Developing And Producing

Goods And Services

Exploring Business

Chapter 6
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Exploring Business
Chapter Objectives
1. Define product and explain sources of product
ideas
2. Explain how to research an industry and
forecast demand
3. Describe the product development process
4. Define operations management and discuss
responsibilities of operations managers
5. List characteristics distinguishing service
from manufacturing operations
6. Explain the use of technology, TQM, and
outsourcing to provide value

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 Product
Exploring Business

“…something that can be

marketed to customers…
provides…a benefit and
satisfies a need.”

Tangible v. Intangible
(Good) v. (Service)
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 New Products
Exploring Business

6-4
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 Product Development
Exploring Business

Idea

Analysis

Develop
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 Generating “New”
Exploring Business

✧New Product

✧Incremental
Improvement

✧Creative Consultants
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Exploring Business
Customers
“…buy products to fill
unmet needs and
because they expect to
derive some value or
benefit from them.”

6-7
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Exploring Business
Idea/Opportunity

6-8
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Exploring Business
Industry
“…a group of related
businesses.”

6-9
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Exploring Business Understand Industry
Evaluate
• Segment Market
• Find Niche—Unmet need
Assess Competition
Understand Customer Needs
Forecast Demand
• Published Industry Data
• Similar Businesses
• Potential Customers
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 Develop/Market
New Product
Exploring Business

6-11
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Exploring Business
Assessing Competition
Industry sales
growing/contracting?
Major competitors?
Product differ?
Opportunities/threats?
Recent changes/direction?
Technology?
Mature/new company success?
Reasonable profits?
6-12
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 Operations Management
Exploring Business

“…all activities involved in

transforming a product idea
into a finished product, as
well as those involved in
planning and controlling the
systems that produce
goods and services.”
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Exploring Business Transformation Process

6-14
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Exploring Business
Utility
Time
Place

Ownership

Form
6-15
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 Risks to
Product Development
Exploring Business

Trade-Offs

Time Pressure

Economics
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 Development Process
Exploring Business

“…series of activities by
which a product idea is
transformed into a final
product.”

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 Product Development
Exploring Business

6-18
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Exploring Business
Patent
“…right to exclude others from
making, using, offering for sale,
or selling the invention in the
United States for 20 years.”
Must:
1. Be new
2. Not be obvious
3. Have utility

Website: http://www.uspto.gov
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Exploring Business
Manufacturing
“…manufacturers…perform
the same basic function: to
transform resources into
finished goods.”
Operations Management:
1. Production Planning
2. Production Control
3. Quality Control
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 Planning:
Production Method Decisions
Exploring Business

Make-To-Order

Mass Production

Mass Customization
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Exploring Business
Facilities Decisions
Site Selection
• Close to suppliers, customers, or both
• Supply of skilled workers
• Quality of life
• Resource costs
• Business climate
Capacity Planning
Layout Planning

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Exploring Business
Process Layout

6-23
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Exploring Business
Product Layout

6-24
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Exploring Business
Cellular Layout

6-25
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 Purchasing And
Supplier Selection
Exploring Business

 Purchasing

 Supplier Selection

 E-Purchasing

 Electronic Data Interchange

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Exploring Business
Inventory Control
 Just-In-Time

 Material
Requirements Planning

 Manufacturing Resource
Planning
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Exploring Business
Work Scheduling
❽Master Production Schedule

❽Gantt Charts

❽PERT Charts
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Exploring Business
Gantt Chart

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Exploring Business
PERT Chart

6-30
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 Technology Of
Goods Production
Exploring Business

Computer-Aided Design
Computer-Aided
Manufacturing
Computer-
Integrated Manufacturing
Flexible Manufacturing Systems

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 Service Providers And
Operations Management
Exploring Business

Intangibility

Customization

Customer Contact
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Exploring Business Operations Planning
Operations Processes
• Make-To-Order
• Make-To-Stock
Facilities
• Site Selection
• Size/Layout
• Capacity Planning
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 Managing Operations
Exploring Business

Scheduling

Inventory Control

6-34
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 Quality Management
Or Assurance—TQM
Exploring Business

Customer Satisfaction
Employee Involvement
Continuous Improvement
• Statistical Process Control
• Benchmarking
International Quality Standards
• ISO 9000
• ISO 14000

6-35
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Exploring Business
Outsourcing
Manufacturing

Service
6-36
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