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Chapter 1: The Nature of Operations*Chapter 1The Nature of
Operations
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Introduction
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*McDonalds CorpFacing
increased competitionSmarter and more demanding customersLess brand
loyalSwitched to hamburger bun that does not require
toasting.Customers prefer taste of new bunSaves time and money
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Olympic Flame10,000
runners15,000 miles through 42 states in 84 daysTwo years of
planningMust plan for no-show runners and rush hour trafficCost of
this operation in the neighborhood of $20 million
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Kmart Versus Wal-MartBoth
chains started in 1962In 1987, Kmart had 2,223 stores to Wal-Marts
1,198.Kmarts sales were $25.63 billion to Wal-Marts $15.96
billionBy 1991, Wal-Marts sales exceeded KmartsKmart still had more
stores
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Kmart Versus Wal-Mart
continuedIn year ending January 1996, Wal-Marts sales were $93.6
billion to Kmarts $34.6 billion.During this time Kmart emphasized
marketing and merchandising (such as national TV ad
campaigns).Wal-Mart was investing millions in its operations to
lower cost.
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Kmart Versus Wal-Mart
continuedWal-Mart developed sophisticated distribution system that
integrated its computer system with its distribution system.Kmarts
employees lacked skills needed to plan and control inventory.Period
from 1987 to 1995 Kmart's market share declined from 34.5 percent
to 22.7 percent.Wal-Mart's increased from 20.1 percent to 41.6
percent
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Kmart Versus Wal-Mart
continuedFast forward to 2004 Kmart appears to have adopted a new
strategy Merge with Sears, Roebuck & Co. Potential synergies
between Kmarts convenient locations and Sears strong brands
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Diversity and Importance of
OperationsImprovements in operations can simultaneously lower costs
and improve customer satisfaction.Improving operations often
dependent on advances in technology.Can obtain competitive
advantage by improving operations.Diversity of operations
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*OperationsHeart of every
organizationOperations are the tasks that create value
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*The Production System
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Systems
PerspectiveInputsTransformation
SystemAlterTransportStoreInspectOutputsEnvironment
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*InputsInputs include
facilities, labor, capital, equipment, raw materials, and supplies.
A less obvious input is knowledge of how to transform the inputs
into outputs.
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Transformation System The
part of the system that adds value to the inputs. Four major ways
Alter physical changeTransport - relocateStore - protectInspect
better understanding
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*OutputsTwo types of outputs
commonly result from a production system Services (abstract or
nonphysical) Products (physical goods)
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Facilitating Good
ConceptOften confusion in trying to classify organization as
manufacturer or serviceFacilitating good concept avoids this
ambiguityAll organizations defined as serviceThe tangible part of
the service is defined as facilitating goodPure services
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*The Range From Services to
Products
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Classification and Evolution
of Economic Offerings
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Comparison of Alternative
Economic Offerings
Economic OfferingCommoditiesGoodsServicesExperiencesValue added
byExtractingProducingDeliveringStagingForm of
outputFungibleTangibleIntangibleMemorableKey
characteristicsNaturalStandardizedCustomizedPersonalizedBuyerMarketUserClientGuest
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Operations
ActivitiesStrategyOutput PlanningCapacity PlanningFacility
LocationFacility LayoutAggregate PlanningInventory
ManagementMaterials Requirements PlanningSchedulingQuality
Control
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Functional View of
OrganizationsThree Core
FunctionsOperationsMarketingFinance/AccountingOther Important
Functional ActivitiesHuman Resource ManagementInformation
SystemsEngineering
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Chapter in PerspectiveTwo
alternative ways for organizing work activities Functional
approach, companies organize activities on the basis of the type of
work performed Organizing activities on the basis of specific
value-creating processes.
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Process View of
OrganizationsAn Evolution
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Traditional Functional
Organization
Chapter 1: The Nature of Operations
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Chapter 1: The Nature of Operations*Value Chain Approach
Chapter 1: The Nature of Operations
