Week 1

Notion of trade-off in operations capabilities

You cannot achieve one capability without sacrificing another

To achieve high-quality production…

Costs will increase

To achieve flexibility…

Costs will increase and quality will decrease

This visual shows a company sacrificing one Capability for another.

This visual shows building on capabilities. Building capabilities is generally more challenging than sacrificing one capability for another.

What is an example of trade-off versus cumulative capabilities?

Ford versus Toyota

Ford only making their cars in black in order to control costs

Toyota was able to offer different versions of cars without sacrificing costs. They Pioneeredcumulative capabilities

Mass customization

is the capability of Producing products that are customized to meet specific customer needs while charging low prices

additive manufacturing for single unit production

Using 3-D printing for specific use cases. Can eliminate the need for dyes and molds while keeping costs low

Quality is harder to define for?

Services

Production and consumption for services is mostly

Simultaneous

Three main service management concepts

1. Customer variability

2. Front and back office

3. Service profit chain

What are the sources of customer variability in services?

Arrival

The timing of demand of customers is uncertain

Request

What the customer demanded varies. Each customer can have a completely different demand.

Capability

Customers having different levels of ability In the things they need to do To have a good service experience

Effort

Customers have different motivation levels

Subjective preference

Different customers have different ideas of what good service means

implications of the front office

Direct customer encounters

1. Provide opportunities to delight

2. Provide openings for mass customization

3. Increase uncertainties in service delivery parameter

4. Result in inefficiencies in service delivery

Service profit chain in short

Happy employees can lead to happy customers and happy shareholders or owners

Common operations capabilities

• Cost

• quality - Control, Features

• delivery - Speed, Reliability

• flexibility - mix, Volume

Operations strategy, decision areas

1. Investments

2. Organization

Investments

1. Location and size of facility

2. Layout of facility

3. Technology choice

4. Extent of vertical integration

Organization

1. Salaries and incentives and employee training

2. Quality management

3. Scheduling of production

4. Centralized versus decentralized control

Order qualifier

Minimum selection criterion that permits, products or services to be even considered by potential customers

Order winner

Criterion that differentiates the products or services from competitors thus resulting in winning orders of customers

Order winners in order qualifiers May get interchanged for different customer segments

Definition of operations strategy

The total pattern of decisions which shaped the long-term capabilities of any type of operation and their contribution to overall strategy, Through the reconciliation of market requirements with operations resources.

Definition of business strategy

Integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage

Alignment among strategies

Method of organizing and doing work

Role of operations

1. Design

2. Manufacturing

3. Sales and distribution

4. After sales service

5. Upgrades

6. Disposal

Defining operations management

Objective is to efficiently and effectively Utilize resources To design produce and deliver products, goods and services. They must be the right quality, right quantity right cost, and available at the right place at the right time to meet customer expectations.