STEN 1000 Chapter Notes - Chapter 12: Operations Management, Workflow, Capital Asset
20 Jun 2018
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CHAPTER 12 - TECHNOLOGY AND OPERATIONS MANAGEMENT
Managing an organization’s operations and supply chain
Operations Management: Fitting into the big picture
- Successful organizations understand the interconnectivity of strategy, business structure, and
operations, and seek to ensure that all three are integrated into the decision making process
and that structure and operations are aligned and in support of the organization’s strategic
intent
- Business System Components (fig. 12.1)
- Strategic intent – what we want to accomplish
- Business structure – provide the control and the
formal communication and responsibility
framework that will guide the organization as it
seeks to realize its strategy
- Operations – the actual processes employed,
which, when combined with the utilization of the
organization’s capital assets, enables strategic
outcomes to be realized
! Right product or service to the right customer at the
right place at the right time for the right price
- Successful business look to establish competitive advantages within their business systems
that enable them to deliver their products/services to their targeted market segments in a
manner superior to that of the competition
- The Big Picture (fig. 12.2)
- Mission, Vision, and Corporate Strategy
- Business Strategies and tactics
- Business system development
- Operations execution
- Customer interaction and sales
Responsibilities of Operations Managers
Operations management – the effective design, development, and
management of the processes, procedures, and practices embedded within an organization’s
business system for the purpose of achieving its strategic intent
- Process management - The design and development of the work flow and connectivity
of the transformation requirement (processes) needed to ensure that an organization’s
products and services are efficiently produced and effectively delivered to the
marketplace
- Looks at specific tasks that need to be done and organizes them in the most
efficient way possible
- With respect to time, quality and cost requirements
- Ex. assembly line approach, fully automated technology-manufacturing process,
using robots, handcrafted approach etc.
- Supply chain management – the management of the interdependencies among
suppliers, manufacturers, and distributors; develops the terms and conditions that will
enable all parties to efficiently and effectively meet their obligations to one another due
to their business relationship
- The flow of materials/products, information and costs through the front end of a
business’ value chain
- Ex. purchase of materials from suppliers, coordination of just-in-time (JIT)
inventory, warehousing and distributing logistics, distribution to channel partners
for sale to customers
- Product/service management - the variety of activities from the design and
development of potential new products in R&D to the post-purchase support of
products/services for the customers
- Ex. supporting product modifications and enhancements, decision trade-offs
associated with quantity and cost, decisions about functionality and durability and
performance,
- Works closely with R&D, marketing, and engineering departments
- Consideration of competitor product/service adjustments or new products
competitors are developing
- Information technology-based operational analytics – assessment of historical and
predictive fate in a way that enables the operations management team to actively manage
the organization’s current and future operational needs
- Managing current and future needs in 4 key areas:
1. Workflow optimization and technology-based automation
2. Monitoring customer and market behaviour in order to predict future trends and
needs to uncover business opportunities
3. Enhanced service support via data-based knowledge management
4. Intelligent forecasting, in order to enhance the scheduling accuracy of the various
tasks and processes the organization undertakes in the delivery of goods and
services to the marketplace
The Organization’s Value Chain
- Underlying principle of value chain model - managers should seek to make decisions across
the chain’s activity areas in a manner that contributes positively to the overall value of the
products/services being produced or offered
- Value maximization – maximizing the benefits (price/quality comparison) that a customer
will realize as a result of using a product or service
- Cost efficiencies, high quality standards, customization, product uniqueness, high
performance standards etc.
Value Chain: Primary Activities (fig. 12.4)!
- Primary activities – the specific
activities though which the development
and transformation of a product or
service occurs as it is produced and
delivered to the marketplace
- Inbound logistics - The management of supplier relationships relating to the
pats/components or finished products, that are brought into the organization in order
to produce finished products for delivery to the marketplace
- Ex. iPad: scheduling, shipping and temporary warehousing of the glass, metal
and electronic parts and components
- Ex. retailer purchasing finished goods (ex. T-Shirt from Thailand):
coordination of shipping and delivery to retailer’s warehouse, temporary
storage until they were shipped to other retail sites
- Operations - The manufacturing and/or product change processes set up to ensure
that the final product the organization is manufacturing or handling is ready for the
marketplace
- Ex. iPad: manufacturing processes to combine the various parts and
components into an actual iPad
- Ex. T-Shirt: packaging, attaching labels, branding, ensuring that it meets
regulations in Canada
- Outbound logistics – getting the finished product to the customer via a distribution
channel that is accessible, convenient, and bale to minimize stock outs and other sales
impediment factors
- Warehousing, distribution, inventory management, transportation
- Ex. iPad: shipping the iPad to Apple stores, determining which other retailers
can sell it and delivery to those places
- Marketing and sales – activities that create profile and awareness for the
organization’s products, services, or brand, and the benefits derived from the
acquisition and use of such products or services
- Effectively communicate the benefits to create preference and commitment
from customers
- Advertising, sales promotion, packaging, point of sales communication
- Customer service – the support provided to customers before, during, and following
the purchase process
- Technical support, repair support, warranty, installation, replacement parts,
upgrading options, customer training
! The development of strong supplier and distributor relationships is invaluable to the
organization with regard to understanding market trends and shifts, maintaining a watchful
eye on competitive innovation, and ensuring that cost control management practices are put
into place throughout the supply chain in order to maintain competitive pricing strategies.
Value Chain: Support Activities (Fig. 12.5)
- Support activities – areas within organization that are not directly associated with the actual
processes the organization uses to produce products or deliver services but that are an
integral part of the support structure that the primary activities relay on to successfully
execute strategy
- Ex. IT department – collaborate with the operations department – development and
application of new technologies in support of the value chain process
- R&D, engineering depts. – focus on new product development, product enhancement
and process design and development
- HR – assists in recruitment, employee development, support services for employees
