Operations as a Competitive Weapon KR: Chapter 1 Operations as a Competitive Weapon

Chapter Outline What is a process? Nested process Customer-supplier relationships Service and manufacturing processes Differences and similarities Degree of customer contacts

Traditional Organizational Chart (How traditional organizations are managed) CEO Sales Marketing Engineering Manufacturing Distribution Customer service Policy and decisions are deployed downward Information flows upward

Process view (How process-focused organizations work) Product Delivered Order placed Chain of events is horizontal

Core Process Map Customer Sales Marketing Finance Distribution Field engineering & service Customer Order Delivery acceptance 1.1 Order placement 1.2 Order entry 1.9 Invoice 1.3 Credit check 1.4 Pick and Pack 1.5 Schedule 1.7 Ship 1.6 Site prep 1.8 Install

Process Hierarchy Core process (1) Order fulfillment Functional process (8 to 12) Order processing Production Staging and installation Subprocesses (20 to 50)) Order entry Credit check Verify Customer address Assign Customer Identification Number Enter Product code Work steps (hundreds to thousands)

Five Process Groups with 12 Subprocesses group B, contracting Process group A, Order processing 4 Process group C, delivery 1 2 5 6 7 3 8 External customers External suppliers Process group D, billing 9 10 Process group E, Customer service 11 12

Chapter Outline What is a process? Nested process Customer-supplier relationships Service and manufacturing processes Differences and similarities Degree of customer contacts

Nature of Services Intangible No inventory Simultaneous production and consumption Variety of services Labor intensive

Continuum of Characteristics More like a manufacturing organization More like a service organization Physical, durable product Output can be inventoried Low customer contact Long response time Regional, national or International markets Large facilities Capital intensive Quality easily measured Intangible, perishable product Output cannot be inventoried High customer contact Short response time Local markets Small facilities Labor intensive Quality not easily measured

Chapter Outline What is a process? Value Chain Core process Support process

Internal Value-Chain Linkages Showing Work and Information Flows External suppliers External customers Support processes Supplier relationship process Order fulfillment process New service/ product development process Customer relationship process The first slide establishes the continuum. Figure 1.3

Support Processes Table 1.1 Examples of Support Processes Capital Acquisition The provision of financial resources for the organization to do its work and to execute its strategy Budgeting The process of deciding how funds will be allocated over a period of time Recruitment and Hiring The acquisition of people to do the work of the organization Evaluation and Compensation The assessment and payment of the people for the work and value they provide to the company Human Resource Support and Development The preparation of the people for their current jobs and future skill and knowledge needs Regulatory Compliance The process that insure the company if meeting all laws and legal obligations Information Systems The movement and processing of data and information to expedite business operations and decisions Enterprise and Functional Management The systems and activities that provide strategic direction and ensure effective execution of the work of the business

International Benchmarking Clearinghouse’s Standard Process Classification Understand markets and customers Develop vision and strategy Design products and services Produce and deliver Manage improvement and change Develop and manage human resources Manage information Market and sell Invoice and service customers Execute environmental management program Manage financial and physical resources Manage external relationships Manage improvement and change

Chapter Outline What is a process? Value Chain What is operations management? Broad and narrow interpretations OM as a set of decisions OM as a function

The Operations Management System Outputs Goods Services External environment Customer or client participation Operations and processes Information on performance 5 1 2 3 4 Inputs Workers Managers Equipment Facilities Materials Land Energy

Manufacturing Management Activities NOTES:

Operations As A Basic Function MARKETING FINANCE OPERATIONS

Operations As The Technical Core Finance Capital Markets, Stockholders Marketing Customers Workers Suppliers Purchasing Personnel

Chapter Outline What is a process? Value Chain What is operations management? Productivity

Productivity Output Input Productivity = This series of slides illustrates the productivity calculations shown in Example 1.1. The series builds in steps to the conclusion of the Example showing the development of key equations along the way. This slide advances automatically..

Chapter Outline What is a process? Value Chain What is operations management? Productivity Road map for competitive operations Operations management as a competitive weapon

Operations Roadmap Figure 1.6 Competing with Operations Operations As a Competitive Weapon 1 Operations Strategy 2 Process Design Strategy 3 Designing Value Chains Supply Chain Design 9 Lean Systems 11 Location 10 Designing and Improving Processes Process Analysis 4 Process Performance and Quality 5 Capability 6 Layout 7 Planning and Managing Projects 8 Operating Value Chains Information Technology and Value Chains 12 Forecasting 13 Inventory Management 15 Resource Planning 16 Scheduling 17 Aggregate Planning 14 Outcomes Figure 1.6

Operations Management Activities