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the systematic design, direction and control of processes that transform inputs into services and products for internal and external customers
processes can be linked together to form a supply chain |
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any activity or group of activities that takes one or more inputs, transforms them and provides one or more outputs for its customers
two main kinds: manufacturing and services |
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human resources, capital, purchased materials and services, land and energy
two special kinds: participation by customers and performance from internal/external sources |
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| services or tangible products |
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| group of resources performing all or part of one or more processes |
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| an interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers |
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| synchronization of a firm’s processes with those of its suppliers and customers to match the flow of materials, services and information with customer demand |
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| customer who is either an end user or intermediary buying the firms finished services or products |
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| one or more employees or processes that rely on inputs from other employees or processes in order to perform their work |
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| business or individuals who provide the resources, services, products and materials for the firm’s short-term and long-term needs |
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| employees or processes that supply important information or materials to a firm’s processes |
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| concept of a process within a process |
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changes one or more of a materials' dimensions
physical properties, shape, size, surface finish and joining parts/materials |
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set of activities that delivers value to external customers
supplier relationship process, new service/product development process, order fulfillment process and customer relationship process |
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| supplier relationship process |
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| process that selects the suppliers of services, materials and information and facilitates the timely and efficient flow of these items into the firm |
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| new service/product development process |
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| process that designs and develops new services or product from inputs received from external customer specifications or from the market in general through the customer relationship process |
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| order fulfillment process |
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| process that includes the activities required to product and deliver the service or product to the external customer |
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| customer relationship process |
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| process that identifies, attracts and builds relationships with external customers and facilitates the placement of orders by customers, sometimes referred to as customer relationship management |
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| process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business |
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| the means by which operations implements the firms corporate strategy and helps to build a customer-driven firm |
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overall direction that serves as the framework for carrying out all the organization's functions
includes environmental scanning, core competencies, core processes and global strategies |
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| managers monitor trends in the environment for potential opportunities or threats to stay ahead of the competition |
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unique resources and strengths that an org's management considers when formulating strategy
work force, facilities, market and financial know-how, systems and technologies |
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agreement with another firm, 3 kinds:
collaborative effort, joint venture, or technology licensings |
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when one firm has core competencies that another needs but is unwill or unable to duplicate
buyer-supplier relationships |
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two firms agree to produce a service or product jointly
often used to gain access to foreign markets |
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| one company licenses its service or production methods to another |
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| market segmentation and assessment of needs |
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| process of identifying groups of customers with enough in common to warrant the design and procision of services or products that the group wants and needs |
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identifies the needs of each segment and assess how well competitors are addressin those needs
4 kinds: service or product needs, delivery system needs, volume needs, other needs |
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attributes of a product or service
price, quality, degree of customization |
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attributes of processes/supporting systems and the resources needed to deliver
availability, convenience, courtesy, safety, accuracy, reliability, delivery speed, delivery dependability |
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attributes of demand for the service or product
high/low volume, degree of variability, degree of predictability |
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| reputation, years in business, after-sale tech support, ability to invest in international financial markets, competent legal services |
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| critical dimensions that a process or supply chain must posess to satisfy its internal or external customers, both now and in the future |
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| cost, quality, time, and flexibility dimensions that a process or supplt chain actually posesses and is able to deliver |
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delivering a service or product at the lowest possible cost
processes must be designed and operated to make them efficient
ex. Costco |
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top quality - ex. Ferrari
consistent quality - ex. McDonald's |
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delivery speed - ex. Dell
on-time delivery - ex. UPS
development speed - ex. Zara |
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customization - ex. Ritz Carlton
variety - ex. Amazon
volume flexibility - USPS |
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| strategy that focuses on the competitive priorities of delivery speed and development speed |
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criterion customers use to differentiate the services or products of one firm from those of another
price, quality, time, flexibility, tech support, reputation |
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| demonstrated level of performance of an order winner that is required for a firm to do business in a particular market segment |
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| used to compare processes by finding the volume at which two different processes have equal total costs |
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vc
costs that vary directly with the volume of output |
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F
costs that remain constant with changes in output level |
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| technique for systematically changing parameters in a model to determine the effects of such changes |
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F + vc*(units) = price * units
total cost = total revenue |
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| Volume above which you'd rather buy than make = FC of making/(price of buying - vc of making) |
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Volume above which choice b is attractive = (FCb - FCa)/(VCa - VCb)
B = higher fixed cost, A = higher variable cost |
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| expected value of a decision |
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| (% chance of occurring) * profit |
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| find expected values of all decisions, add two options together for total choice value, work back until original decision |
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| pattern of decisions made in managing processes so that they will achieve their competitive priorities |
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| process strategy principles |
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1. Make choices that fit the situation and that make sense together, that have a close strategic fit
2. Individual processes are the building blocks that eventually create the firms whole supply chain
3. Management must pay particular attention to the interfaces between processes |
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process structure including layout
customer involvement
resource flexibility
capital intensity |
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| process type relative to the kinds of resources needed, how resources are partitioned between them and they key characteristics |
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| the ways in which customers become part of the process and the extent of their participation |
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| the ease with which employees and equipment can handle a wide variety of products, output levels, duties and functions |
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| extent to which the customer is present, actively involved, and receives personal attention during the service process |
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| face-to-face interaction or moment of truth |
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three elements:
1. degree of customer contact
2. customization
3. process characteristics |
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| process divergence and flow |
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| customization and the latitude as to how tasks are performed |
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how customers, objects, or information are processed
can be either line or flexible |
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| the customers, materials or info move in linear ways from one operation to the next according to a fixed sequence |
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| the customers, materials or info move in diverse ways, with the path of one customer or job often crisscrossing the path that the next one takes |
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| relationship between volume, product customization and process characteristics |
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| process with high customer contact where the serviceprovider interacts directly with the internal or external customer |
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| process with moderate levels of customer contact and standard services with some options available |
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| process with low cstomer contct and little service customization |
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| way of structuring the process by organizing resources around the process or products |
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| manufacturing process structuring |
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| job, batch, line or continuous flow process |
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| a process with the flexibility needed to produce a wide variety of prodcts in significant quantities with considerable complexity and divergence in the steps performed |
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| process that differs from the job process with respect to higher volume, narrower variety and larger quantities |
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| high volumes and standardized prodcts allows resources to be organized around particular products |
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| extreme end of high-volume standardized production and rigid line flows with production not starting and stopping for long time intervals |
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| production and inventory strategies |
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| make to order, assemble to order, make to stock |
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| strategy used by manufacturers that make products to customer specifications in low volumes |
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| assemble to order strategy |
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| strategy for producing a wide variety of products from relatively few subassemblies and components after the customer orders are received |
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| strategy that involves holding items in stock for immediate delivery, therefore minimizing customer delivery times |
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| strategy of delaying final activities in the provision of a product until the orders are received |
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| strategy that uses highl divergent processes to generate a wide variety of customized products at reasonably low costs |
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| line process that uses the make to stock strategy |
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physical arrangement of operations created by various processes
involves gathering info, developing a block plan and designing a detailed layout |
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organize departments into blocks and fit them into the layout close to the departments they interact with most
use closeness matrix or weighted-distance method |
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| calculate distance between all blocks with closeness factor, multiply by their factor, sum to get plan score |
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mix of equipment and human skills in a process
automated manufacturing processes substitute capital equipment for labor |
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produces one type of part or product in fixed sequence
typically requires large investments
relatively inflexible |
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changed to handle various products
ex. Industrial robots |
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ability to produce multiple products more inexpensively in combination than separately
applies to manufacturing and services
requires sufficient collective volume |
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plants within plants
different operations within a facility with individulaied competitive priorities, processes and workforces under the same roof |
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| result of a firms splitting large plants that produced all the company's producs into several specialized smaller plants |
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| Manufacturing decision patterns |
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| manufacturing vs. service |
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| operations strategy (graph) |
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| organization flow (graph) |
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| process characteristics (graph) |
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| process strategy decisions (graph) |
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| product-process matrix (graph) |
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| supply chain process (graph) |
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