Process Planning and Design

It is a reflective essay about the topic stated above. additional document about the instruction is provided Operations Management Module 01: Developing customer value through ‘operations’ 1 Module Learning Outcomes After completing the readings and activities associated with this module, you should be able to: • Define and explain ‘operations management’ • Explain how the systems perspective relates to operational activities • Explain why customer value is a cost/benefit judgement • Explain the various factors that contribute to customer value • Relate operational activities to customer value. 2 Business Strategy Why do organisations exist? In other words what is the purpose of organisations? 3 Business Strategy • If organisations exist for some purpose, • how do they achieve that purpose? 4 Business Strategy Influential people within the organisation make decisions about how the organisation will go about achieving its purpose. This is the essence of strategy. 5 Kmart Versus Wal-Mart • Both chains started in 1962 • In 1987, Kmart had 2,223 stores to Wal- Mart’s 1,198. • Kmart’s sales were $25.63 billion to Wal- Mart’s $15.96 billion • By 1991, Wal-Mart’s sales exceeded Kmarts • Kmart still had more stores Kmart Versus Wal-Mart continue • In year ending January 1996, Wal-Mart’s sales were $93.6 billion to Kmart’s $34.6 billion. • During this time Kmart emphasised marketing and merchandising (such as national TV ad campaigns). • Wal-Mart was investing millions in its operations to lower cost. 7 Kmart Versus Wal-Mart continue • Wal-Mart developed sophisticated distribution system that integrated its computer system with its distribution system. • Kmart’s 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 8 Operations strategy and operations management • “Operations strategy is the pattern of decisions and actions that shape the long-term vision, objectives and capabilities of the operation and its contribution to the overall strategy.” (Slack, Chambers, Johnston and Betts 2006, cited in Gardiner 2010 p. 13) • Barnes defines ‘operations management’ as “…the management of the resources and processes required by an organization to produce goods or services for customers.” (Barnes, D 2008, Operations Management, Thompson, London, p. 461.) 9 Operations • Heart of every organisation • Operations are the tasks that create value 10 Competencies, capabilities and competition • Competence is about the activities of an organisation and the processes that link activities together… (Johnson & Scholes, 2002, p. 149) • Capabilities are the processes, systems or organisational routines that the organisation uses to coordinate its resources for productive use. (Hubbard, 2008, p. 111) • Competitive advantage is the ability of a firm to win consistently over the long term in a competitive situation (Hitt, Black, Porter & Hanson, 2007, p. 189) 11 Resources, capabilities and the creation of value Capabilities Resources Better than Competitors? Rare? Difficult to imitate? Organised to deliver? Strategic capabilities Competitive advantage Customer value (Adapted from Hubbard, 2008, p. 112) 12 Diversity and Importance of Operations • Improvements 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 13 14 The Production System • A simple model Strategy • Customer value • Vision/Mission • Strategic Frameworks • Core capabilities Transformation System • Alteration • Transportation • Storage • Inspection Inputs • Capital •Materials • Equipment • Facilities • Suppliers • Labour • Knowledge • Time Outputs • Facilitating goods • Services 15 The Production System • A more complex version of the model Systems Perspective • Inputs • Transformation System – Alter – Transport – Store – Inspect • Outputs • Environment 16 Inputs • Inputs include facilities, labour, capital, equipment, raw materials, and supplies. • A less obvious input is knowledge of how to transform the inputs into outputs. • The operations function quite frequently fails in its task because it cannot complete the transformation activities within the required time limit. 17 Transformation System • The part of the system that adds value to the inputs. • Four major ways – Alter – Transport – Store – Inspect Outputs • Two types of outputs commonly result from a production system – Services (abstract or nonphysical) – Products (physical goods) – Sometimes referred to as facilitating goods 19 20 Facilitating Good Concept • Often confusion in trying to classify organisation as manufacturer or service • Facilitating good concept avoids this ambiguity • All organisations defined as service • The tangible part of the service is defined as facilitating good • Pure Services 21 22 The Range From Services to Products 23 Operations Activities • Strategy • Output Planning • Capacity Planning • Facility Location • Facility Layout • Aggregate Planning 24 • Inventory Management • Materials Requirements Planning • Scheduling • Quality Control Defining and Measuring Quality • Conformance to specifications • Performance • Quick response • Quick-change expertise • Features • Reliability • Durability • Serviceability • Aesthetics • Perceived quality • Humanity • Value Mass Customisation • Seek to produce low-cost, high-quality outputs in high variety. • Not all products lend themselves to being customised (e.g. Sugar, gas, electricity, and flour). • Is applicable to products characterised by short life cycles, rapidly advancing technology, or changing customer requirements. 26 27 Four Mass Customisation Strategies • Collaborative customisers • Adaptive customisers • Cosmetic customisers • Transparent customisers 28 Collaborative Customisers • These organisations establish a dialogue to help customers articulate their needs and then develop customised outputs to meet these needs. For example, one Japanese eyewear retailer developed a computerised system to help customers select eyewear. The system combines a digital image of the customer's face and then various styles of eye-ware are displayed on the digital image. Once the customer is satisfied, the customised glasses are produced at the retail store within an hour. Adaptive Customisers • These organisations offer a standard product that customers can modify themselves such as closet organisers. Each closet-organiser package is the same, but includes instructions and tools to cut the shelving and clothes rods so that the unit can fit a wide variety of closet sizes. Cosmetic Customisers • These organisations produce a standard product but present it differently to different customers. For example, Planters packages its peanuts and mixed nuts in a variety of containers on the basis of specific needs of its retailing customers such as Wal-Mart, 7-Eleven, and Safeway. 31 Transparent Customisers • These organisations provide custom products without the customers’ knowing that a product has been customised for them. For example, Amazon.com provides book recommendations based on information about past purchases. 32 Dependability and Speed • The competitive advantages of faster, dependable response to new markets or to the individual customer's needs have only recently been noted in the business media. • Americans spend more time and money on marketing, whereas the Japanese spend five times more than the Americans on developing more efficient production methods. 33 34 Relationship Between Response Time and Unit Cost Summary • Opening examples demonstrate how ‘operations’ can create strategic advantage • Operations as a ‘system’ – inputs, process, outputs • Adding ‘value’ within the system • Outputs of a production system – goods and services • Operational activities and ways of measuring them • Designing the transformation system to create customer value 35