Week 1-2 Flashcards
Operations’ definition:
“Creation and delivery of products and services to the customers”
Opus (Latin__): Work, “The planning and execution of work”
Operations Function:
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
Process View =
- Input
- Process
- Output
Inputs :
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.
Process:
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.
Outputs:
- 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
Process View at Different Levels:
The process view can be applied at operational, organizational or supply chain level.
The five elements of the Process View are:
- 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.
Example of the five elements of the process view:
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
What are the Product Attributes?
- Product Price
- Product Delivery Time
- Product Variety
- Product Quality
Product Price=
Total cost of ownership of the product/service to the customer including the purchase price, service, maintenance, repair, insurance and disposal cost.
Product Delivery Time=
Total time a customer must wait before receiving a product/service.
Product Variety=
The choices offered to the customer:
- Options, colours and styles offered for a particular model
- Number of product lines and families.
Product Quality=
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
Product Space=
Each product is represented by a point in the four-dimensional competitive product space.
Product Space (Cont’d)=
Customer Value Proposition=
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
Customer Value Proposition Example:
Product Attributes & Process Competencies:
Process competencies determine the product attributes that the process is particularly good at supplying
Process Competencies=
- Process Cost
- Process Flexibility
- Process Quality
- Process Flow Time
Process Cost =
The total cost of producing and delivering products and services.
Process Flexibility =
- 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.
Process Quality =
The ability of the process to deliver quality products.
Process Flow Time =
The total time needed to transform a flow unit from input to output
or
The average flow time of individual flow units
Process Architecture =
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
Job Shop Architecture =
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
Flow Shop Architecture =
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
Process Competencies =
- 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
What are the process competencies associated with flow shop architecture?
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
Operations Strategy =
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.
The strategy Hierarchy:
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
Trade-Off’s and Efficient Frontier =
- 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.
Operations Management =
- 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
