Module 1 - Process Design and analysis (Part 1) Flashcards
What is operations management?
The administration of business practices to create the highest level of efficiency possible within an organization.
COO how Tim cook and Sheryl Sandberg develop there respective corporations as COO.
Tim cook: COO of apple, transformed inventory management to enable Apple to ship iMac in a rainbow of colors, then orchestrated speed delivery within 48 hours.
Sheryl Sandberg: COO of Facebook, How to make Facebook profitable
How Tim cook, differentiated himself from Steve jobs.
Jobs: Elegant, creative, innovative, fun
Cook: Affordable, reliable, available, and profitable. Strength of apple is their business and operations strength.
Operations Expertise needed in management consulting
With operations becoming more complex, companies in manufacturing, retail and technology - consulting firms that service them - are scrambling to hire people with supply chain expertise.
Operations Expertise for Investors.
A deep understanding of a firm’s capability of matching supply and demand is crucial for evaluation the firm’s future value.
Berman, a group of investors who believed that operational data foretell future impacts in profits.
Saucony, inventories declines, stock doubles
Bombay, inventory increased 50%, stock fell.
What are the 3 main functions of an organization?
Marketing: Generates the demand (takes the order for a product or a service
Finance/accounting : Tracks how well the organization is doing, pays the bills, and collects the money
Operations: Creates the good or services by transforming inputs into outputs (70/80% of expenditure in a firm)
OM has many functions. How do we make it a transformation process?
Investment
Equipement
Inventory
Cash
Costs
Materials
Labor
Energy
As inputs -> goes into the firm -> return money (cash) in exchange of the ouput (Physical goods/ Service) -> Customer
OM is the set of activities that create value in the form of goods and/or services by transforming inputs into outputs.
Workflow of operations management
OM inputs through outputs
Inputs -> Organization -> outputs
Inputs
Materials, Equipment, labor, Inventory, Energy, Cash
Organization
Marketing, Finance/accounting, Operations
Outputs
Physical goods services
Customer
OM is about designing, analyzing, and improving the entire transformation process, including procurement, production, distribution, and retailing, with the objective of creating competitive advantage for the firm.
Goods & Services : difference
Goods
* Tangible
* Can be inventoried
* No interaction between customer and processes
* Valuable output: product
* Resources: Production equipment, raw material, packaging, technology
* Role of consumer: Buys product form retailers
Products are physicial items that can be stored and wait for the customer to order them
Services
* Intangible
* Cannot be inventoried
* Direct interatction between customers and processes
* Valuable output: Helping people in there field
* Resources: People, Knowledge, experience, basic IT and communications
* Role of consumer: Service cannot exist without participation from the customer.
Services are (mostly) intangible, cannot be stored, and cannot exist whtout direct involvement of the customer
In the last year, which industry in terms of growth (growth of employment) have been increasing and which has been decreasing.
Services has been increasing
Goods have decrease
Can some products be both goods and services? Explain why?
Yes, most products are “bundle” of goods and services.
From goods to service, In terms of 100% materialization of goods and 100% servization in services. In order you can put Automobilie (Mixe but tends towards good), Restaurant, Auto repair, Consulting (towards 100% Service)
What are the dimensions where operations can have an impact at some expense of others?
- Speed - providing products faster than competitors
- Flexibility - more chips flavor to choose
- Dependability - consistent and reliable food delivery
- Cost - lower cost flights than competitors
- Quality - highest quality call phone
Determine the workflow of Zara’s process and resource.
Design
Inditex management/designers: Determine apparel designs and manufacturing locations
Manufacturing
ASIA: Low QR (quick response) Low cost
In Hourse(40%): High QR, High cost
EUROPE/North africa (40%): High QR High cost
Distribution center
High shipment frequency increases QR
Small batch production lowers the cost of demand uncertainty
Sale
Stores: decentralized management supplements QR
managers determine products to sell and return.
Sale go back to design, IT systems.
It Systems
Provides accurate demand information to determine manufacturing locations and production levels.
What are zara strength and operational competency
Fashion apparel
- Rapid changing tastes and styles
- Highly uncertain demand
- Short life cycle
- High cost of supply/demand mismatch
-> Focus on responsiveness
40% inhouse vs 60% outsourcing
60% outsourcing, 3 thirds are outsourced to European countries
- Shorten the design to market time
(2 weeks vs. 6 months industry stansard)
Frequent in store replenishments
(twice a week, customer vistis 6 times more often)
Keep in store inventory low
(15 to 20% clearance vs. 30-40% industry average)
