UGBA 10 FInally

Operations Management (why a student needs to understand it)

heart of the creation of wealth for business and the improvement in the living standard of citizens of all countries

1. delivery speed
2. variety
3. customization
4. low cost operations

Amazon's defined 4 competitive priorities

3 dimensions of operations and sustainability

economic, environmental, and social

Operations Management

The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers

process

an activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers

operations

group of resources performing all or part of one or more processes

supply chain

linked together processes

Supply Chain Management

the alignment of a firm's processes with those of its suppliers and customers to match the flow of materials , services, and information with customer demand

Inputs

can include a combination of human resources, capital, purchased material and services, land and energy

outputs

can be services (that can take the form of information) or tangible products

external customers

other businesses or individuals who provide the resources, services, products, and materials for the firm's short and long-term needs.

internal customers

employees or processes that supply important information or materials

nested process

the concept of a process within a process

on a continuum or with manufacturing processes on one end and service processes on the other end

ways process can be mapped

1. the nature of their output (manufacturing \= physical products, service \= intangible products)
2. the degree of customer contact (manufacturing \= low degree, service \= high degree)

2 key differences between manufacturing and service processes are:

less

classifications at the process level are \__________ ambiguous than classifications at the firms level

service, manufacture a product

a firm can provide a \__________ and \________________

the link between processes and performance (internal and external processes)

A supply chain reinforces...

core processes

a set of activities that delivers value to external customers

supplier relation process, new service/product development process, order fulfillment process, and customer relationship process

4 core processes:

support process

provides vital resources and inputs to the core processes and is essential to the management of the business

Corporate Strategy

important to understand and keep the \________________ in mind before you start making decisions on operations management

trade-offs

operations management is full of \______________

1. Marketing strategy
2. operations strategy
3. financial strategy

3 examples of functional areas

corporate strategy

represents the overall direction for the company

1. corporate strategy
2. market analysis
3. competitive priorities
4. competitive capabilities

general framework to understand the connection among:

Corporate Strategy

provides an overall direction that serves as the framework for carrying out all the organization's functions

1. environmental scanning
2. developing core competencies
3. developing core processes
4. developing global strategies

developing a corporate strategy involves:

Market Analysis

involves segmenting a firm's customers based on clear characteristics and then identifying the needs of each segment, including price, quality, customization, delivery system, and volume needs

Competitive Priorities

the critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future

the quality of your products should be the highest one among all products in the market

competitive priorities may indicate that:

Competitive Capabilities

the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver

closes the gap between a competitive priority and a firm's capability to achieve that competitive priority

An effective operations strategy

low-cost operations

Delivering a service or a product at the lowest possible cost to the satisfaction of external or internal customers of the process or supply chain

top quality

delivering an outstanding service or product

consistant quality

producing services or products that meet design specifications on a consistent basis

Delivery Speed

quickly filling a customer's order

on-time delivery

Meeting delivery-time promises

development speed

Quickly introducing a new service or a product

Customization

satisfying the unique needs of each customer by changing service or product designs

variety

Handling a wide assortment of services or products efficiently

volume flexibility

accelerating or decelerating the rate of production of services or products quickly to handle large fluctuations in demand

1. low-cost operations
2. top quality
3. consistent quality
4. delivery speed
5. on-time delivery
6. development speed
7. customization
8. Variety
9. Volume flexibility

9 broad competitive priorities

Order Qualifiers

Minimum level required from a set of criteria for a firm to do business in a particular market segment.

Order Winners

a criterion customers use to differentiate the services or products of one firm from those of another

Productivity Improvement

value of outputs produced divided by the value of input resources

increased cross-border investment and increased information technology investment

factors driving increased productivity

labor productivity

output per person or per hour worked

machine productivity

output per machine or per hour operated

Global Competition

exists when firms originate, produce, and market their products and services worldwide

favorable tax laws ad presence in new market

benefits of global competition

1. improved transportation and communication on technologies
2. loosened regulations on financial institutions
3. increased demand for imported services and goods
4. reduced import quotas and other international trade barriers
5. Comparative cost advantages

the 5 developments triggered the need for sound global strategies

risk of giving up proprietary technology, nationalization, and political instabality

disadvantages of globalization

environmental issues, potential ethical dilemmas

Firms have a responsibility for creating \_______________ and \_____________________ arise when business is conducted under different rules; technology changes and brings debates about data protection and customer privacy

integrity, respect for the individual, customer satisfaction, productivity, quality, cost, and profit

operations managers should consider \____________, \________________, and \_____________________ along with more traditional performance metrics such as \_______________, \___________________,\_________ and \_____________

population growth, resource consumption and climate change

environmental issues that effect world's natural resources

set of decisions

view operations management as a...

developing new capabilities, maintaining existing capabilities, designing new processes, developing supply chains, and achieving cost and quality targets

operations management makes several strategic and tactical decisions including:

supply chain, quality, technology, and staffing issues

Each part of an organization must design and operate processes that are part of a \____________ and deal with \_______________,\_______________, and \__________________.

Process View

every single product or service at a business is performed by at least one process

True

T/F: there are processes in supply chains and supply chains can also be seen as a process

Services

processes are not just in manufacturing operations but also in \_________________

billing budge, engineering, sales, waste management and finance

examples of service

Process Strategy

the pattern of decisions made in managing processes so that they will achieve their competitive priorities

Strategic Fit

A state in which an organization's strategy is consistent with its external opportunities and circumstances and its internal structure, resources, and capabilities.

Strategic Fit

the key to successful process decisions is to make choices that have \________________

Individual processes

building blocks that create the firm's entire supply chain

1. process structure
2. customer involvement
3. resource flexibility
4. capital intensity

basic process decisions

Process Strategy

determines the process type relative to the kinds of resources needed

customer involvement

reflects the ways in which customers become part of the process and the extent of their participation

resource flexibility

the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions

capital intensity

the mix of equipment and human skills in a process

customer contact

the extent to which the customer is present, is actively involved, and receives personal attention during the service process

1. Degree of Customer Contact
2. Customization
3. Process Characteristics

Customer-Contact Matrix

X axis customer-contact matrix

the service provided to the customers in terms of customer contact and competitive priorities

Y axis customer-contact matrix or product process matrix

process divergence and flow

process divergence

the extent to which the process is highly customized with considerable latitude as to how its tasks are performed

flow

the movement of customers, materials, or information

1. front office
2. hybrid office
3. back office

3 process structures of matrix

front office

a process with high customer contact where the service provider interacts directly with the internal or external customer

hybrid office

a process with moderate levels of customer contact and standard services with some options available

back office

a process with low customer contact and little service customization

1. volume
2. product customization
3. process characteristics

product-process matrix

x-axis product-process matrix

represents volume and product customization

1. job process
2. batch process
3. line process
4. continuous flow process

4 process choices from product-process matrix

job process

a process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable divergence in the steps performed

Batch Process

a process that differs from the job process with respect to volume, variety, and quantity

line process

a process that lies between the batch and continuous processes on the continuum; volumes are high and products are standardized, which allows resources to be organized around particular products

continuous flow process

the extreme end of high-volume standardized production and rigid line flows, with production not starting and stopping for long time intervals

Inventories

manufacturing processes differ from service processes in part because of the ability to use \____________.

made-to-order strategy

used by manufacturers that make products to customer specifications in low volumes

assemble-to-order strategy

producing a wide variety of products from relatively few subassemblies and components after the customer orders are received

made-to-stock strategy

involves holding items in stock for immediate delivery, thereby minimizing customer delivery times

layout

the physical arrangement of operations created from the various processes and puts them in tangible form

better quality, faster delivery, greater flexibility, lower cost, supply chain coordination, collaboration

advantages to customer involvement

disruption, inefficiencies, quality implications, higher cost of added training and skill level of service provider, revisions of facility layout, decentralized facilities

disadvantages of customer involvement

Flexibility

the ease with which employees and equipment can handle a wide variety of products, output levels, duties and function

work force and to eqipment

flexibility decisions apply to...

workforce

operations managers need to decide whether or not to have a flexible \______________

equipment

managers need to balance the type-volume of products v. the type of \_____________ to invest in