PDF - Week 08 Producing Goods and Services

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Universitas Multimedia Nusantara (UMN) Wisma BNI 46, 2nd Floor, Jl. Jend. Sudirman Kav.1 Jakarta

Exclusively prepared & presented by: Anna Riana Putriya, SE, MSi e-mail: [email protected]

Jakarta, November 2007

Week 8

Producing

Goods and Service

s



What Does Production Mean Today?

• The concept of production means services as well as

goods.

• The key difference between production and services

operations is the customer's involvement in the latter.

• Customers are involved in all kinds of production because

electronic communications are key components in winning and keeping customers.



Services…

• are performed

• are intangible

• are unstorable

• 50.3% of GDP (US)

Goods…

• are made

• are tangible

• are storable

• 29.7% of GDP (US)



The Growth of Global Operations

• Global competition has made production a faster-paced,

more complex activity.

• New technologies make machines that run cleaner, faster

and safer and that operate on a global scale.

• With the Internet, producers of both services and goods

can integrate their production with those of far-off suppliers

and customers.



What is Operations (or Production) Management

Systematic direction and control of the processes

that transform resources into finished products

that create value for and provide benefits to customers



Resource Transformation Process

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Services…

• are performed

• are intangible

• are unstorable

• 50.3% of GDP (US)

Goods…

• are made

• are tangible

• are storable

• 29.7% of GDP (US)



Operations Processes

• Operations process is a set of methods and technologies

used in the production of a good or a service

– Goods classification is based on whether an operations

process combines resources or breaks them into component parts

– Services classification is based on the extent of customer contact required



Goods-Manufacturing Processes : Analytic vs. Synthetic Processes

• Analytic process breaks down resources into components

• Synthetic process combines raw materials to produce a finished product



Service Processes: Extent of Customer Contact

• High-contact system is an operation in which the customer is part of the system during service delivery



• Low-contact system is an operation in which the

customer need not be a part of the system to receive the

service



Differences betweenService and Manufacturing Operations

• Focus on Performance

• Focus on Process and Outcome

• Focus on Service Characteristics

– Intangibility

– Customization

– Unstorability

• Focus on the Customer-Service Link

– E-Commerce: The “Virtual Presence” of the Customer

• Focus on Service Quality Considerations

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Operations Planning

• Managers from many departments contribute to decisions

about operations.

• The business plan and forecasts developed by top

managers guide operations planning.

– Forecast is a facet of a long-range

production plan that predicts

future demand



Operations Planning and Control



What is Capacity ?

Amount of a product that a company can produce

under normal working conditions



Capacity Planning

• Capacity Planning for Producing Goods

– Capacity planning for goods means ensuring that a firm’s capacity slightly exceeds normal demand for its product.

• Capacity Planning for Producing Services

– In low-contact processes, maintaining inventory lets managers set capacity at the level of average demand.

– In high-contact processes, managers must plan capacity to meet peak demand.



Location Planning

• Location Planning for Producing Goods

– Location decisions are influenced by proximity to raw materials and markets, availability of labor, energy and transportation costs and other factors.

• Location Planning for Producing Services

– Low-contact services can be located near resource supplies, labor or transportation outlets.

– High-contact services must locate near the customers who participate in the system.



Layout Planning for Producing Goods

Layout must be planned for three types of space:

1. Productive facilities

2. Nonproductive facilities

3. Support facilities

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Layout Planning for Producing Goods

• Process layout groups equipment and people according to function

• Cellular layout works well when a family of products follows a fixed flow path

• Product layout is set up to make one type of product in a fixed sequence and is arranged according to its production requirements

– Assembly line is a product layout in which a product moves step-by-step through a plant on conveyer belts or other equipment until it is completed



Layouts for Producing Goods



Other Developments in Layout Flexibility

• U-shaped product line is a product layout in which machines and workers are placed in a narrow U shape

rather than a straight line

• Flexible Manufacturing System (FMS) is a production

system in which a single factory uses automation to produce a wide variety of products



Layout Planning for Producing Services

• In a low-contact system, the facility should be arranged to

enhance the performing of the service.

• In a high-contact system, the facility should be arranged

to meet customer needs.



Layout of a Typical Piccadilly Cafeteria



What is Quality ?

The American Society for Quality defines quality

as the combination of “characteristics of a product

or service that bear on its ability to satisfy stated

or implied needs.”

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Methods Planning

• Methods Improvement in Goods

– Process flowchart is a diagram included in a detailed

description of methods

• Methods Improvement in Services

– Service flow analysis shows the flow of processes

that make up a given service

– Designing to Control Employee Discretion in Services

– Design for Customer Contact in Services



Service Flow Analysis



Operations Scheduling

• Scheduling Goods Operations

– Master production scheduleshows which products will be produced, when production will take place and what resources

will be used

• Scheduling Service Operations

– In low-contact services, work scheduling may be based

either on desired completion dates or on the time of order arrivals.

– In high-contact services, the customer must be accommodated as part of the system and its processes.



Tools for Scheduling Service Operations

• Gantt chart diagrams steps to be performed and specifies

the time required to complete each step



Tools for Scheduling Service Operations

• PERT chart breaks down large projects into steps and

specifies the time required to perform each one



What is Operation Control ?

Process of monitoring production performance by comparing results with plans

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What is Follow-Up ?

Production control activity for ensuring

that production decisions are being implemented



Materials Management

• Materials management allows managers not only to

control but also to plan and organize materials flow

– Standardization is the use of standard and uniform

components in the production process



Major Areas in Material Management

1. Transportation includes the means of transporting

resources to the manufacturer and finished goods to

buyers

2. Warehousing is the storage of both incoming materials for

production and finished goods for distribution to

customers

3. Inventory control includes the receiving, storing, handling

and counting of all raw materials, partly finished goods

and finished goods

4. Purchasing is the acquisition of the raw materials and

services that a firm needs to produce its products



Purchasing Processes

• Holding costs are costs of keeping extra supplies or inventory on hand

• Opportunity costs are additional earnings that the company must pass up because funds are tied up in inventory

• Lead time is the gap between the customer’s order placement and the seller’s shipment

• Supplier selection is the process of deciding which suppliers to buy from



Tools for Operations Process Control

• Worker Training

• Lean Production Systems:

Just-in-Operations

– Just-in-Time (JIT) Production

• Material Requirements Planning

– Bill of Materials

– Manufacturing Resource Planning (MRP II)



What is Quality Control

Management of the production process designed to manufacture goods or supply services that meet specific

quality standards

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thank you

Documents

PDF - Week 08 Producing Goods and Services