Competitive Priorities

Cost

1. Low-cost operations

Quality

2. Top quality
3. Consistent quality

Time

4. Delivery speed
5. On-time delivery
6. Development speed

Flexibility

7. Customization
8. Variety
9. Volume flexibility

Strategic Gaps
PRIORITIES
1.

2.

3.

4.

GAPS

Recommendations

Key Concepts in
Operations Management

A Systematic Approach to Process

Analysis
Identify
Opportunity
1

Define
Scope
2

Document
Process
3

Implement
Changes
6

Redesign
Process
5

Evaluate
Performance
4

Customer-Contact Model for

Processes
Less Customer Contact and Customization

Less Complexity, Less Divergence, More Line Flows

Service Package

Figure 3.3

Process
Characteristics
(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

(1)
High interaction with
customers, highly
customized service

(2)
Some interaction with
customers, standard
services with some options

(3)
Low interaction with
customers, standardized
services

Front office

Hybrid office

Back office

Product-Process Matrix for Processes

Less Customization and Higher Volume

Less Complexity, Less Divergence, More Line Flows

Product Design

Figure 3.6

Process
Characteristics
(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

(1)
One of a kind
products, made
to customer
order

(2)
Low volume,
low
standardization

(3)
Multiple
products
moderate
volume

(4)
Few major
products,
higher
volume

(5)
High volume
high
standardization,
commodity
products

Project
process

Job
process
Batch
process
Line
process
Continuous
process

Waiting Line Models

Customer
population
Service system

Waiting line
Priority
rule

Service
facilities

Served
customers

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.

B1
20

A
15

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

CH = contribution per hour

cp(T s)
CH
T

External Value-Chain Linkages

X
T

First-Tier Supplier

Service/Product Provider

Support Processes

Support Processes

N
A

P
L
I
E
R
S

Business- toBusiness (B2B)

New Service/
Product
Development
Process

U
P

Supplier
Relationship
Process

Customer
Relationship
Process
Order
-Fulfillmen
t Process

Business-toCustomer

New Service/
Product
Development
Process
Supplier
Relationship
Process

(B2C)
Order
-Fulfillmen
t Process

Customer
Relationship
Process

C
U
S
T
O
M
E
R
S

Variability
Facial Tissue
Package
Supplier
Customer
Consumer

K-C

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

Environments & Design Features

Environment Factors

Design Factors

Efficient Supply
Chains

Efficient Supply Chains

Responsive Supply Chains

Responsive Supply Chains

The Shaping of Modern

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