Service Ops Review Test One Chapter One What Operations and Supply Chain Managers Do What is Operations o A function or system that transforms inputs into outputs of greater value o The central activity of the firm o Customers pay us for our operations o A series of activities along a value chain extending from supplier to consumer What is Operations Management o Designing planning controlling and improving these transformation systems Why is Operations Management important o Globally work with global partners o Nationally work with national partners o Corporately innovate and integrate o Personally ensure quality Transformation Process o Physical as in manufacturing operations o Locational as in transportation or warehouse operations o Exchange as in retail operations o Physiological as in health care o Psychological as in entertainment o Informational as in communication Operations as a transformation process o Input material machines labor management capital customers o Output goods services customers Services Emphasis o Services activity that does not directly produce a physical product o Good a physical product can hold it in your hand o Operations management approaches often differ Why is service operations management in Marketing curriculum o In services the marketing of the service is tied very closely to the creation of the service o Separating marketing and operations is impossible in services o Operations is the core of the organization with finance accounting marketing HR and suppliers all interacting Competitiveness degree to which a nation or company can produce goods and services that meet the test of relevant markets Productivity ratio of output to input Increases in productivity allow wages to grow without producing inflation thus the standard of living o Output sales made products produced customer served meals delivered or calls answered o Input labor hours investment in equipment material usage square footage Single factor productivity output labor output materials output capital Multifactor productivity output labor materials overhead output labor energy capital Total factor productivity goods and services produced all inputs used to produce item Balanced scorecard measuring more than financial performance productivity o Finances how should we look to our shareholders o Customers how should we look to our customers o Processes at which business processes must we excel o Learning and growing how will we sustain our ability to change and improve Key performance indicators set of measures to help managers evaluate performance in critical areas Strategy and operations identifies and prioritizes what needs to be done to close the gap between the firm s vision and its current position o How the mission of a company is accomplished o Provides direction for achieving a mission o Unites the organization o Provides consistency in decisions o Keeps organization moving in the right direction o Includes the mission and vision the corporate strategy the voice of the customer the voice of the business and provides direction to for formulating the marketing strategy operations strategy and the financial strategy Strategy formulation o Defining a primary task what is the firm in the business of doing transportation o Assessing core competencies what does the firm do better well exceptional service communication higher quality lower cost o Determining what the customer wants order winners the final factor in the purchasing decision most important and order qualifiers characteristics that qualify a product to be considered for purchase o Positioning the firm how will the firm compete what unique value it will deliver to the customer Considers strengths and weaknesses of the organization the weaknesses of the organization the needs of the marketplace and competitors o Deploying the strategy develop an operations function to achieve strategic goals converts a firm s positioning strategy and order winners qualifiers into specific performance requirements Positioning the firm o Costs low cost low price to consumers Standardization Automation Reducing waste Lean operations o Speed customers want the product or service fast Internet customer expect immediate responses Service organizations Mcds LensCrafters FedEx all compete for speed Manufacturers time based competition efficient supply chains faster new product design o Quality Internal quality minimizing defect rates or conforming to design specifications External quality satisfy customer needs better than anyone else Ex Ritz Carlton one customer at a time Service system designed to move heaven and earth to satisfy customer Employees empowered to satisfy a guest s wish Teams set objectives and devise quality action plans o Flexibility ability to adjust to changes in product mix production volume or design Mass customization the mass production of customized parts Ex National Bicycle Industrial Company offers 11 231 862 variations delivers within 2 weeks at costs only 10 above standard models Modular Design Subway Dell Postponement Policy Deployment translates corporate strategy into measurable objectives everyone in the cooperation should understand the plan be able to derive goals from the plan Hoshins action plans generated from the policy deployment process aligned to complete each functional objective which will combine to achieve the strategic plan Process Planning Chapter Six o Process basic component of operations group of related tasks with specific inputs and outputs exist to create value for the customer shareholder or society o Process strategy and organization s overall approach for physically producing goods and services choose a process type defines its vertical integration capital intensity process flexibility customer involvement o Process design critical to determine what the steps are their sequence who does them where they are done o Process planning converts designs into workable instructions for manufacture or delivery decides which components will be made in house and which will be purchased from a supplier Process Strategy Decisions products VS Outsourcing o Vertical integration the degree to which a firm produces the parts that go into its Cost Capacity how much is available Quality easier to control in house quality Speed transit time reliable Reliability in quality and timing Expertise decide whether to share your expertise protect your knowledge o Type of process chosen o Trade off between efficiency