Operation management chapters 1-4

Sourcing/purchasing
The process associated with identifying material and service needs, locating and selecting suppliers, negotiating contract and payment terms, and tracking to assess supplier performance.
Logistics
The function that 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.
Supply chain
A network of organizations that work together to convert and move goods from the raw materials stage to the end customer.
Operations management
Consists of the processes that produce, transform, and deliver a product or service.
Supply chain management
Is the organization of supply chain activities, including purchasing of raw materials and components from suppliers, distribution of parts and finished goods, and administration of the relationship with customers, in order to maximize customer value and maximize competitive advantage.
Competitive priorities
The relative rankings of what the company would like to achieve.
Competitive capabilities
The relative effectiveness that the company is able to actually achieve.
Customization
The ability to make a product to exactly fit customer needs.
Postponement
Keeping products in a standard format and then adding unique components for the individual customer at the last possible moment.
Mass customization
The process in which products are produced in high volume at roughly the same cost as standard products, but are customized to individual customer tastes.
Competitive priorities
1) Cost- low cost operations.
2) Quality- consistent quality and superior quality.
3) Time/delivery- on time delivery, delivery speed, and product development speed.
4) Flexibility- customization, variety, and volume flexibility.
Operational decision areas
The tactical tools that allow an organization to achieve its priorities.
Structural decisions
Long term, high – capital – investment decisions that occur less frequently but have a lasting impact on the organization.
Infrastructural decisions
Decisions that are shorter term, more frequent, less capital intensive, and easier to change or modify.
Services and manufacturing have 3 fundamental differences
1) the nature of their output – tangible vs intangible.
2) the degree of customer contact and co production.
3) simultaneous production and consumption.
Services
Are intangible, require the participation of huge customer in the production process, and are produced and consumed at the same time, since they cannot be delivered without customer involvement.
Similarities between services and manufacturing
All businesses involve elements of each.
Why firms improve quality
-high quality products and services are necessary for the survival, growth, and competitiveness of the organization.
-quality improvement efforts reduce overall production cost within an organization. In the long run, by investing in prevention cost, a firm can reduce both internal and external failure costs and assurance costs, which reduces overall costs.
-in the long run, higher customer satisfaction, positive word of mouth, good reputation, increased market share, and profitability are results of an organizations quality improvement efforts.
Determinants of the quality of goods can be determined by 8 dimensions:
1) performance
2) special features
3) reliability
4) conformance
5) durability
6) serviceability
7) aesthetics
8) brand equity
Quality of services is measured by 10 determinants:
1) reliability
2) responsiveness
3) competence
4) access
5) courtesy
6) communication
7) creditability
8) security
9) understanding/knowing the customer
10) intangibles
Continuous improvement philosophy
An approach involving continuously searching for ideas for improving the quality of goods and services.
Total quality management
Addresses all areas and all employees of an organization, emphasizes customer satisfaction, and uses continuous improvement tools and techniques.
Top management commitment (essential element of TQM)
TQM requires personal involvement from top management in clearly deploying values and goals at are consistent with the objectives of the company and in creating deploying well defines systems, methods, and performance measures for achieving those goals.
Employee participation (essential element of TQM)
A successful TQM environment requires a committed and well trained workforce that participates fully in quality improvement activities.
Customer focus (essential element of TQM)
Achieving the highest levels of the customer satisfaction is considered to be the highest priority. Customer focus means understanding the needs of customers, translating those needs into specific product and service design requirements, designing products and delivering services that satisfy customer needs, and developing processes that support all related production activities.
Management by fact (essential element of TQM)
TQM emphasizes the need for using objective data rather an subjective perceptions when making managerial decisions.
Six sigma
A comprehensive and flexible system for achieving, sustaining, and maximizing business success. It’s driven by close understanding of customer needs, disciplined use of facts, data and statistical analysis, and diligent attention to managing, improving, and reinventing business processes.
DMAIC
The acronym for define, measure, analyze, improve. And control, the five step plan of a sigma six approach.
Why new products fail
– based on poor market research.
– closely associated with problems or defects.
– based on inferior designs, therefore they do not succeed.
– poor timing of their introduction.
– introduced with costs higher than expected compared to the benefit derived.
Why firms develop new products
-sources of competitive advantage.
-market share gain.
-high profitability.
-enhancement of corporate image and brand name.
-faster competitive response.
-operating costs and capacity utilization.
Brand equity
The monetary or relative value of a brand perceived in the marketplace by its customers.
New product development process
A disciplined and definite set of tasks and steps that describe the normal means by which a company repetitively converts embryonic ideas into sale able products or services.
Mass customization
A process in which individual customer co designs products and services that meet their Needs with regard to certain product features.
Computer aided design
The use of computers to interactively design products and prepare engineering documentation.
Green production
Techniques that include reducing wastes and missions during production and assessing the total impact of a good or service on the environment, taking into account every activity associated with the production and supply of that good.
Modular design
Products designed as independent sub products that we attached to create a final product.
Production platform
A commonly used technique for developing a variety of products based on common structures or basic architectures.
The goal of the organization
Make money through increased throughput, decreased inventory,and decreased costs.
Product process matrix
Matches product characteristics with process characteristics for manufactured products and includes project, job shop, batch, line flow, and continuous flow processes.
Process layout
Process layouts group together machines, equipment, or people with similar functions or goals. Typically used for lower volume, flexible processes like job shop, batch, service shop, or professional service.
Product layout
Product layouts dedicate equipment and workers to specific products in a linear route. Most often used for high volume, relatively inflexible processes such as line, continuous flow, mass service, or service factory.
Manufacturing processes
Convert raw materials and inputs into finished products that have a physical, tangible form.
Project process
A type of process that has a high degree of customization, a large scope, a high degree of customer involvement, and use of primarily generalized tools and equipment.
Job shop
A type of process that provides high flexibility to produce a variety of products in limited volumes.
Batch process
A higher volume Job shop, in which the same or similar products are produced repetitively.
Line processes
Processes that have high volumes, standardized products, and dedicated resources.
Continuous process
Processes that have high volume and low flexibility, and that work with non discrete items that are not divided into their final packages until the very end production.
Bottleneck
The step with the slowest cycle time in a given process.
Cycle time
The time it takes to complete a particular step or action once.
Output
The number of units that can be produced per unit of time.
Utilization
The percentage of available time that equipment, space, or labor is used and adding value.
Throughput time
The time that an individual unit must spend in a given process or step.
Flow charting
A technique that involves graphically portraying the key elements, steps, participants, and materials of a process.
Self sourcing
A technique that includes customers in the process in a way that reduces the resource demands in the organization providing the product or service, while also providing the customer with improved service.
Outsourcing
Selecting suppliers with expertise Ina particular area of business to produce and deliver a component part or service to another company.
The manufacturing process consists of one or more of the following transformations of the input materials:
1) physical properties
2) shape
3) fixed dimension
4) surface finish
5) joining parts and materials
Service bundle
All the value added physical and intangible items that an organization provides to the customer.