University:
Massachusetts Institute of Technology
Course:
15.992 | S-Lab: Laboratory for Sustainable Business
Academic year:

2023
Views:

69

Pages:

30
Author:

Jakob Golden

Chapter 14 Managing Service and Manufacturing Operations What Would You Do?     Newsday operates in a highly competitive environment Some customers are unhappy that latebreaking stories are not covered Stories have to be finalized and filed between 9:00 and 11:00 p.m. How can Newsday improve its processes to give better coverage of late-breaking stories? Learning Objectives: Managing for Productivity and Quality After reading these next two sections, you should be able to: 1. discuss the kinds of productivity and their importance in managing operations 2. 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   why productivity matters kinds of productivity Why Productivity Matters Higher productivity  Lower costs  Lower prices  Higher market share  Higher profits  Higher standard of living Kinds of Productivity Partial productivity = Outputs _________________ Single Kind of Input Multifactor productivity = Outputs ________________________________ Labour + Capital + Materials + Energy Multifactor Productivity Growth Across Industries Quality     Quality-related product characteristics Quality-related service characteristics ISO 9000 Total quality management Quality-Related Product Characteristics  Reliability   Serviceability   the average time between breakdowns how easy or difficult it is to fix a product Durability  the mean time to failure Quality-Related Service Characteristics Quality service  Reliability  Tangibles  Responsiveness  Assurance  Empathy ISO 9000    A series of five international standards Certifies quality processes Managers often want this to improve customer satisfaction Total Quality Management An integrated, principle-based, organization-wide strategy for improving product and service quality  Customer focus  Customer satisfaction  Continuous improvement  Variation  Teamwork Learning Objectives: Managing Operations After reading these next three sections, you should be able to: 3. explain the essentials of managing a service business 4. describe the different kinds of manufacturing operations 5. describe why and how companies should manage inventory levels Service Operations   The service-profit chain Service recovery and empowerment Service-Profit Chain Service Recovery and Empowerment   Restoring customer satisfaction to strongly dissatisfied customers Empowering workers is one way to speed up service recovery Benefits of Empowering Service Workers for Service Recovery 1. Quicker responses to customer complaints and problems 2. Employees feel better about their jobs and themselves 3. Employee interaction with customers will be warm and enthusiastic 4. Employees are more likely to offer ideas for improving service or preventing problems Costs of Empowering Service Workers for Service Recovery 1. 2. 3. 4. 5. 6. Increased selection costs to find capable workers Increased training costs Higher wages to attract and keep talented service workers Focus on recovery might lead to less focus on reliability Empowered workers may cost the company money by providing too many “giveaways” Workers may unintentionally treat customers unfairly to make up for slow service Manufacturing Operations   Amount of processing in manufacturing operations Flexibility of manufacturing operations Amount of Processing in Manufacturing Operations  Make-to-order operation   Assemble-to-order operation   manufacturing does not begin until an order is received used to create semi-customized products Make-to-stock operation  manufacture standardized products Manufacturing Operations  Continuous-flow production   produces goods at a continuous rate Line-flow production  Pre-established linear processes that produce one type of product Manufacturing Operations  Batch production   Job shops   operation that produces goods in large batches in standard lot sizes operation that handles customer orders or small batch jobs Project manufacturing  operation that produces large, expensive, specialized products Flexibility of Manufacturing Operations Inventory     Types of inventory Measuring inventory Costs of maintaining inventory Managing inventory Types of Inventory     Raw materials inventories Component parts inventories Work-in-process inventories Finished goods inventories Measuring Inventory  Average aggregate inventory   Stockout   the average overall inventory during a particular time period situation in which a company runs out of finished product Inventory turnover  the number of times per year that a company sells its average inventory Costs of Maintaining an Inventory  Ordering cost   Setup cost   downtime and lost efficiency when changing goods produced Holding cost   costs associated with ordering inventory cost of keeping inventory until used or sold Stockout costs  cost of running out of inventory Managing Inventory  Economic order quantity (EOQ)   Just-in-time inventory system (JIT)   parts arrive just as needed at each stage of production Kanban   formulas that help determine how much and how often inventory should be ordered ticket-based system that indicate when to reorder Materials requirement planning (MRP)  determines production schedule, batch sizes and inventories Inventory Systems  Independent demand systems   the level of one kind of inventory does not depend on another, for example EOQ Dependent demand system  the level of inventory depends on the number of finished goods to be produced, for example, JIT or MRP What Really Happened?       Extended deadlines for sports score from 11:20 p.m. to 11:55 p.m. Moved delivery times from 6:00 a.m. to 5:30 a.m. Offered a money-back guarantee for 5:30 a.m. delivery Improved printing room processes Improved flexibility Used JIT and MRP to improve handling of “inventory”