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Understanding Operations Management: Processes, Strategies, and Trends

Learn about the importance of operations management in transforming inputs into valuable outputs, the different types of processes, strategies for competitive priorities, and trends in the field.

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Understanding Operations Management: Processes, Strategies, and Trends

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  1. Chapter 1 Competing with Operations

  2. What Is a Process? • Process • Activities that transform inputs, add value and generate output(s) • Example: Furniture Manufacturing • Primary Process • Cutting or staining wood • Non-Manufacturing Process • Controlling Inventory

  3. Internal and external customers • Inputs • Workers • Managers • Equipment • Facilities • Materials • Services • Land • Energy • Outputs • Services • Goods Processes and operations 2 3 1 4 5 Information on performance Figure 1.1 Processes & Operations 1-3

  4. BANK Operations Retail Products Wholesale Trading Loan administration Leasing Others Cash Management Loan operations Trading operations Others Auto Finance Cards Mortgages Others Distribution Compliance Finance Human resources Fund management Market making spot Dealer support Others ATM support Customer transactions Service quality Others Teller line transactions Track branch sales ATM hotline Others Credit applications Manage retail products Originate lease portfolio Others Maintain cards Research problems Site analysis Others Prepare reports Attend meetings Input funds deals Others Process deposits Cash checks Safe deposit boxes Others Loan documentation Review credit standing Obtain manager approval Others Nested Processes at a Large Bank Figure 1.2 1-4

  5. What Is Operations Management? • Efficiently using processesto transforminputs into valuable outputs • Successful operations management results from careful allocation of: • Human Resources • Capital • Information • Materials

  6. Operations Management as a Function Functions • Accounting • Distribution • Engineering • Operations • Finance • Human resources • Marketing Types of Organizations Manufacturing Construction Transportation Health care Wholesale Retailing Bank Government • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- Figure 1.3 1-6

  7. Operations Management As a Function • Skill Areas • Quantitative methods • Organizational behavior • General management • Information systems • Economics • International business • Business ethics and law Types of Organizations Manufacturing Construction Transportation Health care Wholesale Retailing Bank Government • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- • ----------------- Figure 1.3 1-7

  8. Trends & New Challenges in Operations Management • Growth of the Service Sector • Intense Productivity pressures • Global Competition • Firms can no longer hide behind borders • Ethics, Diversity & Environmental Issues • Conflicting business protocol • Cultural dilemmas

  9. Business Environment Continuous Environmental Scanning is necessary Flexibility Capacity to meet ever-changing client demands Core Competencies Using the firm’s unique strengths to seize opportunities Strategic Considerations

  10. The Importance of Market Analysis • Market Segmentation • identify groups or sub-groups of clients • Needs Assessment • identify the requirements of each group • Product or service needs • Delivery system needs • Volume needs

  11. Corporate strategy • goals • core competencies • environmental responses • new products/services • global strategies Competitive Priorities Cost 1. Low-cost operations Quality 2. High-performance design 3. Consistent quality Time 4. Fast delivery 5. On-time delivery 6. Development speed Flexibility 7. Customization 8. Volume flexibility • Market analysis • segmentation • needs assessment Figure 1.5 Selecting Competitive Priorities 1-11

  12. Corporate strategy • goals • core competencies • environmental responses • new products/services • global strategies • Market analysis • segmentation • needs assessment • Competitive priorities • Operations Marketing • cost • quality Finance • time • flexibility Others • Capabilities • current • needed • plans • Functional area strategies • finance • marketing • operations • others Figure 1.5 Selecting Competitive Priorities 1-12

  13. Corporate strategy Market analysis Competitive priorities Operations strategy Figure 1.8 Services Manufacturing • Standardized services • Assemble-to-order • Customized services • Make-to-stock • Assemble-to-order • Make-to-order Strategy and Decisions 1-13

  14. Examples of Service Strategies • Standardized services • Canada Post • Assemble-to-order • Cable companies (pre-arranged packages) • Customized services • Health clinics

  15. Health Clinic Process D R P B T D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions) Figure 1.6 1-15

  16. Health Clinic Process Physical exam Physical exam D R P B T D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions) Figure 1.6 1-16

  17. Health Clinic Process Physical exam Physical exam D R P Broken arm Broken arm B T D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions) Figure 1.6 1-17

  18. Health Clinic Process Physical exam Flu Physical exam D R P Broken arm Broken arm B T Flu D: Doctor (examination rooms) R: Radiology (X-ray) T: Triage (assess severity of illness) B: Blood (lab test) P: Pharmacy (fill prescriptions) Figure 1.6 1-18

  19. Examples of Manufacturing Strategies • Make-to-stock • Mass-produced automobiles • Assemble-to-order • Upscale Unique Furniture • Make-to-order • High-end homes

  20. Services Manufacturing • Standardized services • Assemble-to-order • Customized services • Make-to-stock • Assemble-to-order • Make-to-order Corporate strategy Strategy and Decisions Market analysis Competitive priorities Capabilities Operations strategy Figure 1.8 • Process decisions • Quality decisions • Capacity, location, and layout decisions • Operating decisions 1-20

  21. Cross-Functional Coordination • Removing barriers between departments • Moving from sequential decision-making to coordination leads to: • Improved communication • More accurate market information • More timely internal feedback

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