IES 303 Operations Strategy Process Design

1
IES 303 Operations StrategyProcess Design
Chapters 1-3 Week 2 Nov 17, 2005
Objective Understand current business
environment and strategic decisions in operations

2
Case DiscussionStarbucks Cappuccino Express

• By integrating Starbucks successful stories with
  your own perceptions, discuss the followings
• What factor can be expected to have a major
  impact of the success of The Cappuccino Express?
  Explain.
• What type of decisions must Vincent make daily
  and over the long run for his shops operations
  to run effectively?
• Vincent would like to monitor the performance of
  each site manager. What measure(s) of performance
  should he use?

3
Operations Management as Function
Figure 1.4
4
Types of Operations Management (OM) Decisions

• Strategic choices
• ________________
• ____________________
• ____________________
• Operating Decisions
• ___________________
• ___________________
• ___________________
• ___________________

5
Value Chain

• An interrelated series of processes that produces
  a service or product
• Each activity in a process should __________ to
  the preceding activities
• Concept of value chain is important because ___
  ________________

6
Core / Support Processes

• ______________
• A chain of activities that delivers value to
  external customers
• ______________
• A process that provides vital resources and
  input to the core processes and therefore is
  essential to the management of the business

7
Competitive Priorities

• Capabilities
• current
• needed
• planned

Figure 2.1
8
Competitive Priorities
The critical dimensions that a process must
possess to satisfy its internal or external
customers, both now and in the future

• Competing on cost
• ___________________
• ___________________
• ___________________
• Competing on quality
• ___________________
• ___________________
• ___________________

• Competing on Time
• ___________________
• ___________________
• ___________________
• Competing on Flexibility
• ___________________
• ___________________

Provide some practical firms / organizations that
can be categorized as above
9
New Service/Product Development Process
Figure 2.2
10
Process Design

• Process design includes ___________, ________,
  ________, and ________ that transform inputs into
  outputs.
• Input selection
• to be produced in-house, or
• Purchased (outsourcing), or
• subcontract.
• Proper mix of human skills and equipment

11
Process Design

• Process design decisions must be made when
• A gap exit between ______________ and
  ______________
• A new service/product/technology is being offered
• Quality must be improved
• Competitive priorities have changed
• Demand is changing
• Current performance is not adequate

12
Major Decisions for Effective Process Design
2
4
1
3
5
Figure 3.1
13
Product-Process Matrix
Less Customization and Higher Volume Product
Design
(1) (2) (3) (4) (5) One of a kind Low
volume, Multiple Few major High volume products,
made low products products, high to customer
standardization moderate higher standardization,
order volume volume commodity products
Process Characteristics
(1) Complex and highly customized process,
unique sequence of tasks (2) Jumbled flows,
complex work with many exceptions (3) Disconnect
ed line flows, moderately complex
work (4) Connected line, routine
work (5) Continuous flows, highly repetitive
work
Project process
Job process
Batch process
Less Complexity, Less Divergence, More Line Flows
Line process
Continuous process
14
Production and Inventory Strategies

• ________________
• Standard customers in anticipation of demand
• ________________
• Standard modules with added option
• ________________
• Design, produce, and deliver products or services
  to customer specifications
• Discuss about the impacts of these strategies on
  the production and inventory level.

15
Next week Discussion Assignment

• Discussion Question 1 (pg 79)
• The onset of exponential growth in the
  development of information technologies has
  encouraged the birth of many dot-com companies.
  The Internet has enabled these companies to reach
  customers in very effective ways. Consider
  Amazon.com, whose web site enjoys millions of
  hits each day and put customers in touch with
  more that 18 million services and products. What
  are Amazon.coms competitive priorities and what
  should its operations strategy focus on?
• In addition to Amazon.com, suggest one other
  dot-com company or website and discuss about its
  competitive priorities.