Competitive Priorities Cost1. Low-cost operations Quality2. Top quality 3. Consistent quality Time4. Delivery speed 5. On-time delivery 6. Development speed Flexibility7. Customization 8. Variety 9. Volume flexibility

Strategic Gaps PRIORITIESGAPS

Recommendations

Key Concepts in Operations Management

A Systematic Approach to Process Analysis Identify Opportunity 1 Define Scope 2 Document Process 3 Evaluate Performance 4 Redesign Process 5 Implement Changes 6

Figure 3.3 Customer-Contact Model for Processes Front office Hybrid office Back office (1)(2)(3) High interaction withSome interaction withLow interaction with customers, highlycustomers, standardcustomers, standardized customized serviceservices with some optionsservices ProcessCharacteristics (1) Jumbled flows, complex work with many exceptions (2) Flexible flows with some dominant paths, moderate job complexity with some exceptions (3) Line flows, routine work easily understood by employees Less Complexity, Less Divergence, More Line Flows Less Customer Contact and Customization Service Package

Figure 3.6 Product-Process Matrix for Processes (1)(2)(3)(4)(5) One of a kindLow volume,MultipleFew majorHigh volume products, madelowproductsproducts,high to customer standardizationmoderate higherstandardization, ordervolumevolumecommodity products ProcessCharacteristics (1) Complex and highly customized process, unique sequence of tasks (2) Jumbled flows, complex work with many exceptions (3) Disconnected line flows, moderately complex work (4) Connected line, routine work (5) Continuous flows, highly repetitive work Less Complexity, Less Divergence, More Line Flows Less Customization and Higher Volume Product Design Continuous process Project process Line process Batch process Job process

Waiting Line Models Customer population Service system Served customers Waiting line Priority rule Service facilities Figure C.1

Operating Characteristics  Line length  Number of customers in system  Waiting time in line  Total time in system  Service facility utilization

Decision Areas  Arrival rates  Number of service facilities  Number of phases  Number of servers per facility  Server efficiency  Priority rule  Service facility arrangement

Applying the Theory of Constraints 1.Identify the bottlenecks. 2.Optimize the schedule of the bottleneck. 3.Schedule all other resources to support the bottleneck. 4.If the bottleneck is still restrictive, increase its capacity. 5.Once the bottleneck has been relieved, check for other bottlenecks.

A 15 B1 20 B2 30 B3 15 C 20 D 10

How Can I Tell Which Markets Will Be Most Profitable? Contribution per hour c = contribution to profits and overhead per unit s = changeover time (hrs.) p = productivity rate (units per hour) T = total resource hours required for customer order = contribution per hour

EXTERNALSUPPLIERSEXTERNALSUPPLIERS EXTERNALCUSTOMERSEXTERNALCUSTOMERS Support Processes Business- to- Business (B2B) Customer Relationship Process Supplier Relationship Process Order - Fulfillment Process Supplier Relationship Process Order - Fulfillment Process Business-to- Customer (B2C) Customer Relationship Process First-Tier Supplier Service/Product Provider New Service/ Product Development Process New Service/ Product Development Process External Value-Chain Linkages

Consumer Customer K-C Package Supplier Variability Facial Tissue

Inventory Measures Average inventory = $2 million Cost of goods sold = $10 million 52 business weeks per year Weeks of supply = = 10.4 weeks $2 million ($10 million)/(52 weeks) Inventory turns = = 5 turns/year $10 million $2 million Example 9.1

Environments & Design Features Design Factors Efficient Supply Chains Responsive Supply Chains Environment Factors Efficient Supply Chains Responsive Supply Chains

The Shaping of Modern Value Chains Ten Forces that Flattened the World 6. Offshoring 7. Supply Chaining 8. In-Sourcing 9. In-Forming 10. The Steroids 1. Berlin Wall and Windows Operating System 2. Web Browsers 3. Work Flow Software 4. Open Sourcing 5. Outsourcing