ITM410 notes for ENTIRE COURSE

38 Pages
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Department
Information Technology Management
Course Code
ITM 410
Professor
Tim Mc Laren

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Description
ITM 410 Notes Week 1: Chapter 1: Using Operations to Compete • Business process concepts and terminology o How to define a process o The link between Business Process Design, Operations Management, and Competitive Priorities o How to calculate productivity ratios for a process • Operations management  Systematic design, direction, control of processes that transform inputs into services and products o Process  Activity(s) takes inputs and transforms into outputs o Operation  Group of resources performing processes o Supply chain  Interrelated series of processes o Supply chain management  Synchronization of a firm’s processes with those of its supplies + customers to match flow of materials, services, and information w/ customer • Across the organization o operation managers are responsible for key decisions that affect the success of the organization (chief operations officer COO) o operations are key functions w/in an organization  operations  translates materials and services into outputs  marketing  generate sales of outputs  finance  acquires financial resources and capital for inputs o each has own knowledge and skill areas, primary responsibilities, processes, decision domains o it’s a circle: finance decides how to invest resources and convert them into assets, operations transform materials into product/service outputs, marketing is produces sales revenue which become returns to investors and capital for supporting operations o functions such as accounting, information systems, human resources, and engineering make the firm complete by providing essential information, services, and other managerial support • history o james watt invented steam engine (1785) o subsequent establishment of railroads facilitated efficient movement of goods o cotton gin in 1794, eli whitney introduced concept of interchangeable parts o great industrial revolution in England/Europe o textile industry is mechanized o nineteenth century spreads to US o great innovations  internal combustion engine, steam powered ships, metallurgy of iron making, large scale production of chemicals, invention of machine tools o mechanical computer by Charles babbage and concept of division of labor o Frederick taylor in 1911 foundation for scientific management of operations and supply chain management o Invention of assembly line by henry ford o Alfred sloan strategic planning for achieving product proliferation and variety o Taiichi ohno removing wasteful activities from an organization • Process view o Process can have its own objectives, involve work flow across departmental boundaries, require resources from several departments o External customers o Internal customers o External suppliers o Internal suppliers • Nested processes • Service and manufacturing processes o Service processes + manufacturing processes o Differentiated by nature of output + degree of customer contact o Manufacturing processes  Longer response times  More capital intensive  Quality easily measured  Aka products  Can be produced stored transported for future demand  Based on 5 dimensions  Physical properties  Shape  Size  Surface finish  Joining parts and materials o Service processes  If a process does not change the properties of materials on at least one of the five dimensions it is a service process  Intangible, perishable  Higher degree of customer contact • Supply chain view o Each activity in a process should add value to the preceding activities o Waste and unnecessary cost should be eliminated o Core processes  Set of activities that delivers value to external customers  Supplier relationship process  Selects supplier of services, materials, information and facilitates timely efficient flow of these items into firm  New service/product development process  Designs and develops new services or products from inputs received from external customer specifications or from market in general through customer relationship process  Order fulfillment process  Includes activites required to produce and deliver service or product to external customer  Customer relationship process  Process that identifies, attracts, builds relationships w/ external customers, and facilitates the placement of orders by cutomers o Support processes  Provides vital resources and inputs to the core processes and is essential to the management of the business  Ex: budgeting, recruiting, scheduling • Operations strategy o Means by which operations implements corportate strategy and helps to build a customer-driven firm o Helps develop the capabilities the firm needs to be competitive • Corporate strategy o Provides an overall direction that serves as framework for carrying out all org’s functions o Specifices businesses company will pursue, isolates new opportunities and threats in the environment and identifies growth objectives o Developing a corporate strategy involves four considerations  Monitoring and adjusting to changes in the business environment  Identifying and developing the firms core competencies  Developing the firms core processes  Developing the firms global strategies • Environmental scanning o External business environment changes continually and needs to adapt o Managers monitor trends in environment for potentional opportunities threats o Stay ahead of competition o Gain edge by broadening service or product lines, improve quality, lower costs o Environmental concerns include erends, technological changes, political conditions, social changes, availability of resources • Developing core competencies o Firms succeed by taking advantage of what they do best o Workforce  Well trained and flexible workforce allows orgs to respond to market needs in timely fashion o Facilities  Have well located facilities , there is long lead time to build new ones, flexible facilities can handly variety of services and diff lvls of volume o Market and financial know how  An org that can easily attract capital from stock sales, market and distribute its services or products, or diff them from similar services or products on the market has a competitive edge o Systems and tech  Have an edge in industries that are data intensive • Developing core processes o Firms core competencies should drive its core processes: customer relationship, new service/prod development, order fulfillment, supplier relationship • Global strategies o Ex: buying foreign services, combat threats from foreign competitors, planning to enter new markets o Two effective strategies  Strategic alliances  Agreement with another firm that may take one of three forms  Collaborative effort: one firm has core competencies that another needs but is unwilling to duplicate  Joint venture  Tech licensing  Locating abroad • Market analysis o Understand what the customer wants and how to provide it o Divide firms customers into market segments and then identify needs of each segment  Market segmentation  Needs assessment  Identifies needs of each segment, asses how well competitors are addressing those needs  Service or product needs  Delivery system needs  Volume needs  Other needs • Competitive priorities and capabilities o Customer driven operations strategy requires a cross functional effort by all areas of the firm to understand the needs of the firms external customers and to specify the operations capabilities the firm requires to outperform its competitors o Also addresses needs of internal customers because overall performance of the firm depends upon performance of its core and supporting processes o Competitive priorities  Critical dimensions a supply chain must possess to satisfy its internal/external customers both now and in future o Competitive capabilities  Cost, quality, time, flexibility dimensions a supply chain actually possess • Order winners and order qualifiers o Order winner is criterion customers use to differentiate services/products of one firm to another o Order qualifier is min lvl required from set criteria for firm to do business in market segment  Does not ensure competitive success • Operations strategy as pattern of decisions o Operations strategy translates service/product plans and competitive prorities for each market segment into decisions affecting the supply chains that support those market segments  Determine competitive prorities and assess competitive capabilities • Trends in operations management o Ex: productivity improvement, global competition, ethical/diversity/environment issues o Productivity improvement: basic measure of performance for economies, industries, firms, processes o Productivity=output/input o Increase value of output relative to cost of input • Global competition o Increase market penetration by locating production facilities in foreign countries for local presence o Comparative cost advantages o Political risks, nationalization, lower employee skills • Operations management as set of decisions o Each part of an organization not just the operations function must design and operate processes that are part of a supply chain and deal with quality technology, staffing issues o Each function of an org has its own identity and y is connected w/ operations through shared processes • Addressing challenges o Creating value through operations management o Managing processes o Managing supply chains Week 2: Chapter 3: Process Strategy • Learning goals o Explain why processes exist everywhere in all organizations o Discuss 4 major process decisions o Position process on customer contact matrix/product process matrix o Configure operations into layouts o Define customer involvement, resource flexibility, capital intensity, and economies of scope o Discuss how process decisions should fit together o Define process reengineering and process improvement • Process decisions o Should further a company’s long term competitive goals o Managers focus on controlling their competitive priorities o An ongoing activity o Process strategy specifies the pattern of decisions made in managing processes to achieve their competitive priorities  Process structure  Customer involvement  Resource flexibility  Capital intensity o Two basic change strategies  Process reengineering  Process improvement o Three principles concerning process strategy  Make choices that fit the situation and make sense together, should not optimize one at the expense of the other  They are building blocks , eventually create firms whole supply chain, highly effective on customer satisfaction and competitive advantage  Management must pay attention to interfaces b/w processes, dealing with these interfaces underscores the need for cross-functional coordination • Supply chain processes – business processes that have external customers or suppliers o Outsourcing, warehousing, sourcing, customer service, logistics, cross=docking • Processes are not just in operations o All organizations perform similar business processes • Fig 3.1 pg 92 four common process decisions o Process structure determines process type relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics. The layout, physical arrangement of operations created from various processes, puts these decisions into tangible form. o Customer involvement reflects the way in which customers become part of the process and the extent of their participation o Resource flexibility is the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions o Capital intensity is the mix of equipment and human skills in a process. The greater the relative cost of equipment, the greater is the capital intensity • Process structure in services o Customer contact  Type and amount, customer is actively present, involved, receives personal attention  Degree off customer contact  Customization  Process characteristics o Fig 3.2 Customer contact and customization o Process divergence and flow  Process divergence + flow • Extent to which process is highly customized • Flexible flow vs line flow • Fig 3.3 Service process structuring o It is unlikely a process can be a top performer if a process lies too far from one of these positions  Front office • High customer contact, service provider • Considerable divergence • Flexible flow  Hybrid office • Moderate lvls of customer contact • Work flow progresses from one workstation to the next, with some dominant paths apparent  Back office • Low customer contact, little customization • Standardized, routine, line flows • Process structure in manufacturing o Product-process matrix  Volume, product customization, process characteristics • High product customization = lower volumes • Each manufacturing process should be evaluated on two dimensions • Manufacturing process structuring o Process choice – way of structuring the process by organizing resources around the process or organizing them around the products o Job process  Creates flexibility needed to produce a wide variety of products in significant quantities, w/ considerable divergence in steps performed  Customization high  Volume low  Workforce, equipment flexible  Make products to order, single unit  Flexible flows o Batch process  Most common  Volumes are higher  Same/similar products/parts are produced repeatedly  Average/moderate volumes  Process divergence is still too great to warrant dedicating a separate process for each product o Line process  Between batch and continuous processes  Volumes are high  Products standardized  Divergence is minimal  Each step performs the same process over and over, little variability o Continuous flow process  Extreme end of high volume standard production, rigid line flows  Process divergence is negligible  Materials flow through process w/o stopping until whole batch is finished  Ex: petroleum refining, chemical processes, processing soft drinks • Production and inventory strategies o Make to order  Make products to customer specifications in low volumes  Complex process  High degree of customizationhigh divergence o Assemble to order strategy  Wide variety of products from few subassemblies and components  Involves line process for assembly and batch process for fabrication  Assembly processes create product from standardized components and subassemblies  Forecasting relatively inaccurate  Postponement – final activities in provision of product are delayed until orders are received  Mass customization o Make to stock  Firms hold items to stock for immediate delivery  Standardized products w/ high volumes  Mass production • Stable environment, predictable • Narrowly defined tasks w/ low divergence • Layout o Physical arrangement of operations created from various processes and puts them in tangible form o An approach to layout design that positions those departments close together that have strong interactions  Gather information • Determine what you already have • Determine what you need  Develop block plan • Allocates space + indicates placement of each operation • Closeness matrix – measures relative importance of each pair of operations being located close together (pg 98 fig) • block plan is usually trial and error • success depends on ability to spot patterns in data  weight distance method • evaluate based on cloeness factors • Euclidean distance (shortest distance) o • Rectilinear distance o Distance b/w 2 points w/ 90 degree turns o Dab = |xa - xb| + |ya - yb|  Design detailed layout • Customer involvement o Disadvantages  Not always good idea  Disruptive  Less efficient process  Timing and volume o Advantages  Increase net value to customer  Sometimes seek active participation  Enjoy savings in both price and time  Better quality, faster delivery, greater flexibility, lower cost  Active dialogue • Resource flexibility o Account for process divergence + diverse process flows o Employees need broad range of duties o Equipment is for general purpose o Flexible Workforce  High cost  Greater skills  More training + education  Also more benefits  Achieves reliable customer service and alleviate capacity bottlenecks  Depends on need for volume flexibility o Flexible Equipment  Low volumes of process should select flexible, general –purpose equipment • Capital intensity o Mix of equipment and human skills in the process o Greater relative cost of equipment, the greater the capital intensity o Automation – system, process, equipment that is self acting and self regulating o Improves productivity and quality consistency o Works best with high volume, customization = reduce volume o Equipment is complicated and expensive o Can be prohibitive investment cost for low volume operations o Unique product or high quality service needs hand labour and individual attention • Fixed automation o Fixed or flexible o Appropriate for line and continuous flow process choices o Produces one type of part.product in fixed sequence of simple operations o When demand volumes are high, product design is stable, product life cycles are long o Two drawbacks: large initial investment cost, relative inflexibility o But maximizes efficiency and gives lowest variable cost per unit • Flexible automation o Can be changed easily to handle various products o Ability to reprogram machines useful for both low and high customization processes • Automating service processes o Must understand customer o How much close contact is valued o Whether seek visible presence + personal attention o Technologies reduce to going through options on internet or phone may be poor choice • Economies of scope o Capital intensity is high, resource flexibility is low o Programmable automation breaks this inverse o Ability to produce multiple products more cheaply in combination than separately o Two conflicting competitive priorities, customization and low price • Strategic fit o Spot ways to improve poorly designed processes o Decision patterns for service processes  Process should reflect its desired competitive prorities  Front offices emphasize top quality + customization  Customer involvement, resource flexibility, capital intensity • process structure: customer is present, involved, receives attention (high divergence and flexible process flows) • customer involvement: customer contact is high, unique service • resource flexibility: high process divergence + flexible process flows • capital intensity: volume is high, automation + capital intensity are more likely o decisions for manufacturing processes  fig 3.3 change horizontal in degree of customization and volume  move vertical by changing process divergence  competitive priorities must be considered Competitive priorities Process choices top quality, on time, flexibilityjob process/small batch process low cost operations, consistent large batch, line, continuous quality, delivery speed, flow process Competitive priorities w/ Production and inventory process choice strategy Top quality, on time, flexibilityMake to order Delivery speed and variety Assemble to order Low cost operation and delivery Make to stock speed o focus by process segments  plants within plants • fewer layers of management • greater ability to rely on team problem solving • shorter lines of communications b/w departments o focus service operations  break into smaller stores focus on specific customers/products o focused factories  splitting large plants into several specialized smaller plants  narrowing the range of demands on a facility will lead to better performance b/c management can concentrate on fewer tasks + lead workforce to single goal • strategies for change o process reengineering  fundamental rethinking + radical redesign of processes  improve cost, quality, service, speed  reinvention rather than incremental improvement  not simple or easily done not appropriate for every process  usually those ppl who perform the work each day know how to reengineer it o process improvement  systematic study of activities and flows of each process to improve it  fully understand process, review all aspects  constent  streamline tasks, elimate processes, cut materials/ services, improve environment, make safer  improve customer satisfaction Week 3: Chapter 4: Process Analysis • a firm needs to adjust their processes and maintain analysis to gain competitive advantage over long run • four supporting techniques o flowcharts o service blueprints o work measurement techniques o process charts • process analysis – the documentation and detailed understanding of how work is performed and how it can be redesigned o identify opportunities  pay attention to four core processes • supplier relationship • new service/product development • order fulfillment • customer relationship  deliver value to external customers  do gaps exist b/w process’s competitive priorities and its current competitive capabilities o define scope  establishes the boundaries of the process to be analyzed  can be broad or narrow o document process  make list of inputs, suppliers, outputs, customers o evaluate performance  use metrics to measure performance  identify multiple measures of performance  collect info on how process is currently performing on each one o redesign process  uncover gaps between actual and desired performance  generate ideas for improvement o implement changes • document the proves with flowcharts, swim lane flowcharts, service blueprints, work measurement techniques, process charts o flowcharts  trace the flow of info, customers, equipment, materials through various steps of a process o swimlane flow charts  visual representation that groups functional areas responsible for diff. sub-processes into lanes o service blueprints  depends on type and amount of customer contact  a special flowchart of service process that shows which steps have high customer contact o work measurement techniques  estimates average time each step in process takes  for capacity planning, constraint management, performance appraisal, scheduling • time study method o uses a trained analyst to perform four basic steps in setting a time standard for job/process  select work elements  time elements  determine sample size  set final standard • elemental standard data approach o a database of standards compiled by a firms analysts for basic elements that they can draw on later to estimate the time required for a particular job • predetermined data approach o divides processes into even smaller micromotions o for highly repetitive processes • work sampling o estimates proportion of time spent by ppl on diff activities, based on observations randomized over time o used to assess process’s productivity, estimate allowances needed to set, set standards for other work, and spot areas for process improvement • learning curve analysis o takes into account that learning takes place on an ongoing basis o workers learn to perform jobs more efficiently, process improvements are identified, better administration methods are created o it’s a line that displays the relationship b/w processing time and the cumulative quantity of a product/service produced • process charts o an organized way of documenting all the activities performed by a person or group of people at a workstation, with a customer, or working with certain materials o operation, transportation, inspection, delay, storage o annual labor cost = (time to perform process in hours) (variable costs per hour)(num of times process performed per year) • evaluating performance o metrics and performance information o good starting points  per-unit processing time  cost at each step  time elapsed from beg-end of process o process delays  capacity utilization  environmental issues  waiting times o quality problems  customer satisfaction measure  error rates  scrap rates • data analysis tools o checklists  form used to record frequency of occurrence o histograms/bar charts  summarizes data measured on continuous scale, showing frequency distribution of some process failure o pareto charts  bar chart on which factors are plotted along horizontal axis in decreasing order of frequency o scatter plots  plot of 2 variables showing whether they are related, can be used to verify or negate suspicion of process failure o case and effect diagrams  identify a design problem that relates to key performance problem to its potential causes  links each metric o graphs • redesigning process o what o when o who o where o how o how well • benchmarking • systematic procedure that measures a firm’s processes, services, and products against those of industry leaders • used to better understand how outstanding companies do things so that they can improve their own processes Thin txtbk: Ch 4: Documenting Info. Systems • data flow diagram o graphical representation of a system o system components, data flows among components, sources, destinations, storage of data • context diagram o top lvl diagram of a system depicting the system and all its activities as a single bubble, and showing the data flows into and out of the system and into and out of the external entities • physical data flow diagram o graphical rep of a system showing internal and external entities and flows of data • logical data flow diagram o system processes, data stores, flows of data • systems flowchart o graphical rep of business process, including information processes, operations processes Week 5: Thin txtbk: Ch 10: The Order Entry/Sales Process • steps: presales activities, sales order processing,
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