Ops Review Midterm Every organization in every industry must manage their operations Operations Management o The processes that effectively produce transform and deliver a product or service o Broad definition a transformation or a conversion of input to outputs which vary for each company o Management v leading Managing is doing things right Creating implementing improving Leading is doing the right things creates transformations o When done well and effectively OM and SCM can Improve business process effectiveness Improve relationships between business entities Utilize resources more effectively and sustainably Meet strategic goals Increase customer service o It is all about how to get things Improvement of business systems for better customer service reduced cost and greater competitiveness Remove waster and increase value add Application to all managers and all business functions o Strongest relationship between operations and marketing Ops product and service outputs marketing revenue finance Operations account for about 60 to 80 of the direct expense So it has power and influence Companies with better operations have better profits Deliver better products and service that have higher value o Process A system of activities that transforms inputs into valuable outputs Organizations need to efficiently and effectively manage their resources and processes to meet demand and add value o Goal use the least inputs to generate the needed outputs o Environment the competitive landscape and factors that impact operations design Internal customers receive the output of others within the firm External customer purchase the goods and services o nested process a process that is part of a larger process Can be broken down more o Manufacturing physical vs Services Characteristics Services are a growing of US economy 80 o Service organizations also have operations that must be well managed Many manufacturing companies have outsourced or offshored Manufacturing process change materials in one or more dimensions Physical properties shape fixed dimensions surface finish joining parts and materials If it is not doing any of those it is a service process o Locational exchange retailing storage physiological healthcare informational exchange Characteristic Differences Manufacturing capital intensive quantity inventory easily measured large facilities Service intangibles that quantity cannot be easily measured labor intensive local markets simultaneous production and consumption Servitization More blends between products and service apple o Core Competencies the unique resources and strengths an organization develops and possesses Core competencies include Workforce Facilities Market and Financial Know How Systems and Technology should determine the firm s core processes Core Processes delivering value to customers o 1 Supplier relationship processes o 2 New service product development processes o 3 Order Fulfillment processes o 4 Customer relationship processes o Support processes provide input to help core processes productive o Customer Driven Operations Strategy Corporate Strategy how they want to be viewed Views the organization as a system of interconnected parts each working with others to achieve desired goals Operations Strategy how to develop corporate strategy Supports the corporate strategy and requires continuous cross functional interaction Should be market and customer focused Developing a Strategy 1 Assessing monitoring and adapting to the environment 2 Identifying and developing core competencies 3 Developing the firm s core processes o Operation is about becoming capable of meeting priorities Competitive Priorities What the company would like to achieve How they would like to compete and beat their competitors o Cost changing price is a marking solution Low cost v high cost Low price requires low cost operations Superior v consistent Delivery speed reliability development speed of new products and services o Quality o Time o Flexibility Customization variety volume flexibility o Others service social and environmental concerns Competitive Capabilities reverse supply chains The unique and valued skills processes and knowledge the firm is able to actually achieve and use to satisfy customers Competitive Advantage Categories Order winners characteristics that cause customers to prefer you Order qualifiers characteristics you need to have to be over competitors considered by customers Order Losers characteristics that drive customers away o Operational Decision Areas Structural decisions Long term high capital less frequent Capacity facilities sourcing IT Infrastructural decisions Shorter term more frequent less capital Workforce organization quality systems planning and control However there is cross over between them o Voice of Customer VOC Kano Model 1 Basic quality Must haves expected or basic quality Serious dissatisfaction when absent But don t create additional value when present Ex Car Satisfiers more functionality provides more satisfaction and vice 2 Performance quality versa One Dimensional Ex Good gas mileage 3 Excitement Quality with less Not expressed in surveys Ex Air conditioning seat fan 4 Changing Expectations Delighters customers are satisfied with more but not dissatisfied When Delighters become Must haves Requires continual understanding of market and customers Requires continual improvement o Productivity value of outputs inputs Outputs services and products Single Factor calculation Inputs labor equipment material Labor productivity policies processed employee hours Eg 450 policies 3 employees x 7 5 hr day x 5 days per week Multifactor 5 policies hr Multifactor productivity output value at standard cost labor cost material cost overhead cost Eg 500 units x 10 unit 2000 2 5 o Supply Chain Strategy Linked set of multiple organizations Structured fashion Supply chains have existed since trading routes were developed Globalization IT quick and cheap o Major areas within SCM supply chain management Operations Management inputs to outputs Sourcing purchasing included the processes associated with identifying material and service needs locating and selecting suppliers negotiating the contract and payment and tracking performance Logistics Plan implement and manage the efficient effective flow and storage of goods and service from the point and origin to the point of end consumption o Supply Chain Downstream toward customer Upstream toward raw Process Strategy o