MGTA02 - Ch 1 - 6.docx

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Rotman Commerce
William Mc Conkey

Chapter 1 Producing Goods and ServicesService operations production activities that yield tangible and intangible service products example store clerk instructors and bus driversGoods production production activities that yield tangible products example newspapers buses and booksWhat Does Production Mean TodayProduction also means servicesService sector managers focus less on equipment and technology than on the human element in operationsSuccess or failure may depend on providercustomer contactA key difference between production and service operations is the customers involvement in the latterCustomers are increasingly involved in all kinds of production because electronic communications are key components in winning and keeping customers in a range of competitive industriesThe growth of global operationsGlobal competition has reshaped production into a faster paced more complex business activityCompanies are advancing by using high tech machines computers and clean roomsCompanies are becoming much more environmentally friendlyFirms today face constant changeNew technologies allow machines to run more cleanly quickly and safelyModern factories with online manufacturing are able to communicate with other machines in the company via an intranet and with other companies machines without human helpSo called smart equipment stores performance data that become available at desktops around the worldDesigners can click on machine date simulate machine action and evaluate performanceWith aid from the internet producers are including their production activities with faroff suppliers and customers Creating Value Through Production Products provide businesses with both economic results profits wages goods purchased from other countries and noneconomic results new technology innovations pollutionOperations production management the systematic direction and control of the processes that transform resources into finished goodsProduction managers managers responsible for ensuring that operations processes create value and provide benefits They must bring raw materials equipment and labour together under a production plan that effectively uses all the resources availableThey must control costs quality levels inventory and plant and equipmentFarmers are considered to be production managersOperation processesOperation process a set of methods and technologies used in the production of a good or serviceGoods can be described according to the kind of transformation technology they require or according to whether their operations process combines resources or breaks them downServices can described according to the extent of customer contact requiredGoods Producing ProcessesAll goods manufacturing process can be classified into two waysFirst way is type of transformation technology that transforms raw materials into finished goodsSecond way is by the analytic or synthetic nature of the transformation processTypes of transformation technology1Chemical processes raw materials are chemically altered example steel aluminum2Fabrication processes mechanically alter the basic shape or form of a product example woodworking3Assembly processes put together various components example electronics appliances cars4Transport processes goods acquire place utility by being moved from one location to another5Clerical processes transform information Combination of employee absences and machine breakdowns are put into a productivity report Analytic vs Synthetic processesA second way of classifying production processes is by the way in which resources are converted into finished goods1Analytic process any production process in which resources are broken down into components such as aluminum 2Synthetic process any production process in which resources are combined such as paintService Producing ProcessesServices are classified according to the extent of customer contactThe two processes are high contact and low contactHigh contact system a system in which the service cannot be provided without the customer being physically in the systemExample transit systemsTransit managers must worry about the cleanliness and appearance of the buses and stationsLow contact system a system in which the service can be provided without the customer being physically in the system Example lawn care servicesCustomers are not in contact while the service is being provided Differences Between Service and Manufacturing OperationsIn goods production the raw materialsinputs are not steel or glassIn service production the raw materialsinputs are people who chose among sellers because they have either unsatisfied needs or possessions in which they require some form of care or alteration In service operation the outputs are people with needs met and possessions servicedFocus on PerformanceGoods are produced services are performedCustomer oriented performance is a key factor in measuring the effectiveness of a service companyWal mart has speedy delivery and its keen customer focus emphasizes avoiding unnecessary inventories and getting fast response from suppliers The focus of service operation is more complex than good productionService operations feature a unique link between production and consumptionAlso a unique link between process and outcomeServices are more intangible and more customized and less storableQuality considerations must be defined and managed differently in the service sector than goods productionFocus on Process and OutcomeThe products offered by most service operations are combinations of goods and servicesServices must focus on both the transformation process and its outcomeExample both on making the pizza and on delivering it to the customerService operations require different skills from manufacturing operationsFocus on Service CharacteristicsService products are characterized by three key qualities intangibility customization and unstorability1Intangibility an important value is the intangible value that the customer experiences in the form of pleasure satisfaction or feeling of safety Some services provide tangible elements as well2Customization when you visit a doctor you expect to be treated from your symptoms You expect the services to be designed for your needs3Unstorability services cannot be produced ahead of time and then stored If a service is not used when available it is usually wasted Services are characterized by a high degree of unstorabilityFocus on the Customer Service LinkThe growth of ecommerce has introduced a virtual presenceConsumers interact electronically with seller collecting information on product features delivery availability They have aroundtheclock access to informationInternet technology also enables firms to build relationships with industrial customers
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