprise Resource Planning: Large information systems for integrating activities of a company’s business units Type of Information System - Knowledge Workers: employees whose jobs involve the use of information and knowledge as the raw materials of their work - Transaction Processing Systems (TPS): applications of information processing for basic day-to-day business transactions - System Operations Personnel: people who run a company’s computer equipment - Computer-Aided Design (CAD): computer analysis and graphics programs that are used to create new products - Computer-Aided Manufacturing (CAM): computer systems used to design and control all the equipment and tools for producing goods - Management Information Systems (MIS): systems that support an organization’s managers by providing daily reports, schedules, plans and budgets - Decision Support System (DSS): computer systems used to help managers consider alternatives when making decisions on complicated problems - Executive Support System (ESS): quick-reference, easy-access application of information systems specially designed for upper-level management - Artificial Intelligence (AI): construction and/or programming of computers to imitate human thought processes - Robotics: use of computer-controlled machines that perform production tasks - Expert System: form of artificial intelligence in which a program draws on the rules an expert in a given field has laid out to arrive at a solution for a problem Chapter 4 – Accounting Issues What is accounting and who uses it? - Accounting: comprehensive system for collecting, analyzing and communicating financial information - Bookkeeping: recording accounting transactions - Accounting Information System (AIS) – organized procedure for identifying, measuring, recording and retaining financial information so that it can be used in accounting statements and management reports Users of Accounting Information - Business Managers: set goals, develop plans, set budgets, and evaluate future prospects - Employees and Unions: to get paid and to plan for
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