Chapter 7
Managing
Operations and
Improving Quality
PowerPoint Presentation by Charlie Cook
Copyright © 2005 Prentice Hall, Inc.
All rights reserved.
“There are many ways of
going forward, but only one
way of standing still.”
—Franklin D. Roosevelt
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
7–2
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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7–3
Defining Operations
• Service Operations:
 Produce tangible and
intangible services.
• Goods Production:
 Produces tangible
products.
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7–4
Growth in the Goods and Services
Sectors
Millions of Workers
(Billions)
100
Services
Services
80
$4,000
60
$3,000
40
$2,000
$1,000
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2000
1998
1996
1994
1990
1988
1986
Goods
Production
1984
2000
1998
1996
1994
1992
1990
1988
1986
1984
Goods Production
1992
20
7–5
Integration of Global Operations
• Technology has pushed operations to
become cleaner, faster, and safer…on a
global scale.
• The internet has integrated
production with global
suppliers and customers.
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7–6
Products and Services Create Utility
To 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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7–7
Operations Management: A Resource
Transformation Process
Operations Managers
• plan
• organize
Inputs
•
•
•
•
•
•
land
capital
human resources
material
customers
information
• schedule
• control
Transformation
Activities
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Outputs
(Goods and
Services)
7–8
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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7–9
Service Operations Differ Markedly From
Manufacturing
• Focus on:
 Performance
 Process and outcome
 Service characteristics
 Customer-service link
 Service quality considerations
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7–10
Operations Planning
Capacity
Location
Quality
Layout

Process
 Product
 Cellular
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Methods
7–11
Operations Scheduling
• Scheduling Goods Operations
• Scheduling Service Operations
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7–12
Operations Control Monitors Results,
Which Ensures Performance
• Materials managers plan, organize, and
control the flow of materials from design
through distribution.
• Transportation
• Warehousing
• Purchasing
• Supplier Selection
• Inventory Control
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7–13
Tools for Operations Process Control
Worker Training
Just-in-time Production Systems (JIT)
Material Requirements Planning
Quality Control
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7–14
Total Quality Management
• Always Delivering
High Quality
Planning for quality
Organizing for quality
Directing for quality
Controlling for quality
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7–15
Tools for Total Quality Management
Statistical
Process
Control
Quality/Cost
Studies
ISO 9000
Getting Close
to the
Customer
Process
Reengineering
Outsourcing
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7–16
Adding Value Through Supply Chains
Grain
Grain
Flour
Bakery
Wood
Pulp
Paper
Packager
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Packaged Baked Goods
7–17
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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7–18
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.
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
7–19