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Achieving World-Class
Operations Management
Case: Coca-Cola’s Crisis Management in
Belgium
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Learning Goals
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Production and Operations Management
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The Production Process
Inputs Outputs
1. Production Planning
Main
Types of 2. Production Control
Decisions
3. Improving production
and operations
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The Production Process
Production and operations management involves three main
types of decisions that are made at three different stages:
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Production Planning
• During production planning, the firm considers
the competitive environment and its own
strategic goals in an effort to find the best
production methods.
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Decisions in Production Planning
Four important decisions must be made in production planning.
They involve the :
Site selection
Facility layout
Resource planning
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How Do We Make It?
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Production Processes
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How Do We Make It?
Three types of production
Mass
The ability to manufacture many
Production identical goods at once.
(One for all)
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Converting Inputs
Into Outputs
The two basic processes for converting inputs into
outputs are:
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Production Timing
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Where Do We Make It?
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Where Do We Make It?
The facility’s location affects operating and shipping costs, and mistakes made at this
stage can be costly because moving a facility is expensive.
The factors to consider include:
Marketing factors
Manufacturing environment
Local incentives
International location
considerations
Process layout
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Where Do We Make It?
The factors to consider include:
1. Availability of production inputs: Assess the availability of raw
materials, parts, and equipment, as well and availability and cost of labor.
2. Marketing factors: Evaluate how their facility location will affect their
availability to serve their customers. Locating near customers can
provide market advantages. Consider the location of competitors. With
more than one facility, consider how far to spread their locations in order to
maximize market coverage.
3. Manufacturing environment: When a large number of manufacturers are
already located in an area, that area is likely to offer greater availability of
resources, better accessibility to suppliers and transportation, and other
factors that increase efficiency.
4. Local incentives: Incentives offered by countries, states, or cities, such
as tax breaks and exemptions.
5. International location considerations: Labor costs are lower in countries
like Singapore, China, and Mexico. Foreign countries may have fewer
regulations.
6. Process layout: arranges work flow around the production process.
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Where Do We Make It?
Process Work flows according to the
Layout production process
Cellular manufacturing combines some aspects of both product and fixed-position layout. There3
are usually five to ten workers in cell, and they are trained to be able to do any of step in
production process.. Create team environment. From beginning to end 24
Facility
Layouts
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Resource Planning
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Resource Planning
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Make or Buy?
The firm must decide whether to make its own
production materials or buy them from outside
sources. This is the Make-or-Buy decision. The
factors to be considered are listed –next slide.
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Make or Buy?
Quantity of items needed
Standard or
non-standard items
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Make or Buy?...Cont
Factors that may influence firms making a part in-house include:
(Burt et al, 2013)
1. Cost considerations (less expensive to make the part)
2. Desire to integrate plant operations
3. Need to exert direct control over production and/or quality
4. Better quality control
5. Design secrecy is required to protect proprietary technology
6. Unreliable suppliers
7. Quantity too small to interest a supplier
8. Control of lead time, transportation, and warehousing costs
9. Political, social or environmental reasons (union pressure)
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Inventory Management
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Costs in Determining
Inventory Levels
Holding inventory
Frequent reordering
Managers must measure all three costs and try to minimize them.
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Computerized
Resource Planning
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Supply Chain Management
In the past, relationships between purchasers and suppliers was often
competitive, antagonistic, and short-term. Today, many firms are moving toward a
new concept in supplier relationships, called a supply chain. A critical element
of effective supply chain management is to develop tighter bonds with suppliers.
If any links in this process are weak, customers may end up dissatisfied.
Track Shipments
Synchronize Flows
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Supply Chain
Production and Operations Control
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Production and Operations Control
The coordination of materials, equipment, and human
resources to achieve production and operating efficiencies is
called production control. Two of its key aspects are routing
and scheduling.
Value-stream
Routing
mapping
Gantt charts
Critical path
Scheduling
method
PERT
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Production and Operations Control
Routing is the first step in production control,
setting the work flow of machines and operations
through which a product progresses from start to
finish. One useful tool is value-stream mapping,
where production managers map the flow from
suppliers through the factory and to customers.
Excess Travel
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Gantt Chart
The Critical Path Method: Example
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Improving Production and Operations
Methods used to help keep production costs down include quality
management techniques, lean manufacturing, and automation.
Quality management
techniques
Lean manufacturing
Automation
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Putting Quality First
The process of creating standards for
Quality quality, producing goods that meet them, and
control then measuring finished products against
them.
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Quality Standards
International Organization for Standardization (ISO)
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Lean Manufacturing
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Applying What You’ve Learned