Operations Management: Processes, Strategies, and Analysis Flashcards

A comprehensive set of 100 vocabulary flashcards covering key terms, process definitions, calculations, order winners/qualifiers, process choices, and reengineering concepts from Operations Management lecture notes.

External Customers

End customers who purchase or receive the services or products produced by an organization.

Internal Customers

Employees or internal processes that rely on inputs from other internal processes or employees to perform their work.

External Suppliers

Outside vendors or businesses that provide services, materials, and information to an organization.

Internal Suppliers

Employees or internal processes that provide information, materials, or services to other internal processes within the firm.

Nested Process

The concept of a process within a process, where a process is broken down into subprocesses, which in turn can be further broken down into additional subprocesses.

Manufacturing Process Characteristics

Operations characterized by physical and durable outputs, output that can be inventoried, low customer contact, long response times, high capital intensity, and easily measured quality.

Service Process Characteristics

Operations characterized by intangible and perishable outputs, output that cannot be inventoried, high customer contact, short response times, high labor intensity, and quality that is not easily measured.

Core Processes

A set of activities that directly deliver value to external customers, where managers and employees interact with external customers, develop new products/services, and manage suppliers.

Supplier Relationship Process

A core process that selects suppliers of services, materials, and information and facilitates the timely and efficient flow of these items into the firm.

New Service/Product Development Process

A core process that designs and develops new services or products based on inputs from external customer specifications or market demands.

Order Fulfillment Process

A core process that includes all activities required to produce and deliver a service or product to the external customer.

Customer Relationship Process

A core process (also known as customer relationship management) that identifies, attracts, and builds relationships with external customers and facilitates the placement of orders.

Support Processes

Processes such as Accounting, Finance, Human Resources, Management Information Systems, and Marketing that provide vital resources and inputs to core processes.

HR Support Function

A support process responsible for hiring and training personnel to provide human resources to core business processes.

Legal Support Function

A support process that ensures the organization maintains compliance with rules, regulations, and legal standards.

Accounting Support Function

A support process responsible for tracking how financial resources are created and allocated over time.

Information Systems Support Function

A support process responsible for the movement and processing of data and information needed to make business decisions.

Productivity Formula

The basic measure of process or firm performance defined as $\text{Productivity} = \frac{\text{Output}}{\text{Input}}$.

Labor Productivity Formula

A performance metric calculated as output divided by total labor hours, expressed as $\text{Labor Productivity} = \frac{\text{Policies Processed}}{\text{Employee Hours}}$.

Multifactor Productivity Formula

A performance metric calculated as $\text{Multifactor Productivity} = \frac{\text{Value of Output}}{\text{Labor Cost} + \text{Materials Cost} + \text{Overhead Cost}}$.

Insurance Policy Labor Productivity Example

A productivity calculation yielding $5\text{ policies/hour}$, derived from 3 employees processing 600 policies across 40 hours each ($\frac{600}{3 \times 40}$).

Job Cost Multifactor Productivity Example

A multifactor productivity ratio of $2.35$, calculated from 400 units sold at $\text{\\n}10$ each divided by total costs of $\text{\\n}400$ (labor), $\text{\\n}1,000$ (materials), and $\text{\\n}300$ (overhead).

U.S. Manufacturing Employment Trend

U.S. manufacturing employment peaked just below 20 million in mid-1979 and shrank by nearly 8 million between 1979 and 2011, while manufacturing productivity climbed steadily.

Corporate Strategy

An overall directional framework for carrying out all of an organization's functions, based on environmental scanning, core competencies, core processes, and global strategies.

Environmental Scanning

The analysis of trends in industry, society, technology, competition, new entrants, and resource availability to inform corporate strategy.

Core Competencies

Key organizational resources—including people, facilities, knowledge, systems, and technology—that drive a company's core processes.

Global Strategies

Corporate expansion approaches including strategic alliances (collaborative efforts, tech licensing, joint ventures) and locating operations abroad.

Operations Strategy

The means by which operations implements corporate strategy, links short-term and long-term decisions, and builds capabilities to remain competitive.

Vishay Operations Strategy

An operations strategy pairing a corporate goal of being the widest electronic component provider with fast delivery (inventory strategy) at a low price (process strategy).

Southwest Airlines Operations Strategy

An operations strategy competing against cars and trains via quick aircraft turnarounds, excellent service, and a strong operational focus on employees.

TransDigm Operations Strategy

An operations strategy designed to maintain enormous pricing power by selling innovative, patented solutions.

McDonald's Strategy Focus

An operations strategy focused on selling convenient, popular fast food through continuous operational innovation.

Competitive Priorities

The critical operational dimensions a process or supply chain must possess to satisfy internal or external customers both currently and in the future.

Cost Competitive Priority

An operational focus centered on delivering low-cost operations.

Quality Competitive Priorities

Operational dimensions encompassing top quality (delivering superior service/product) and consistent quality (producing services/products that meet specs consistently).

Time Competitive Priorities

Operational dimensions including delivery speed, on-time delivery, and development speed.

Flexibility Competitive Priorities

Operational capabilities including customization, product variety, and volume flexibility.

Time-Based Competition

A competitive strategy exemplified by ZARA, focusing operations on process delivery speed and rapid development speed.

Order Winners

Criteria used by customers to differentiate the services or products of one firm from those of another.

Order Qualifiers

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

Order Qualifier Threshold Impact

Fulfilling an order qualifier does not ensure competitive success; it only positions the firm to compete in the market once the threshold level is reached.

Vishay Order Qualifiers vs Winners

For chipmaker Vishay, good quality serves as the order qualifier, while fast delivery functions as the order winner.

1980s Automotive Market Qualifiers vs Winners

For automakers in the 1980s, a reasonable price was the order qualifier, whereas good quality was the order winner.

Quality Function Deployment (QFD)

A product development approach centered on the House of Quality chart to map customer requirements to engineering and technical features.

House of Quality

A conceptual chart in QFD used for inter-functional planning and communication, linking customer wants to technical specifications and competitor comparisons.

Voice of the Customer

An essential element of QFD that explicitly captures customer needs and wants.

Voice of the Engineer

An element of QFD that identifies the technical parameters and engineering matters related to customer needs.

Design Stage (NPD)

The initial development phase where customer needs are observed, new offering ideas are proposed, and feasibility is screened.

Analysis Stage (NPD)

The development phase evaluating manufacturing methods, corporate strategy alignment, regulatory standards, market risks, and resource requirements.

Development Stage (NPD)

The development phase where competitive priorities guide design, processes are analyzed, personnel are trained, pilot runs occur, and supply chains are refined.

Concurrent Engineering

An approach bringing product engineers, process engineers, marketers, buyers, and quality specialists together early to design products and processes simultaneously.

Full Launch Stage (NPD)

The ramp-up period when production volume is increased to meet demand while managing last-minute design changes and quality issues.

Post-Launch Review

The final stage of new product development where teams evaluate what worked during launch and identify areas for process improvement.

Front Office

A service process structure characterized by high customer contact where service providers directly interact with internal or external customers.

Hybrid Office

A service process structure featuring a moderate level of customer contact and standard services with some customizable options.

Back Office

A service process structure characterized by low customer contact, standardized services, and little customization.

Process Choice

A way of structuring a manufacturing process by organizing operational resources either around the process itself or around specific products.

Job Process

A manufacturing structure with high customization, low volume, flexible flows, and build-to-order production for custom machined products.

Small Batch Process

A batch manufacturing process structured for small order sizes, moderate customization, low-to-moderate volume, and disconnected line flows.

Large Batch Process

A batch manufacturing process structured for larger production quantities where dominant flow paths emerge.

Line Process

A manufacturing structure for high-volume, standardized products with low customization and connected, highly repetitive work flows (e.g., computers, autos, toys).

Continuous-Flow Process

A manufacturing structure for high-volume commodity products with low customization and rigid continuous flows (e.g., petroleum refineries, paper, steel, soft drinks).

Design-to-Order Strategy

A production strategy where products are custom designed to unique customer specifications, typically utilizing job processes.

Make-to-Order Strategy

A production strategy where custom or low-volume products are manufactured after receiving a customer order, utilizing job or small batch processes.

Assemble-to-Order Strategy

A production strategy producing components in advance via batch processes and assembling them after receiving orders via line processes, enabling postponement and mass customization.

Make-to-Stock Strategy

A mass production strategy producing standardized products in advance based on accurate demand forecasts to hold in inventory.

Postponement

A strategy in assemble-to-order operations where final customization or assembly is delayed until an actual customer order is received.

Mass Customization

The ability to generate high product variety at low cost by coupling assemble-to-order operations with flexible process design.

Customer Involvement Disadvantages

Operational drawbacks including process disruption, scheduling challenges, difficult quality measurement, high interpersonal skill requirements, and added cost from multiple locations.

Flexible Workforce

Employees trained to perform multiple tasks, providing operational flexibility at higher compensation and skill levels.

General-Purpose Equipment

Equipment with lower fixed costs and higher variable costs, best suited for low-volume production environments.

Special-Purpose Equipment

Machinery with high fixed costs and low variable costs, providing cost efficiency for high-volume production above the break-even quantity.

Break-Even Quantity Formula (Equipment)

The volume $Q$ where total costs of two process options are equal, calculated as $Q = \frac{F_m - F_b}{c_b - c_m}$.

Manual Welding Costs (BBC Example)

The manual bicycle frame welding process alternative with fixed equipment costs of $\text{\\n}10,000$ and variable costs of $\text{\\n}50.00$ per frame.

Robot Welding Costs (BBC Example)

The automated bicycle frame welding process alternative with fixed equipment costs of $\text{\\n}400,000$ and variable operating costs of $\text{\\n}20.00$ per frame.

BBC Indifference Volume (Break-Even Quantity)

The break-even quantity of $13,000\text{ frames}$ where total manual welding cost equals total robotic welding cost ($10,000 + 50Q = 400,000 + 20Q$).

Process Choice Selection Decision Rule

If expected volume exceeds break-even quantity ($Q > Q_{BE}$), choose the expensive option with lower variable costs; if $Q < Q_{BE}$, choose the cheaper option.

Capital Intensity

The relative mix of equipment and human skills in a process, where a higher equipment-to-labor cost ratio indicates higher capital intensity.

Automation Volume Requirement

High capital intensity and automation require high production volume and high utilization to recover large fixed capital investments.

Gillette Automation Example

Gillette's investment of $\text{\\n}750\text{M}$ in production lines and robotics to achieve a $1.2\text{B}$ annual razor capacity while keeping downstream packaging flexible.

Fixed Automation

A manufacturing process style executing fixed sequences of simple operations, best suited for stable product designs, long lifecycles, and line/continuous flows.

Flexible (Programmable) Automation

Automation using versatile industrial robots and CNC machines that can be reprogrammed to handle multiple tasks, small batches, or product changes.

CNC Machines

Computer Numerical Control machines that enable flexible automation by changing computer programs to perform different manufacturing tasks.

Service Process Automation

Technology applications (such as distance learning) that replace or supplement human effort to lower costs, increase task divergence, or enhance consistency.

Economies of Scope

The operational ability to produce multiple distinct products more cheaply in combination than separately by using shared flexible equipment.

Process Reengineering

The fundamental rethinking and radical redesign of core business processes to achieve dramatic performance improvements.

Critical Process Focus in Reengineering

A core element of process reengineering focusing specifically on core business processes that deliver value to external customers.

Leadership Role in Reengineering

Strong leadership needed during reengineering to overcome organizational cynicism, departmental resistance, and functional boundaries.

Cross-Functional Teams in Reengineering

Teams formed by members from all affected functional areas, empowered to carry out radical process changes.

Clean-Slate Philosophy

A reengineering mindset that starts completely fresh from customer requirements rather than attempting incremental changes to existing processes.

Information Technology in Reengineering

The primary enabler of process reengineering, facilitating the redesign of operations around work and information flows.

Process Analysis in Reengineering

A thorough evaluation of current process performance and external influences to gain a sound understanding before executing reengineering.

Laptop Purchase Decision Example

In a laptop purchase where processing speed and screen size narrow the options, and weight and price determine the final choice, speed/screen size are order qualifiers and weight/price are order winners.

Order Winner Graphic Relationship

A graphical relationship illustrating that sales increase continuously as a firm achieves higher performance on an order-winning competitive priority.

Order Qualifier Graphic Relationship

A graphical relationship showing that achieving competitive priority up to a threshold level increases sales rapidly, after which further achievement yields diminishing returns.

Product-Process Matrix Diagram

A framework mapping manufacturing process choices (job, batch, line, continuous-flow) against customization level, volume, and line flow divergence.

Break-Even Equipment Choice Graph

A visual break-even chart comparing general-purpose equipment total cost against special-purpose equipment total cost to identify break-even volume.

Supplier Relationship Process Diagram

The specific core process highlighted in Figure 1.4 that connects external suppliers directly to internal operations.

Order Fulfillment Process Diagram

The specific core process highlighted in Figure 1.4 that connects supply processes, new product development, and customer processes to deliver final goods.

Customer Relationship Process Diagram

The specific core process highlighted in Figure 1.4 that directly interacts with external customers to build relationships and process orders.