BSAD 3500 – EXAM #1 REVIEW

PROCESS VIEW OF AN ORGANIZATION: Operations Management – The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external customers. Process – any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers Operation – a group of resources performing all or part of one or more processes Supply Chain – an interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers Supply Chain Management – the 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 Role of Operations in an Organization: Process View: Opposed to viewing an organization as a conglomerate of departments or the firm as a whole, the process view of the firm provides a much more relevant picture of the way firms actually work. Departments typically have their own set of objectives, a set of resources with capabilities to achieve those objectives, and managers and employees responsible for performance. Some processes, such as billing, may be so specific that they are contained wholly within a single department, such as accounting. How Processes Work: External Customers – a customer who is either an end user or an intermediary (e.g. manufacturers, financial institutions, or retailers) buying the fire’s finished services or products Internal Customers – one or more employees of processes that rely on inputs from other employees or processes in order to perform their work. External Suppliers – the businesses or individuals who provide the resources, services, products, and materials for the firm’s short-term and long-term needs Internal Suppliers – the employees or processes that supply important information or materials to a firm’s processes ▪ Every process and every person in the organization has customers: ▫ External Customers ▫ Internal Customers ▪ Every process and every person in the organization relies on suppliers ▫ External Suppliers ▫ Internal Suppliers Nested Process – the concept of a process within a process (e.g. assembly of an engine within the Model-T assembly process) Service and Manufacturing Processes: Manufacturing Processes – convert materials into goods that have a physical form we call products Service Processes – a process that does not change the properties of matirals on at least one of the following five dimensions: 1. Physical Properties 2. Shape 3. Size (e.g. dimensions of lumber) 4. Surface Finish 5. Joining Parts and Materials Service processes tend to produce, intangible, perishable outputs. For example, the output from the auto loan process of a bank would be a car loan, and an output of the order fulfillment process of the USPS is the delivery of your letter. They cannot be held in a finished goods inventory to insulate the process from erratic customer demands. Supply Chain View: *Each activity in a process should add value to the preceding activities; waste and unnecessary cost should be eliminated. Core Process – a set of activities that delivers value to external customers ▫ Supplier Relationship Process – a process that selects the suppliers of services, materials, and information and facilitates the timely and efficient flow of these items into the firm ▫ New Service/Product Development Process – a process that designs and develops new services or products from inputs received from external customer specifications or from the market in general through the customer relationship process ▫ Order Fulfillment Process – a process that includes the activities required to produce and deliver the service or product to the external customer ▫ Customer Relationship Process – a 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 Support Processes – a process that provides vital resources and inputs to the core processes (accounting, finance, human resources, management information systems, and marketing) and therefore is essential to the management of the business Operations Strategy – the means by which operations implements the firm’s corporate strategy and helps build a customer-driven firm, links long-term and short-term operations decisions to corporate strategy Corporate Strategy – provides and overall direction that serves as the framework for carrying out all the organization’s functions, it specifies the business or businesses the company will pursue, isolates new opportunities and threats in the environment, and identifies growth objectives. Developing one involves four considerations: ▪ Monitoring and Adjusting to Changes in the Business Environment (Environmental Scanning) ▫ A process by which managers monitor trends in the environment (e.g., the industry, the marketplace, and society) and potential opportunities or threats ▪ Identifying/Developing Core Competencies ▫ Taking advantage of what the firm does well, reflects the collective learning of the company, these include the following: 1. Workforce 2. Facilities 3. Market and Financial Know-How 4. Systems and Technology ▪ Developing Core Processes ▫ A firm’s core competencies should drive its core processes: customer relationship, new service/product development, order fulfillment, and supplier relationship ▪ Developing Firm’s Global Strategies ▫ A global strategy may include buying foreign services or parts, combating threats from foreign competitors, or planning ways to enter markets beyond traditional national boundaries Market Analysis – understanding what a customer wants and how to provide it, a market analysis first divides the firm’s customers into market segments and then identifies the needs of each segment: ▪ Market Segmentation – the process of identifying groups of customers with enough in common to warrant the design and provision of services or products that the group wants and needs, an analyst must determine the characteristics that clearly differentiate each segment, then the company can develop a strategy to appeal to that segment. ▪ Needs Assessment – identifies the needs of each segment and assesses how well the competitors are addressing those needs, each segment’s needs can be related to the service or product and its supply chain and include both tangible and intangible attributes and feature of products and services required by a customer ▫ Service or Product Needs ▫ Delivery System Needs ▫ Volume Needs ▫ Other Needs Supply Chain Processes: ▪ Business processes that have external customers or suppliers ▪ Examples: ▫ Outsourcing - Exploring available suppliers for the best options to perform processes in terms of price, quality, delivery time, environmental issues ▫ Warehousing - Receiving shipments from suppliers, verifying quality, placing in inventory, and reporting receipt for inventory records ▫ Sourcing - Selecting, certifying and evaluating suppliers and managing supplier contracts ▫ Customer Service – providing information to answer questions or resolve problems using automated information services as well as voice-to-voice contract with customers ▫ Logistics – selecting transportation mode (train, ship, truck, airplane, or pipeline) scheduling both inbound and outbound shipments, and providing intermediate inventory storage ▫ Crossdocking - Packing of products of incoming shipments so they can be easily sorted more economically at intermediate warehouses for outgoing shipments to their final destination ▪ These supply chain processes should be documented and analyzed for improvement, examined for quality improvement and control, and assessed in terms of capacity and bottlenecks. ▪ Supply chain processes will only be as good as the processes within the organization that have only internal suppliers and customers. ▪ Each process in the chain, from suppliers to customers, must be designed to achieve its competitive priorities and add value to the work performed. Competitive Priorities and Capabilities: Competitive Priorities – the critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future. Competitive Capabilities – the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver Time-Based Competition - A strategy that focuses on the competitive priorities of delivery speed and development speed. Order Winners and Qualifiers: