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Understanding business 8th by mcchugh nickels chapter 09

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Producing
World-Class
Goods
and
Services

Nickels

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McHugh

McGraw-Hill/Irwin
Understanding Business, 8e

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CHAPTER

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9

McHugh
1-1

9-1

© 2008 The McGraw-Hill Companies, Inc., All Rights


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Leading U.S.
Manufacturing States
Michiga
n
Illinois

W A S H IN G T O N

M O N TA N A

New York
M A IN E

N O R T H D A K O TA

M IC H I G A N

O R E G O N

V T


M IN N E S O TA

ID A H O

S O U T H D A K O TA

W IS C O N S IN

N E W

YO R K

N H

M A S S
C O N N

R I

M IC H IG A N

W Y O M IN G

P E N N S Y LV A N IA

IO W A

N E VA D A

N E W
JE R S E Y

N E B R A S K A
O H IO

D E LAW A R E

U TA H
IL L IN O IS

D C

IN D IA N A

C O LO R A D O

V IR G IN IA
K A N S A S

C A L IF O R N IA

M A R Y LA N D

W E S T
M IS S O U R I

V IR G IN IA

K E N T U C K Y

T E N N E S S E E
O K LA H O M A

A R IZ O N A
N E W

Californi
a

A R K A N S A S

M E X IC O

A L A B A M A
L O U IS IA N A
M IS S IS S IP P I
T E X A S

Ohi
o
G E O R G IA

N O R T H C A R O L IN A

S O U T H
C A R O L IN A

Pennsylvani
a

A L A S K A

F L O R ID A

0

0

1 0 0

6 0 0 M i le s

H A W A II
0

2 0 0 M il e s

Texas

2 0 0 M il e s

Source: Britannica Student Encyclopedia, 2006

9-2


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Top Ten US Manufacturers

1. ExxonMobil
2. Chevron
3. General Motors
4. ConocoPhillips
5. Ford Motor

6. General Electric
7. Altria Group
8. IBM Corp.
9. Hewlett-Packard
10.Valero Energy

Source: Industry Week, June 1, 2006

9-3


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How Manufacturers Have
Become More Effective

• Focus on customers
• Maintain close relationships
• Continuous improvement
• Focus on quality
• Save costs
• Rely on the Internet
• New production techniques
9-4


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Labor Hours / Vehicle

Source: Detroit Free Press, June 2, 2006



Ford – 35.79 hours



Daimler/Chrysler – 33.71
hours



GM – 33.19 hours



Honda – 32.51 hours



Toyota – 29.4 hours



Nissan – 28.46 hours

9-5


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From Production to
Operations Management

• Production
• Production

Management

• Operations

Management
(OM)
9-6


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Comparing Asian Giants






CHINA
Driving Force:
Manufacturing
Largest Communist
Country
Population: 1.3
Billion
Economic Growth
Rate: 9%
Financial/Commercial
Capital: Shanghai

Source: Kiplinger.com December 19, 2005, BBC News, In Depth, accessed July 15, 2006







INDIA
Driving Force:
Services
Largest Democracy
Population: 1.1
Billion
Economic Growth
Rate: 7%
Financial/Commercial
Capital: Mumbai
9-7


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Production Processes


Form Utility



Process Manufacturing



Assembly Process



Continuous Process



Intermittent Process
9-8


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Three Requirements
For Production

1. Build and deliver products in response
to the demands of the customer at a
scheduled delivery time

2. Provide an acceptable quality level
3. Provide everything at the lowest
possible cost

9-9


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Production Efficiency






Krispy Kreme Doughnuts – 5,208 a minute
Twinkies – 972 a minute
LifeSavers 5 Flavor Roll – 100 rolls a minute
Jell-O Gelatin Boxes – 764 a minute
Chips Ahoy! – 4,000 a minute

Source: World Features Syndicate

9-10


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What Is Increasing
Productivity?

Source: 2005 National Innovation Survey, Council on Competitiveness

9-11


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Product Improvements With
Computer Technology

• Computer-Aided Design - CAD
• Computer-Aided Manufacturing - CAM
• Computer-Integrated Manufacturing - CIM

9-12


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Top Ten Tech Spenders











STATE
California
New York
Texas
Illinois
Florida
Pennsylvania
Ohio
New Jersey
North Carolina
Georgia

$ in Billions
38.9
29.8
24.6
15.1
13.9
12.8
11.8
11.3
9.4
9.3

Source: Business Week Online, December 5, 2005

9-13


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Production Techniques

• Flexible

Manufacturing

• Lean

Manufacturing

• Mass

Customization
9-14


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Operations Management
Planning




Facility Location





Purchasing

Facility Layout
Materials Requirement
Planning

J-I-T Inventory Control
Quality Control
9-15


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Quality Control

• Six Sigma Quality
• Statistical Quality Control (SQC)
• Statistical Process Control (SPC)
• The Baldrige Award
• ISO 9000
• ISO 14000
9-16


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Baldrige Award Recipients







Sunny Fresh Foods, Inc.,
Monticello, MN (Manufacturing)

DynMcDermott Petroleum Operations,
New Orleans, LA (Service)

Park Place Lexus,

Plano, TX (Small Business)

Richland College,
Dallas, TX (Education)

Jenks Public Schools,
Jenks, OK (Education)

Bronson Methodist Hospital,
Kalamazoo, MI, (Health care)

Source: NIST News Release, November 22, 2005

9-17


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ISO

• ISO was founded in 1947
• At the end of 2004, the worldwide
total of certificates:

• ISO 9000 – 670,000 in 154 countries
• ISO 14000 – 90,000 in 127 countries

Source: Business Week Online, March 17, 2006

9-18


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Control Procedures

• Program Evaluation &
Review Techniques
(PERT)

• Gantt Chart

9-19


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PERT Steps

1. Analyzing and sequencing tasks that

need to be done
2. Estimating the time needed to complete
each task
3. Drawing a PERT network illustrating the
information from steps 1 and 2
4. Identifying the critical path

9-20


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Gantt Chart

• Named for its developer,
Henry Gantt

• A bar graph that clearly

shows what projects are
being worked on and how
much has been
completed at any given
time
9-21


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Learning from Failure

• Formalize forums for analyzing failure
• Move the goalposts
• Share personal stories
• Bring in outsiders
• Prove yourself wrong, not right
• Celebrate smart failures
Source: Business Week Online, July 10, 2006

9-22



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