Research and development
- Work directed toward the innovation, introduction, and improvement of products and
In the Survey of Innovation conducted by Stats Can, respondents indicated that the three most
important objectives of innovation are to improve product quality, to increase production
capacity, and to extend product range.
It continues to elaborate by stating that, through innovation, new products are introduced in the
market, new production processes are developed and introduced, and organizational changes
As you may note, four of the top 10 spenders were organizations that are part of the
communications/telecommunications equipment and aerospace industries.
Over the previous two decades, foreign manufacturers captured huge chunks of the North
American market for basic products such as steel, cement, machinery, and farm equipment
using the latest in production techniques.
Canadian manufacturers have emphasized the following:
- Focusing on customers
- Maintaining close relationships with suppliers and other companies to satisfy customer
- Practising continuous improvement
- Focusing on quality
- Saving on costs through site selection
- Relying on the Internet to unite companies
- Adopting production techniques such as enterprise resource planning, computer
integrated manufacturing, flexible manufacturing, and lean manufacturing
Manufacturers perform 75% of private-sector R&D.
Production - The creation of finished goods and services using the factors of production: land, labour,
capital, entrepreneurship, and knowledge
- Has historically been associated with manufacturing, but the nature of business has
changed significantly in the last 20 years or so
The service sector has grown dramatically, and the manufacturing sector has not grown much at
- The term used to describe all of the activities that managers do to help their firms create
The term production often has been replaced by operations to reflect both goods and services
- A specialized area in management that converts or transforms resources (including
human resources into goods and services)
It includes inventory management, quality control, production scheduling, follow-up services,
and more. Another example of the growing importance of services is in the area of corporate
Operations management face issues such as facility location, facility layout, and quality control.
- The process of selecting a geographic location for a company’s operations
- In keeping with the need to focus on customers, one strategy in facility location is to find
a site that makes it easy for consumers to access the company’s service and to maintain
a dialogue about their needs
One of the most common reasons for a business move is the availability of inexpensive labour
or the right kind of skilled labour. Low-cost labour is one reason why some firms are moving to
Malaysia, Mexico, and other countries with low wage rates.
Inexpensive resources are another major reason for moving production facilities. Companies
usually need water, electricity, wood, coal, and other basic resources.
Another way to work closely with suppliers to satisfy your customers’ needs is to locate your
production facilities near supplier facilities. That cuts the cost of distribution and makes
communication easier. Businesses also study the quality of life for workers and managers. Facility location has become
a critical issue in operations management.
Outsourcing goods and services has become a hot practice in North America. Software
development, call-centre jobs, and back-office jobs have been moving to developing countries
for some time.
According to the Canadian Vehicle Manufacturers’Association, the auto sector is Canada’s
biggest contributor to manufacturing GDP and its largest manufacturing employer, employing
one out of every seven Canadians.
To potential investors, Canada offers cost advantages due to our public Medicare program and,
until a few years ago, a low currency. A major goal of the Canadian Automotive Partnership
Council (CAPC) is to improve the future of the assembly industry. The Council has
acknowledged tax cuts and provincial government support for investment in environmental
research as important to the survival of this industry in Canada.
- The physical arrangement of resources (including people) in the production process
- The idea is to have offices, machines, storage areas, and other items in the best
possible position to enable workers to produce to produce goods and provide services
Services are becoming more and more customer oriented in how they design their stores and
their Internet services.
Many companies are moving from an assembly line layout, in which workers do only a few tasks
at a time, to a modular layout, in which teams of workers combine to produce more complex
units of the final product.
A process layout is one in which similar equipment and functions are grouped together. When
working on a major project, such as bridge or an airplane, companies use a fixed-position layout
that allows workers to congregate around the product to be completed.
- Consistently producing what the customer wants while reducing errors before and after
delivery to the customer
Products were completed and then tested. This resulted in several problems: 1. There was a need to inspect other people’s work.
2. If an error was found, someone would have to correct the mistake or scarp the product.
3. If the customer found the mistake, he or she might be dissatisfied and might even buy
from someone else thereafter.
Companies have turn to the use of modern quality control standard, such as six sigma.
Six sigma quality
- A quality measure that allows only 3.4 defects per million events
- Detects potential problems to prevent their occurance
Statistical quality control (SQC)
- The process that some managers use to continually monitor all phrases of the
production process to ensure that quality is being built into the product from the
Statistical process control (SPC)
- The process that taking statistical samples of product components at each stage of the
production process and plotting those results on a graph
The National Quality Institute (NQI) an independent, Canadian, not-for-profit organizations, is
the leading authority in Canada on workplace excellence based on quality system and healthy
workplace criteria. The Canada Awards for Excellence (CAE) are presented annually to private,
public, and not-for-profit organizations that have displayed outstanding performance in the areas
of quality and healthy organizations.
The International Organization for Standardization (ISO) is a worldwide federation of national
standards bodies from more than 140 countries that set the global measures for the quality of
individual products. ISO is a non-governmental organization established in 1974 to promote the
development of world standards to facilitate the international exchange of goods and services.
- The common name given to quality management and assurance standards
- The standards require that a company must determine what customer needs are,
including regulatory and legal requirements
The European Union is demanding that companies that want to do business w