Service Ops Review Test OneChapter OneWhat Operations and Supply Chain Managers Do- What is Operations?o A function or system that transforms inputs into outputs of greater valueo The central activity of the firmo Customers pay us for our operationso 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 partnerso Nationally-work with national partnerso Corporately-innovate and integrateo Personally-ensure quality- Transformation Processo Physical- as in manufacturing operationso Locational- as in transportation or warehouse operationso Exchange- as in retail operationso Physiological- as in health careo Psychological- as in entertainmento Informational- as in communication- Operations as a transformation processo Input- material, machines, labor, management, capital, customerso Output- goods, services, customers- Services Emphasiso Services- activity that does not directly produce a physical producto Good- a physical product, can hold it in your hando Operations management approaches often differ- Why is service operations management in Marketing curriculumo In services, the marketing of the service is tied very closely to the creation of the serviceo Separating marketing and operations is impossible in serviceso 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 answeredo 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/productivityo 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 accomplishedo Provides direction for achieving a missiono Unites the organizationo Provides consistency in decisionso Keeps organization moving in the right directiono 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 formulationo Defining a primary task- what is the firm in the business of doing? (transportation, communication)o Assessing core competencies- what does the firm do better well? (exceptional service, 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 firmo Costs- low cost=low price to consumers Standardization Automation Reducing waste Lean operationso 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 designo 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. Chapter Six- Process Planningo 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 andservices, 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 doneo 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 Decisionso Vertical integration- the degree to which a firm produces the parts that go into its products; VS Outsourcing Cost Capacity- how much is available Quality- easier to control in house quality