Foundations of Operations Management, Canadian Edition Ritzman, Krajewski, Klassen © 2004 Pearson Education Canada Inc. Chapter 1 Competing with Operations

Foundations of Operations Management, Canadian Edition Ritzman, Krajewski, Klassen © 2004 Pearson Education Canada Inc.

Chapter 1 Chapter 1

Competing with Competing with OperationsOperations

Foundations of Operations Management, Canadian Edition Ritzman, Krajewski, Klassen © 2004 Pearson Education Canada Inc. 1-2

What Is a Process?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


Outputs• Services• Goods

Internal andexternal customers

Processes and operations

5

1

2

3

4

Inputs• Workers• Managers• Equipment• Facilities• Materials• Services• Land• Energy

Information on performanceFigure 1.1

Processes & OperationsProcesses & Operations

1-3


Figure 1.2Figure 1.2

BANKBANK

OperationsOperations RetailRetail ProductsProducts WholesaleWholesale

Maintain cardsResearch problems

Site analysisOthers

Process depositsCash checks

Safe deposit boxesOthers

Loan documentationReview credit standing

Obtain manager approvalOthers

Prepare reportsAttend meetingsInput funds deals

Others

ATM supportCustomer transactions

Service qualityOthers

Teller line transactionsTrack branch sales

ATM hotlineOthers

Credit applicationsManage retail products

Originate lease portfolioOthers

Fund managementMarket making spot

Dealer supportOthers

Cash ManagementLoan operations

Trading operationsOthers

DistributionCompliance

FinanceHuman resources

Auto FinanceCards

MortgagesOthers

TradingLoan administration

LeasingOthers

Nested Processes at a Large Nested Processes at a Large BankBank

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What Is Operations What Is Operations Management?Management?

• Efficiently using processesprocesses to transform inputsinputs into valuable outputs outputs

• Successful operations management results from careful allocation of: – Human Resources– Capital– Information– Materials


Operations Management as a Operations Management as a FunctionFunction

Figure 1.3

1-6


Operations Management As Operations Management As a Functiona Function

Skill Areas• Quantitative methods• Organizational

behavior• General management• Information systems• Economics• International business• Business ethics

and law

Figure 1.3

1-7


Trends & New Challenges in Trends & New Challenges in Operations ManagementOperations 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


Strategic ConsiderationsStrategic Considerations

• 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


The Importance of Market The Importance of Market AnalysisAnalysis

• 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


Selecting Competitive PrioritiesSelecting Competitive Priorities

Market analysis• segmentation• needs assessment

Corporate strategy• goals• core competencies• environmental responses• new products/services• global strategies

Figure 1.5

Competitive PrioritiesCost 1. Low-cost operations

Quality 2. High-performance design3. Consistent quality

Time 4. Fast delivery5. On-time delivery6. Development speed

Flexibility 7. Customization8. Volume flexibility

1-11


Corporate strategy• goals• core competencies• environmental responses• new products/services• global strategies

Market analysis• segmentation• needs assessment

Competitive prioritiesOperations Marketing• cost• quality Finance• time• flexibility Others

Capabilities• current• needed• plans

Functional area strategies• finance• marketing• operations• others

Figure 1.5

Selecting Competitive PrioritiesSelecting Competitive Priorities

1-12


Strategy and DecisionsStrategy and Decisions

Operations strategy

Market analysis

Competitive priorities

Corporate strategy

Figure 1.8

Services Manufacturing• Standardized services• Assemble-to-order• Customized services

• Make-to-stock• Assemble-to-order• Make-to-order

1-13


Examples of Service Examples of Service StrategiesStrategies

• Standardized services– Canada Post

• Assemble-to-order

– Cable companies (pre-arranged packages)

• Customized services– Health clinics


D

T

R P

B

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

Health Clinic ProcessHealth Clinic Process

1-15


Physical exam

D

T

R P

B


Physical exam

Figure 1.6


1-16


Physical exam

Broken armD

T

R P

B


Broken arm

Physical exam

Figure 1.6


1-17



Physical exam

Broken arm

Flu

D

T

R P

B


Broken arm

Flu

Physical exam

Figure 1.6

1-18


Examples of Examples of Manufacturing StrategiesManufacturing Strategies

• Make-to-stock

– Mass-produced automobiles

• Assemble-to-order– Upscale Unique Furniture

• Make-to-order

– High-end homes


Strategy and DecisionsStrategy and Decisions

Operations strategy

• Process decisions• Quality decisions• Capacity, location, and layout decisions• Operating decisions

Market analysis

Competitive priorities

Corporate strategy

Services Manufacturing• Standardized services• Assemble-to-order• Customized services

• Make-to-stock• Assemble-to-order• Make-to-order

Capabilities

Figure 1.8

1-20


Cross-Functional Cross-Functional CoordinationCoordination

• Removing barriers between departments

• Moving from sequential decision-making to

coordination leads to:

– Improved communication

– More accurate market information

– More timely internal feedback

Documents

Foundations of Operations Management, Canadian Edition Ritzman, Krajewski, Klassen © 2004 Pearson Education Canada Inc. Chapter 1 Competing with Operations