Page 538 - Business Principles and Management

Chapter 19 • Product Planning and Production Management

wanted to produce a new food product or drug. They had already spent months
and often years developing and testing the product. Then they had to prepare,
print, and ship volumes of reports to the FDA for approval. Today that entire
process can be managed on the Web. Companies can transmit reports instantly,
research questions online, send answers to the FDA by e-mail, and conduct meet-
ings on computer screens. The approval process time has been cut in half, and
the cost of approval has gone down substantially.
An automobile manufacturer with plants in many countries around the world
is improving the automobile design process using the Internet. Product designers
come together in cyberspace to share ideas and plan new products. If one factory
identifies design or manufacturing problems, it can immediately share informa-
tion about the problems with every other facility and cooperatively develop a
solution. The system is resulting in cost savings because there are fewer design
problems and good designs are now being used over and over in many locations.
Also, the manufacturer benefits from greater creativity in developing new auto-
mobile models as people from around the world share their ideas.

CHECKPOINT

Describe the factors companies consider when they plan
production.

19.2 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Circle the best answer for each of the following questions.
1. All of the following should be considered when deciding where to
locate a manufacturing company except
a. availability of raw materials
b. transportation methods
c. supply and cost of energy and water
d. international competition
2. Production planning includes all of the following except
a. building planning
b. human resource planning
c. inventory management
d. production scheduling

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Explain why a company would need to consider the supply and cost
of energy and water.
4. Explain why quality standards are important for
manufacturing businesses.

thomsonedu.com/school/bpmxtra

525