Module 1 - Intro to Business Processes Flashcards
What does Operations Management (OM) involve?
It involves the design, control, and improvement of the system used by an organization to create the goods and services it provides to customers.
What is the relationship of internal and external customers to the organization?
customers can be internal (within the organization) or external (served by the organization).
Why is it important to effectively manage processes that serve internal customers?
Because the cost of these processes will affect eventually the product cost’s to end users.
Name as many business process transformations as possible and give an example for each
PPEILTS
Transformation – Examples
Physical – Manufacturing; Assembly; Packaging.
Physiological – Medical Practice; Psychologist; Therapist.
Exchange – Insurance; Bookstore; Supermarket.
Informational – Software; Education; Consultation.
Location – Airline; Taxi; Trucking; Mail Delivery.
Storage – Banking; Hotel; Warehousing.
Name differences between the manufacturing and service processes
Activity Time Duration
Flow Unit (in/tangible)
Role of Information
Process Flow (across/within department)
Quality Definitions (in/formal)
Quality Control (inspections/management reviews)
Contact w/Customers (major/minor)
Priority Setting (formal plans / subjective)
Main Resource (machinery / labor)
Buffering Mechanism (capacity/inventory)
Cost Structure (hidden / visible)
Characteristic – Manufacturing – Service
Activity Time Duration – Fixed – Variable
Flow Unit – Tangible – Intangible
Role of Information – Supports Flow – Is the Flow Unit
Process Flow – Within a Department – Across Departments
Quality Definitions – Formal Specifications – Informal & Subjective
Quality Control – Inspection Plans – Management Reviews
Contact w/Customers – Minor – Major
Priority Setting – Formal Plans/Schedules – No Explicit Priority Setting
Main Resource – Machinery – Labor
Buffering Mechanism – Inventory or Capacity Buffers – Capacity Buffers
Cost Structure – Primarily Visible – Mostly Hidden
How does a manufacturing vs a service system buffer for uncertainty?
Manufacturing - inventory buffers
Services - capacity buffers
Why was traditional OM focused almost exclusively on manufacturing? (3 reasons)
1- Services represented a smaller proportion of Gross National Product (GNP)
2- Services (compared to manufacturing) appeared to be less technologically sophisticated.
3- The activities that make up services vary a great deal more than the activities associated with manufacturing.
What does the acronym SIPOC stand for?
It lists __ of a process
Suppliers – Inputs – Process – Outputs – Customers
* Suppliers - those who provide process inputs (can be either internal or external).
* Inputs - the flow unit as it arrives to the process.
* Process - the flow units, activities, and resources that make up the process.
* Outputs - the flow unit as it leaves the process.
* Customers - those who receive the outputs (can be internal or external).
important characteristics
A “stakeholder” is anyone who __ the operation of a process.
Besides suppliers and customers, name other “stakeholders” of a process.
affects, or is affected by
Other stakeholders include employees, Board members, partners, shareholders (i.e., investors), regulators, and the community at large
Compare job shop vs flow shop
(flexibility, queue time, speed, volume)
Describe each.
A job shop process uses general purpose resources and is highly flexible and slower, and has more queues. Small companies deal with high-mix, low-volume products. The product moves between machines in various ways& quantities, just to get the job done.
A flow shop process uses specialized resources and the work follows a fixed path. It’s faster and has less queues. High volume manufacturers use this model, with a set flow. Each stage happens in exactly the same order every time.
What is the concept of plant-within-a-plant (PWP) and what are the challenges? Give an example.
An existing facility is divided both organizationally and physically into separate PWPs. Each PWP has its own facilities in which it can concentrate on its particular manufacturing task, using its own work-force management approaches, production control, organization structure, etc.
If the demand across product lines changes significantly, the system may become unbalanced. For example, some flow lines may become overloaded and others under-loaded.
Example of PWP: hospital is often organized by departments (based on the needs of individual patients, such as surgery, radiology, emergency, etc)
Name the 6 types of information-based services.
Type – Description
Troubleshooting – Solves a specific customer problem within a specified class.
Gathering – Provides instructions or summarizes information for use by others.
Evaluation – Determines if a specification or a standard is met.
Analysis – Determines if resources should be allocated for a specific purpose.
Planning – Plans, tracks, and controls sets of processes and other activities.
Consultation – Provides considerable expertise to assist customers with various needs.
Why are statistical models very useful in operations management?
Because the complexity of the system requires that models be used and statistical models are designed to consider variation in their logical foundations.
Fisher suggests a two-by-two matrix based on the product (functional or innovative) and the product system (cost efficient or responsive). Which product type uses a responsive production system?
Innovative, because demand will be difficult to forecast precisely and the ability to sell may be fleeting
The duration/level of forecast uncertainty has what relationship with the production lead time?
A shorter lead time system has the advantage of requiring shorter duration forecasts.
For example, if a production lead time is 6 months, then the forecast must cover a duration considerably longer than 6 months.
Within a production system, there are two types of approaches to triggering production of goods. What is the difference between push and pull?
(ie- batch or responsive, long or short lead times
Push systems = the forecast of demand is used to plan and schedule the production of items
–associated with efficient operating systems and batch production
–long production lead times
Pull systems = actual customer demand signals the production of items to replenish what the customer consumes.
–associated with responsive operating systems, Lean production, Kanban
–short production lead times
Determining how customers define value would likely consist of:
Interviews with customers
Why are production systems that manufacture parts in low wage countries not effective for the production of new innovative products?
Demand is not predictable. Predictions are needed for overseas production because of longer lead times.
What results would be expected if a highly responsive operating system were implemented for an easy to forecast product?
There would be:
– excessive idle time (and therefore wasted resources and increased resource costs)
because capacity buffers would be unnecessary. Additionally, production close to the source of demand may be unnecessary and more economical locations may have been beneficial to consider.
Why does a flow shop have lower inventory levels?
Due to the nature of the production process in a flow shop, there is less of a need for work-in-progress inventory because there is a smooth progression from one stage to the next.
The operating __ as consisting of a series of interrelated __, each of which includes a set of interrelated __
system
processes
activities
OM refers to activities that take place within __, while Supply Chain Management (SCM) refers to activities that take place within __
a single organization
an extended enterprise (i.e., a group of interrelated organizations)
Business Process Transformations acronym:
PPEILS
Manufacturing process – the flow unit is __ and __ changed during processing.
Service process – the flow unit is either __, OR it __ changed during processing
tangible, is changed
intangible, is not changed
What are the two types of approaches to triggering production of goods?
Push and pull systems
What are the 4 ways that service systems have been classified based on their degree of customer interaction and the degree of labor intensity?
(1) Service Factory (low interaction, low labor) – such as airlines and hotels
(2) Service Shop (high interaction, low labor) – such as hospitals and repair
(3) Mass Service (low interaction, high labor) – such as retailing and schools
(4) Professional Service (high interaction, high labor) – such as lawyers and architects
When uncertainties are included in the simulation’s logic, it is sometimes referred to as a __ simulation. These simulations can be either __ or __.
“Monte Carlo”
“manual” or computerized
Q: Capacity is 2, demand is 2. They increase capacity to 3 to add a buffer.
Capacity buffer =
(new average capacity - average demand) / average capacity
=1/3
How is the value definition for service customers determined?
What is the best approach to establish a set of these?
Provide examples of performance dimensions related to service quality.
Through performance dimensions
The best way to establish these dimensions is by interacting directly with customers in an open-ended manner
Examples of performance dimensions include
–Conformance (accuracy, usefulness, completeness),
–Speed (promptness, responsiveness, timeliness, punctuality),
–Access (availability, convenience), Knowledge (competency, integrity, professionalism),
–Empathy (courtesy, friendliness, respectfulness, consideration).
Question: The following is not a performance dimension for customers of a business process:
a. Friendliness
b. Quality
c. Clarity
d. Accuracy
b. Quality
Because quality is not a direct customer-facing performance dimension in the context of this question
Characteristics of push systems (AKA produce-to-stock)
3
- efficient operating systems
- batch production
- long production lead times
Characteristics of pull systems (AKA just-in-time)
- Actual customer demand signals the production of items
- responsive operating systems
- Lean production
- JIT (just-in-time)
- production synchronized with demand
- TPS (Toyota production system)
- short production lead times
- Kanban
- service operations are almost always pull systems
How does Kanban work?
It uses signals (traditionally cards) to signal the need to replenish a container of parts once the container is emptied.
Otherwise, no production would take place even if resources remain idle.
What did Stickley Adhesives do to account for being overwhelmed with demand?
They created a Monte Carlo computerized simulation to decide what the capacity buffer should be
What is a value stream map and when do you create one?
It’s a display of the current process
(activities, how they are connected (i.e., the process flow), where inputs are received, the location of inventory buffers, the destination of outputs, and any important data that are readily available)
You create one when doing a Lean process analysis to develop a thorough understanding of the current process
What is the difference between a process map and a value stream map and consumption map?
A consumption map focuses on the end-to-end flow of value from the customer’s point of view,
Process map = value stream map = focuses on the specific tasks and interactions within a process
The best-case flow time AKA __, is __ than the flow times experienced in reality because of __.
Theoretical flow time
Less than
Wasteful activities (ie - waiting for parts to be shipped, waiting overnight for work to be finished)
The identification and removal of __ (or __) __ will minimize the gap between theoretical flow time and actual flow time
non-value added (or wasteful) activities
Manufacturing waste activities:
WIDMOOT
Waiting
Inventory
Defects
Motion
Over-processing
Overproduction
Transportation
Define Manufacturing waste activities of motion and transportation
Motion - Production done inefficiently due to movement within a workstation.
Transport - Items moved from one location to another location.
Define Manufacturing waste activities of Overproduction and Over-Processing
Overproduction - Items made in large quantities due to economies of scale.
Over-Processing - Extra production operations that ideally would not be necessary (due to inadequate capabilities)
