Operations Management Midterm Study Guide Chap 1 Operations management the systematic design direction and control of processes that transform inputs into services and products for internal as well as external customers Study it so that companies can learn the best cheapest most efficient ways to make customers happy To provide products and or services with The Right 6 with right level of quality to right customer at right time at right place in right quantity for right cost or price A Process View 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 Shows the role of operations in an organization coordination among different business functions is necessary and key to developing a common strategy Supply Chain an interrelated series of processes within and across firms that produce 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 all processes have inputs and outputs and then provide outputs to customers ex Of a firm dept small group or even and individual circles operations through which services products or customers pass and where processes are performed arrows flows dotted line participation by customers and information on performance from both internal and external sources Nested Processes a process within a process Customer Supplier Relationships in terms of External Customers customer who is either an end user or intermediary financial institutions manufacturers 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 employees or processes that supply important information or materials to a firm s processes Two Major Processes Services and Manufacturing Differ the nature of their output manufacturing gives physical products and can be produced stored and transported services are intangible and perishable the degree of customer contact services much higher and customers have an active role manufacturing capital intensive quality easily measured long response time services labor intensive quality not easily measured have short response time service providers don t just offer services and manufacturing providers don t just offer products ex Restaurant good food and good service wanted do keep inventory Similar The Supply Chain View Core Processes a set of activities that delivers value to external customers Supplier Relationship Process selects the suppliers of services materials and information and facilitates the timely and efficient flow of these items into the firm ex Negotiating fair prices New Service Product Development Process designs and develops new services or products from inputs 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 identifies attracts and builds relationships with external customers and facilitates the placement of orders by customers marketing could be a part of this process Support Process a process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business allow core processes to function ex Budgeting recruiting scheduling Operations Strategy the means by which operations implements the firm s corporate strategy and helps to build a customer driven firm links long and short term operations decisions to corporate strategy and develops the capabilities the firm needs to be competitive translates service or product plans and competitive priorities for each market segment into decisions affecting the supply chains that support those market segments the pattern of decisions that have been made for a company s processes and supply chains any gap between a competitive priority and the capability to achieve that priority must be closed by and effective operations strategy Corporate Strategy coordinates the firm s overall goals with its core processes specifies businesses it will pursue isolates threats and identifies growth objects 4 considerations Environmental Scanning process by which managers monitor trends in the environment for potential opportunities or threats in order to stay ahead of competition ex Economic trends new entrants into the market social changes political conditions Developing Core Competencies unique resources and strengths that and organization s management considers when formulating strategy reflects the collective learning of the organization how to coordinate processes and integrate technologies Workforce Facilities Market and Financial Know How Systems and Technology Developing Core Processes should drive its core processes customer relationship new service product development order fulfillment and supplier relationship some companies have all 4 while others focus on only a few want to provide the greatest competitive strength Global Strategies ex Buying foreign services or parts combating threats from foreign competitors planning ways to enter markets beyond traditional national boundaries strategic alliance an agreement with another firm that may take one of 3 forms collaborative effort arises when one firms has core competencies that another needs but is unable to duplicate joint venture 2 firms agree to produce a service or product jointly often to gain access to foreign markets technology licensing one company licenses its service or production methods to another locate abroad in another country must recognize customs preferences and economy in other countries Market Analysis divides the firm s customers into market segments and then identifies the needs of each segment Market Segmentation process of identifying groups of customers with enough in common to warrant the design and provision of services or products that the group wants and needs must determine