Module 1 Exam Vocab + Companies Flashcards
Operations Management
In charge of supplying products and services in the right amount, at the right place, at the right time and at the right quality.
Corporate Sustainability
Business approach that creates long-term value through green strategy aimed at natural environment that considers how a business operates in social, cultural, and economic context
Shareholders
People who have an equity share in a company
Stakeholders
Shareholders, employees, customers, society, interested institutions; anybody/group involved with the company
Scholastic + Harry Potter
Distributed millions, no info leak, coordinated, sustainable.
Done through bypassing warehouses, thousands of trucks, same-size pallets, and GPS transponders to coordinate delivery
Apple
Had to double production to keep up with demand. Leader in operations –> former COO Tim Cook became CEO. Understands impact of products, life cycles, and supply chain.
Marketing
Creates demand and generates sales of outputs
Operations
Supplies good and services while also translating materials/services into outputs
Finance
Manages resources/capital and acquires them for the inputs
Support Functions
Include accounting , IT, HR, and engineering
Process
Activity of activity group that takes input(s) and transforms them into output(s)
Manufacturing Process Characteristics
Physical, durable input Output can be inventoried Low customer contact Long response time Capital intense Quality easily measured
Service Process Characteristics
Intangible/perishable input Output can't be inventoried High customer contact Short response time Labor intense Quality hard to measure
Core Processes
Set of activities that directly deliver value to external customers and help drive core competencies
Support Processes
Provides vital resources/inputs to core processes and are essential
4 kinds of Core Processes
Supplier relationship process
New service/product development
Order fulfillment process
Customer relationship process
Supplier relationship process
Process that selects that suppliers of services, materials, and information and facilitates inflow of these
New service/product development
Process to design and develop new services or products from customer/market inputs
Order fulfillment process
A process to produce and deliver services or products to the external customer
Customer relationship process
A process that identifies, attracts and builds relationships with external customers and facilitates the placement of orders
Corporate Strategy
Provides an overall direction that serves as the framework for carrying out organizations functions (such as finance, marketing and operations).
It includes the firms overall goals with its core competences.
Environmental Scannning
Understanding key trends in industry/marketplace/society and economic trends, technological changes, and political conditions
Core Competencies
Identifying the unique resources and strengths.
Examples include workforce, facilities, sector understanding, cutting-edge/proprietary technology, etc
Global Strategies
Having a response to global trends, opportunities and risks; can take form of strategic alliances and overseas expansion
Market Analysis
Consists of market segmentation and needs assessment
Market Segmentation
Find a group of customers with enough in common to warrant the design and provision of products and services
Needs Assessment:
Identify customers needs and understand how well competitors are addressing those needs.
Competitive Priorities
What you want to deliver; the 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
What you can deliver; the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver.
Order Qualifiers
The minimum level required from a set of criteria for a firm to do business in a particular market segment; allows product to be considered but not selected for final purchase; only positions firm to compete
Order Winners
The criterion customers use to differentiate the services or products of one firm from those of another (and make a final decision).
Example Order Winners
Low price, quality, time, flexibility, after sale support, tech support, reputation
Southwest Airlines
Priorities: Deliver connection services at low cost, timely and frequent.
Product Planning: Minimize costs and idle land-time, simplify operations, pleasant travel, on-time performance
Process Planning: No ticket/seat reservations, no meals, no baggage transfer, lean/quick processes, flexible employees, secondary airport usage
Order Winners: Frequent/reliable departures, lean/flexible/productive ground and gate crew, high aircraft utilization/standardization, low ticket price, limited service, short routes
3 trends in Ops Management
Productivity Improvement
Global Competition
Ethical/Workforce Diversity and Environmental Issues
Productivity Meaning/Equation
The value of outputs (services and products) produced divided by the values of input resources (wages, costs of equipment, etc.)
Productivity = Outputs’ Value/Inputs’ Value
Labor Productivity
Labor Productivity = (Units of Work Done)/(Employee Hours)
Global Competition
Advantages: Increased market penetration, comparative cost advantages
Disadvantages: Political risks, lower skilled workers, vulnerability to supply chain disruptions
4 Decisions of Process Strategy
Process Structure, Customer Involvement, Resource Flexibility, and Capital Intensity
Process Structure
Determines process type relative to kinds of resources needed and characteristics. Includes layout decisions
Dimensions of Customer Contact (Services)
Physical presence, what is processed, contact intensity, personal attention, and method of delivery
Front Office
High customer interaction and customization.
Flexible flows with individualized processes
Hybrid Office
Some customer interaction, standard services with some options
Flexible flows but with dominant paths, and few exceptions to workflow
Back Office
Low customer interaction and very standardized
Line flows, and routine work done the same for all customers
Job Process
Low-volume products made to order
Customized process with flexible/unique task sequence
Batch Process
Multiple products of low/moderate volume
Disconnected line flow, moderately repetitive
Line Process
Few major products, high volume
Connected line, highly repetitive
Continuous-Flow Process
High volume/standardization, usually commodity products
Continuous flow
Make-to-Order
Built exactly to customer specifications
Make-to-Stock
Mass production, created to fill a forecasted need
Assemble-to-Order
Made of modular parts; involves mass production of modules, which can then be mass customized through postponement of creation until customer orders
Layouts
Efficient layout can reduce handling, lower costs, and maintain product flow
Walmart
Corporate strategy is based around quality goods at competitive prices
Operations strategy involves short flow times and low inventory levels
Operations structure involves cross docking, EDI (electronic data interchange), logistics, focused locations, store-supplier communication
Key to Walmart’s Low Prices
Huge volume of sales
Supply chain that maximizes efficiencies and reduces outlays
Minimizes overhead and operational cost
Leverages bargaining power to force suppliers to lower prices
Customer Involvement
Way in which customers become part of the process and participate; essential to service processes
Process and equipment must be easy/friendly to use
Starbucks
Process, layout, cup, and communications are designed to deal with high variety/volumes of drinks
80,000 drinks possible, done using universal code
Coffee cups are a concise/clear medium of communication between cashier and barista
Advantages of Customer Involvement
Better net value/quality/delivery speed/flexibility to customer, lower costs, supply chain coordination, more accommodating process revisions
Disadvantages of Customer Involvement
Disruptive, time/volume management can be challenging, hard to measure quality, interpersonal skills needed, revised layouts, multiple locations may be needed
Resource Flexibility
Ease with which employees and equipment can handle a wide variety of products, output levels, duties and functions.
General-Purpose Equipment
If you are producing at Low Volumes
Low investment/fixed cost, but may have high variable cost
May be good to do the job but not at peak efficiency
Special-Purpose Equipment
High volumes and low customization
High investment/fixed cost, but may have lower variable cost
Break-Even Quantity
Point at which special/general purpose equipment would give you same returns.
Under this quantity is general purpose, over is special-purpose
On plot of relationship between process cost and product volume
Break-Even Quantity Formula
F = Fixed; V = Variable
F1 - F2)/(V2-V1
Capital Intensity
Mix of equipment and human skills in a process
Greater the cost of equipment relative to cost of labor, the greater the capital intensity
Automation
Replacing human operations/control of machinery with programmed control
Can happen in manufacturing or service processes
Robot
Programmable machine capable of manipulating materials
Suited for dangerous, tedious, dirty, and labor-intense tasks
Flexible and don’t get tired
Economies of Scope
Economies that reflect the ability to produce multiple products more cheaply in combination than separately.
Strategic Fit
The degree to which an organization is matching its resources and capabilities with the opportunities in the external environment
Link between Competitive Priorities and Process Choice
Job/Small Batch - Quality, on-time delivery, flexibility
Large Batch/Line/Continuous Flow - Low-cost ops, consistency, delivery speed
Link between Competitive Priorities and Inventory Strategy
Make to Order - Quality, on-time delivery, flexibility
Assemble to Order - Delivery speed, variety
Make to Stock - Low-cost ops, delivery speed
High-Customer Contact Process Characteristics
More divergence and flexible flows
More customer involvement
More resource flexibility
Volume-varying capital intensity
Low Customer-Contact Process Characteristics
Less divergence and more line flows
Less customer involvement
Less resource flexibility
Volume-varying capital intensity
Low Volume, Make to Order Process Characteristics
More divergence and flexible flows
More customer involvement
More resource flexibility
Less capital intensity
High Volume, Make to Stock Process Characteristics
Less divergence and more line flows
Less customer involvement
Less resource flexibility
More capital intensity
Process Improvement
Systematic study of the activities and flows of each process in order to improve it. Involves continuous marginal improvements
Process Reengineering
Coming up with a radical new design of business processes to dramatically improve costs, quality, speed, and/or service
Key Elements: Critical processes, strong leadership, cross-functional teams, information technology, clean-slate, and process analysis
Amazon
4 competitive priorities: Delivery speed (distribution centers, robots, inventory, direct shipping), variety, customization (many products in unique order per customer), and low-cost ops (high selling volume and logistic-oriented supply chain)
Factors Spurring Supply Chain Improvement
Global competition, shorter product life cycle, low-cost distribution channels, better informed customers, internet/E-Business
Global Competition Facts
Brazil is an expensive place to produce
Chinese manufacturing is more expensive than Mexican and almost the same as American
Manufacturing cost in Eastern Europe are similar to those of USA
UK is lowest cost manufacturer in Western Europe
Shorter Product Life Cycles
Need to replace products every few years to keep up with demand forces companies to streamline their supply networks
Rapid and sharp fluctuations in demand also call for supply chains that are flexible
Supply Chain Management
Efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements.
List of Competitive Priorities
Low-cost ops, quality, consistency, delivery speed, on-time delivery, development speed, customization, variety, volume flexibility
Supply Chain Measures
Inventory measures and Financial measures
Inventory Measures
Average Aggregate Inventory Value, Weeks of Supply, Inventory Turnover
Average Aggregate Inventory Formula
(# of units)(value of A) + (# of units)(value of B) …..
Weeks of Supply Formula
Average Aggregate Inventory Value/Weekly Sales (at cost)
Inventory Turnover Formula
Annual Sales (at cost)/Average Aggregate Inventory Value
