Transcript COMPETING WITH OPERATIONS Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 1–1

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COMPETING WITH
OPERATIONS
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
1–1
OM as an Organization or Function
View
Finance
Acquires financial
resources and capital
for inputs
Material &
Service Inputs
Sales
Revenue
Support Functions
Operations
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Accounting
Information Systems
Human Resources
Engineering
Translates
materials and
service into
outputs
Figure 1.1
Marketing
Generates sales
of outputs
Product &
Service Outputs
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OM As A Process View
External environment
Internal and external
customers
Inputs
• Workers
• Managers
• Equipment
• Facilities
• Materials
• Land
• Energy
Outputs
• Goods
• Services
Processes and
operations
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3
5
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4
Information on
performance
Figure 1.2
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A Process View
More like a
manufacturing
process
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•
•
•
Physical, durable output
Output can be inventoried
Low customer contact
Long response time
Capital intensive
Quality easily measured
More like a
service
process
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Intangible, perishable output
Output cannot be inventoried
High customer contact
Short response time
Labor intensive
Quality not easily measured
Figure 1.3
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OM As A Supply Chain View
New
service/
product
development
Supplier
relationship
process
Customer
relationship
management
Order
fulfillment
process
External customers
External suppliers
Support Processes
Figure 1.4
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The Supply Chain View
 Core processes are sets of activities that
deliver value to external customers
1. Supplier relationship process
2. New service/product development process
3. Order fulfillment process
4. Customer relationship process
 Support processes provide vital
resources and inputs to the core
processes
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
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Operations Strategy
Corporate Strategy
• Environmental scanning
• Core competencies
• Core processes
• Global strategies
Market Analysis
• Market segmentation
• Needs assessment
Competitive Priorities
• Cost
• Quality
• Time
• Flexibility
New Service/
Product Development
• Design
• Analysis
• Development
• Full launch
No
Yes
Performance
Gap?
Operations Strategy
Decisions
• Managing processes
• Managing supply chains
Competitive Capabilities
• Current
• Needed
• Planned
Figure 1.5
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Competitive Priorities
TABLE 1.2
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DEFINITIONS, PROCESS CONSIDERATIONS, AND EXAMPLES OF COMPETITIVE
PRIORITIES
COST
Definition
Process Considerations
Example
1. Low-cost
operations
Delivering a service or a
product at the lowest
possible cost
Processes must be designed and
operated to make them efficient
Costco
2. Top quality
Delivering an outstanding
service or product
May require a high level of
customer contact and may require
superior product features
Ferrari
3. Consistent
quality
Producing services or
products that meet design
specifications on a
consistent basis
Processes designed and
monitored to reduce errors and
prevent defects
McDonald’s
4. Delivery speed
Quickly filling a
customer’s order
Design processes to reduce lead
time
Dell
5. On-time
delivery
Meeting delivery-time
promises
Planning processes to increase
percent of customer orders
shipped when promised
United Parcel
Service (UPS)
6. Development
speed
Quickly introducing a new
science or a product
Cross-functional integration and
involvement of critical external
suppliers
Li & Fung
QUALITY
TIME
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Competitive Priorities
TABLE 1.2
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DEFINITIONS, PROCESS CONSIDERATIONS, AND EXAMPLES OF COMPETITIVE
PRIORITIES
FLEXIBILITY
Definition
Process Considerations
Example
7. Customization
Satisfying the unique
needs of each customer
by changing service or
products designs
Low volume, close customer
contact, and easily reconfigured
Ritz Carlton
8. Variety
Handling a wide
assortment of services or
products efficiently
Capable of larger volumes than
processes supporting
customization
Amazon.com
9. Volume
flexibility
Accelerating or
decelerating the rate of
production of service or
products quickly to
handle large fluctuations
in demand
Processes must be designed for
excess capacity
The United States
Postal Service
(USPS)
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Operations Strategy
TABLE 1.3
|
OPERATIONS STRATEGY ASSESSMENT OF THE BILLING AND PAYMENT PROCESS
Competitive Priority
Measure
Capability
Gap
Action
Low-cost operations


$0.0813
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$17,000
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
0.90%
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Acceptable
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No action
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0.74%
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Acceptable
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No action
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48 hours
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Acceptable
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No action
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98%
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Consistent quality
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Delivery speed
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Volume flexibility
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Cost per
billing
statement
Weekly
postage
Percent
errors in
bill
information
Percent
errors in
posting
payments
Lead time
to process
merchant
payments
Utilization
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
Target is
$0.06
Target is
$14,000
Too high to
support
rapid
increase in
volumes



Eliminate microfilming and
storage of billing statements
Develop Web-base process for
posting bills
Acquire temporary employees
Improve work methods
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