Optimizing Business Production and Operations

Key Production Function Activities

Procurement

Provides the necessary materials for production, including supplier selection and purchasing management.

Manufacturing

Manages the production process, transforming various production factors into a final product.

Quality Control

Verifies that the manufactured product possesses the characteristics desired by customers.

Current Trends in Production and Operations

Global Outlook

Companies are no longer limited to producing for a single country; they can produce in different countries or organize their production globally.

Just-In-Time (JIT) Production

Businesses no longer produce in large quantities for storage. Instead, they aim to offer products precisely when demanded by the client, necessitating rapid production.

Mass Customization

Companies strive to offer tailored products while simultaneously producing large quantities to achieve economies of scale.

Delegating Roles and Worker Autonomy

Workers increasingly have more autonomy in their workplaces, requiring significant creativity and knowledge.

Types of Production Processes

Production Projects

Consists of transforming or producing goods that meet the individual needs of a specific customer, based on their indicated characteristics and assignments.

Workshops or Batch Production

The production transformation is divided into units, each assigned an activity that includes one or more operations. Each unit is often called a workshop or section.

Mass Production

Applies to mass consumption items (e.g., televisions, refrigerators). Factories anticipate needs, basing production systems on stock, and have processes efficient enough to respond quickly to demand.

Production Strategies

Low-Cost Strategies

The objective is to offer products at a competitive, low price without incurring losses. Consumers perceive value by paying a lower price for a product or service. This section explores methods for companies to reduce costs.

Reliability and Flexibility

This strategy encompasses different aspects: the company delivers the product when appropriate, adapts easily to changes in the environment, and is capable of rapid production.

Key Production and Operations Decisions

• Product and Service Design: The design dictates the subsequent production process.
• Quality: Refers to meeting consumer wishes and expectations.
• Process Design and Capacity Decisions: Determining how products are made and the production volume.
• Location Selection: Choosing the optimal site for production facilities.
• Production Scheduling: Involves deciding the order, timing, and calendar for production.
• Maintenance: Ensures that facilities function properly and prevents potential problems.

Total Quality Management (TQM)

A business management approach focused on the continuous improvement of its processes and outcomes. It represents a culture and operational style that involves the entire staff of the company or organization.

Time Horizons in Production

Long Term

A period where a company can change the amount of all production factors, including fixed factors and technology used in the organization.

Short Term

A period where production varies by changing the amount of variable factors, while fixed factors remain constant.