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Presentation Transcript

Chapter 15: 

Chapter 15 Managing Service and Manufacturing Operations

What Would You Do? Productivity at Huffman Corporation: 

What Would You Do? Productivity at Huffman Corporation Sales in the machine tool industry are off by 60 percent Huffman wants to increase productivity How do you measure and improve productivity? Will improved productivity really matter to the customers?

Learning Objectives Managing for Productivity and Quality: 

After discussing this section, you should be able to: Learning Objectives Managing for Productivity and Quality discuss the kinds of productivity and their importance in managing operations. explain the role that quality plays in managing operations.

Productivity: 

A measure of performance that indicates how many inputs it takes to produce or create an output Productivity Why Productivity Matters Kinds of Productivity Productivity

Why Productivity Matters: 

Why Productivity Matters Higher Productivity Lower Costs Lower Prices Higher Market Share Higher Profits Higher Standard of Living

Kinds of Productivity: 

Kinds of Productivity Partial productivity = Multifactor productivity =

Quality: 

Quality Quality-Related Service Characteristics Quality-Related Product Characteristics ISO 9000 Baldrige National Quality Award Total Quality Management

Quality-Related Product Characteristics: 

Quality-Related Product Characteristics Reliability the average time between breakdowns Serviceability the ease with which a product is fixed Durability mean time to failure

Quality-Related Service Characteristics: 

Quality-Related Service Characteristics Adapted from Exhibit 15.4

ISO 9000: 

ISO 9000 A series of five international standards Certifies quality processes Managers often want this to improve customer satisfaction

Baldrige National Quality Award: 

Baldrige National Quality Award Given to U.S. companies Recognizes achievement in quality Winners have been financially successful

Criteria for the Baldrige National Quality Award: 

Criteria for the Baldrige National Quality Award Leadership Strategic Planning Customer and Market Focus Information and Analysis Human Resource Focus Process Management Business Results

Total Quality Management: 

Total Quality Management Customer Focus and Satisfaction Continuous Improvement Teamwork

Defects at Six Sigma Quality: 

Defects at Six Sigma Quality 50 150 250 350 450 550 650 750 Defects Per Million Parts (000) Sigma Quality Level 6 Sigma 5 Sigma 4 Sigma 3 Sigma 2 Sigma 1 Sigma 690,000 defects per million 3.4 defects per million 230 defects per million 6,210 defects per million 66,800 defects per million 308,538 defects per million Adapted from Exhibit 15.7

Learning Objectives Managing Operations: 

After discussing this section, you should be able to: Learning Objectives Managing Operations explain the essentials of managing a service business. describe the different kinds of manufacturing operations. describe why and how companies should manage inventory levels.

Service Operations: 

Service Operations Service- Profit Chain Service Recovery and Empowerment

Service-Profit Chain: 

Service-Profit Chain Internal Service Quality High Value Service Customer Satisfaction Customer Loyalty Profit and Growth Adapted From Figure 15.8

Components of Internal Service Quality: 

Components of Internal Service Quality Policies and Procedures Tools Effective Training Rewards and Recognition Communication Management Support Goal Alignment Teamwork Adapted from Exhibit 15.9

Service Recovery and Empowerment: 

Service Recovery and Empowerment Service recovery is restoring customer satisfaction to strongly dissatisfied customers Empowering workers is one way to speed up service recovery

Costs of Empowering Service Workers for Service Recovery: 

Costs of Empowering Service Workers for Service Recovery Increased costs of selection Increased training costs Higher wages Less emphasis on service reliability Overly eager, empowered service workers may provide “giveaways” Empowered service workers may be overly eager to make up for poor service

Benefits of Empowering Service Workers for Service Recovery: 

Benefits of Empowering Service Workers for Service Recovery Quicker response to customer complaints and problems Employees feel better about their jobs Employee interaction with customers will be warm and friendly Employees more likely to offer ideas for improving service and preventing problems

Manufacturing Operations: 

Manufacturing Operations Amount of Processing in Manufacturing Operations Flexibility of Manufacturing Operations

Amount of Processing in Manufacturing Operations: 

Amount of Processing in Manufacturing Operations Make-to-order operations manufacturing doesn’t begin until an order is placed Assemble-to-order operations used to create semi-customized products Make-to-stock operations manufacture standardized products

Flexibility of Manufacturing Operations: 

Flexibility of Manufacturing Operations Least Flexible Most Flexible Continuous- Flow Production Line- Flow Production Batch Production Job Shops Project Manufacturing Adapted From Figure 15.12

Inventory: 

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

Types of Inventory: 

Types of Inventory Raw Materials Adapted From Figure 15.4

Measuring Inventory: 

Measuring Inventory Average aggregate inventory the average overall inventory for a certain time period Stockout running out of inventory Inventory turnover the number of times a year that a company sells its average inventory

Inventory Turn Rates Across Industries: 

Inventory Turn Rates Across Industries Adapted from Exhibit 15.14

Blast From The Past Guns, Geometry, and Fire: 

Blast From The Past Guns, Geometry, and Fire Whitney and standardized parts interchangeable parts fewer defects Monge’s 3-dimensional drawings more precise designs Fire led to just-in-time at Oldsmobile

Costs of Maintaining an Inventory: 

Costs of Maintaining an Inventory Ordering costs all associated costs with ordering goods Setup costs changing goods produced Holding costs carrying inventory Stockout costs running out of inventory

Managing Inventory: 

Managing Inventory Economic Order Quantity Kanban Just-in-Time Materials Requirement Planning

Been There, Done That: 

Been There, Done That Wiremold has used continuous improvement and just-in-time inventory systems Quality has increased and costs have been reduced The more inventory is turned, the better customer service gets Lean Manufacturing at Wiremold

What Really Happened? Productivity at Huffman Corporation: 

What Really Happened? Productivity at Huffman Corporation Labor hours to produce a machine tool is 33 percent less, allowing a 20 percent price drop Ended most recent year with record sales and profits Results find their way to customer performance, for example some medical machines that improve productivity of doctors