Process Planning and Design
It is a reflective essay about the topic stated above. additional document about the instruction is provided
Developing customer value through
Module Learning Outcomes
After completing the readings and activities
associated with this module, you should be
• Define and explain ‘operations management’
• Explain how the systems perspective relates to
• Explain why customer value is a cost/benefit
• Explain the various factors that contribute to
• Relate operational activities to customer value.
Why do organisations exist?
In other words what is the
purpose of organisations?
• If organisations exist for some purpose,
• how do they achieve that purpose?
Influential people within the organisation
make decisions about how the
organisation will go about achieving its
This is the essence of strategy.
Kmart Versus Wal-Mart
• Both chains started in 1962
• In 1987, Kmart had 2,223 stores to Wal-
• Kmart’s sales were $25.63 billion to Wal-
Mart’s $15.96 billion
• By 1991, Wal-Mart’s sales exceeded
• 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
• 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.
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
• Wal-Mart’s increased from 20.1 percent to
Operations strategy and operations
• “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.)
• Heart of every organisation
• Operations are the tasks that create value
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.
Resources, capabilities and the creation of value
Better than Competitors?
Difficult to imitate?
Organised to deliver?
(Adapted from Hubbard, 2008, p. 112)
Diversity and Importance of Operations
• Improvements in operations can
simultaneously lower costs and improve
• Improving operations often dependent on
advances in technology.
• Can obtain competitive advantage by
• Diversity of Operations
The Production System
• A simple model
• Customer value
The Production System
• A more complex version of the model
• Transformation System
• 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.
• The part of the system that adds value to
• Four major ways
• Two types of outputs commonly result
from a production system
– Services (abstract or nonphysical)
– Products (physical goods)
– Sometimes referred to as facilitating goods
Facilitating Good Concept
• Often confusion in trying to classify
organisation as manufacturer or service
• Facilitating good concept avoids this
• All organisations defined as service
• The tangible part of the service is defined
as facilitating good
• Pure Services
The Range From Services to Products
• Output Planning
• Capacity Planning
• Facility Location
• Facility Layout
• Aggregate Planning
• Quality Control
Defining and Measuring Quality
• Conformance to
• Quick response
• Perceived quality
• Seek to produce low-cost, high-quality
outputs in high variety.
• Not all products lend themselves to being
customised (e.g. Sugar, gas, electricity,
• Is applicable to products characterised by
short life cycles, rapidly advancing
technology, or changing customer
Four Mass Customisation Strategies
• Collaborative customisers
• Adaptive customisers
• Cosmetic customisers
• Transparent 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.
• 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
• 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.
• 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.
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
Relationship Between Response Time and
• Opening examples demonstrate how
‘operations’ can create strategic advantage
• Operations as a ‘system’ – inputs, process,
• Adding ‘value’ within the system
• Outputs of a production system – goods and
• Operational activities and ways of measuring
• Designing the transformation system to create
customer value 35