Chapter 18 Managing Service and Manufacturing Operations 2015

Chapter 18 Managing Service and Manufacturing Operations © 2015 Cengage Learning MGMT 7

18 -1 discuss the kinds of productivity and their importance in managing operations 18 -2 explain the role that quality plays in managing operations 18 -3 explain the essentials of managing a service business 18 -4 describe the different kinds of manufacturing operations 18 -5 explain why and how companies should manage inventories © 2015 Cengage Learning

Productivity © 2015 Cengage Learning 18 -1

Why Productivity Matters For companies • Higher productivity results in lower costs, lower prices, faster service, higher market share, higher profits For countries • Higher standard of living, increased wages, more charitable giving © 2015 Cengage Learning 18 -1

Kinds of Productivity © 2015 Cengage Learning 18 -1

Multifactor Productivity Growth across Industries © 2015 Cengage Learning 18 -1

Quality A product or service free of deficiencies. The characteristics of a product or service that satisfies customer needs. 18 -2 © 2015 Cengage Learning

Quality-Related Characteristics for Products • Reliability • Serviceability – product failure • Durability 18 -2 © 2015 Cengage Learning

Quality-Related Characteristics for Services • Reliability • Tangibles • Responsiveness • Assurance • Empathy © 2015 Cengage Learning 18 -2

ISO 9000 A series of five international standards for achieving consistency in quality management and quality assurance. 18 -2 © 2015 Cengage Learning

ISO 14000 A series of international standards for managing, monitoring, and minimizing an organization’s harmful effects on the environment. © 2015 Cengage Learning 18 -2

Baldrige National Quality Award Given “to recognize U. S. companies for their achievements in quality and business performance and to raise awareness about the importance of quality and performance excellence as a competitive edge. ” © 2015 Cengage Learning 18 -2

2013 J. D. Power Initial Quality Survey © 2015 Cengage Learning 18 -2

Total Quality Management • Customer focus • Customer satisfaction • Continuous improvement – variation • Teamwork 18 -2 © 2015 Cengage Learning

Services vs. Goods • Goods are made, but services are performed • Someone has to perform the service for you • Services are intangible • Services are perishable and un-storable © 2015 Cengage Learning 18 -3

Criteria for the Baldridge National Quality Award © 2015 Cengage Learning 18 -3

Service Recovery and Empowerment • Service recovery • Empowerment 18 -3 © 2015 Cengage Learning

Amount of Processing • Make-to-order • Assemble-to-order • Make-to-stock © 2015 Cengage Learning 18 -4

Manufacturing Flexibility The degree to which the manufacturing operations can easily and quickly change the number, kind, and characteristics of products they produce. • Continuous-flow production • Line-flow production • Batch production • Job shops © 2015 Cengage Learning 18 -4

Inventory The amount and number of raw materials, parts, and finished products that a company has in its possession. 18 -5 © 2015 Cengage Learning

Service-Profit Chain © 2015 Cengage Learning 18 -5

Measuring Inventory • Average aggregate inventory • Stockout • Inventory turnover © 2015 Cengage Learning 18 -5

Inventory Costs • Ordering • Setup • Holding • Stockout 18 -5 © 2015 Cengage Learning

Managing Inventory © 2015 Cengage Learning 18 -5

Managing Inventory • Just-in-time (JIT) inventory system • Kanban • Materials requirement planning (MRP) – master production schedule – bill of materials – inventory records © 2015 Cengage Learning 18 -5

Which System? • Independent demand systems = EOQ • Dependent demand systems = JIT or MRP 18 -5 © 2015 Cengage Learning

Barcelona Restaurant Group <click screenshot for video> 1. How does Barcelona Restaurant Group’s approach to customer service fulfill the qualityrelated characteristics of services? 2. How does Barcelona Restaurant Group’s approach to customer service fulfill the three aspects of Total Quality Management? © 2015 Cengage Learning