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Chapter 16

Chapter 16 – Producing World-Class Goods and Services.docx

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Rita Cossa

Chapter 16 – Producing World-Class Goods and Services Canada today We are one of the largest producers of forest products in the world. Research and development Research and development (R&D): work directed toward the innovation, introduction and improvement of products and processes. Technology is know-how, knowing how to make and use the tools for the job. An innovation is a new product or process that can be purchased – an idea may lead to an invention, but it cannot be called an innovation until it is commercialized. The 3 most important objectives of innovation are to improve product quality, increase production capacity and extend product range. Canada’s evolving manufacturing and services base What Canadian manufacturers have done to regain a competitive edge:  Focusing on customers  Maintaining close relationships with suppliers and other companies to satisfy customer needs  Practicing 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 Manufacturing is not only important in employing Canadians (7%), it is critical to our economy, as manufacturers perform 75% of private sector R&D. From production to operations management Production: the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship and knowledge. Production management: the term used to describe all of the activities that managers do to help their firms create goods. The term production often has been replaced by operations to reflect both goods and services production. Operations management: a specialized area in management that converts or transforms resources (including human resources) into goods and services.Manufacturers turn to a customer orientation and services for profit Many manufacturers have spent an enormous amount of money on productivity and quality initiatives. Operations management has become much more focused on services, because by redirecting corporate thinking towards satisfying customer needs better than the competition, they retain their customers. Operations management planning Operations management planning involves many of the same issues in both the service and manufacturing sectors. These issues include facility location, facility layout, and quality control. Facility location Facility location: the process of selecting a geographic location for a company’s operations. Facility location for manufacturers One of the most common reasons for a business move is the availability of inexpensive labor or the right kind of skilled labor. Inexpensive resources are another major reason for moving production facilities. Reducing time to market is another decision-making factor. Canada’s auto industry Auto sector is Canada’s biggest contributor to manufacturing GDP. Facility layout Facility layout: the physical arrangement of resources (including people) in the production process. Facility layout depends greatly on the processes that are to be performed. For services, the layout is usually designed to help the consumer find and buy things. 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. A fixed position layout allows workers to congregate around the product to be completed. Quality control Quality: consistently producing what the customer wants, while reducing errors before and after delivery to the customer.Before, quality control was often done by a quality control department at the end of the production line. Products were completed and then tested. This resulted in several problems: 1. There was a need to inspect other people’s work. This required extra people and resources. 2. If an error was found, someone would have to correct the mistake or scrap the product, which was costly. 3. If the customer found the mistake, he or she might be dissatisfied and might even buy from someone else thereafter. Quality control should be part of the operations management planning process rather than simply an end-of-the-line inspection. Six sigma quality: a quality measure that allows only 3.4 defects per million events, it detects potential problems to prevent their occurrence. Statistical quality control (SQC): the process that some managers use to continually monitor all phases of the production process to ensure that quality is being built into the product from the beginning. Statistical process control (SPC): the process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards. SQC and SPC save companies much time and many dollars. Some companies call such an approach to quality control the Deming cycle. The cycle steps are: Plan, Do, Check, Act (PDCA). Deming’s approach, including implementing standards, was used for many years before the International Organization for Standardization (ISO). Quality award: the Canada awards for excellence 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 workplace. ISO 9000 and ISO 14000 standards The 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. It is a non- governmental organization
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