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Learn about the process of transforming concepts into finished products or services, including production processes, data mining and sharing, facility location and layout, material requirements planning, just-in-time manufacturing, tools for operations management, new technologies, supply chain management, and quality assurance.
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Managing Processes Introduction to Business
Operations Management Operations management is responsible for all the activities involved in transforming a concept into a finished product or service
Production Processes Operations management includes decisions about the way in which production will proceed. Common production processes include: • Project-based • Batch • Mass • Continuous production
Data Mining, Warehousing, and Sharing Data mining is the practice of automatically searching large stores of data to discover patterns and trends that go beyond simple analysis. Data warehousing is the electronic storage of a large amount of data by a business. Data sharing is the ability to share the same data resource with multiple applications or users.
Production Planning Depending on the product being manufactured, operations planning needs to decide: • Where the facility will be located • How the facility will be organized • What materials are needed for production • How the various activities that go into the production process will be scheduled
Considerations for Facility Location • Proximity to customers, suppliers, and skilled labor • Environmental regulations • Financial incentives offered by state and local development authorities • Quality-of-life considerations • Potential for future expansion
Facility Layout The layout of a facility is most often determined by the product being manufactured. Types of layouts • Process: arrange equipment according to its function. • Product: a series of workstations at which already-made parts are assembled. • Cellular: each cell is designed for a specific process, part, or a complete product. • Fixed position: large products stay in place and workers and equipment go to them.
Practice Question What would be the best facility layout and production process to produce candles? Why?
Material-requirements planning (MRP) Material-requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. MRP systems meets the following objectives simultaneously: • Ensure materials are available for production. • Ensure products are available for delivery to customers. • Maintain the lowest possible material and product levels in store. • Plan manufacturing activities, delivery schedules, and purchasing activities.
Just-in-time (JIT) manufacturing Strategy companies employ to increase efficiency and decrease waste by receiving goods only when they are needed. Operations managers must accurately forecast the need for materials, since even the slightest deviation can result in a slowdown of production.
Tools of Operations Managers Three tools that are used by operations managers to ensure that projects and tasks are completed on time are: • Gantt charts • PERT • Critical path method (CPM)
Program Evaluation and Review Technique (PERT) • For complex schedules with interdependent steps • Analyzes the tasks involved in completing a given project, especially the time needed to complete each task and to identify the minimum time needed to complete the total project • Developed primarily to simplify the planning and scheduling of large and complex projects • Organizes activities in the most efficient sequence
Critical Path Method CPM calculates the longest path of planned activities (expressed in time) to logical end points or to the end of the project, and the earliest and latest that each activity can start and finish without causing a delay to determine which activities are “critical” and which can be delayed without extending the overall project duration
New Technologies Companies can manufacture products faster and more efficiently using new technologies: • CAD (computer-aided design) • CAM (computer-aided manufacturing) • CIM (computer-integrated manufacturing) • Flexible manufacturing • 3D printing
Supply Chain Management The management activities that maximize customer value and allow the company to gain a competitive advantage. Supply chain activities include: product development, sourcing of materials, actual production, and transportation logistics.
Quality Assurance In order to ensure that their products, goods, and services meet consumer quality standards, companies employ quality-control techniques such as: • SPC • Benchmarking • Lean manufacturing • Six Sigma They can also seek certification through national and international quality-assurance organizations.
Statistical Process Control (SPC) Method of quality control that uses statistical or mathematical methods to monitor and control a process. Goal: to ensure that production operates at its full potential. “Full potential” indicates the point where the process produces as much conforming product as possible with a minimum of defective parts, rework, or scrap.
Benchmarking Comparing business processes and performance metrics to industry bests and best practices from other companies. Metrics compared: quality, time, and cost. Management identifies the best firms in their industry—or in another industry where similar processes exist—and compares the results and processes of those studied (the “targets”) to one’s own results and processes.
Lean Manufacturing Lean manufacturing focuses on eliminating waste from the manufacturing process using the following goals and assumptions: • Continuous improvement • Respect for people • Long-term approach to process improvement • The right process will produce the right results • Add value to the organization by developing your people and partners • Continuously solving root problems
Six Sigma Six Sigma focuses on eliminating defects and reducing variability. • A focus on measurable and quantifiable financial returns • An increased emphasis on strong and passionate management leadership and support • A commitment to making decisions on the basis of verifiable data and statistical methods
Quick Review • What is operations management? • What are the 4 categories of production processes? • How do organizations support operations by mining, warehousing, and sharing data? • What are the components involved in planning and scheduling the production process? • What existing and emerging technologies are changing the way goods are produced and delivered? • Why are supply chain management and logistics important? • What common management techniques are used to ensure high-quality goods and services?
