MGMT 3000 1st edition Lecture 32 Outline of Last Lecture I Strategic information II Processing information III Capturing information IV Protecting information Outline of Current Lecture I Productivity II TQM III Processing in manufacturing Current Lecture Productivity Productivity matters for companies because it leads to lower costs and prices and higher profits Productivity matter for countries because it leads to higher standard of living and wages Operations is one of the main components of the balanced scorecard and it is linked to productivity Operations management managing the daily production of goods and services 2 components 1 Productivity Efficiency Quantity of inputs vs outputs a Productivity is a measure of performance that indicates how many inputs it takes to produce or create an output b Outputs inputs fewer inputs equals higher productivity c Partial productivity Outputs Single kind of input d Multifactor productivity Outputs labor capital materials energy 2 Quality defects reliability performance durability or serviceability of the product a Reliability average time between breakdowns b Serviceability ease of repair vs product failure c Durability Mean time to product failure Quality related characteristics for services 1 Reliability Ability to consistently perform a service well 2 Tangibles Appearance of the offices equipment and personnel with the delivery of a service 3 Responsiveness Promptness and willingness with which service provider gives good service 4 Assurance Confidence that service providers are knowledgeable courteous and trustworthy 5 Empathy Extent to which service provider gives individual attention and care to customer s concerns and problems ISO 9000 a series of five international standards for achieving consistency in quality management and quality assurance These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute ISO 1400 a series of international standards for managing monitoring and minimizing an organizations harmful effect on the environment Baldridge national quality award Given to recognize U S companies for their achievements in quality and business performance and to raise awareness about the importance of quality and performance excellence as a competitive edge Total quality management TQM integrated organization wide strategy philosophy for improving product and service quality Characterized by Customer Focus means that the entire organization from top to bottom should be focused on meeting customers needs The result of that customer focus should be customer satisfaction which occurs when the company s products or services meet or exceed customers expectations Continuous improvement is an ongoing commitment to increase product and service quality by constantly assessing and improving the processes and procedures used to create those products and services o Continuous improvement is usually associated with a reduction in variation Variation is a deviation in the form condition or appearance of a product from the quality standard for that product The less a product varies from the quality standard or the more consistently a company s products meet a quality standard the higher the quality Teamwork means collaboration between managers and nonmanagers across business functions and between the company and its customers and suppliers Service Profit chain Success actually begins with how well management treats service employees as the serviceprofit chain The key concept behind the service profit chain is internal service quality meaning the quality of treatment that employees receive from a company s internal service providers Employee satisfaction occurs when companies treat employees in a way that meets or exceeds their expectations Service capability is an employee s perception of his or her ability to serve customers well Finally according to the service profit chain high value service leads to customer satisfaction and customer loyalty which in turn lead to long term profits and growth Service Recovery and empowerment Service Recovery restoring customer satisfaction to dissatisfied customers Empowerment permanently passing decision making authority and responsibility to workers Processing in manufacturing Operations The highest degree of processing occurs in make to order operations A make to order operation does not start processing or assembling products until it receives a customer order A moderate degree of processing occurs in assemble to order operations A company using an assemble to order operation divides its manufacturing or assembly process into separate parts or modules The company orders parts and assembles modules ahead of customer orders Then based on actual customer orders or on research forecasting what customers will want those modules are combined to create semi customized products The lowest degree of processing occurs in make to stock operations also called build to stock Because the products are standardized meaning each product is exactly the same as the next a company using a make to stock operation starts ordering parts and assembling finished products before receiving customer orders Operations Strategy setting broad policies and plans for using the resources of a firm must be integrated with the corporate strategy Operations effectiveness performing activities in a manner that best implements strategic priorities at a minimum cost