2007 Pearson EducationOperations as a Competitive WeaponChapter 1 2007 Pearson EducationHow Operations As a Competitive Weapon fits the Operations Management Philosophy Operations As a Competitive Weapon Operations Strategy Project ManagementProcess Strategy Process Analysis Process Performance and Quality Constraint Management Process Layout Lean SystemsSupply Chain Strategy Location Inventory Management Forecasting Sales and Operations Resource Planning Scheduling 2007 Pearson EducationFedExWhy are they successful?FastOn-time deliveriesRelatively low costTechnology in shipment tracking 2007 Pearson EducationInputsTransformation Processes (Adding value)OutputsOperations Management is“The systematic design, direction and control of processes that transform inputs into services and products for internal, as well as external, customers.” 2007 Pearson EducationOperations Management as a Function 2007 Pearson EducationProcessesProcesses should add value.Processes can be broken down into sub -processes, which in turn can be broken down further.Any process that is part of a larger process is considered a “nested process.”Each process and each nested process has inputs and outputs. 2007 Pearson EducationExternal vs. Internal CustomersExternal Customers are those who purchase the goods and services. Internal Customers are those who receive the output of others within the firm. They are part of the transformation process.Inputs from other processesTransformation Processes (Adding value)Outputs to Internal or to External customers 2007 Pearson EducationProcessesAdvertisement Design and Planning ProcessCreative design process Receive work request Assemble team Prepare several designs Receive inputs from Account Executive Prepare final concept Revise concept per clients inputsMedia planning process Receive work request Prepare several media plans Receive inputs from Account Executive Prepare final plan Revise plan per clients inputs 2007 Pearson EducationService Processes and Manufacturing ProcessesManufacturing processes change materials in one or more of the following dimensions: Physical properties Shape Fixed dimensions Surface finish Joining parts and materialsIf a process isnt doing at least one of these, then it is a service (non-manufacturing) process. 2007 Pearson EducationMattel: Die-Cast Car Process FlowDie Casting Setup processDebur/ PolishPaint base and top coatDecorations Tampo machineFinal AssemblyPackagingPlastic Injection MoldingLacquerVUMClear/ColorPlastic Wheel MoldingHot Stamping Hub CapsBarbell Assembly 2007 Pearson EducationVideo: service and manufacturing process 2007 Pearson EducationManufacturing and ServiceGoods Production Tangible Can be inventoried Low customer contact Capital Intensive Quality easily measuredService Production Intangible Cant be inventoried High customer contact Labor Intensive Quality hard to measureMost firms provide both goods and services. 2007 Pearson Education“If you drop it on your foot, it wont hurt you.” (Good or service?)“Services never include goods and goods never include services.” (True or false?) 2007 Pearson EducationSimilarities between Manufacturing and Services Both normally provide a package of goods and servicesafter-sale servicesrestaurant meals Service organizations must inventory the inputs for their productssupply of medications in a hospitalmerchandises in wholesale and retail firms Many operations in a service organization have little customer contactback-room operation in a bankbaggage handling area at an airport 2007 Pearson EducationValue ChainsValue chains are an interrelated series of processes that produce a service or product to the satisfaction of customers. Value chains may have core processes or support processes. Core processes deliver value to external customers. Support processes provide vital inputs for the core processes. 2007 Pearson EducationCore Processes Customer relationship processes Identify, attract, and build relationships with external customers and facilitate the placement of orders. New service/product development processes Design and develop new services or products from inputs received from external customer specifications. Order fulfillment processes The activities required to produce and deliver the service or product to the external customers. Supplier relationship processes Select suppliers of services, materials and information and facilitate the timely and efficient flow of these items into the firm. 2007 Pearson EducationR a t a t o u i l l e 2007 Pearson Education 2007 Pearson Education 2007 Pearson EducationThe New Dog (personalization) 2007 Pearson Education 2007 Pearson EducationSupport Processes Internal Value-Chain Linkages Firms have many processes that support the core processes.External suppliersExternal customersSuppor