Operations Management the processes that effectively produce transform and deliver a product Introduction to Operations Management or service managing resources o Account for 60 80 of direct expenses that burden a firms profits power influence o Companies that are strong operationally have better profits o Firms with good OM deliver better products and services that are of higher value Effective supply chain management can Improve business processes effectiveness Improve relationships between business entities o Use resources more efficiently o o o Help meet strategic goals Increase customer service o Process a system of activities that transforms inputs into valuable outputs should add value can be broken down into sub processes nested process Inputs people knowledge equipment facilities material services energy time money Outputs services goods information knowledge External Customers those who purchase goods and services Internal Customers those who receive the output of others within the firm they are part of the transformation process Structural Decisions long term high capital less frequent o Capacity Facilities o o Vertical integration and sourcing o Information and process technology Infrastructural Decisions shorter term less capital more frequent o Workface o Organization o Quality systems o Planning and control Strategy made up of direction and implementation o Direction what should we do o Implementation how do we do it Developing a Strategy o Assessing monitoring and adapting to the environment o o Developing the firm s core processes Identifying and developing core competencies Competitive Priorities what the company would like to achieve how the company would like to compete and beat their competitors o Cost high low cost o Quality consistent superior o Time on time reliable delivery o o Others service social environmental concerns returns reverse supply chains certifications Competitive Capabilities the unique and valued skills processes and knowledge the firm is able to actually achieve and use to satisfy customers Flexibility customization postponement mass customization variety mix volume Order Winners characteristics causing customers to prefer you over your competitors Order Qualifiers characteristics you need to have to be considered by potential customers Order Losers characteristics you have that may drive away customers Kano Model made up of three important levels of quality characteristics for customers o Must Be mandatory characteristics taken for granted o One Dimensional customers look for these such as extra features of the points that differentiate the business from competitors o Delighters surprises that are not expected but which often and soon do become part of expectations Voice of the Customer VOC o Basic Quality must haves characteristics with minimum expectations serious dissatisfaction when absent does not create additional value when present ex brakes in a car o Performance Quality satisfiers more functionality provides more satisfaction generally expressed in surveys ex good gas mileage o Excitement Quality delighters customers are satisfied with more but not dissatisfied with less generally not expressed in surveys ex really great sound system o Changing Expectations delighters become satisfiers become must haves requires continual understanding of market and customers requires continual improvement Core Competencies the unique resources and strengths an organization develops and possesses o A trained productive and flexible workforce o Appropriately designed and located facilities o Having market and financial know how o Expertise in systems and technology Core Processes o Customer Relationship Processes identify attract and build relationships with external customers and facilitate the placement of donors o New Service Product Development Processes design and develop new services or products from inputs received from external customer specifications o Order Fulfillment Processes the activities required to produce and deliver the service or product to the external customers o Supplier Relationship Processes select suppliers of services materials and information and facilitate the timely and efficient flow of these items into the firm Manufacturing Processes change materials in one or more of the following dimensions o Physical properties o Shape o o Surface finish o Fixed dimensions Joining parts and materials If the process isn t doing at least one of these then it is a service process Locational transportation logistics o o Exchange retailing o Storage warehousing o Physiological health care o Informational exchange of data information The Trend to Blend o Today we see more blend of product and service Supply Chain Strategy linked set of multiple organizations o Structured fashion o Supply chains have existed since trading routes were developed Information technology quick and inexpensive communication o o Globalization Major Areas Within SCM o Operations Management includes planning and managing the processes used for transformation of inputs into valued outputs o Sourcing Purchasing includes the processes associated with identifying material and service needs locating and selecting suppliers negotiating contract and payment terms and tracking to assess supplier performance Logistics plans implements and manages the efficient effective flow and storage of goods and services from the point of origin to the point of end consumption o Process Strategy Process Choice involves numerous decisions regarding the relationships among workers technology inputs and job assignments Process Decisions o Process Structure how processes are designed technology used resources needed and their key characteristics o Customer Involvement the extent of customer participation in design and delivery o Resource Flexibility the ability to handle a wide variety of products output levels duties and functions Service Package o Capital and Labor Intensity the mix of equipment and human skills in the process o Supporting Facilities the physical resources that must be in place to provide the service Facilitating Goods material purchased or consumed by the customer while receiving the o service o Explicit Services benefits readily observable by customer and an essential feature of the service Implicit Services psychological benefits that the customer may vaguely sense or are nonessential features of the service Information data needed to provide the service o o