Revision /11/2011

Organisations need to use the value chain to gain customers, create value, and keep customers. Use examples for your business (airplane engine manufacture) to illustrate how this might work in practice. A value chain is defined as a network of facilities and processes that describes the flow of goods, services, information, and financial transactions from suppliers through the facilities and processes that create goods and services and deliver to customers. As the owner of airplane engine manufacture company, I will be focusing on three core responsibilities of a value chain:

1. Gaining customer 2. keeping customers 3. Creating value 1.Gaining Customer Designing goods and services - designing the airplane engine according to the market requirements. Suppliers and purchasing services – making sure better suppliers and purchasing services. Contracts and finance – professional contracts and financial arrangements with customers Guarantees and warranties – providing superior Guarantees and warranties Education and training – provide training for the customers about the operation and other details Sales and marketing – better or quality sales and marketing

2. Creating value As an airplane engine manufacturer the second objective in using value chain is to add value. This can be done as follows: Creating goods and/or services Determining process type and capability- deciding the type of process and capability in operation. Determining prices, quality, learning, markets, etc. Allowing the best price for the customers with superior quality Building value through productivity – creating value by better productivity

Keeping customers Servicing loans and financing - arranging these facilities to enhance the relationship to the customers. Installation, maintenance and repair – providing peripheral services to satisfy or exceed the customers. Transportation services – providing transportation services for delivery to give a “one stop shop” feeling. Warranty and claims services – to meet the competition Training services - providing training to customers Recycling – helping to dispose the heavy waste from complicated aeroplane engines. Warehouse inventory management – involving and helping in managing the inventory of airplane companies, where fast replacement or service is made possible.

How do I compose this answer? Understand and explain value chain first. Remember to explain the key objectives of value chain such as keeping customers, creating value, gaining customers. Always connect the every single point to the question Reference page 42 and 45 new reference book. Main points are taken from the lecture slide chapter 2

What do an organization do to increase the value? Page 41 new reference book Value is the perception of the benefits associated with a good, service or bundle of goods and services in relation to what buyers are willing to pay for them. If the value ratio is high, customers perceive the goods and service favourably, and the organization providing the goods or service will be successful. Management of an organization must determine how to maximize the value by designing processes and systems that create and deliver proper goods and services customer want to use. Increase benefits without increasing price Increase perceived benefits whilst reducing price Decrease price without decreasing perceived benefits

What value can good practice of operations management principles provide to an organization? How can it help the personal development of every manager? Many decisions in OM can be taken with the help of Quantitative Methods. Page 20 new reference book Quantitative tools fall into two categories: Problem specific techniques and General tools. Quantitative tools can be used for forecasting customer demands, allocating capacity, planning production, scheduling work on machines, determining locations for plants and warehouses, transporting finished goods to customers and staffing and scheduling customer service representatives.

Quantitative tools can be used for the following purposes Finding the best location for the central facility. Balancing assembly line Sequencing jobs in a process General tools can be used for the following purposes Statistical methods Simulation Waiting –line theory

How technology can improve value chain operations? Provide examples. Page 48 new reference book, paragraph 4,5,6 How does operational structure of a value chain influence the operations management decisions that need to be made in managing the value chain? Page 48 paragraph 2

How can you understand layout easily? Simple! Listen carefully …….. Shsssssssss In any operation or business we have raw materials(materials, information, customers) These raw materials or transformed resources are changed into output by transforming resources. What is transforming resources? Facilities such as machines/equipments/plant/factory/robots/staff e.t.c transform or change these raw materials into output products and services.

Now important point comes! The layout means where to keep machine, or where to keep staff, or where to keep raw materials or information or customer to make goods and services.

Simple john’s definitions Fixed-position layout – means raw materials( materials, information, customers) will not move they remain in one place but the transformed resources such as facility ( equipment/plant/machinery/people) move around. Why? Because the raw materials are too large to be moved, difficult to be moved or delicate to be moved.

To understand it better check –out the examples. Construction of motorway – cannot move the road, so we move people, machines and equipments to construct the road. Open-heart surgery – here we cannot take the heart to the doctor. So we admit the patient in the hospital and the doctors, nurses, machines, equipments will work around the patient.

Shipbuilding – here ship is big to move so people/machine/equipment will work around the ship. For NCC examination if you get a question with situations mentioned above or the following, remember to use fixed layout. Construction of road Construction of house Construction of ship Construction of anything ! A gym or fitness center Mainframe maintenance of a computer

Functional layout Again, remember the basic we discussed in the previous layout. Here transforming resources such as raw materials, information, people move from one activity to another activity according to the needs. Why? Different materials or customers or information will have different needs.

Examples Hospital – such as X-ray, laboratories Some machine parts for aircraft engines Supermarket – some products such as fresh vegetables/ fish/ meat will be together. Library – where customer move between different sections of book

Cell layout Remember again, here raw materials, information, customers move to one part of the operation and the transforming resources in that part of the operation transform them into output. After one part the transformed resources go to another cell. Why? To process the same of operation together

Some examples Computer manufacturing Lunch area in the supermarket Maternity unit in a hospital Shopping mall Department store confusion? Don’t worry! Mostly cell layout is associated with manufacturing operations. But some cases like shopping mall we see the same type of goods together to satisfy the customer so we can call them cell too.

Product layout Remember again, here facilities/machine, equipment, plant follow the transforming resources such as customer, information and materials. So here transformed resources flow in a fixed route.

Examples Automobile assembly – Mass-immunization or injection self-service Wine making industry Credit card processing Insurance policy processing Mixed layouts Some operation uses mixed layouts For example hospital – X-ray will be functional layout, surgical theatre will be fixed layout, laboratory will be product layout.

Again a restaurant also may use mixed layout! The kitchen – functional layout Service restaurant - fixed –position layout Buffet restaurant – cell layout Cafeteria for staff – product layout

Please find some more information in the new reference book page 308,309,310 What layout strategy would you suggest is most appropriate to use for the hotel’s Fitness Suite? Explain and justify your decisions. You must follow the same order whenever, you answer a question related to layouts.

Layout of an operations means how transforming resources are positioned relative to each other and how various tasks are allocated to these transforming resources. Layout decisions are important, because if the layout proves wrong, it may lead to confused low, customer queues, long process times, inflexible operations and high cost. Re-laying a layout will be costly as it may cause disruption to the operation and customer dissatisfaction. So as an operational manager before deciding any layout we have to understand the objectives of the layout.

There are three objectives for any layouts as follows: Inherent safety, length of flow and clarity of flow. ( you can draw the diagram in page 187 of text book here) Before deciding the layout of the fitness suite of a hotel, we have to consider two important aspects as follows: 1. Requirements of a good layout include: an understanding of capacity and space requirements selection of appropriate material handling equipment decisions regarding environment and aesthetics

2. The decision making process for determining the appropriate layout involves the following steps: Selection of process type – volume-variety characteristics that dictate process type Selection of basic layout Selection of detailed design of layout – need to define the exact position of individual parts of the operation. A fixed position layout would be the most appropriate for the fitness suite. Hotel guests would have to move between different apparatus. Cell layout might also be appropriate, whereby certain types of facilities are brought together, e.g. sauna/massage. Remember to use the same method for every answer: related to layout!

What layout strategies would you suggest are most appropriate to use in the different areas that make up the FilmPlex complex? Explain and justify your decisions Remember use the style as we discussed in the previous question. How? 1.Definition 2.Importance 3.Objectives 4.A sentence related to the example such as before deciding the layout of FilmPlex complex 5.Requirement of a good layout 6.Decision making process for a layout 7.Finally your conclusion Here we have to use a mixed layout. Because a movie theatre has many different services to offer, snacks bar, bar, restaurant, theatre e.t.c A functional layout (also known as process layout) would be most appropriate for the overall cinema customer experience. But could also use Product layout for the snack bar, cell layout for the licensed bar, product layout for the snack bar, etc