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Bovee/Thill, Business in Action 7/e Instructor’s Manual
Chapter 9
PRODUCTION SYSTEMS
Chapter Overview
This chapter combines the two important business functional areas of operations and
information technology. It introduces the key concept of business system and uses it
as a foundation to describe value chain, supply chain management and quality
control. It then surveys how businesses use information systems to help improve both
the efficiency and quality of various business processes.
Chapter Outline
Classroom Activities
Break-out Group Discussion: Offshoring
Goal: Asks students to debate whether it is ethical for firms to offshore production
facilities to countries with less strict environmental standards.
Details:
1. Break students into groups of four or five, with half of the groups supporting
offshoring and the other half opposing offshoring. (2 minutes)
2. Ask the supporting groups to come up with the top two or three reasons they
support offshoring, e.g. more job opportunities for the host country, stronger
economies and improved living standards, etc. Ask the opposing groups to
come up with the top two or three reasons they oppose offshoring such as
degrading environmental conditions in the host country, job losses in the
home country, etc. (10 minutes)
3. Ask teams from both sides to debate each other on the topic whether it is
ethical for firms to offshore production facilities to countries with less strict
environmental standards. The teams may go back and forth, attacking each
other’s viewpoints and rationales. (8 minutes)
End-of-Chapter
In the case of Carvin, the production situation is more complex because of its
combination of automation and human touch. There is some built-in
cushion/slack in the processes that are automated and production capacities can
be easily adjusted. However, it is much harder to adjust product capacity for the
processes that involve human touch. (LO: 4, AACSB: Application of knowledge)
9-3. Wooden musical instruments have been carved by hand for hundreds of
years. Why wouldn’t Carvin want to continue this tradition?
While students’ answers may vary, the following are points to consider:
The tradition of hand-carving wooden musical instruments becomes a major
bottleneck in production to satisfy increasing customer demand. Carvin’s new
approach in mass customization enables it to differentiate itself from both full
custom guitar producers and discounters by producing a large quantity of
customized musical instruments faster and more economically. (LO: 4, AACSB:
Reflective thinking)
(LO: 1)
9-10. Why do some firms now think in terms of value webs instead of value
chains?
Instead of the linear value chain, some businesses now think in terms of value
webs, multidimensional networks of suppliers and outsourcing partners. The
outsourced, value-web approach has several key advantages, including speed,
flexibility, and the opportunity to access a wide range of talents and technologies
that might be expensive or impossible to acquire otherwise. Established
companies can narrow their focus to excel at their core competencies;
entrepreneurs with product ideas can quickly assemble a team of designers,
manufacturing plants, and distributors in far less time than it would take to build
an entire company from scratch. (LO: 2)
needs. All of these benefits help the company to establish an advantage over
competitors. (LO: 3, AACSB: Analytical thinking)
9-13. Ethical Consideration. How does society’s concern for the environment
affect a company’s facility location and layout?
Our society’s concern for the environment affects facility-location decisions
because firms must recognize that the public wants the least amount of
environmental impact possible. In particular the public is concerned that firms
don’t put manufacturing plants in their “backyards.” This puts pressure on firms
to find locations that are acceptable to the public and still cost effective. Layout
decisions are also affected by public interest in the environment because firms
need to be as efficient as possible with as little waste as possible to meet today’s
environmental standards. (LO: 4, AACSB: Ethical understanding and reasoning)
9-15. If 30 percent of the patrons eating at your restaurant say they won’t eat
there again, what steps would you take to define the problem(s) that needs to
be solved, measure the relevant performance variables, and then analyze the
root cause of the problem(s)?
Students’ answers may vary but the following are some points to consider.
Patrons won’t eat at your restaurants again possibly because the food was sub-
standard, or the quality of service was poor, etc. Performance variables may
include quality of good, speed and quality of service, and cleanliness of
restaurant, etc. (LO: 5, AACSB: Application of knowledge)
9-18. What is the nature of the work for industrial production managers?
Does the combination of people management and technical problem solving
appeal to you?
Students’ answer may vary depending on interests, but industrial production
managers plan, direct, and coordinate the production activities required to
produce the vast array of goods manufactured every year in the United States.
They make sure that production meets output and quality goals while remaining
within budget. Depending on the size of the manufacturing plant, industrial
production managers may oversee the entire plant or just one area of it. Industrial
production managers devise methods to use the plant's personnel and capital
resources to best meet production goals. They may determine which machines
will be used, whether new machines need to be purchased, whether overtime or
extra shifts are necessary, and what the sequence of production will be. They
monitor the production run to make sure that it stays on schedule, and they
correct any problems that may arise. (LO: 4, AACSB: Reflective thinking)
9-19. What is the outlook for careers in this profession? If you were interested in
this field, would you consider it, given the job outlook?
Students’ answers will vary depending on their interest. However, employment of
industrial production managers is expected to decline moderately by 2 percent over
the 2012–22 decade. Most of these managers are employed in various manufacturing
industries, which are expected to see a decrease in overall employment as a result of
increased productivity. In the past, employment of industrial production managers
was less affected by productivity gains, since these managers were responsible for
coordinating work activities with the goal of increased productivity. However, as
facilities adapt to this new, leaner production model, employment of workers and
managers should be equally affected by productivity increases.
Some manufacturing jobs are at risk of being sent to other countries with lower
wages, dampening some employment growth. However, this risk may be reduced
by recent trends of “reshoring,” where previously outsourced personnel and
services are being brought back to the United States, and “domestic sourcing”
where firms move jobs to lower cost regions of the United States instead of to
other countries. (LO: 4, AACSB: Reflective thinking)
The potential uses of nanotechnology range from the practical – smart materials that
can change shape and heal themselves, more efficient energy generation and
transmission, superstrong and superlight materials for airplanes, better cosmetics,
smart medical implants, and ultrasmall computers – to somewhat wilder – food-
growing machines and microscopic robots that could travel through your body to
cure diseases and fix injuries. Like any new technology with lots of promise,
nanotechnology also suffers from lots of hype.)
Well over 1,000 nanotechnology-enabled products have hit the market in a number of
industries, from automotive materials to medicine to consumer products. Also,
although they’re slightly larger than the generally accepted scale of nanotechnology,
microelectromechanical systems (MEMS) are having a major impact in some
industries. These tiny machines (pumps, valves, and so on), some no bigger than a
grain of pollen, are used in the nozzles of ink-jet printers, air bag sensors, and
ultraprecise miniature laboratory devices.
Students’ answers will vary depending on the actual products they identify. (LO: 4,
AACSB: Application of knowledge)
Student answers will vary, but should address several key points: (1) production
design, (2) facility layout and (3) commitment to quality. Questions should seek to
find out how efficient the firm is, and how committed to quality and service the firm
is. (LO: 4, AACSB: Application of knowledge)
Students’ answers will vary depending on the company chosen but they should
reflect the stakeholder model in Chapter 4. The best answers should seek to balance
the interests of various stakeholder groups. (LO: 2, AACSB: Ethical understanding
and reasoning)
9-21. What problems led the company to rethink its production process?
What kind of technology did it choose to address these problems? What
goals did the company set for applying technology in this way?
Answers will vary depending on the article and company selected by the student.
(LO: 4)
9-22. Before adding the new technology, what did the company do to analyze
its existing production process? What changes, if any, were made as a
result of this analysis?
Answers will vary depending on the article and company selected by the student.
(LO: 4)
9-23. How did technology-enhanced production help the company achieve its
goals for financial performance? For customer service? For growth or
expansion?
Answers will vary depending on the article and company selected by the student.
(LO: 4)
Assisted-graded Questions
9-24. How does the offshoring controversy reflect the larger question of
balancing the competing demands of stakeholder groups?
Answers will vary but will address the idea that the interests of various
stakeholders are often at odds with one another. Acting in the interests of one
particular group can be detrimental to the interests of others. Businesses need to
consider the big picture, but ultimately choices must be made, perhaps depending
on the magnitude of the impact or upon which stakeholders deserve primary
allegiance. (LO: 2, AACSB: Ethical understanding and reasoning)
9-25. Using any service business you like, how can this company help align
customer expectations of quality with the company’s ability to perform
those services?
Answers will vary depending on the businesses students’ choose. Answers might
include the idea that strong communication is important to align customer
expectations of quality with the service provider’s ability to perform them.
Instead of guaranteeing “great results,” which can be subjective, the company
could quantify the expected results, so it is a matter of fact, not perception, as to
whether they are achieved. (LO: 5, AACSB: Application of knowledge)
CHECKPOINTS
Critical thinking:
(1) Why are leverage points in a system so critical to understand?
Because a leverage point is a relatively small correction that could make the entire
company perform better and represents low cost and high return on investment.
(2) Why should a manager in marketing care about systems in the finance or
manufacturing departments?
Because the systems view states that all of the departments, including finance,
marketing and manufacturing are all interconnected. Seeing how such departments
connect with each other, i.e. seeing the big picture is critically important for business
success.
(2) Think back to your experience of registering for this class. How might you
improve that system?
Students’ responses will vary depending on personal experiences or opinions.
LEARNING OBJECTIVE 2: Describe the value chain and value web concepts,
and discuss the controversy over offshoring.
Critical thinking:
(1) Do U.S. companies have an obligation to keep jobs in the United States? Why or
why not?
Students’ responses will vary depending on personal opinions but points to consider
include the fact that many U.S. companies choose to send manufacturing jobs to
developing countries because of lower labor costs in such countries.
(2) Will global labor markets eventually balance out, with workers in comparable
positions all over the world making roughly the same wages? Explain your answer.
Students’ responses will vary depending on personal opinions.
Critical thinking:
(1) Why can’t companies just stockpile huge inventories of all the parts and materials
they need, rather than carefully manage supply from one day to the next?
Because warehousing large quantities of parts and materials take a lot of space,
which may not be available to many manufacturers. It can also be quite expensive. In
addition, parts and materials can become obsolete. Keeping a huge inventory of parts
and materials may present a significant financial risk.
(2) Why would a company invest time and money in helping its suppliers improve
their business practices? Why not just dump underperformers and get better
suppliers?
Because high-quality supplier network typically takes time and effort to build and
can become a significant competitive advantage for manufacturers.
Critical thinking:
(1) Why is it essential to identify tasks in the critical path of a project?
Because such tasks collective represent the most efficient way to complete a project.
(2) How does mass customization help a company balance productivity and customer
satisfaction?
Mass customization has the twin advantages of economies of scale, which maximize
a firm’s productivity, as well as providing a relatively customized customer
experience, which improves customer satisfaction.
(2) If customers are paying for a service, why should they ever have to share in the
responsibility of ensuring quality results?
Because quality of experience is often an important aspect of customer service, and
under most circumstances, feedback on quality of experience can only come from the
customers.
(2) If you’re not a “natural,” what steps could you take to succeed in a service job
anyway?
Students’ responses will vary depending on personal opinions.
Critical thinking:
(1) How significant is the role of software in product quality today?
As products become increasingly complex, defining and maintaining quality becomes
an even greater challenge. Additionally, sophisticated production methods also
increase the chance that something can – and most likely will – go wrong. Quality
management software can assist a company in managing corrective and preventive
actions, root cause analysis, audits, and customer and supplier issues.
(2) Have you ever tried anything like the Six Sigma DMAIC process in your own
life, even partially or informally?
Students’ responses will vary depending on personal experiences.
III.