Chapter 15 Managing Service and Manufacturing Operations Management

2 What Would You Do? Producing a Daily Paper at Newsday 4 How can

3 Learning Objectives Managing for Productivity and Quality After discussing this section, you should

4 Productivity Why Productivity Matters Kinds of Productivity Management, by Williams South-Western College Publishing

5 Why Productivity Matters Higher Productivity Higher Standard of Living Lower Costs Lower Prices

6 Kinds of Productivity 4 Partial productivity = Outputs Single Kind of Input 4

7 Quality-Related Product Characteristics Quality-Related Service Characteristics ISO 9000 Malcolm Baldrige National Quality Award

Quality-Related Product Characteristics 8 4 Reliability Tthe average time between breakdowns 4 Serviceability Tthe

9 Quality-Related Product Characteristics Reliability Tangibles Responsiveness Assurance Empathy Management, by Williams South-Western College

10 ISO 9000 4 A series of five international standards 4 Certifies quality processes

Malcolm Baldrige National Quality Award 11 4 Given to U. S. companies 4 Recognizes

Total Quality Management 12 Customer Focus and Satisfaction Continuous Improvement Teamwork Management, by Williams

13 Learning Objectives Managing Operations After discussing this section, you should be able to:

14 Service Operations Service. Profit Chain Service Recovery and Empowerment Management, by Williams South-Western

15 Service-Profit Chain Internal Service Quality Employee Satisfaction Service Capability High Value Service Customer

Service Recovery and Empowerment 16 4 Service recovery is restoring customer satisfaction to strongly

17 Manufacturing Operations Amount of Processing in Manufacturing Operations Flexibility of Manufacturing Operations Management,

Amount of Processing in Manufacturing Operations 18 4 Make-to-order operations Tmanufacturing doesn’t begin until

Flexibility of Manufacturing Operations 19 Continuous- Line. Batch Job Project Flow Production Shops Manufacturing

Back to the Future 20 Software Simplifies Operations Management 4 Sophisticated mathematical and statistical

21 Inventory Types of Inventory Measuring Inventory Costs of Maintaining an Inventory Managing Inventory

22 Types of Inventory Raw Materials Fabrication Vendors Component Parts Initial Assembly Retailers Field

23 Measuring Inventory 4 Average aggregate inventory Tthe average overall inventory for a certain

Blast From The Past 24 Guns, Geometry, and Fire 4 Whitney and standardized parts

Costs of Maintaining an Inventory 25 4 Ordering costs Tall associated costs with ordering

Managing Inventory 26 Economic Order Quantity Just-in-Time Independent Demand Systems Dependent Demand Systems Kanban

27 Been There, Done That Mr. Kaizen 4 America has focused on quality, not

What Really Happened? 28 Producing a Daily Paper at Newsday 4 Reduce delays by

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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? Management, by Williams South-Western College Publishing Copyright © 2000

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. Management, by Williams South-Western College Publishing Copyright © 2000

5 Why Productivity Matters Higher Productivity Higher Standard of Living Lower Costs Lower Prices Higher Profits Higher Market Share Management, by Williams South-Western College Publishing Copyright © 2000

6 Kinds of Productivity 4 Partial productivity = Outputs Single Kind of Input 4 Multifactor productivity = Outputs Labor + Capital + Materials + Energy Management, by Williams South-Western College Publishing Copyright © 2000

7 Quality-Related Product Characteristics Quality-Related Service Characteristics ISO 9000 Malcolm Baldrige National Quality Award Total Quality Management, by Williams South-Western College Publishing Copyright © 2000

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 Management, by Williams South-Western College Publishing Copyright © 2000

10 ISO 9000 4 A series of five international standards 4 Certifies quality processes 4 Managers often want this to improve customer satisfaction Management, by Williams South-Western College Publishing Copyright © 2000

Malcolm Baldrige National Quality Award 11 4 Given to U. S. companies 4 Recognizes achievement in quality 4 Winners have been financially successful Management, by Williams South-Western College Publishing Copyright © 2000

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. Management, by Williams South-Western College Publishing Copyright © 2000

15 Service-Profit Chain Internal Service Quality Employee Satisfaction Service Capability High Value Service Customer Satisfaction Customer Loyalty Profit and Growth Adapted From Figure 15. 2 Management, by Williams South-Western College Publishing Copyright © 2000

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 Management, by Williams South-Western College Publishing Copyright © 2000

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 Management, by Williams South-Western College Publishing Copyright © 2000

Flexibility of Manufacturing Operations 19 Continuous- Line. Batch Job Project Flow Production Shops Manufacturing Production Least Flexible Adapted From Figure 15. 3 Most Flexible Management, by Williams South-Western College Publishing Copyright © 2000

Back to the Future 20 Software Simplifies Operations Management 4 Sophisticated mathematical and statistical models Tnow in easy to use software 4 Examples: TResources in Motion Management System (RIMMS) TROBCAD Management, by Williams South-Western College Publishing Copyright © 2000

22 Types of Inventory Raw Materials Fabrication Vendors Component Parts Initial Assembly Retailers Field Warehouses Wholesalers Adapted From Figure 15. 4 Work-in. Progress Distribution Centers Final Assembly Finished Goods Management, by Williams South-Western College Publishing Copyright © 2000

23 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 Management, by Williams South-Western College Publishing Copyright © 2000

Blast From The Past 24 Guns, Geometry, and Fire 4 Whitney and standardized parts Tinterchangeable parts Tfewer defects 4 Monge’s 3 -dimensional drawings Tmore precise designs 4 Fire led to just-in-time at Oldsmobile Management, by Williams South-Western College Publishing Copyright © 2000

Costs of Maintaining an Inventory 25 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 Management, by Williams South-Western College Publishing Copyright © 2000

Managing Inventory 26 Economic Order Quantity Just-in-Time Independent Demand Systems Dependent Demand Systems Kanban Materials Requirement Planning Management, by Williams South-Western College Publishing Copyright © 2000

27 Been There, Done That Mr. Kaizen 4 America has focused on quality, not cost management 4 Eliminating muda is important 4 Must focus on gemba Management, by Williams South-Western College Publishing Copyright © 2000

What Really Happened? 28 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 Management, by Williams South-Western College Publishing Copyright © 2000