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Chapter 8 Producing Quality Goods and Services - Coggle Diagram
Chapter 8 Producing Quality Goods and Services
Operations management
– all the activities required to produce goods and services
To produce a product or service successfully, a business must perform a number of specific activities, such as:
- Marketing research
- Planning
- Control of operations
=> Product quality
=> Performance standards
=> Inventory
=> Production costs
The Conversion Process
The purpose of manufacturing or a service business is to provide utility to customers.
Utility
– the ability of a good or service to satisfy a human need
Although there are four types of utilities—
form, place, time, and possession
—operations management focuses
primarily on form utility.
Form utility – utility created by people converting raw materials, finances, and information into finished products
Manufacturing Using a Conversion Process
Focus or Major Resource
Focus – the resource or resources (financial, material, information, and people) that make up the major or most important input
Magnitude of Change
Magnitude of change – the degree to which the resources are physically changed
(i.e. Sand => Glass)
Number of Production Processes
A single firm may employ one production process or many, whereas larger firms that make a variety of products use multiple production processes.
Design planning
– the development of a plan for
converting an idea into an actual product
or service
The major decisions involved in design planning deal with product line, required capacity, and use of technology.
Product Line
Product line
– a group of similar products that differ only in relatively minor characteristics
An important issue in deciding on the product line is to balance customer preferences and production requirements.
Once the product line has been determined, each distinct product within the product line must be designed.
Product design
– the process of creating a set of specifications from which a product can be produced
Required production CAPACITY
Capacity
– the
amount of products or services that an organization can produce in a given time
If a firm has too much capacity, valuable resources (plant, equipment, and money) will lie idle.
If a firm has too little capacity, additional capacity may have to be added later when it is much more expensive than in the initial building stage.
Use of technology
Labor-intensive technology
– a process in which people must do most of the work
Capital-intensive technology
– a process in which machines and equipment do most of the work
SITE SELECTION AND FACILITIES PLANNING
Plant layout
– the arrangement of machinery, equipment, and personnel within a production facility
3 types of plant layout:
Process layout
– used when different operations are required for creating small batches of different products or working on different parts of a product
i.e. an auto repair facility at a local automobile dealership
Product layout
– used when all products undergo the same operations in the same sequence
i.e. an assembly line
Fixed-position layout
– used when a very large product is produced
i.e. used by commercial airlines and shipbuilders
PURCHASING
Purchasing – all the activities involved in
obtaining required materials
, supplies, components, and parts from
other firms
The objective of purchasing is to ensure that required materials are available when they are needed, in the proper amounts, and at minimum cost.
The choice of suppliers should result from careful analysis of a number of factors.
(PQRCS)
PRICE
QUALITY
RELIABILITY
CREDIT TERMS
SHIPPING COSTS
QUALITY CONTROL
Quality control – the process of ensuring that goods and services
are produced in accordance with design specifications
Malcolm Baldrige National Quality Award – an award given by the President of the United States to organizations judged to be outstanding in specific managerial tasks that lead to improved quality for both products and services
Improving quality through employee participation
Quality circle
– a team of employees who meet on company time to solve problems of product quality
Example: Quality circles have been used successfully in companies such as Toyota, IBM, and Lockheed Martin.
Inspection
– the examination of the quality of work-in-process
Total quality management (TQM)
Examples: American Express, AT&T, and Hewlett-Packard all have used TQM to improve product quality and customer satisfaction.
Six Sigma
– a disciplined approach that relies on statistical data and improved methods to eliminate defects for a firm’s products and services
Example: General Electric, Ford, and Honeywell have used Six Sigma
International Organization for Standardization (ISO)
– a network of national standards institutes and similar organizations from over 160 different countries that is charged with developing standards for quality products and services and environmental standards for global manufacturers and producers