Chapter 13 Managing Service and Manufacturing Operations Effective

Chapter 13 Managing Service and Manufacturing Operations Effective Management, by Williams South-Western College Publishing Copyright © 2002

2 What Would You Do? Producing a Daily Paper at Newsday 4 How can late-breaking stories be included in the paper? 4 How can quality and productivity be improved? 4 In terms of production, should they focus on efficiency or flexibility? Effective Management, by Williams South-Western College Publishing Copyright © 2002

3 Learning Objectives Managing for Productivity and Quality After discussing this section, you should be able to: ¬ discuss the kinds of productivity and their importance in managing operations. explain the role that quality plays in managing operations. Effective Management, by Williams South-Western College Publishing Copyright © 2002

4 Productivity Why Productivity Matters Kinds of Productivity Effective Management, by Williams South-Western College Publishing Copyright © 2002

5 Why Productivity Matters Higher Productivity Higher Standard of Living Lower Costs Lower Prices Higher Profits Higher Market Share Effective Management, by Williams South-Western College Publishing Copyright © 2002

6 Kinds of Productivity 4 Partial productivity = Outputs Single Kind of Input 4 Multifactor productivity = Outputs Labor + Capital + Materials + Energy Effective Management, by Williams South-Western College Publishing Copyright © 2002

7 Quality-Related Product Characteristics Quality-Related Service Characteristics ISO 9000 Malcolm Baldrige National Quality Award Total Quality Management Effective Management, by Williams South-Western College Publishing Copyright © 2002

Quality-Related Product Characteristics 8 4 Reliability Tthe average time between breakdowns 4 Serviceability Tthe ease with which a product is fixed 4 Durability Tmean time to failure Effective Management, by Williams South-Western College Publishing Copyright © 2002

9 Quality-Related Product Characteristics Reliability Tangibles Responsiveness Assurance Empathy Effective Management, by Williams South-Western College Publishing Copyright © 2002

10 ISO 9000 4 A series of five international standards 4 Certifies quality processes 4 Managers often want this to improve customer satisfaction Effective Management, by Williams South-Western College Publishing Copyright © 2002

Malcolm Baldrige National Quality Award 11 4 Given to U. S. companies 4 Recognizes achievement in quality 4 Winners have been financially successful Effective Management, by Williams South-Western College Publishing Copyright © 2002

12 Total Quality Management Customer Focus and Satisfaction Continuous Improvement Teamwork Effective Management, by Williams South-Western College Publishing Copyright © 2002

13 Learning Objectives Managing Operations After discussing this section, you should be able to: ® explain the essentials of managing a service business. ¯ describe the different kinds of manufacturing operations. ° describe why and how companies should manager inventory levels. Effective Management, by Williams South-Western College Publishing Copyright © 2002

14 Service Operations Service. Profit Chain Service Recovery and Empowerment Effective Management, by Williams South-Western College Publishing Copyright © 2002

15 Service-Profit Chain Internal Service Quality Employee Satisfaction Service Capability High Value Service Customer Satisfaction Customer Loyalty Profit and Growth Adapted From Figure 13. 2 Effective Management, by Williams South-Western College Publishing Copyright © 2002

Service Recovery and Empowerment 16 4 Service recovery is restoring customer satisfaction to strongly dissatisfied customers 4 Empowering workers is one way to speed up service recovery Effective Management, by Williams South-Western College Publishing Copyright © 2002

17 Manufacturing Operations Amount of Processing in Manufacturing Operations Flexibility of Manufacturing Operations Effective Management, by Williams South-Western College Publishing Copyright © 2002

Amount of Processing in Manufacturing Operations 18 4 Make-to-order operations Tmanufacturing doesn’t begin until an order is placed 4 Assemble-to-order operations Tused to create semi-customized products 4 Make-to-stock operations Tmanufacture standardized products Effective Management, by Williams South-Western College Publishing Copyright © 2002

Flexibility of Manufacturing Operations 19 Continuous- Line. Batch Job Project Flow Production Shops Manufacturing Production Least Flexible Adapted From Figure 13. 3 Most Flexible Effective Management, by Williams South-Western College Publishing Copyright © 2002

20 Inventory Types of Inventory Measuring Inventory Costs of Maintaining an Inventory Managing Inventory Effective Management, by Williams South-Western College Publishing Copyright © 2002

21 Types of Inventory Raw Materials Fabrication Vendors Component Parts Initial Assembly Retailers Field Warehouses Wholesalers Adapted From Figure 13. 4 Work-in. Progress Distribution Centers Final Assembly Finished Goods Effective Management, by Williams South-Western College Publishing Copyright © 2002

22 Measuring Inventory 4 Average aggregate inventory Tthe average overall inventory for a certain time period 4 Stockout Trunning out of inventory 4 Inventory turnover Tthe number of times a year that a company sells its average inventory Effective Management, by Williams South-Western College Publishing Copyright © 2002

Costs of Maintaining an Inventory 23 4 Ordering costs Tall associated costs with ordering goods 4 Setup costs Tchanging goods produced 4 Holding costs Tcarrying inventory 4 Stockout costs Trunning out of inventory Effective Management, by Williams South-Western College Publishing Copyright © 2002

Managing Inventory 24 Economic Order Quantity Just-in-Time Independent Demand Systems Dependent Demand Systems Kanban Materials Requirement Planning Effective Management, by Williams South-Western College Publishing Copyright © 2002

What Really Happened? 25 Producing a Daily Paper at Newsday 4 Reduce delays by reducing production problems 4 Moved up most closing times but extended it for sports 4 Used both JIT and MRP Effective Management, by Williams South-Western College Publishing Copyright © 2002