MAN3506 Chapter 1 & 2 PDF

Operations Management The systemic design, direction, and control of processes that transform inputs into services and products for internal, as well as, customers. Process Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its cu...

Operations Management The systemic design, direction, and control of processes that transform inputs into services and products for internal, as well as, customers. 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. Supply Chain Management The synchronization of a firm’s processes with those of its supplies and customers to match the flow of materials, services, and information with customer demand. - Flow of information between firms 3 Functional Groups 1. Marketing - Creates demand 2. Operations - Fills demand 3. Finance - Pays demand Service and Manufacturing Processes Physical, durable output Output can inventoried Low customer contact Long response time Capital intensive Quality easily measured Intangible, perishable output Output cannot be inventoried High customer contact Short response time Labor intensive Quality not easily measured Supply Chain View Each activity in a process should add value to the preceding activities; waste and unnecessary should be eliminated. Supplier Relationship Process A process that selects the supplies of services, materials, and information and facilities the timely and efficient flow of these items into the firm. New Service/Product Development A process that 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. - Starts when a customer places an order and ends when received. Customer Relationship Process A process that identifies, attracts and builds relationships with external customers and facilities the placements of orders by customers (customer relationship management). - How are customers quality? - How do you handle returns? Supply Chain Processes Business processes that external customers or suppliers Ex: - Outsourcing - Warehousing: Receiving shipments, inventory management - Sourcing: Selecting, certifying and evaluate of supplies - Customer Service: Resolving issues - Logistics: Transportation - Cross Docking: Packaging and sorting of products before they are shipped to customers Operation Strategy Operations implements the firm’s corporate strategy and helps to build a customer-driven firm. - Links long term and short term ops decisions to corp. strategy. Corporate Strategy Provides an overall direction that serves as the framework for carrying out all the organization’s functions. - Environmental Scanning: Monitoring and adjusting changing in business environment Core Competencies: What sets your organization apart unique - Resources - Drives core process - Workforce. Facilities, Market and Financial Know-how, systems, and technology Core Processes - What do you do well? Manufacturers? Technology? Global Strategies: Identify both opportunities and thoughts in global markets Market Analysis Understanding what the customers want and how to provide it. Market Segmentation: Identify groups of customers wants and needs Needs Assessment: Identify how well competitors are addressing their needs Competitive Priorities (Where are you competing? Cost? Luxury? Quality?) - Critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future. Competitive Capabilities (How capable is your process to meet the needs of your customers?) - Cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver. - Always has a trade off - Cannot compete on all levels (Delivery speed & 100 customization) Order Winners - A criterion customers use to differentiate the services or products of one firm from those of another. Order Qualifiers - Minimum level required from a set of criteria for a firm to do business in a particular market segment. Measuring Productivity - value of outputs produces/ inputs resources Productivity = output/input Output/Input - services a products/ wages, cost of equipment Roles of Management Managers examine productivity from supply chain level because its a collective performance of the individual process Challenge - Increase value of output relative to cost of inputs If process generates more output or outputs of better quality using the same amount of inputs productivity increases Fourth Industrial Revolution Ongoing automation of traditional manufacturing and industrial practices using modern smart technology. Ex: - Smart manufacturing technologies - Smart products technologies - Smart supply technologies - Base technologies Manufacturing Execution Systems (MES) Computerized systems used in manufacturing to track and document the transformation of raw materials to finished goods and optimize their production output. Artificial Intelligence (AI) Constellation of technologies, from machine learning to natural language processing, that allows machines to sense, comprehend, act, and learn. Internet of Things (IoT) Interconnectivity of objects embedded with software,sensors, and actuators that enable these objects to collect and exchange data over a network without requiring human intervention - OM Applications - Concerns and Barriers - Cost of technology - Privacy concerns - Security Chapter 2 Process Strategy - Pattern of decisions made in managing processes so that they will achieve their competitive priorities - Process as inputs-transformation output - How we create and maintain those steps Customer Contact Extent to which the customer is presently, actively involved, and receives personal attention during the service process Customization Service level ranging from highly customized to standardized Process Divergence Extent to which the process is highly customized with considerable latitude as to how its tasks are performed Flow How the work progresses through the sequence of steps in a process Customer-Contact Mix - Brings together 3 elements: 1. Degree of customer contact 2. Customization 3. Process characteristics Front Office - High customer contact - Work flows flexible - Product/services change one customer to next Hybrid Office - Moderate levels of contracts - Standard services with some options for customers Back office - Low customer contact - Work standardized and routine Process choice A way of structuring the process by organizing resources around the process or organizing them around the products. Job Process Batch Process (Small or Large) Line Process Continuous-flow Process Production and Inventory Strategies Design-to-order Strategy Make-to-order strategy Assemble-to-order strategy - Postponement: Final activities to compete order delayed until order placed - Mass customization: Paint cans Layout - Physical arrangement of operations ( or departments) created from the various processes and put in tangible form. Tend to be clustered together into departments OPerations - Group of human and capital resources performing all or part of one or more processes. Customer Involvement Possible Advantages - Increased net value to the customer - Better quality, faster delivery, greater flexibility, and lower cost - Reduction in product, shipping, and inventory costs - Coordination across the supply chain Capital Inventory - Mix of equipment and human skills in the process  - The greater the equipment cost relative to labor, the greater the capital intensity. Automating Manufacturing Processes - Fixed Automation - Produces 1 type of product in a field sequence - Great for high volume stable products - Trade-offs large initial investment (Inflexible) - Flexible (Programable) Automation - Can produce multiple products in small batches - Can be reprogrammed if product is at end of life cycle Automating Service Processes Economies of Scope - Capital intensity high resources flexibility low - Ability to produce multiple products more cheaply in combination than separately 6 Sigma Process Improvement Model - Define: Scope & boundaries of the process to be analyzed are first established - Measure: Meters to evaluate how to improve the process are determined - Analyze: Process analysis is done, using the data on measure, to determine where improvements are necessary - Improve: Team uses analytical and critical thinking to generate a long list of ideas for improvement - Control: Process is monitored to make sure that high performance levels are maintained Dumb Managers Always Ignored Customers Swim Lane Flowchart - Visual representation that groups functional areas responsible for different sub processes into lanes.