Why is operations (& supply chain) management important to business survival?
Because it underlies all departments and functions in a business
What are key inputs into any process that produces a product or a service?
Workers, managers, equipment, facilities materials, land, energy
What is a product?
Physical property, size, shape
What is a service?
Intangible, perishable output, can’t be inventoried, labor intensive
Can there be services without products?
Longer response times, more capital intensive, and their quality can be measured more easily. Physical, can be inventoried, low customer contact.
Produce intangible, perishable output. High customer contact, labor intensive, quality not easily measured
What 4 core processes do operations managers obsess over?
Supplier Relationship, new service/product development, order fulfillment, customer relationship
What “decisions” do operations managers typically make?
At the strategic level, development of new capabilities and the maintenance of existing capabilities to best serve the firms external customers. These should reflect corporate strategy
specifies the means by which operations implements the firm’s corporate strategy and helps build a customer driven firm.
coordinates the firm’s overall goals with its core processes
What are core competencies?
the unique resources and strengths that an organization’s management considers when formulating strategy
What are the 4 core competencies?
Workforce, facilities, market and financial know-how, systems and technology
What are the competitive priorities?
Low-cost operations, top quality, consistent quality, delivery speed, on-time delivery, development speed, customization, variety, volume flexibility
What are the 4 competitive capabilities?
Cost, quality, time, and flexibility
How are competitive priorities and capabilities different?
Competitive priorities focus on what operations can do to help a firm be more competitive and capabilities are what the company actually possesses and is able to deliver
What is an order winner?
a criterion customers use to differentiate the services or products of one firm from those of another
What is an order qualifier?
minimal level required from a set of criteria for a firm to do business in a particular market segment
Competitive capabilities are…
What are the four basic process strategy decisions?
Process structure, customer involvement, resource flexibility, capital intensity. All inter-related as they all indirectly affect one another
the process type relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics
the ways in which customers become part of the process and the extent of their participation
the ease with which employees and equipment can handle a wide variety of products, output levels, duties and functions
the mix of equipment and human skills in a process
How is a layout related to these process strategy decisions?
It puts the decisions into physical form (Block plan, detailed layout)
What are they key attributes of the product-process matrix?
Volume, product customization, and process characteristics
How do process structures in manufacturing differ among the key attributes in the product-process matrix?
Higher product customization means lower volume.. Deals with process divergence and flow.
What are the key attributes of the customer -contact matrix?
The degree of customer contact, customization, process characteristics
How do process structures in services differ among the key attributes in the customer-contact matrix?
Differ in terms of volume, product customization, and process divergence and flow. These differences determine competitive priorities and capabilities. These determine whether a firm uses make-to-order or made-to-stock.
How does the degree of customer contact relate to sales opportunity and efficiency in designing services?
The more contact with the customer, the higher chance of sales. Will be a very flexible flow model. Lead to low vs. high moments of truths.
What are the advantages of involving customers?
Increase the net value of customers, can mean better quality, faster delivery, greater flexibility, and even lower cost.
What are the disadvantages of involving customers?
Can be disruptive making the process less efficient. Demand becomes more challenging.
What is capacity?
The maximum rate of output of a process or system
How are input measures different from output measures?
Input measures usually deal with low volume, flexible processes while output measures usually deal with high volume processes.
What does utilization rate tell a manager?
The degree to which equipment, space, or the workforce is currently being used
100% Utilization is…
Not good as this is unrealistic
What is capacity management?
How managers can best revise capacity levels and best determine when to add and reduce capacity for the long term
What are the three key decisions in capacity management?
Sizing capacity cushions, timing and sizing expansion, and linking process capacity and other operating decisions