Chapter 1 Study Guide Operations management refers to the systematic design direction and control of processes that transform inputs into services and products for internal and external customers Process any activity or group of activities that takes inputs transforms them and provides outputs for customers Operation a group of resources employees machines performing all or part of one or more processes Supply chain interrelated series of processes within a firm and across different firms that produce a service or product to satisfy the firm s customers Supply Chain Management the synchronization of a firm s processes with those of its suppliers and customers to match the flow of materials services and information with customer demand I Operations Management and Supply Chain Management across the Organization A 3 main functions of a business 1 Finance acquiring financial resources 2 Operations translates materials into products services 3 Marketing generates sales of outputs a b c Circular cycle of the above three elements The generated sales become a part of the financial function cycle begins again Support functions managerial support Accounting HR Information Systems etc B An Organization s success is based off of the ability of these 3 main functions and supporting functions working together 1 Cannot just look at a single function 2 THESE FUNCTIONS ARE LINKED TOGETHER THROUGH PROCESSES II A A Process View Introduction 1 Must view a firm at the process level to understand how the firm works 2 Processes are not limited to any single function they can involve multiple functions 3 Process improvement is essential for competitive competition 4 AN ORGANIZATION IS ONLY AS EFFECTIVE AS ITS PROCESSES B How Processes Work 1 Inputs and outputs a Any process has inputs Human resources capital energy etc b Any process has outputs Services Products 1 Internal customers one or more employees or processes that rely on inputs from other employees or processes in order to perform their work External customers end customers intermediaries manufacturers financial institutions 2 PROCESSES ALSO RELY ON SUPPLIERS Internal suppliers employees who provide information material to other employees a b External suppliers outside businesses who provide resources services etc for firm C Nested Processes a process within a process View page 5 of KRM 1 PPT which illustrates processes and operations in action D Service and Manufacturing Processes 2 MAIN DIFFERENCES 1 Method of output 2 Amount of customer contact E Service and Manufacturing Processes SIMILARITIES 1 Harder to label companies as a whole as either strictly service or production 2 These companies provide both 3 Easier to label the process as service or production View page 6 of KRM 1 PPT to distinguish specific characteristics between service and manufacturing processes III A The Supply Chain View Introduction 1 Production necessitates cross functional coordination a However this does not explain the core elements of individual processes b Processes must add value for customers throughout the supply chain c Processes in supply chain Core Processes Support Processes B Core Processes 1 Deliver value to customers 2 Each activity in a process should add value to the preceding activities 3 Eliminate waste and unnecessary costs 4 A set of activities that delivers value to EXTERNAL customers a Remember external customers end customers intermediaries manufacturers financial institutions retailers 5 4 Core Processes a Supplier Relationship Process b New Service Product Development Process 2 c Order Fulfillment Process d Customer Relationship Process C Support Processes 1 Essential for management 2 Provides vital resources and inputs to the core processes 3 Allows core processes to function efficiently a human resources b accounting c d engineering information systems View pages 8 12 in the KRM 1 PPT to gain insight on how the Core Processes and Supporting Process work together as a whole D Operations Strategy 1 The means by which operations strategy implements corporate strategy 2 Purpose build a customer driven firm 3 Develops goals to assess a firm s capabilities in order to stay competitive 4 Links processes together to form supply chains a This supply chain helps embrace suppliers AND customers 5 Coordinates the firm s overall goals with its core processes 6 Develops market analysis Identifies customers a b Determines customers needs c Assesses competitors strengths This assessment allows a firm to develop competitive priorities 7 This information will be explored further in detail in this studyguide E Corporate Strategy provides an overall direction for carrying out all organization s functions and there are 4 considerations when dealing with corporate strategy 1 Environmental scanning a The external business environment b Monitor trends in the environment industry marketplace society c Look for potential opportunities or threats d This is crucial for staying ahead of competition 2 Core competencies the unique resources and strengths that an organization s management considers when formulating strategy a Workforce Well trained flexible workforce Respond to market needs efficiently b Facilities Good locations to complement efficient lead times Lead Time the elapsed time between the receipt of a customer and filling it c Market and financial know how Attract capital from stock sales 3 a A firm s core competencies as described above will drive its core processes and there Financial aspect of developing a competitive advantage d Systems and technology Information systems Internet technologies 3 Developing Core Processes Customer relationship are four categories of core processes New service product development Order fulfillment Supplier relationship 4 Global Strategies a Strategic alliance an agreement with a firm that can take 1 of 3 forms Collaborative effort when one firm has core competencies that another needs Joint venture two firms agree to produce a product service together Technology licensing license service production methods together all of these methods are exploited to take advantage of global markets b 5 Market Analysis divides a firm s customers into market segments and then identifies the needs of each segment a Market segmentation determine the characteristics that clearly define each segment b Needs assessment identify the needs of each segment and assess how well the firm s competitors are addressing those needs Service production