BUS106 Producing World-Class Goods and Services - from UNDERSTANDING CANADIAN BUSINESS, 7th Canadian Edition (custom publication for Seneca) ; published by McGraw-Hill

1. Week 10, Chapter 9
Producing World-Class Goods and Services

2. Agenda
1. Review
2. Chapter 93. Exercise(s)

3. Imports < Exports
=
Imports > Exports
=
Review - Balance of Trade
Trade Surplus Favourable
Trade Deficit Unfavourable

4. Review - Balance of Payments
Cashflowin
exports
foreign tourist spending in
Canada
foreign investments in Canada
earnings from Canadian
investments outside
of Canada Cashflowout
imports
Canadian tourist spending
outside of Canada
Canadian investments outside
of Canada
earnings of foreign
investments in Canada
foreign aid, military
expenditure outside of Canada
$ $

5. Review - Foreign Exchange Rate
“strong” CAD $ = high demand for Canadian dollars and products
When the value of the
CAD$ depreciates
• exports increase and
imports cost more
When the value of the
CAD$ appreciates
• exports decrease and
imports cost less
$
$

6. Review - Barriers to Trade

7. Learning Objectives
Define operations
management
• and explain what types of firms
use it
Describe the operations
management planning
issues involved in
manufacturing and the
service sectors.
Discuss the problem of
measuring productivity in
the service sector,
• and tell how technology is
leading to productivity gains in
service companies
Explain how manufacturing
processes can be used in
the manufacturing sector.
Describe seven
manufacturing techniques
that have improved the
productivity of companies.

8. Canada Today: constant and restless change and dislocation, as
ever-newer technologies and increasing global competition force
companies to respond quickly to these challenges
Canada is facing some serious challenges
to its ability to remain a modern,
competitive industrial country.

9. Canada Today - Figure 9.1

10. Research and Development - work directed toward the innovation,
introduction, and improvement of products and processes
Through the adoption of newer,
more advanced technologies
and practices, industries can:
increase their production
capabilities,
improve their productivity,
and e x p a n d their lines of
new goods and services.

11. Canada’s Evolving Manufacturing and Services Base
the manufacturing sector employs slightly over 7% of
Canada’s working population
manufacturers perform 75% of private-sector R&D
operations management has become a challenging and vital
element of Canadian business

12. Operations
Management -
specialized area
in management
that converts or
transforms
resources
(including
human
resources) into
goods and
services

13. Operations Management Planning
A major issue of the recent past has been the shift of
manufacturing organizations from one city or province to
another in Canada, or to other foreign sites.

14. Operations Management Functions
Facility Location
Facility Layout
Quality Control and
Standards
ISO 9000/ISO 140000

15. Operations Management Planning: Facility Location - WHY?
availability of inexpensive labour or the right kind of skilled labour
reducing time to market
building factories in foreign countries to get closer to their
international customers

16. Operations Management Planning: Facility Location in the Future
Developments in
information
technology
(computers, modems,
email, voice mail,
teleconferencing,
etc.) are giving firms
and employees more
flexibility than ever
before in choosing
locations while
staying in the
competitive
mainstream.

17. Image source: http://www.flickr.com/photos/historicallyinaccurate/
Operations Management Planning: Facility Layout
The physical arrangement of resources (including people) in the
production process.
The idea is to have offices, machines, storage areas, and other
items in the best possible position to enable workers to
produce goods and provide services for customers.

18. Operations Management Planning: Facility Layout – Figure 9.3

19. Operations Management Planning: Facility Layout – Figure 9.3

20. Operations Management Planning: Facility Layout – Figure 9.3

21. Operations Management Planning: Facility Layout – Figure 9.3

22. Outsourcing
Outsourcing goods and services
has become a hot practice in
North America.
Software development, call-
centre jobs, and back-office jobs
have been moving to developing
countries for some time.
The range of jobs now shifting to
these countries includes
accounting, financial analysis,
medicine, architecture, aircraft
maintenance, law, film
production, and banking
activities.

23. Canadian companies are also benefiting from other countries’
outsourcing. Canada is one of the top IT outsourcing destinations in
the world, especially for the United States.
Source: http://www.youtube.com/watch?v=-e7DndFck-k

24. Canada’s Auto Industry – lots of competition!
The industry supports jobs across Canada in 13
assembly plants, more than 540 parts
manufacturers, 3,900 dealerships, and many
other related industries.

25. 0
5
10
15
20
25
30
35
Toyota Honda GM Ford Daimler/Chrysler
Productivity Challenge in the Automobile Industry
Source: Harbour & Associates, Center for Automotive Research
Labour/Hour

26. Define “GOOD QUALITY”

27. Peter F. Drucker
(American Educator and Writer, b.1909)
“Quality in a product or service is not what the supplier puts in. It is
what the customer gets out and is willing to pay for. A product is
not quality because it is hard to make and costs a lot of money, as
manufacturers typically believe. This is incompetence. Customers
pay only for what is of use to them and gives them value. Nothing
else constitutes quality.”
Source: http://www.gear6.net

28. Quality
consistently producing what the
customer wants while reducing errors before
and after delivery to the customer
not an outcome; it is a never-ending process of
continually improving what a
company produces
should be part of the
operations management
planning process
rather than simply an
end-of-the-line inspection

29. Dimensions of Quality
performance
features
reliability
conformance
durability
serviceability
aesthetics
perceived quality

30. The International Organization for Standardization (ISO) is a
worldwide federation of national standards bodies from more than
140 countries that set the global measures for the quality of
individual products.
ISO is a non-
governmental
organization established
to promote the
development of
world
standards to
facilitate the
international exchange of
goods and services.

31. ISO 9000 Standards - quality management and assurance
The standards require that a company
must determine what customer needs
are, including regulatory and legal
requirements.
What makes ISO 9000 so important is
that the European Union (EU) is
demanding that companies that want to
do business with the EU be certified by
ISO standards.
Some major Canadian companies are
also demanding that suppliers meet
these standards.

32. ISO 14000 Standards - a collection of the best practices for
managing an organization’s impact on the environment

33. Quality Control Standards
Six Sigma ( ) Quality - 3.4 defects/million
Statistical Quality Control (SQC)
Statistical Process Control (SPC)
Deming Cycle – Plan, Do, Check, Act (PDCA)
Quality Function Deployment (QFD)
ISO 9000/14000/19011:2002
(Guidelines for quality and/or environmental
management systems auditing)

34. Logistics - activities that focus on getting the right amount
of the right products or services to the right place at the right time
at the lowest possible cost.

35. Supply Chain - The sequence of firms that perform
activities required to create and deliver a good or service to
consumers or industrial users

36. Supply Chain Management –
the integration and organization of
information and logistics activities
across firms in a supply chain for
the purpose of creating and
delivering goods and services
that provide value to
customers

37. Supply Chain Management
When implementing supply chain management,
firms are trying to improve quality, reduce
costs, increase flexibility and speed, and
improve customer service while reducing the
number of suppliers used.

38. Service Sector Operations Management -
is all about creating a good experience for
those who use the service.

39. Productivity measures do not capture improvements in quality
Interactivity helps provide quality service.

40. Manufacturing Sector Operations Management – Figure 9.4
INPUTS
• land
• capital
• entrepreneurship
• knowledge
PRODUCTION
CONTROL
• planning
• routing
• scheduling
• dispatching
• follow-up
OUTPUTS
• goods
• services
• ideas

41. Manufacturing Sector Operations Management
Form Utility – value added by
creating finished goods and
services
Manufacturing Processes
Assembly Process
Continuous Process
Intermittent Process
Materials Requirement
Planning
Bill of Materials
Enterprise Resource Planning
IT/Customer-Relationship
Marketing

42. Manufacturing Sector Operations Management
Materials requirement planning (MRP) is a computer-based
operations management system that uses sales forecasts to ensure
that needed parts and materials are available at the right time and
place in a specific company.

43. Manufacturing Sector Operations Management
The newest version of MRP is
enterprise resource planning
(ERP).
ERP is a computer application that
enables multiple firms to manage
all of their operations (finance,
requirements planning, human
resources, and order fulfillment)
on the basis of a single, integrated
set of corporate data.

44. Modern Production Techniques
MRP
Just-In-Time (JIT) Inventory
Purchasing
Flexible Manufacturing
Lean Manufacturing
Mass Customization
Computer-Aided Design (CAD)
and Computer-Aided
Manufacturing (CAM)

45. JIT: Just-in-Time - Inventory Control systems keep a minimum of
inventory on the premises and parts, supplies, and other needs are
delivered just in time to go on the assembly line.
To work effectively,
however, the process
requires excellent
coordination with
carefully selected
suppliers.

46. JIT: Just-in-Time Inventory Control
JIT runs into
problems when
suppliers are farther
away.
Shipments may be
delayed due to poor
weather, worker
strikes, and events
such as the power
outage in Ontario in
August 2003.

47. Purchasing - the functional area in a firm that searches for quality
material resources, finds the best suppliers, and negotiates the
best price for quality goods and services

48. Flexible manufacturing - designing machines to do
multiple tasks so that they can produce a
variety of products
Flexible manufacturing (also known as
flex) not only leads to improved
productivity, but it may also result in
cost savings.

49. Lean manufacturing
Lean manufacturing is the production of goods
using less of everything compared to mass
production: less human effort, less manufacturing
space, less investment in tools, and less
engineering time to develop a new product.
A company becomes lean by
continuously increasing its
capacity to produce high-quality
goods while decreasing its need
for resources.

50. Mass Customization

51. Computer-Aided Design and Manufacturing (CAD/CAM)
CAD + CAM = CIM
(computer-integrated
manufacturing)
Image source: http://www.flickr.com/photos/cadcamzone/

52. Chapter Summary
Define operations management - what types of firms use it
Firms in both the manufacturing and the service sectors use
operations managers
Describe the operations management planning issues
involved in manufacturing and the service sectors
Functions involved in both the manufacturing
and the service sectors include facility
location, facility layout, and
quality control

53. Chapter Summary
Discuss the problem of measuring
productivity in the service sector
How technology is leading to productivity
gains in service companies
New information systems must be
developed to measure the quality of
goods and services, the speed of their
delivery, and customer satisfaction.

54. Chapter Summary
How manufacturing
processes can be
used in the
manufacturing sector.
Process
manufacturing
physically or
chemically changes
materials.
Assembly processes
put components
together.

55. Chapter Summary
7 Manufacturing techniques that have improved
the productivity of companies:
• materials requirement planning,
• just-in-time (JIT) inventory control,
• purchasing,
• flexible manufacturing,
• lean manufacturing,
• mass customization, and
• computer-aided design and manufacturing
(CAD/CAM)

57. 57
Homework