Midterm 1 - Chp. 1, 2, 3 (Version 2)

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

Operations Management

Any activity or group of activities that takes inputs, transforms them, and provides outputs for customers.

Process:

The concept that a process can be broken down into sub processes, which can be further subdivided.

Nested Process

Manufacturing:

Output: Physical, durable; can be inventoried

Customer Contact: Low

Response Time: Long

Intensity: Capital intensive

Quality: Easily measured

Manufacturing Processes (Service vs. Manufacturing Processes)

Service:

Output: Intangible, perishable; cannot be inventoried

Customer Contact: High

Response Time: Short

Intensity: Labor intensive

Quality: Not easily measured

Service (Service vs. Manufacturing Processes)

Deliver value directly to external customers.

Core Processes

Selecting suppliers and facilitating the flow of items into the firm.

Supplier Relationship Process

Designing new offerings based on customer specifications or market trends.

New Service/Product Development

Activities required to produce and deliver the service/product to the customer.

Order Fulfillment

Identifying and building relationships with customers and facilitating order placement.

Customer Relationship Process

Provide vital resources to the core processes.

Examples: Accounting (tracking finances), Finance, HR (hiring/training), Management Information Systems (data processing), and Marketing.

Support Processes

A basic measure of performance for economies and firms:
Productivity = Output/Input

Productivity

Labor Productivity = 600 policies / (3 employees×40 hours/employee) = 5 policies/hour

Labor Productivity Example

Provides overall direction and serves as a framework for all organizational functions.

Corporate Strategy

Monitoring trends in industry, technology, and competition.

Environmental Scanning

Utilizing key resources like people, facilities, and technology to drive core processes.

Core Competencies

Includes strategic alliances (joint ventures (marriage), , tech licensing) and locating operations abroad.

Global Strategies

Implements corporate strategy to build a customer-driven firm.

Operations Strategy

The minimum level required for a firm to do business in a specific market segment.

Order Qualifiers

Criteria customers use to differentiate one firm's products/services from another's.

Order Winners

Critical dimensions a process must possess (Cost, Quality, Time, and Flexibility).

Competitive Priorities

A technique to refine offerings using the "House of Quality".

Quality Function Deployment (QFD)

Technical matters related to customer needs.

Voice of the Engineer

Comparing performance against competitors.

Technical Comparison

Identifying customer needs in everyday life and screening for feasibility.

Design (Development Step 1)

Ensuring the product meets corporate strategy and regulatory standards.

Analysis (Development Step 2)

Using competitive priorities to design the process, pilot production runs, and train personnel.

Development (Development Step 3)

Ramping up production and conducting post-launch reviews.

Full Launch (Development Step 4)

High customer contact where the provider interacts directly with the customer; high customization.

Front Office

Low customer contact and little customization; standardized work.

Back Office

Customization, Volume, & Process: High volume/standardization requires line or continuous-flow processes; low volume/high customization requires job or small batch processes.

Product-Process Matrix Concept

Make-to-Stock: High-volume mass production based on forecasts.(Buffet)

Make-to-Stock

Producing components in advance and assembling them once an order is received. (Subway, jersey mikes)

Assemble-to-Order

Increased value, better quality, faster delivery, and lower costs (e.g., IKEA assembly).

Customer Involvement Advantages

Can be disruptive, challenging to manage volume/timing, and requires interpersonal skills.

Customer Involvement Disadvantages

Flexible workforces and general-purpose equipment are best for low-volume, high-variety environments.

Resource Flexibility

Versatile robots/machines capable of multiple tasks; allows for economies of scope.

Flexible Automation

The ability to produce multiple products more cheaply in combination than separately.

Economies of Scope

Radical redesign of processes to achieve dramatic performance improvements.

Process Reengineering

Focus on critical processes, strong leadership, cross-functional teams, and information technology as a primary enabler.

Key Elements of Process Reengineering