OPERAT

IONS

MANAGEMENT IN

MANUFACTU

RING A

ND

SERVICE IN

DUSTRIE

S

CH

AP

TE

R 1

1

Operations Management

The value-creation activities that convert a company’s inputs into finished goods and services.

Materials Management

The set of activities that control the flow of resources into and out of a firm’s operating system.

Creating a competitive advantage

Production Operation Systems

Make-to-Order

Alden Restaurant Furniture

Production Operation Systems

Mass Production

X-Box

Production Operation Systems

Mass Customization

Sears Optical

Facility Layouts

Arranging the product process as efficiently as possible.

Process layout: Grouping people by task; specialized equipment used to perform tasks.

Product layout: Products produced by people arranged in an assembly line.

Cellular layout: Small teams handle all aspects of production (e.g., construction, plumbers, or electricians)

Tyco’s factory layout

Bread factory layout

Furniture factory layout

Keeping track of production schedules

Gantt chart

Vermont Teddy Bear

Keeping track of production schedules

Start

Cut material for cloth (10 min.)

Sew clothes (10 min.)

Embroider T-shirt (10 min.)

Dress bear (15 min.)

Package bear (5 min.)

Ship bear (5 min.)

Cut fur (10 min.)

Stuff fur (30 min.)

Cut accessories (5

min.)

Sew accessories (10

min.)

PERT Chart: How long does it take to make a teddy bear?

Keeping track of production schedules

Start

Cut material for cloth (10 min.)

Sew clothes (10 min.)

Embroider T-shirt (10 min.)

Dress bear (15 min.)

Package bear (5 min.)

Ship bear (5 min.)

Cut fur (10 min.)

Stuff fur (30 min.)

Cut accessories (5

min.)

Sew accessories (10

min.)

PERT Chart: How long does it take to make a teddy bear?

Critical Path: The longest path

Service Blueprint Components

Blueprint for Overnight Hotel Stay ServiceS

UP

PO

RT

PR

OC

ES

SC

ON

TAC

T P

ER

SO

N

(Bac

k S

tage

)(O

n S

tage

)

CU

ST

OM

ER

Hotel ExteriorParking

Cart for Bags

DeskRegistrationPapersLobbyKey

ElevatorsHallwaysRoom

Cart for Bags

RoomAmenitiesBath

Menu DeliveryTrayFoodAppearance

Food BillDeskLobbyHotel ExteriorParking

Arriveat

Hotel

Give Bagsto

BellpersonCheck in

Go toRoom

ReceiveBags

SleepShower

CallRoom

Service

ReceiveFood

EatCheck out

andLeave

Greet andTakeBags

ProcessRegistration

DeliverBags

DeliverFood

ProcessCheck Out

Take Bagsto Room

TakeFoodOrder

RegistrationSystem

PrepareFood

PH

YS

ICA

LE

VID

EN

CE

Line of Interaction

Line of Visibility

Line of Internal Interaction

RegistrationSystem

Total Quality Management (TQM)

Continuous improvement of the product process by increasing the quality of product and lowering operating costs.

Key components of TQM

• Involve top management• Employee involvement• Focus on customer satisfaction• Continuous improvement