Understanding Operations Management

• Operations management involves designing, managing, and improving the activities required to create and deliver products and services to customers.
• It includes activities, people, resources, technology, knowledge, processes, and procedures.

Strategic Impact of Operations

• Well-managed operations and processes are key to a company's strategic success.
• This helps in controlling costs, generating revenue, ensuring quality, and avoiding/recovering from errors.
• Operations directly affects Return on Investment (ROI) and competitive advantage.

Business Processes and Transformation

• Organizations function through structured processes that define how activities, participants, and end-user interactions align.
• "AS IS" and "TO BE" models help improve efficiency.
• Process transformation focuses on aligning input, events, process transformation, and outputs to enhance effectiveness.

Importance of Operations Management

• Operations occur across the entire organization, making every manager, an operations manager to some extent.

• Helps reduce operational risk, optimize investments, build capabilities, control costs, and increase revenues.

• The nature of processes is managed based on Volume, Variety, Variation, and Visibility.

Key Stages in Operations Management

• Operations management involves five core areas:
• Planning: involves defining process flows, factory locations, workstation layouts, demand estimation, and setting production levels.
• Sourcing: involves supplier selection, setting pricing, delivery frequency, quality standards, and contract terms.
• Producing: involves process flows, workforce scheduling, material movement, efficiency balancing, and optimization.
• Delivering: Refers to the frequency of output, warehouse/customer delivery, logistics information, and transport efficiency.
• Returning: involves handling returns, capturing data, and defining post-return processes.

Supply Chain and Business Model Examples

• Case studies on online businesses founded in the late 1990s used a supply chain-driven model for book, music, and household product delivery.
• Successful supply chain management involves:
• Coordination between separate but interdependent organizations.
• Optimization of global suppliers, production, and distribution.
• Effective management of customer touchpoints, ensuring good service and fast response.
• Senior management's recognition of operations as a strategic tool, exemplified by Zara's fast production cycles and P&G-Gillette's supply chain synergies.

Current Issues in Operations

• Outsourcing and globalization create complex coordination challenges.
• Customer service management and training are critical to brand reputation.
• There is increasing focus on sustainability by emphasizing Profit, Planet, and People (Triple Bottom Line).

Success in Operations

• Depends on:
• Effective strategy integration.
• Streamlined processes for product/service delivery.
• Analytics-driven decision-making.

Operations and Supply Chain Concepts:

• Operations includes manufacturing and service processes that convert resources into products.
• Supply Chain involves managing material and information flow across different entities.

Principles for Transformation Process Design:

• Organizing different process types.
• Determining capacity and production speed.
• Monitoring quality and utilizing information for better decision-making.

Role of the Chief Operating Officer (COO):

• Works with the CEO and executives to define competitive strategies.
• Makes key decisions on locations, facilities, suppliers, and hiring.
• Lower-level teams execute these operational decisions.

Key Operations & Supply Chain Management (OSCM) Concepts:

• Manufacturing Strategy Paradigm
• Lean Manufacturing, Just-in-Time (JIT), and Total Quality Control (TQC)
• Service Quality & Productivity
• Total Quality Management (TQM) & Certification
• Business Process Reengineering
• Six Sigma Quality
• Supply Chain Management
• E-commerce Strategies
• Sustainability (Triple Bottom Line)

Efficiency, Effectiveness, and Value:

• Efficiency: Achieving goals at the lowest cost.
• Effectiveness: Creating maximum value.
• Value: Defined as quality/price.

Operations and Supply Chain Strategy:

• Should align with corporate strategy, ensuring operational effectiveness and cost efficiency.

Competitive Dimensions:

• Operations strategy balances:
• Price: Offering low-cost products/services.
• Quality: Ensuring superior products/services.
• Delivery Speed: Fast production and service.
• Delivery Reliability: Meeting promised timelines.
• Flexibility: Adjusting to demand changes.
• New Product Speed: Fast innovation and product rollouts.

Other Product-Specific Considerations:

• Technical Support: Assisting with product development.
• Launch Date Alignment: Coordinating with partners.
• After-Sale Support: Managing post-sale services.
• Environmental Impact: Considering sustainability.
• Customization Options: Addressing customer preferences.

Trade-Offs in Operations Strategy:

• Companies must prioritize critical performance parameters.
• A cost-focused firm may struggle with rapid innovation.

Order Winners vs. Order Qualifiers:

• Order Qualifiers: Minimum criteria for a product to be considered.
• Order Winners: Unique features that differentiate products.

Productivity Measurement:

• Measures resource efficiency.
• Productivity = Outputs/Inputs
• Partial Productivity: Compares output to a single input.
• Multifactor Productivity: Compares output to multiple inputs.
• Total Productivity: Compares output to all inputs.

Examples of Productivity Measures:

• Restaurants: Customers served per hour.
• Retail: Sales per square foot.
• Farms: Meat production per unit of feed.
• Power plants: Energy produced per fuel unit.
• Paper mills: Paper output per wood input.

Sustainable Strategy and the Triple Bottom Line:

• Shareholders: Individuals or firms owning stock.
• Stakeholders: All parties impacted by the firm's operations.
• Sustainability ensures present value creation without harming future generations.

Triple Bottom Line (People, Planet, Profit) broken down:

• Social Responsibility: Ethical business practices.
• Economic Prosperity: Ensuring shareholder value.
• Environmental Stewardship: Minimizing environmental impact.

Introduction to Business Process Management (BPM):

• A process is a structured arrangement of resources and activities that transforms inputs into outputs to satisfy customer needs (internal or external).
• Processes are fundamental to all operations, and their design directly influences overall performance.
• BPM involves integration and coordination, ensuring that different processes work together efficiently.

Types of Processes:

• Processes vary depending on their structure and function within a business.

• Different types include Project, Batch, Mass, and Continuous which vary by demand volume, number of different products, and production system.

• Video links are provided to demonstrate various types of processes in real-world applications.

Key Manufacturing Process Terms:

• Lead Time: Time required to respond to a customer order.
• Customer Order Decoupling Point: Location where inventory is positioned to allow independent supply chain operations.
• Lean Manufacturing: Approach to achieving high customer service with minimal inventory.

Types of Firms Based on Production Strategy

• Make-to-Stock (MTS): Produces goods in advance and stores them in inventory (e.g., televisions, clothing, packaged food); Challenge: Balancing inventory levels with customer service.
• Assemble-to-Order (ATO): Uses pre-assembled modules to customize products based on customer orders (e.g., Dell Computers assembling desktops); Benefits: Greater flexibility and efficient use of inventory.
• Make-to-Order (MTO): Products are manufactured only after receiving a customer order (e.g., Boeing's process for making commercial aircraft).
• Engineer-to-Order (ETO): Fully customized production, requiring collaboration with the customer before manufacturing begins.

Product-Process Matrix: Layout Strategies

• Framework classifying manufacturing systems based on product variety and production volume

Production System Design:

• Project Layout: Fixed-location manufacturing (e.g., construction projects).
• Workcenter (Job Shop): Organizes machines and operations based on similar functionalities.
• Manufacturing Cell: Groups different machines for products requiring similar processing.
• Assembly Line: Linear production where products move through a sequence of operations.
• Continuous Process: Similar to an assembly line but used for liquids and bulk production.

How Manufacturing Processes Are Organized:

• Project Layout: The product remains in one place, and materials/machinery move around it.
• Workcenter (Job Shop): Groups similar functions together.
• Manufacturing Cell: Focuses on efficiency by grouping dissimilar machines for similar products.
• Assembly Line: Products follow a structured, step-by-step process.
• Continuous Process: High-volume, uninterrupted production, typically for liquids or bulk materials.

Business Process Management (BPM):

• BPM is a methodology for analyzing, optimizing, and implementing efficient processes.
• Benefits of BPM:
• Strategy alignment with business objectives.
• Cost reduction and improved efficiency.
• Risk control and enhanced value creation.
• The core philosophy: "Manage your business by managing your processes."

Continuous Process Improvement:

• Processes always have room for improvement.
• Improvements reduce inefficiencies and eliminate non-value-adding activities.
• Provides an iterative approach to refining operations.

Value-Added Analysis (VAA):

• A technique to remove unnecessary steps in processes.
• Four types of process steps:
• Customer-affecting: Directly impacts customer experience.
• Management: Oversees process efficiency.
• Primary: Core operational processes.
• Support: Helps primary processes function.
• Steps in VAA:
• Map the process.
• List all steps.
• Review steps for inefficiencies (DOWNTIMe method).
• Classify activities:
• VA (Value-Adding): Essential steps that benefit customers.
• NVA (Non-Value-Adding): Steps that can be automated or optimized.
• NVAU (Unnecessary Non-Value-Adding): Wasteful steps that should be eliminated.
• Redesign the process to remove inefficiencies.

Key Findings in VAA:

• Only 5% of process steps add value.
• The remaining 95% should be analyzed for elimination or improvement.
• Eliminating waste activities significantly improves efficiency.

Waste Reduction in Services:

• The service industry also contains wasteful steps.
• Reducing unnecessary procedures improves customer experience and operational efficiency.

Case Study: Tesco Homeplus Virtual Subway Store (South Korea)

• A real-world example of process innovation.
• Tesco implemented virtual shopping using QR codes in subway stations.
• Customers scanned product images, placed orders, and had items delivered to their homes.
• Resulted in increased sales and improved customer convenience.

Introduction to Process Design:

• Process Design is a critical aspect of Business Process Management (BPM), focusing on creating, analyzing, and optimizing processes.
• A process refers to any part of an organization that transforms inputs into outputs.
• If a process does not align with a firm's needs, it negatively impacts the company's efficiency and competitiveness.

Process Analysis:

• Cycle Time: The average time between successive unit completions in a process.
• Utilization: The ratio of actual activated resource time to its available time.

Process Categorization:

• Single-Stage Process: All activities are collapsed into one and analyzed with a single cycle time.
• Multiple-Stage Process: Consists of multiple groups of activities linked by workflows Stage: A collection of activities grouped together for analysis.

Key Process Constraints:

• Buffering: A storage area that holds outputs from one stage before the next stage is ready.
• Blocking: Occurs when a stage cannot proceed because the next stage has no available space for additional items.
• Starving: Happens when a stage stops working because there are no inputs.
• Bottleneck: The slowest stage in a process that limits overall capacity.

Process Output Consistency:

• What enters a process must eventually exit, ensuring process continuity and efficiency.

Production Strategies: Make-to-Stock vs. Make-to-Order:

• Make-to-Stock (MTS): Activated based on forecasted demand; Keeps finished goods inventory to fulfill customer orders quickly.
• Make-to-Order (MTO): Activated only when a customer order is received; Minimizes inventory but has longer response times.
• Hybrid: A combination of MTO and MTS, allowing businesses to balance inventory management and responsiveness.

Process Mapping:

• Process maps visually represent workflows, showing inputs, outputs, and intermediate steps.
• Customer Journey Mapping helps understand how customers interact with processes.
• Pacing: having a fixed time for the movement of items through the process

Measuring Process Performance:

• Benchmarking: Comparing process metrics against industry standards or competitors.
• Productivity:.
• Total Factor Productivity: Measures total output relative to all inputs (usually in monetary terms).
• Partial Factor Productivity: Evaluates output relative to one input (e.g., labor productivity).
• Efficiency: Ratio of actual process output compared to the expected standard.

Key Process Performance Metrics:

• Run Time: The time required to complete a batch.
• Setup Time: The time required to prepare a machine for production.
• Operation Time: Run Time + Setup Time.
• Flow Time: The total time a unit spends in the process, including waiting time.
• Value-Added Time: The time spent on actual productive work.
• Process Velocity (Throughput Ratio): The ratio of value-added time to total flow time.

Little's Law and Inventory Management:

• Little's Law states: Inventory = Throughput x Flow Time

Key Inventory Metrics:

• Total Average Inventory Value: The sum of raw materials, work-in-progress, and finished goods.
• Inventory Turns: Cost of Goods Sold (COGS) / Average Inventory Value.
• Days-of-Supply: The inverse of inventory turns, scaled to days.

Job Design Decisions:

• Job Design involves structuring work activities to meet organizational and employee needs.
• Objectives:
• Align tasks with business needs and technology.
• Enhance worker satisfaction and engagement.

Behavioral Considerations in Job Design:

• Specialization of Labor: Improves speed and lowers costs but can negatively impact workers (repetitiveness, burnout).
• Job Enrichment:
• Horizontal Enrichment: Expands task variety.
• Vertical Enrichment: Involves workers in planning, organizing, and quality control.

Strategies for Process Flow Time Reduction:

1. Perform activities in parallel rather than sequentially.
2. Change the sequence of activities for better efficiency.
3. Reduce interruptions to maintain a steady flow.

Work Measurement and Standards:

• Work Measurement is used to analyze jobs and set time standards.
• Benefits:
• Helps schedule work and allocate resources.
• Motivates and evaluates employee performance.
• Establishes benchmarks for improvement.
• If standards are set too high, employees may be overworked.
• Workers who improve efficiency may be penalized with revised (stricter) targets.

Four Work Measurement Techniques:

Direct Methods:

1. Time Study: Uses a stopwatch to measure task durations.
2. Work Sampling: Random observations track activity levels over time.

Indirect Methods:

1. Predetermined Motion-Time Data System (PMTDS): Uses standardized movement times recorded in a lab to estimate task duration.
2. Elemental Data: Uses a database of similar task durations to estimate work time.

Introduction to Process Maps:

• Process modeling graphically represents workflows using a predefined methodology.
• A process map includes key elements:
• Inputs & Outputs
• Activities & Tasks
• Organizational Units
• Gateways (decision points)
• Process maps provide a clear and structured visualization of how a process is executed in reality.

Principles of Process Modeling:

• End-to-End Perspective: Captures the full workflow from input to output.
• Customer Vision: Includes both:
• Current/Real Situation (AS IS)
• Proposed/Optimized Process (TO BE)
• Gemba Approach: Observing actual operations to ensure process maps reflect reality.

Structure of Process Modeling:

• A process is structured around:

1. Inputs.
2. Events (Triggers).
3. Transformation Process (Tasks).
4. Gateways (Decision Points).
5. Outputs.
6. Delivery (Final Step).

• This structure ensures a clear and logical flow for any business process.

Business Process Modeling Notation (BPMN):

• BPMN is a graphical language used to describe and model business processes.
• It prioritizes simplicity and ease of understanding.
• Includes a basic set of elements, with optional elements added for more complex processes.

Key BPMN Elements include:

• Tasks: The fundamental units of work.
• Sequence Flow: Defines the order of execution.
• Gateways: Decision points that direct the flow.
• Events: Triggers that initiate or conclude a process.
• Lanes: Sections that organize tasks by roles.

Types of Elements within BPMN

Events

1. Start Event: Initiates the process.
2. Intermediate Occurrence(s): Occur within the process.
3. End Concludes the process

Activities

1. General Task: A standard work unit.
2. Automated Task: A system-performed task.
3. Manual Task: Requires human execution.

Optional Elements/Objects

• Data Objects: Hold important information.

• Groups: Categorize process steps.

• Text Annotations: Provide clarifications.

• There also exists something called a BPMN Message Flow

Three types of Flows

• Start Message: Receiving a message (e.g., customer request).
• Intermediate Message: Receiving or sending a message mid-process.
• Final Message: Sending a message to conclude a process..

Loop

Used when repetitions occur.

Advantages of BPMN:

1. Widely recognized language in the industry.
2. Easy to understand with clear visual representation.
3. Precise and structured for process improvement.
4. Provides necessary details for process optimization.
5. ARIS Express: a tool for process modeling

Identifying Process Fail Points:

• Failures include:

• Steps that do not add value.

• Lack of customer involvement.

• Poor process design, making operations inefficient.

• Improving Process Quality Includes by simplifying the process and ensuring customer integration

• Best Practices of usage*

• Tasks: Use infinitive verbs (e.g., “Clean machine").

• Events: Use pass participles (e.g., “Order received").

• Gateways: Phrase as closed questions (e.g., "Payment received?").

• To map service you just need to..*

1. List all activities
2. Determine the order Steps for Creating a Process Map:
3. List all activities in the process.
4. Determine their sequence.
5. Connect activities with arrows.
6. Use appropriate symbols (tasks, events, decisions).

Conclusion:

• Process maps improve business workflows.
• They help:
• Identify and eliminate inefficiencies.
• Improve service quality.
• Enhance customer integration in business processes.
• Online Shopping vs Offline*
• Online:*
  • Automated order placement
  • Fast Processing
  • Lowers effort required
• Offline:*
  • Physical Selection
  • Immediate Availablity
  • More Effort Required

• Lanes Organize Workflow responsibilities

Service Processes

• Emphasis on* Customer interaction, experience and efficiency.
• Services can't be inventoried must meet demand in real time
• Operations manages must oversee process

Case Study: Amazon's Service Innovation

• Service in 1995 shipping books* became dominant
• 2 tired retail structure to buyer and seller and market
• Personal shopping experience
• Home Delivery
• Disruptive

Customer is the center!

Nature of Services

Ensure operation does the following

• Efficient service system
• Proper service infrastructure
• Effective service workforce

5 Service package (Bundle of Goods and Services)

• All include some support and facility to give implicit or explict services.

Designing the Service

• Can't Inventory services you must deliver in real time*
• Ensure you pick the correct capacity

Marketing promotions can adjust pricing and demands on high wait.

• Use wait lines to manage customer overflow.*

Service System differences

• Product's Developed simultaneously with design
• No legal protection as service cant be patented
• Package is a main output
• Quality depends on workforce management
• *Encounter a Structured Matrix- ** Customers have many options.
• Mail in to face the customer with total automation
• Customer interaction increases
• lower custommer contact yields streamlined operations

Virtual Services changed customers

• Now play on active role
• Pure cutomer - Ebay and Second life
• Mixed- Youtube and wikipedia

Managing Introduced variablility

• Challenge in managing variation
• High demand results in lost satisfaction
• Standard approach balance efficacy and flex

The key to a Service is

• preventing the failure before they occur! (Poka yoke)
• Can be common if it's manufactored*

Service Design types are as follow

• production line approach: ATMS taking the Bank job
• self service approch: Self Check in.
• attention approach. Service customization Ritz.

A good service package results

• Customer vary contact

Customer Journey's Guide.

Introduction to Customer Journeys

• Is referring to interaction and experience with all their life
• Helps with optimization.
• Improve cust exp
• Enhance Efficiency by identifying cost points.
• Deliver needed info
• Phases of the Guide*
• Discovery to make you aware to sub
• Invest - look at options
• Acquistion to purchase or Sub
• Contract sign formal agreement
• Vision service to be done.

Example Guide

• Loan acquisition* includes.. touchy part.
• Cutomer uses online centers
• Aged 25-35 trust family. They need help with documentation and rates but like clear terms

Resturants are easy to check

• See the menu
• Time you wait time
• And you dining exp

Jobs is Seamless Experiences.

• Journey visually represents all steps in a interaction.
• Issues caused friction as most customers are at steak.
• Disatisfaction harms the customer experience, by finding those*
• The pain can cause unclear process, slow response or even tough interactions*

Identilying Moments of Truth (MOT)

• Mots are where the customers go or leave.. improving them improves customer care and service. Some Ex is the initial experiance

Waiting Lines.

• Present in service.
• Queuey theory aims for optimizations
• Customers come and all need help.
• Finite population* ( limited customers)
• Infinite pop* (Large Enough for fluc)
• Arrival and Distributions*
• Arrive based intervals or all*
• Sized unit at once.
• Batch- arrive all together
• Queue Characteristics*
• Length for limit for length

Service times distribution

• Customer helps to serve and distribute times!

Queue optimisation with distributions,

• Descipline
• Size
• Behaviours
• Servers

Queue management to analyse

• Cost effective

• Analise strategies and try and help with these

• train employes help those

• provide wait times

• Provide distraction

• Finte capcity helps

• Long time is a issue

Physoclogy is important

• Keep them doing something
• Do 1 thing at the time.
• Make them belive its worth the weight.

Is customer integation

• It helps to involve customers
• They cost more less capable.
• No good influence
• Adds to service issues.

"Tools to Manager Integration"

• Ensure you check your support systems when desining. "Management you gotta give clear things to follow"

You NEED control Customer Behavior!!

• ReWard Them and Penalise Them
• Norming it helps with approval!!*
• Trust, underdtanding helps but actions matter "Have those that desing it to help"

5 things they impact

1. Arrival, Request, Capbility, Effor, and Sub Preference!
2. Quality
3. "It helps you get a great output"

Customer needs help!

1. Happen in online
2. Correct mistakes and allow it to help
3. 9. Case Study: Waze and Customer Data Crowdsourcing

• Key Take's*
• Helpyes with innovation which resluts i customer help.

Customer involment and integration is Key.

Capacity is Ability

• Its messured with system output
• consider all options
• different industry measure.

Capacity planning occurs across time

• LONG Range 1 year
• Strategic* helps size workers to help
• helps with balances
• adjustments help to build Short rage month helps to make machines work and
• Helps on the capacity right*

Helps with demand

• cost, inventory

Important To trade Capacity

Capacity utilisation rate

• Economies of scale. volume increase
• Capacity Fucus helps with set production* helps scale quickly which helps workers to perform well!

Maintain systems to follow:

• Align capacity across all operations Adding capacity results in invest and demans
• outsouce at peak demand
• Share Capacity
• Temporary or permanitaly reduse* WHAT TO CONSIDER WHEN CHANGING CAPACITY
• Is a facility fixed or adjustable
• should you contract some.
• WHAT Resurces to specific tasks*

7 capacity requirments?

forect, and calc

S&OP Helps to optimise, sell plan!

• HELPS IMP PROV
• IM STORE PROD STAB
• man time"
• Meets to decide all Manage capactiuce
• dynamic pricing increases

Six Sigma Quality Management

• What is quality management
• Even 99% Quality leads to DEFECTS
• 26K a YEAR
• Quality is essential

Sigma

It helps for reducing varibility and defects! Aim fo less than 3.4 Defect per Million oppotunities

• Data Drivin decision makes.*
• Contounios improvment!

Key Elements

• Performce messurments needs
• Comintment key and leaders take action

Helps clarify process structure and efficiency. 6. "Points of Time help them out."

• Measure, and Improve quality!!*

Improve process.

• Brain storm solutions for help and imp employees

• Adopt to automatice helps! (Quality controll makes sure standard and helps correct them)

• TRACK WHAT is worth*

• EX Toyota quality** and high inspection makes em perform***

• Lean six integrates Effincieny. It helps to reduce errors and imp statisfcation

• The main objective is customer satafacition*

• And to prevent Defect which is key*