Chapters 11,12, 14,15,16,17,19,20
[Type the author name]
www.notesolution.com Chapter 11: Operations
Service Operations Production activities that yield tangible and intangible service
Goods Production production activities that yield tangible products
GE is an example of both because it invests in electronics and media.
Production creates four kinds of utility, satisfaction of wants and value:
1. Time utility producing items when consumers want it (decorations for Christmas)
2. Place utility available in convenient places
3. Ownership utility quality that people can take pleasure in possessing/consuming
4. Form utility requires raw materials to be transformed into something
Operations (previously production) Management is the systematic direction of the
processes that transform resources into goods and services. Production managers are
responsible for creating utility.
Operations Process is a set of methods and technologies used in the production, such as:
Good Producing Processes
Type of Transformation Technology
-Such as chemical processes to alter metals, fabrication of lumber into furniture,
assembly processes of car parts and electronics, transport processes by moving items, and
clerical processes by transferring information
Analytic vs. Synthetic Processes [Way of Transforming]
-The way resources are converted, whether analytically (breaking down the basic
resources into components such as extracting gold), or synthetically (combining resources to
make something, like paint).
Service Producing Processes
Classified by the extent of customer contact:
-The service cant be provided without the customer being physically in the system,
-Cleanliness is a big factor
-A system where service can be provided without the customer being there, like
cheque-processing centres and lawn care services, and auto repair shops
www.notesolution.com Operations are designed to support the business strategy. It is in those strategic areas that
the company must do really well called operations capability. (eg, Toyota is quality, FedEx
Toyota High quality standards for materials
Just-In-Time material flow for lean manufacturing
Specialized equipment for consistency
Operations personnel are experts on continuous
improvement of product, work methods, and materials
FedEx Customer automation: uses online tools to shorten shipping time
Wireless info system for package scanning and tracking
Maintains a company air force, weather centre, and ground
transportation for pickup and delivery with backup vehicles for
Each of the 30 automated distribution hubs processes up to 45,000
packages per hour for next-day deliveries
Differences between Service and Manufacturing Operations
Service operations have a unique link between production and consumption process and
outcome. They are more intangible, more customized, and less storable than most products.
Forecast estimate of future demand for both new and existing products
Capacity planning for goods usually implies that the amount of a good it can produce under
normal conditions is slightly Higher than normal demand.
Location Planning is influenced by the proximity to raw materials and markets. Skilled
workers, low wages, and good environment led Car Companies to place their manufacturing
Producing Goods layout must be planned for productive facilities, non-productive facilities
like storage, and support facilities like offices and cafeterias. Focusing on productive
Process Layouts a way of organizing production activities such that equipment
and people are grouped together according to function
Cellular Layouts a layout used to produce goods when families of products can
follow similar flow paths (ie an area to make the same family of pockets for shirts and coats)
Product Layout one type of product is produced ina f ixed sequence of steps
arranged by its production requirements (assembly lines) Lean Manufacturing
suppliers pre-assemble parts nto modules, then production workers combine modules to
make the product.
www.notesolution.com Others U-shaped Production Line machines placed in a U so workers can
access more than one easily, or Flexible Manufacturing System (FMS), which allows the
production of small batches of different goods by integrating sales info with factory
production with computer-controlled instructions.
Quality Planning (Chapter 12)
Goods: Begins when a manager documents the current method. A detailed process flow
chart is helpful for organizing information because it identifies the sequence of production
activities, movement of materials, and work performed at each stage. Then, it can be
analyzed to find wasteful activities and sources of inefficiencies. The final step is
Services: In low-contact, methods improvements are used.
Service Flow Analysis shows the process flows that are necessary to provide a service,
allowing managers to see which ones are required. Potential problems = fail points.
Managers must develop time tables for acquiring resources for production.
Master Production Schedule shows which products will be produced, when, and what
resources will be used during specified time periods. Short term detailed schedules manage
start and stop tiemes, and scheduled work assignments.
Gantt Charts diagram steps to be performed and specifies the time required to complete
each step (like Daniels implementation charts).
PERT Charts Program Evaluation and Review Technique; specifies the sequence and
critical parth for performing the steps
This requires production managers to monitor production performance by comparing
results with plans and schedules. Follow-up is essential checking to ensure that
production decisions are implemented.
Material cost accounts for 50-70% of total product costs, and this management process
involves planning organizing, and controlling the flow of materials from purchase through
distribution. This is also called Logistics.
-Purchasing (Many opt for the hand-to-mouth option, placing small orders
frequently. This makes the lead time faster, the time between customers order to delivery).
Tools for Operations Process Control