MGMT 361 1st Edition Lecture 2Outline of Last Lecture I. What is Operations Management (OM)?II. Why should you care about OM?III. Intro to manufacturing versus Service IV. Course overview-objectives, projects, assignments, grading etc. Outline of Current Lecture I. Strategic Planning Hierarchy II. Competitive Priorities and Operations StrategyIII. Product/Process MatrixCurrent LectureI. Strategic Planning Hierarchy - Top: Corporate- Level; GE CEO Jack Welcho Mission Statements- are broad- overtime you can still use it o Core Competencies- what you do to be better than competitors, ie) essential capabilitiesthat create a firm’s competitive advantage- built over time and can not be imitated (Coca-Cola)—although usually not products Apple: smart phone would NOT be one, but the innovative process WOULD be - Middle Level: Business-Level: o Market Analysis: Porter’s Five Forces Potential Entrants: entry barriers, brand awareness, legal, regulation, capital investment Buyer Bargaining Power: power to influence price  Substitute products: different products with similar functions  Suppliers Bargaining Power Industry Competitors: produce same/similar products -Order Qualifier: characteristics of a product or service that qualify it for consideration for purchase by a customer or segment – Computer ex—HP, Dell, Mac -Order winner- the winning characteristic of a product or service that causes the customer to purchase it – become order qualifiers over time, because they can be easily mimicked and imitated if you are not innovative- Last Level: Functional Strategic Planning These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.II. Competitive Priorities- Cost, Quality, Time, Flexibility o Cost: Materials (from suppliers)LaborInventoryTransportation  EX) Southwest Airlines: Materials (No drinks, buy old used plans)/ Labor (fewer workers at the gate)/Inventory (none because they are service o Quality: delivering higher performance and/or higly consistent product that the competitors- EX) Rolex, Prada, Mercedes-Benz Focus: Product development Service Error ReductionVariability Reduction o Time: reliably fulfilling customer needs faster than competitors EX) Jimmy Johns, Fed Ex  Focus: Continually reduce processing timeAnd Wasted time o Flexibility: being better able to adapt to changes in customer needs- Customization EX) Dell  Focus: Product variety Volume flexibility—peak loading - Any two priorities must have a trade-off/ cant focus on all four at a time, you must pick one at a time EX) Angus Barn vs. McDonalds-Angus Barn focuses on quality and flexibility -McDonalds focuses on cost and time III. Product/Process MatrixFour Processes 1. Job Shop: one or two products; production of small batches of a large number of different products, most of which require a unique set or sequence of processing steps, may be customized (high variety/low volume)—Steak house 2. Batch: produce bunches at a time, process which is relatively stable line of products, each of which is produced in periodic batches, either to customer order to forecast. Routings are usually standardized (Medium variety/medium volume) - McDonalds3. Assembly Line: production of discrete units in high volume using fixed routings. Product may be standard or made from standard modules (Low variety/high volume) –Cars4. Continuous- production in which products flow continuously rather than be divided. Equipment is sequences according to the steps involved in producing the product and setups are seldom changed (Super low variety/super high volume)- commodity products – Sugar