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Week 10 - Sustainability and Operations.docx

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Laura Allan

Week 10 - Sustainability Operations  Operations is about getting it done Critical Success Factors (Indicators of Business Success) 1) Achieving financial performance 2) Meeting customer needs 3) Providing quality products and services 4) Encouraging innovation and creativity 5) Gaining employee commitment  Trying to operate in the most innovative way we can  Very close connection between operations and marketing  Whole goal is to achieve financial performance Key Chapter Concepts: Achieving World-Class Operations Management  3 Decisions at 3 Stages  Cant produce until you’ve designed product  Comes from what customer want  “Matching the voice of the customer with the voice of the engineer” 1) Planning – starts with product design o Production types and processes  Mass production vs mass customization  Assembly line, etc  Type of business impacts on how you are going to do it, type impacts process o Choice of location and facility layout  Link between type of production, process used, and layout  Type of production dictates process you use, dictates type and location of factory o Resource planning and supply chain management  Supply Chain: long chain of organizations, from raw material to retailer  Inventory management – liqudity  How much money is tied down, need to keep liquid  If manage inventory well can operate with little to no inventory  Make or buy? – outsourcing  Big decision, need to know key players, fundamental decision of businesss  Where is your company in this chain?  Need to develop relationships with those linked to you  With internet relationship between each link of chain has become much stronger  Technology exchange has allowed for instantaneous knowledge of what customer wants, can exchange that freely with supplier, works together as part of one company 2) Controlling o Routing and scheduling  When do I need to buy things and when am I going to pay for them o Quality and cost control  Quality: No decision, it is a given  Cost-Control: How to keep breakeven down  Harley-Davidson – productivity-quality connection  Today there is a standard of quality that customer expects, need to meet that or will not sell o Improving  Application of technology 3) Trends Service Vs. Manufacturing  Both transform “raw material” into finished good, BUT in service…  Raw material is person with unsatisfied need or possession that requires care  Service is performed not produced  Focus on process as well as outcome o Judged on quality of work and service  Characteristics are different o Manufacturing is tangible, service not o In service will always customize to consumer needs, need to incorporate that into layout of business o Intangible – experience key, customized, can’t be stored  Customer is part of process o Extent of contact affects operations o In manufacturing not part of process, in a service where customer contact is high have to make decisions based on that Impacts capacity  Integration of marketing and operations o Demand / Capacity tradeoff o Tradeoff when forecasting, need sufficient capacity to meet demand, and ability to meet demand is based on capacity o Need sufficient capactity  Manufacturing o Set capacity slightly ahead of demand  Expensive to add/sit idle  In short term turn away customers or outsource at lower margins  Set ahead of demand slighly, expensive to add on later or not use  Turning away customers not god, outsource at lower margins o Seasonality – shift demand and capacity requirements by pricing  Need more capacity in season and less out, level off demand  Increase demand in off season through pricing, evens out capacity during year so not overproducing during low demand and underproducing during high demand  Service o Low Contact – set capacity to average demand  Set capacity to averagee demand as doing things on low time, can spread it out o High Contact – set capacity at peak demand  Do not have a choice, where customers are involved, need to set capacity at high demand o Set capacity at peak demand depending on times Mass Product Vs. Mass Customization  Sensitivity analysis o Attempt at approximating numbers, but also giving the numbers that would represent the worst-case scenario  Mass production technology: o Relies on stable market conditions - Doing the same thing over and over in large quantities - Need to be able to sell it o Focus on maximizing efficiency to maximize quantity and minimize costs; efficiency vs. effectiveness - Doesn’t focus on what producing, but how producing it o Repetition  New economic reality: o Constant change o Customer-driven - Effectiveness is first issue, then efficiency o Customization and innovation - Don’t assume that they all want the same thing - Idea is to be able to always meet the needs and wants of the customers  This all relies on available technology Sustainability “development that meets the needs of the present without compromising the ability of future generations to meet their needs” UN World Commission on Environment and Development  Measured by the Triple Bottom Line – Andy Savitz
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