Pre-Midterm Topics Flashcards
What is The Input-Process-Output Model
- Inputs — the right resources, such as people, equipment and materials, are available in the right quantity at the right time for the operation’s needs.
Transformation processes — a series of interlinked activities or steps that consume resources to meet a goal or output.
Transforming resources: pertains to those that are used in the transformation process.
Transformed resources: pertains to those that are transformed by the operation to produce the goods or services. This includes materials, information, and customers.
- The product / service innovation process
- Outputs — meeting customers’ needs by delivering required products or services, based on the standards of production (6)
What is the process hierarchy?
A Process Hierarchy is an overview of the relationship between a group of maps, showing both higher and lower levels. Process hierarchies divide complex processes into smaller parts, following the principle ‘from abstract to concrete’, with the strategy at the top level and the detail at the bottom level.
4Vs analysis - How do operations and processes differ?
Volume, variety, variation of demand, degree of visibility
Operation manager responsibilities
direct, design, deliver, develop (improvements)
Why is operations performance vital in any organization?
Operations management is concerned with doing things better – better quality, better service, better responsiveness, better reliability, better flexibility, better cost, and better use of capital invested in facilities.
There is a relationship between process and outcome. Good operations management is the best way to produce good products and services.
- levels of performance for operations management
Societal, strategic, operational level
How is operations performance judged at societal level?
Triple (p) bottom line — people, planet, profit
Planet — the extent to which business activity negatively impacts the natural environment.
Profit — the economic account, measured by profitability, return on assets, etc., of the operation —> impacts operations strategic impact
People — all stakeholders, operations should judge themselves based on the 3BL principle of people
How is operations performance judged at a strategic level? (5)
Economic choices effect learning, risk, capital, costs and revenues
Strategic contributions affect:
1. higher utilization of capacity - less capital required to provide capacity
2. opportunities for OL and improvement - useful for future innovation
3. less failure and reduced errors - lower risks of opreational failure
4. high efficiency, less waste - lower costs
5. enhanced service - higher revenue
Higher revenue + lower operating costs = higher profits
How is operations performance judged at five different operational levels, based on operations strategic choices - both internal and external effects
Quality
- Error free products — error free processes
- Quality reduces costs, the fewer mistakes made by each process in the operation, the less time will be needed to correct the mistakes
- Specifics of a product (how presented) as well as conformance = confirming customer’s expectations about specifications
Speed
- The elapsed time between customers requesting products or services and their receiving them, Quick delivery
- Fast response to external customers is greatly helped by speedy decision making and speedy movement of materials (inventory) and information inside the operation, Fast throughput (cost, dependability - internal)
- Reduces inventories, risks since forecasting and internal speed is quick and demand might still stay the same
Dependability
- Reliable operation (speed, cost — internal)
Less of the operation’s time has been wasted coping with the disruption.
Affects the ‘quality’ of the operation’s time. If everything in an operation is always perfectly dependable, a level of trust will have built up between the different parts of the operation.
- On-time delivery for branding
Flexibility
- product/service flexibility – the operation’s ability to introduce new or modified products and services;
- mix flexibility – the operation’s ability to produce a wide range or mix of products and services;
- volume flexibility – the operation’s ability to change its level of output or activity to produce different quantities or volumes of products and services over time;
- delivery flexibility – the operation’s ability to change the timing of the delivery of its services or products.
Affects: range of products and services (amount of customization), delivery and volume changes (external) as well as ability to change in speed, costs ans dependability (internal agility)
Cost
- Each of the various performance objectives has several internal effects, but all of them affect cost, so one important way to improve cost performance is to improve the performance of the other operations objectives
- Externally reduce costs and provide higher profit margins
Efficient frontier - How do performance objectives trade off against each other?
- shows the relative performance of several companies in the same industry in terms of their cost efficiency and the variety of products or services that they offer to their customers.
- Trade-off s are the extent to which improvements in one performance objective can be achieved by sacrificing performance in others.
- The views on efficiency frontier
- Improvement through focus on variety
- Improvement through overcoming the trade-off of variety and cost-efficiency
- Improvement through increasing focus on cost efficienc
Four stage model of operations contributions to companies — Hayes and Wheelwright’s
- Internal neutrality
a. Poorest level of contribution by the operations function
b. Holding the company back from competing effectively
Correct the worst problems, strategic impact holding the organization back, internally neutral capabilities - External neutrality
a. Begin comparing itself with similar companies or organizations in the outside market, measuring itself against its competitors
As good as competitors, implement strategy and adabt best practice, externally neutral operations capabilities - Internally supportive
a. Aspire to be clearly and unambiguously the very best in the market
Clearly the best in the industry, contribution of operations supporting the strategy internally - Externally supportive
a. Company views the operations function as providing the foundation for its competitive success
Redefining industry expectations with strategy, driving strategy that is externally supportive for operations capabilities
Difference of top-down and bottom-up view on operations strategy?
- Top-down strategy — reflection of what the whole group or business wants to do, business strategy sets the objectives for each individual business and how it positions itself in its marketplace.
- Bottom-up— activity where operations improvements build strategy, learn from experience and a philosophy of continual and incremental improvement on the daily (OL)
Market requirements vs. operations resources — views difference on operations strategy?
- Market requirements — Operations performance objectives and operations decisions should be primarily influenced by a combination of customers’ needs and competitors’ actions, product/service life-cycle approach
- The ‘operations resources’ perspective of operations strategy is based on the resource-based view (RBV) of the firm and sees the operation’s core competences (or capabilities) as being the main influence on operations strategy. Operations capabilities are developed partly through the strategic decisions taken by the operation. Strategic decision areas in operations are usually divided into structural and infrastructural decisions.
How can operations strategy be put together - Line of fit
At a strategic level, the whole purpose of operations improvement is to make operations performance better at serving its markets. Operations strategy should aim for alignment or ‘fit’ between an operation’s performance and the requirements of its markets.
1 Achieving ‘alignment’ – This means achieving an approximate balance between ‘required market performance’ and ‘actual operations performance’.
2 Achieving ‘sustainable’ alignment – It is not enough to achieve some degree of alignment to a single point in time. Equally important is whether operations processes could adapt to the new market conditions.
3 Improving overall performance
At a strategic level, there are risks deriving from any deviation from the ‘line of fit’.
Innovation S-Curve
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Radical Innovation
- Often includes large technological advancements which may require completely new knowledge and/or resources making existing services and products obsolete and therefore non-competitive
- More likely with new market entrants, agility to make radical changes
-
Incremental innovation
- More likely to involve relatively modest technological changes, built upon
existing knowledge and/or resources so existing products and services are not fundamentally changed - Established companies may favor incremental innovation because they
have the experience of building up a significant pool of knowledge and emphasis on continuity (not even considering new innovations)
- More likely to involve relatively modest technological changes, built upon
The Henderson–Clark model - failure to exploit seemingly obvious incremental innovations.
Henderson and Clark, looked at the question of why some established companies sometimes fail to exploit seemingly obvious incremental innovations. They answered this question by dividing the technological knowledge required to develop new products and services into ‘knowledge of the components of knowledge’ and ‘knowledge of how the components of knowledge link together’. They called this latter knowledge ‘architectural knowledge’.
- Modular innovation is built on existing architectural knowledge, but requires new knowledge for one or more components
- Incremental innovation is built upon existing component and architectural knowledge
- Radical innovation changes both component and architectural knowledge.
- Architectural innovation will have a great impact upon the linkage of components (or the architecture), but the knowledge of single components is unchanged.
What is the strategic role of product and service innovation?
The performance of the design process can be assessed in the same way as any process, namely in terms of quality, speed, dependability, flexibility, cost and ‘sustainability’.
- Good design takes innovative ideas and makes them practical, adds value to company
- Producing design innovations for products and services is itself a process that conforms to the input–transformation–output model described in Chapter 1.
Performance objectives of the design process
- Quality — error-free, meet product/service process design specifications
-
Speed — how fast innovation is launched, fast design brings huge advantages
- earn revenue earlier and longer
- market stimulation
- decision making flexibility
A delay in the ‘time to market’? — Increase in costs, delay of revenue
- Dependability — consider unexpected disturbances, changes to the process
- Flexibility — ability to cope with external or internal changes
- Cost — Costs of inputs, labor and running the process
- Sustainability — Benefits the triple- bottom line – people, planet and profit.
What are the stages of product and service innovation?
- Concept generation: ideas from consumers, competitor activity, staff, R&D
- The Design Funnel
- Preliminary design - How to reduce complexity?
- Design evaluation and improvement - Quality Function Deployment (QFD)
- Prototyping and final design
Preliminary design - How to reduce complexity?
- Standardization (produce the same product, i.e. clothes’ size)
- Commonality (use similar components for many products i.e. aircraft)
- Modularity (put differently the same standardized sub- components i.e. holiday packages, computers)
- Mass customization (i.e. Converse, Swatch etc.)
Quality Function Deployment (QFD)
- Focus on capturing customer needs & how to achieve them
- The QFD matrix is a formal articulation of how the company sees the relationship between the requirements of the customer (the whats ) and the design characteristics of the new product (the hows ):
How to eliminate Time to Market?
With interactive innovation & design process:
- Integrating design of the product and process
- Simultaneous (instead of sequential) development of the various stages in the overall process, Communication important in all stages
- An early resolution of design conflict and uncertainty.
- An organizational structure which reflects the development project.
What is process technology?
Process technologies are the machines, equipment or devices that help operations to create or deliver products and services. Indirect process technology helps to facilitate the direct creation of products and services.
What do operations managers need to know about process technology?
- Operations managers do not need to know the technical details of all technologies, but they do need to know the answers to four key questions: What does it do? How does it do it? What advantages does it give? What constraints does it impose?
- Process technologies can also be classified according to the transformed resources that they process, namely material-processing technologies, information-processing technologies and customer-processing technologies and integrating technologies (multiple things)
- An important element in understanding process technologies is to understand the implications they hold for the operations where they will be used.
