262 [PART Business Management Empowering Employees to Setty Customers Describe the current state of U.S, manufacturing and what manufacturers hhave done to become more competitive. rr + What is the current state of manufacturing in the United States? Activity in the nation’s manufacturing sector has declined since its height. The result has been fewer jobs in manufacturing. Even though manufac- turing companies offer fewer jobs, they have become more productive, meaning that they need fewer employees to do the same amount of work. Today many manufacturing jobs are coming back to the U.S. as labor costs increase in other countries. Much of this chapter is devoted to showing ‘you what manufacturers and service providers can do to revive the U.S. economy to become world-class competitors. + What have U.S. manufacturers done to achieve increased output? US, manufacturers have increased output by emphasizing close relation- ships with suppliers and other companies to satisfy customer needs; con- tinuous improvement; quality; site selection; use of the Internet to unite companies; and production techniques such as enterprise resource plan- ning, computer-integrated manufacturing, flexible manufacturing, lean manufacturing, and robotics. EE) Per be the evuton om proaucton to operations management. + What is production management? Production management consists of all the activities managers do to help their firms create goods. To reflect the change in importance from manu- facturing to services, the term production is often replaced by the term operations. + What is operations management? Operations management is the specialized area in management that con- verts or transforms resources, including human resources, into goods and + What kind of firms use operations managers? Firms in both the manufacturing and service sectors use operations managers, |dentify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible ‘manufacturing, lean manufacturing, mass customization, and robotics. cr + What is process manufacturing, and how does it differ from assembly processes? Process manufacturing physically or chemically changes materials. Assem- bly processes put together components. + How do CAD/CAM systems work? Design changes made in computer-aided design (CAD) are instantly incor porated into the computer-aided manufacturing (CAM) process. The link- ing of CAD and CAM is computerintegrated manufacturing (CIM). + What is flexible manufacturing? Flexible manufacturing means designing machines to produce a variety of products,+ What is lean manufacturing? Lean manufacturing is the production of goods using less of everything than in mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. + What is mass customization? Mass customization means making custom-designed goods and services for a large number of individual customers. Flexible manufacturing makes mass customization possible. Given the exact needs of a customer, flexible machines can produce a customized good as fast as mass-produced goods ‘were once made, Mass customization is also important in service industries + How do robotics help make manufacturers more competitive? Industrial robotics can work 24 hours a day, seven days a week, with great precision, Most of the jobs they replace are dirty or so repetitive that robots are necessary, or at least helpful, EER) Pe cveretons management panning sues ncn ect eaten, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control. + What is facility location and how does it differ from facility layout? Facility location is the process of selecting a geographic location for a com. pany's operations. Facility layout is the physical arrangement of resources, including people, to produce goods and services effectively and efficiently. + How do managers evaluate different sites? Labor costs and land costs are two major criteria for selecting the right sites. Other criteria include whether resources are plentiful and inexpen- sive, skilled workers are available or are trainable, taxes are low and the local government offers support, energy and water are available, trans- portation costs are low, and the quality of life and of education are high. + What relationship do materials requirement planning (MRP) and enterprise resource planning (ERP) have with the production process? MRP is a computer-based operations management system that uses sales forecasts to make sure the needed parts and materials are available at the right time and place. Enterprise resource planning (ERP), a newer version of MRP, combines the computerized functions of all the divisions and sub- sidiaries of the firm—such as finance, material requirements planning, human resources, and order fulfillment—into a single integrated software program that uses a single database. The result is shorter time between orders and payment, less staff to do ordering and order processing, reduced inventories, and better customer service for all the firms involved. + What is justin-time (JIT) inventory control? JIT requires suppliers to deliver parts and materials just in time to go on the assembly line so they don't have to be stored in warehouses, + What is Six Sigma quality? Six Sigma quality sets standards at just 3.4 defects per million opportuni: ties and detects potential problems before they occur: Statistical quality control (SQC) is the process some managers use to continually monitor all processes in the production process and ensure quality is being built into the product from the beginning. Statistical process control (SPC) tests sta- tistical samples of product components at each stage of the production process and plots the results on a graph so managers can recognize and correct deviations from quality standards. 283264 PARTS Business Management Empowering Employee to Setisty Customers + What quality standards do firms use in the United States? To qualify for the Malcolm Baldrige National Quality Award, a company must demonstrate quality in seven key areas: leadership, strategic plan- ning, customer and market focus, information and analysis, human resources focus, process management, and business results. International standards U.S. firms strive to meet include ISO 9000 and ISO 14000. The first is a world standard for quality and the second is a collection of the best practices for managing an organization's impact on the environment. Ey Sate wee ete ont vet charts to control manufacturing proceses + Isthere any relationship between a PERT chart and a Gantt chart? Figure 9.3 shows a PERT chart. Figure 9.4 shows a Gantt chart. Whereas PERT is a tool used for planning, a Gantt chart is a tool used to measure progress. ‘assembly process 247 formuttlity 247 production 245 computer-aided design Gantt chart 260 production (CAD) 248 intermittent process 248 management 245, computer-aided manufac- 180 14000 259 program evaluation and turing (CAM) 248 feces review technique computer-integrated ustin-time (JIT) inventory _(PERT) 260 manufacturing sears MEO purchasing 257 (CIM) 249 continuous process 247 critical path 260 lean manufacturing 249 quality 257 mass customization 250 S®*Sigma quality 258 materials requirement statistical process control ‘enterprise resource planning (MRP) 254 (SPC) 259 planning(ERP) 255, perations! statistical quality control facility layout 254 management 245 eee aol facility location 252 process telecommuting 254 flexible manufacturing 249 manufacturing 247 <>} 1, Workers on the manufacturing floor are being replaced by robots and other machines. On the one hand, this lets companies compete with cheap labor from other countries. On the other hand, automation eliminates many jobs. Are you concerned that automation may increase unemploy- ment or underemployment in the United States and around the world? Why or why not? 2. Computer-integrated manufacturing (CIM) has revolutionized the produc- tion process. What will such changes mean for the clothing industry, the shoe industry, and other fashion-related industries? What will they mean for other consumer and industrial goods industries? How will you benefit 3. One way to create new jobs in the United States is to increase innovation among new graduates from engineering and the sciences. How can the United States motivate more students to major in those areas?