Fourth Edition

Copyright 2003 Prentice Hall, Inc.

PART 2 . . . . . . . . . . . . . . . . . . . . . . . .
Understanding the Business of Managing
Copyright 2003 Prentice Hall, Inc.
7 - 2
Chapter 7
Managing Operations and
Improving Quality
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7 - 3
There are many ways of
going forward, but only one
way of standing still.

~ Franklin D. Roosevelt
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7 - 4
Key Topics
Operations and the utility provided by
operations processes
Service operations vs. goods production
Operations planning
Total quality management tools
The supply chain strategy vs. traditional
strategies for coordinating operations
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7 - 5
Defining Operations
Service Operations:
Produce tangible and
intangible services.
Goods Production:
Produces tangible
products.
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7 - 6
Growth in the Goods and Services Sectors
100
80
60
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Goods Production
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7 - 7
Integration of Global Operations
Technology has pushed operations to
become cleaner, faster, and saferon a
global scale
The internet has
integrated production
with global suppliers
and customers
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7 - 8
Products and Services Create Utility
Satisfy Human Wants
Time Utility
Place Utility
Ownership utility
Form Utility
Operations managers create utility
for customers through production,
inventory, and quality control.
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7 - 9
Operations Management
A Resource Transformation Process
Inputs Transformation
Activities
Outputs
land
capital
human resources
material
customers
information
Operations Managers
plan
organize
schedule
control
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7 - 10
Operations Processes Are
Methods Used in Production
Goods-Manufacturing:
Analytic processes
Synthetic processes
Service Delivery
High contact processes
Low contact processes
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7 - 11
Service Operations Differ Markedly
From Manufacturing
Focus on:
performance
process and outcome
service characteristics
customer-service link
service quality considerations
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7 - 12
Layout
Process
Product
Cellular
Methods
Quality
Location
Capacity
Operations Planning
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7 - 13
Operations Scheduling
Scheduling Goods Operations
Scheduling Service Operations


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7 - 14
Operations Control Monitors Results,
Which Ensures Performance
Transportation
Warehousing
Purchasing
Supplier Selection
Inventory Control
Materials managers plan, organize, and
control the flow of materials from design
through distribution
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7 - 15
Tools for Operations
Process Control
Worker Training
Just-in-time Production Systems (JIT)
Material Requirements Planning
Quality Control
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7 - 16
Total Quality Management
Always Delivering High Quality
Planning for quality
Organizing for quality
Directing for quality
Controlling for quality
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7 - 17
Tools for Total Quality Management
Statistical Process
Control
Quality/Cost
Studies
Getting Close to the
Customer
Process
Reengineering
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7 - 18
Adding Value Through Supply Chains
Forester
Farmer Co-op Grain
Storage
Flour
Miller
Pulp
Maker
Paper
Factory
Consumers
Distributor
Grain Grain Flour Bakery
Baking
Company
Rolls, bread
Packager
Packaged Baked Goods
Wood Pulp Paper
Grocery
Stores
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7 - 19
The Supply Chain Strategy
Supply Chain Management
Working with the supply chain as a whole to improve
overall flow
Supply Chain Reengineering
Improving the process for better results
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7 - 20
Chapter Review
Explain operations and the utility that operations
processes provide.
Distinguish service operations from goods
production.
Describe the five decision areas involved in
operations planning.
Identify the key tools for total quality management.
Explain the supply chain strategy.