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BU121 Lecture Notes - Internet Relationship, Finished Good, Sun Chips

Course Code
Laura Allan

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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
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
Where is your company in this chain?
Need to develop relationships with those linked to you

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With internet relationship between each link of chain has become much
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

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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
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
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
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