Professional Documents
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1 OPERATIONS
Support Functions
• Accounting
• Information Systems
• Human Resources
Operations • Engineering Marketing
Translates Generates sales
materials and of outputs
service into
outputs
Product &
Figure 1.1 Service Outputs
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1–3
A Process View
External environment
Inputs Outputs
Processes and
• Workers • Goods
operations
• Managers • Services
• Equipment 1 3
• Facilities
5
• Materials
• Land 2 4
• Energy
Information on
performance
Figure 1.2
Figure 1.3
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The Supply Chain View
Support Processes
New
Customer
External customers
service/
External suppliers
product relationship
development management
Supplier Order
relationship fulfillment
process process
Figure 1.4
Human resource support and development The preparation of people for their current jobs
and future skills and knowledge needs
Regulatory compliance The processes that ensure that the company is
meeting all laws and legal obligations
Information systems The movement and processing of data and
information to expedite business operations and
decisions
Enterprise and functional management The systems and activities that provide strategic
direction and ensure effective execution of the
work of the business
New Service/
Product Development
• Design
• Analysis No
• Development
• Full launch
Performance
Yes Gap?
Operations Strategy
Competitive Capabilities
Decisions
• Current
• Managing processes
• Needed
• Managing supply chains
• Planned
Figure 1.5
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Corporate Strategy
Environmental scanning
Developing core competencies
1. Workforce
2. Facilities
3. Market and financial know-how
4. Systems and technologies
Developing core processes
Global strategies
Market segmentation
Needs assessment
Service or product needs
Delivery system needs
Volume needs
Other needs
TIME
4. Delivery speed Quickly filling a customer’s Design processes to reduce lead time Dell
order
5. On-time delivery Meeting delivery-time Planning processes to increase percent United Parcel Service
promises of customer orders shipped when (UPS)
promised
6. Development Quickly introducing a new Cross-functional integration and Li & Fung
speed science or a product involvement of critical external suppliers
9. Volume flexibility Accelerating or decelerating Processes must be designed for excess The United States
the rate of production of capacity Postal Service (USPS)
service or products quickly to
handle large fluctuations in
demand
Order Winner
Sales ($)
Order Qualifier
Sales ($)
Low High
Figure 1.6
At an airline
Customer relationship
Top quality
Consistent quality
Delivery speed
Variety
Top quality
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Using Competitive Priorities
At an airline
Order fulfillment
Low-cost operations
Top quality
Consistent quality
On-time delivery
Variety
At an airline
Supplier relationship
Low-cost operations
Consistent quality
On-time delivery
Variety
Volume flexibility
Productivity improvement
Global competition
Ethical, workforce, and environmental
issues
SOLUTION
Policies processed
a. Labor productivity =
Employee hours
600 policies
= = 5 policies/hour
(3 employees)(40 hours/employee)
SOLUTION
Value of output
a. Multifactor productivity =
Labor cost + Materials cost
+ Overhead cost
Figure 1.7
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Challenges in OM
= $37,500/class
Output $37,500/class
Multifactor productivity = = = 1.25
Input $30,000/class
14 hours 16 weeks
of input =
week class
= 224 hours/class
Output $45,000/class
ductivity = =
Input 224 hours/class
= $200.89/hour
SOLUTION
= $20,680
Output $20,680
or productivity = =
Input 360 hours