Marketing Chapter 3: NPSD Process Insights

Introduction to Operations and Operations Management

• Operations refer to the execution of a function within an organization.
• Operations are one of three core functions: alongside marketing and product/service development.
• Marketing is the outward-facing aspect of a business, often driving growth, though not necessarily profitability.
• Operations are where the organization delivers on marketing's promises, and encompasses the actual execution of tasks.
• The interaction between marketing and operations is illustrated by the example of Microsoft and Google's operating systems (OSs); Microsoft uses aggressive marketing, but sometimes falls short in delivery. Google focuses on operational excellence to attract customers.

Modeling Considerations

• Modeling is a powerful tool for understanding operations.
• A basic model often used for both operations and organizations is the "Inputs-Transformation Process-Outputs" framework.
• This model considers inputs (from suppliers), the transformation process (within the organization), and outputs (to customers).
• Feedback mechanisms can be incorporated, which can improve derived models.

Defining Operations and Operations Management

• Operations relate to how an organization produces and delivers output.
• Operations management is the activity of managing the resources intended for the production and delivery of products and services.
• Organizations have core functions (like product development, marketing, and sales) and support functions (like finance and HR).

Products vs. Services

• Products are tangible, services are intangible.
• Customer contact tends to be present in services, but absent in product transactions.
• Other factors differentiating between products and services include ownership, quality verification, resale potential, storability, and whether production and consumption happen simultaneously.

Introduction to Operations and Operations Management (cont)

• Supply Network: Operations can be understood as a supply network.
• Operations, at the business level, are considered a network composed of other interconnected smaller sub-processes each mimicking the input-output structures.

Characteristics of Operations Processes

• Four Vs: Four key characteristics of operations processes are identified as the "Four Vs":
  • 1. Volume of outputs
  • 2. Variety of outputs
  • 3. Variation in demand for the outputs
  • 4. Visibility of the process from the customer's perspective.
• High visibility occurs when the customer plays a more active role (e.g., customization, detailed feedback, or requiring specific service).
• Low visibility occurs when customers only interact with the product after production or during service provision.

Responsibilities of Operations Management and Operations Managers

• Aligning with the organization's strategic objectives.
• Developing and refining the operations strategy to achieve those objectives.
• Designing the processes for producing and delivering products and services.
• Planning and controlling day-to-day operations.
• Defining performance criteria and continuously improving outcomes.
• Adapting operations to the evolving global context.

Chapter 2: From Strategy to Operations and Vice Versa: Operations as a Driver and Implementation of Strategy

• Strategy, often regarded as an art, is the art or science of planning and conducting a war or a long-term plan for success, especially in business or politics.
• Operational effectiveness is often confused with real strategy.

Chapter 3: Operations in the Process of Developing New Products and Services

• Clients engage with organizations because of the products and services they offer.
• Transformable resources involve various information types.
• Transforming resources include personnel, equipment and tools.
• Key performance metrics like quality, speed, dependability, flexibility, and cost are subject to continuous evaluation.

Chapter 4: Designing the Operation Process, Layout and Flow

• Process design involves making strategic choices shaping the organization's performance.
• Effective process design impacts metrics like quality, speed, dependability, and cost. (See Figure 4.1 for details on factors influencing the process design objectives)
• Types of Processes: Project, Jobbing, Batch, Line (Mass), and Continuous processes
• Services Process Matrix (Schmenner) categorizes processes based on customer interaction and customization vs. labour intensity.

Chapter 5: Capacity Management

• Capacity management balances cost-effectiveness of delivering demand within optimal resource usage.
• Capacity involves the maximum output of an operation, process, or facility over a certain period of time.
• Theoretical capacity is ideal (24/7), design capacity accounts for downtime, and effective capacity reflects potential deviations.

Chapter 6: Managing Operation Flow

• Operation flow is the movement of inputs through processes to become outputs.
• Key considerations include supply chain management, inventory control, and Material Requirements Planning (MRP).
• Just-in-Time (JIT) philosophy emphasizes waste elimination and process synchronization with actual demand.
• Seven Deadly Wastes are sources of inefficiency.

Chapter 7: Quality and Quality Management

• Quality is about achieving excellence at an affordable price and controlling variability at an acceptable cost.
• Five approaches exist to understanding quality: transcendent, manufacturing-based, user-based, product-based, and value-based perspectives.
• Quality depends heavily on customer expectations and perceptions.

Chapter 8: Operations Performance Evaluation and Improvement

• Operation effectiveness is measured through the evaluation and enhancement of operational processes.
• Key measures include: cost, quality, speed, dependability and flexibility
• Activity-Based Costing (ABC) addresses cost distortions by tracing costs to activities, cost drivers and activity centers.
• The Balanced Scorecard offers a framework linking operational and financial performance metrics to strategy.

Chapter 9: Improving Services with Lean Six Sigma

• Lean and Six Sigma offer complementary approaches to service improvement, focusing on flow efficiency and quality.
• Key principles in services include defining desired service performance level, determining throughput rate, managing WIP, and designing process priorities.

Chapter 1: General Considerations on Customer Relationship Management (CRM)

• CRM is a customer-centric methodology encompassing diverse activities.
• Integrating CRM with technology involves managing customer data, workflows, and analytics.
• Stakeholders involved include organizations, vendors, customers, and partners.