Week 1-2

Question 1

Operations’ definition:

Answer 1

“Creation and delivery of products and services to the customers”

Opus (Latin__): Work, “The planning and execution of work”

Question 2

Operations Function:

Answer 2

Part of the organization that is responsible for creating and delivering its products and services.

Every organization has an operation function!

Operation managers are responsible for managing the operations function of an organization

Operations function in a fast food chain:

• Locate potential sites for restaurant
• Design processes to receive orders and produce burgers
• Procure, install, and maintain equipment to produce burgers
• Make burgers with consistent quality
• Reduce impact on local area, and reduce packaging waste

Question 3

Process View =

Answer 3

1. Input
2. Process
3. Output

Question 4

Inputs :

Answer 4

Inputs to the process are mainly materials (natural or processed resources, parts and components), information, and customers.

There maybe other inputs like money and energy too.

Usually one of the above is dominant, e.g. material in manufacturing processes, information in accounting processes, and customers in healthcare processes.

Question 5

Process:

Answer 5

Processes may:

• Transform the physical properties of the materials (e.g. in manufacturing process) or customers (e.g. in hairdressing process)
• Change the location of materials (e.g. in parcel delivery process) or customers (e.g. in air transport process)
• Store materials (e.g. in warehousing process) or customers (e.g. in hotel process)
• Synthesize or analyse information (e.g. in accounting process)
• Transform physiological (e.g. in health care process) or psychological (e.g. in entertainment process) state of customers.

Question 6

Outputs:

Answer 6

• The outputs of some processes are just products, others just services, but most a mixture of the two
• All processes are service providers, who may (or may not) produce products as a means of serving their customers

Question 7

Process View at Different Levels:

Answer 7

The process view can be applied at operational, organizational or supply chain level.

Question 8

The five elements of the Process View are:

Answer 8

• Input / Output
• Flow Unit
• Network of activity and buffers
• Ressources
• Information structure

A flow unit may be a unit of input, such as a customer order, or a unit of output such as a finished product, or the value of input or output.

Question 9

Example of the five elements of the process view:

Answer 9

The process of treating minor patients in an emergency department

• Input / Output: minor patients / healthy patients
• Flow unit: a patient
• Network of activities and buffers: as given in the diagram
• Resources:
  
  • Human: nurses, doctors, ECG technician, radiologist, etc.
  • Capital: beds, cubicles, ECG machine, etc.
• Information structure: a system tracking amount of time each patient has been in the A&E

Question 10

What are the Product Attributes?

Answer 10

• Product Price
• Product Delivery Time
• Product Variety
• Product Quality

Question 11

Product Price=

Answer 11

Total cost of ownership of the product/service to the customer including the purchase price, service, maintenance, repair, insurance and disposal cost.

Question 12

Product Delivery Time=

Answer 12

Total time a customer must wait before receiving a product/service.

Question 13

Product Variety=

Answer 13

The choices offered to the customer:

• Options, colours and styles offered for a particular model
• Number of product lines and families.

Question 14

Product Quality=

Answer 14

The degree of excellence that determines how well the product works. It depends on:

• Features (what it can do?)
• Performance (how well it functions?)
• Reliability (how consistently it works over time?)
• Serviceability (how quickly it can be restored?)
• Aesthetics

Question 15

Product Space=

Answer 15

Each product is represented by a point in the four-dimensional competitive product space.

Question 16

Product Space (Cont’d)=

Answer 16

Question 17

Customer Value Proposition=

Answer 17

A set of benefits (in four dimensional space) that the firm offers to customers.

• McDonald’s value proposition:
  
  • Inexpensive food delivered quickly from a standard and limited menu with average quality
• Zara’s value proposition:
  
  • Timely fashion for the masses. Timely yet limited variety at modest cost and quality

Question 18

Customer Value Proposition Example:

Answer 18

Question 19

Product Attributes & Process Competencies:

Answer 19

Process competencies determine the product attributes that the process is particularly good at supplying

Question 20

Process Competencies=

Answer 20

• Process Cost
• Process Flexibility
• Process Quality
• Process Flow Time

Question 21

Process Cost =

Answer 21

The total cost of producing and delivering products and services.

Question 22

Process Flexibility =

Answer 22

• Scope flexibility: the ability of the process to produce and deliver a range of products and services. It requires flexible resources, e.g. cross-trained workers, general-purpose machines
• Volume flexibility: the ability of the process to deal with fluctuating demand.

Question 23

Process Quality =

Answer 23

The ability of the process to deliver quality products.

Question 24

Process Flow Time =

Answer 24

The total time needed to transform a flow unit from input to output

or

The average flow time of individual flow units

Question 25

Process Architecture =

Answer 25

Type of the resources used to perform the activities and their physical layout in the processing network.

• Process competences are strongly influenced by the process architecture.
• Two extreme process architectures:
  • Job shop architecture
  • Flow shop architecture

Question 26

Job Shop Architecture =

Answer 26

Uses flexible resources to produce low volumes of highly customized variety products.

• Examples are tool and die shops, management consultancy firms, and general hospitals.
• Similar resources are located together in a layout that is called a functional layout, e.g. press machines in stamping department, or x-ray machines and radiologists in imaging department.

Watch: https://www.youtube.com/watch?v=V-9eMmfThD8

Question 27

Flow Shop Architecture =

Answer 27

Uses specialized resources that perform limited tasks with high precision and speed.

Resources are arranged according to the sequence of activities needed to produce a particular product, with limited storage space between activities, in a layout called product layout.

Only for manufacturing?

Watch Ford Model-T video: https://www.youtube.com/watch?v=S4KrIMZpwCY

Question 28

Process Competencies =

Answer 28

• Process competencies for job shop architecture:

High flexibility, long flow time (both in material handling and processes), high variable cost but often low initial investment, high quality but may not be consistent

• Some other challenges of job shop architecture

Complicated workflows, slow material handling over long distances, large volume of inventories, difficult product tracing, difficult product scheduling

Question 29

What are the process competencies associated with flow shop architecture?

Answer 29

Low flexibility, short flow time, low variable cost but often high initial investment (since volume is high, the unit price is often low), consistent quality

Question 30

Operations Strategy =

Answer 30

The concept of strategy originated in military terminology, where strategy refers to plans devised to outmanoeuvre the opposition. In business, firms attack where and when other firms are vulnerable.

Today it simply means a specific plan of action to reach a particular objective.

Question 31

The strategy Hierarchy:

Answer 31

Corporate Strategy: Identifies the industries in which the corporate will participate, configures business units for each industry, and acquires and allocates corporate resources to each business

Business Strategy: Seeks a favourable competitive position in an industry. It can be described in terms of a customer value proposition, i.e. the position that the firm wants to occupy in the competitive product space (the so-called strategic positioning)

Marketing Strategy: How the market will be segmented, how the product will be positioned, priced and promoted

Financial Strategy: How capital will be raised and invested

Question 32

Trade-Off’s and Efficient Frontier =

Answer 32

• Operations have to make trade-off’s (a giving up of one thing in return for another)
• Efficient frontier is the smallest curve that contains all current industry positions.

Question 33

Operations Management =

Answer 33

• Structure the process competencies in the direction of the customer value proposition.
• Develop measures to evaluate the effectiveness and efficiency of the processes.
  
  • In general management definition, effectiveness means ‘doing right things’, while efficiency means ‘doing things right’.
  • In Operations Management, cost efficiency is achieving an output with minimum input, while an effective process is a process that supporting execution of company’s strategy.
• Apply methods and techniques to improve process performance