Chapter 1 Notes
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Department
Information Technology Management
Course
ITM 410
Professor
Margaret Plaza
Semester
Winter

Description
Chapter 1 – Overview of Business Process Design Operations Management - Operations Management: The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers. - Process: Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers. - Supply Chain: series of processes within a firm and across different firms that produce a service or product to the satisfaction of customers - Operation: is a group of resources performing all or part of one or more processes - Supply Chain Management: The synchronization of a firm’s processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand. Operations and Supply Chain Management across the Organization - The below diagram shows that key functions within an organization o Finance: this part of the organizations, provides the financial capitals (cash) to buy resources, which leads to Materials & Service Inputs o Operations: they take the resources and transform them into products and services, which leads to Product & Service Output o Marketing: marketing is performed (advertising), responsible for generating sales revenue of output - Functions such as Accounting, Information Systems, Human Resources, and engineering make the firm complete by providing essential information, services and other managerial support A Process View - The reason for process rather than the departments is because it provides a more relevant picture of the way firm actually work and the can be much broader whereas the department is more specific How Processes Work (Figure 1.2) - All processes have inputs and outputs - External Customers: who may be end users or intermediates (eg. Manufacturers, financial institutions, or retailers) - Internal Customers: who may be employees in the firm whose process input are actually the outputs of early processes managed within the firm - External Suppliers: may be other businesses or individuals who provide the resources, services, products, and materials for the firm’s short term and long term needed - Internal Suppliers: employees or processes that supply important information’s or materials - Participation by customers occurs not only when they receive output, but also when they rake an active part in the processes Nested Processes - Processes can be broken down into sub processes, this is known as nested process o Nested Process: the concept of a process within a process Service and Manufacturing Processes - Manufacturing processes also have longer response times , are more capital intensive, and their quality can be measured more easily those of service processes and the outputs can be produced, stored, and transported in anticipation of future demand - Service processes tend to produce intangible, perishable outputs and the output is not stored in the inventory o Example: bank loan, order fulfillment process of the US Postal Service - There are two types of process: service and manufacturing - Differences o The nature of their output o Degree of customer contact - Similarities o Manufacturing process: some don’t inventory because they cost too much o Service Process: they do inventory their inputs The Supply Chain View - An activity in the supply chain, that doesn’t add value to preceding activities, should be eliminated - There are two main types of processes in the supply chain: core processes and support processes - Core Processes: are a set of activities that delivers values to external customers o Supplier relationship process: A process to select the suppliers of services, materials, and information and facilitate the flow of these into the firm. o New service/product development: a process that designs and develops new services or products from inputs received from external customers specifications or from the market in general through the customer relationship process o Order fulfillment process: process to produce and deliver services or products to the external customer. o Customer relationship process: process that identifies, attracts and builds relationships with external customers and facilitates the placement of orders and also known as CRM - Support Processes: process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business o Accounting, Human Resources, Engineering, and Information Systems that provides vital resources and inputs to the core processes Operations Strategy - Operation strategy: specifics the means by which operations implements corporate strategy and helps to build a customer-driven firm - It is at the heart of managing process and supply chains - Operation Strategies is the linchpin that bring these processes together to form supply chains that extend beyond the walls of the firm, encompassing suppliers as well as customers - It starts with Corporate Strategy: the firms overall goals with its core processes, markets - Based on corporate strategy, a market analysis categorizes the firm’s customers, identifies their needs, and assesses competitors’ strengths. This information is used to develop competitive priorities. These priorities help managers develop the services or products and the processes needed to be competitive in the marketplace. Competitive priorities are important to the design of existing as well as new services or products, the processes that will deliver them, and the operations strategy that will develop the firm’s capabilities to fulfill them. Developing a firm’s operations strategy is a continuous process because the firm’s capabilities to meet the competitive priorities must be periodically checked and any gaps in performance must be addressed in the operations strategy. Corporate Strategy - It provides an overall direction that serves as a framework for carrying out all the organizations functions. There are four considerations: o Environment Scanning  The organizations need to be able to adapt to changes  It is the process where the managers monitor trends in the environment for threats and opportunities  New entrants, new technology, social changes, political changes, availability of resources o Core competencies: are the unique resources and strength that an organization’s considers when formulating strategy  Workforce: well trained employees  Facilities: well-located offices, stores and plants  Market and Financial Know How: An organization that can attract capital from stock sales, market, and distribute its services or products at different levels of volume provide a competitive advantage  System and Technology: knowledge on the latest technology o Developing Core Process  The firms core competencies should drive its core processes: customer relationship, new service/product development, order fulfillment, and supplier relationship o Global Strategies  Identifying opportunities and threats requires a global perspective  Two effective global strategies:  Strategic alliance and locating abroad o Strategic alliance: is an agreement with another firm that may take one of three forms  Collaborative effort: often rises when one firm has core competencies that needs but is unwilling to duplicate  Joint venture: two firms agree to produce a service or product jointly  Technology licensing: one company licenses its service or production methods to another (Microsoft and RBC) o Locating abroad is a key decision in the design of supply chains because it effect of the flow of materials, information, and employees in support of the firms core process - Market Analysis o Market Segmentation  It is the process of identifying groups of customers with enough in common to warrant the design and provision of services or products that the group wants and needs o Need Assessment  Identifies the needs of each segment and assess how well competitors are addressing those needs (tangible or intangible)  Service/Product Needs: price, quality, degree of customization  Delivery System Needs: availability, convenience, safely, accuracy, delivery speed, delivery dependency  Volume Needs: high or low volume, degree of variability in volume, and degree of predictability in volume.  Other needed: reputations, years in the business, after sale support Competitive Priorities and Capabilities - Competitive Priorities: The critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future. o How you going to be competitive from the other companies o Examples: Low Cost operations, consistent quality, delivery speed, volume flexibility - Time-based competition: A strategy that focuses on the competitive priorities of delivery speed and development speed for their processes - Competitive priorities may change over time o Example: color printer, at one point of time of low demand, there was quality, delivery speed, and volume flexibility but now when the demand is high, the
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