Operations Management 3230 02 23 2014 Operations Management the systematic design direction and control of processes that transform inputs into services and products for internal as well as external customers Process any activity or group of activities that takes one or more inputs transforms them and provides one or more outputs for its customers Operation a group of resources performing all or part of one or more processes Supply Chain an interrelated services of processes within and across firms that produces a service or product to the satisfaction of 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 External Customers a customer who is either an end user or an intermediary e g manufacturers financial institutions or retailers buying the firm s finished services or products Internal Customers one or more employees or processes that rely on inputs from other employees or processes in order to perform their work External Suppliers the businesses or individuals who provide the resources services products and materials for the firm s short term and long term needs Internal Suppliers the employees or processes that supply important information or materials to a firm s processes Nested Process the concept of a process within a process Core Process a set of activities that delivers value to external customers Supplier Relationship Process a process that selects the suppliers of services materials and information and facilitates the time and efficient flow of these items into the firm New Service Product Development Process a process that designs and develops new services or products from inputs and received from external customer specifications or from the market in general through the customer relationship process Order Fulfillment Process a process that includes the activities required to produce and deliver the service or product to the external customer Customer Relationship Process a process that identifies attracts and builds relationships with external customers and facilitates the placement of orders by customers sometimes referred to as customer relationship management Support Process a process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business Operations Strategy the means by which operations implements the firm s corporate strategy and helps to build a customer driven firm Core Competencies the unique resources and strengths that an organization s management considers when formulating strategy Workforce Facilities Market and Financial Know How Systems and Technology Lead Time the elapsed time between the receipt of a customer order and filling it and in the future Competitive Priorities the critical dimensions that a process or supply chain must process to satisfy its internal or external customers both now Low cost Operations delivering a service or a product at the lowest possible cost to the satisfaction of external or internal customers of the process or supply chain Top Quality delivering an outstanding service or product Consistent Quality producing services or products that meet design specifications on a consistent basis Delivery Speed quickly filling a customer s order On Time Delivery meeting delivery time promises Development Speed quickly introducing a new service or a Customization satisfying the unique needs of each customer by changing service or product designs Variety handling a wide assortment or services or products product efficiently Volume Flexibility accelerating or decelerating the rate of production of services or products quickly to handle large fluctuations in demand Competitive Capabilities the cost quality time and flexibility dimensions that a process or supply chain actually possesses and is able to deliver Time Based Competition a strategy that focuses on the competitive priorities of delivery speed and development speed Order Winner a criterion customers use to differentiate the services or products of one firm from those of another Order Qualifier minimal level required from a set of criteria for a firm to do business in a particular market segment Productivity the value of outputs services and products produced and divided by the values of input resources wages costs of equipment and so on Creating Value through Operations Management using operations to compete project management Managing Processes Process strategy Process analysis Quality and performance Capacity planning Constraint management Lean systems Managing Supply Chains Supply chain inventory management Supply chain design Supply chain location decisions Supply chain integration Supply chain sustainability and humanitarian logistics Forecasting Operations planning and scheduling Resource planning Decision Making 02 23 2014 Break Even Quantity the volume at which total revenues equal total costs have equal total costs of output Break Even Analysis the use of the break even quantity it can be used to compare processes by finding the volume at which two different processes Variable Cost the portion of the total cost that varies directly with volume Fixed Cost the portion of the total cost that remains constant regardless of changes in the levels of output Sensitivity Analysis a technique for systematically changing parameters in a model to determine the effects of such changes Preference Matrix a table that allows the manager to rate an alternative according to several performance criteria Decision Theory a general approach to decision making when the outcomes associated with alternative are often in doubt Payoff Table a table that shows the amount for each alternative if each possible event occurs Decision Tree a schematic model of alternatives available to the decision maker along with their possible consequences Process Strategy 02 23 2014 Process Strategy the pattern of decisions made in managing processes so that they will achieve their competitive priorities Make choices that fit the situation and that make sense together Effective process is one that matches key process characteristics The cumulative effect on customer satisfaction and competitive and has a close strategic fit advantage is huge Management must pay particular attention to the interfaces between processes Dealing with these interfaces underscores the need for cross functional coordination