competing with fedex operations - wilkes...
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Chapter 1
Operations as a Competitive Weapon 1
Presentation materials supplemented by Jennifer Edmonds, PhD
Competing with Operations
Year Expected Demand
Cash Flow
0 80,000 ($150,000)
1 90,000 $90,000
2 100,000 $150,000
3 110,000 $210,000
4 120,000 $270,000
5 130,000 $300,000
Presentation materials supplemented by Jennifer Edmonds, PhD
FedEx, 2, 3, 4
Why are they successful?
Fast
On-time deliveries
Relatively low cost
Technology in shipment tracking
Effective execution of
operations
Presentation materials supplemented by Jennifer Edmonds, PhD
InputsTransformation Processes
(Adding value)Outputs
Operations Management is…
“The systematic design, direction and control of processes that transform inputs into goods and services for internal, as well as external, customers.”
Presentation materials supplemented by Jennifer Edmonds, PhD
Core & Support Processes
Value chains are an interrelated series of processes that produce a service or product to the satisfaction of
customers.o Core processes deliver value to external customers.
o Support processes provide vital inputs for the core processes.
Chapter 1
Operations as a Competitive Weapon 2
Presentation materials supplemented by Jennifer Edmonds, PhD
Core Processes
1. Customer relationship processes Identify, attract, and build relationships with external
customers and facilitate the placement of orders.
2. New service/product development processes Design and develop new services or products from
inputs received from external customer specifications.
3. Order fulfillment processes The activities required to produce and deliver the service
or product to the external customers.
4. Supplier relationship processes Select suppliers of services, materials and information
and facilitate the timely and efficient flow of these items into the firm.
Organizations excel at
one or more of these…
Presentation materials supplemented by Jennifer Edmonds, PhD
Exte
rnal
su
pp
liers
Exte
rnal c
usto
mers
Support processes
Supplier
relationship
process
Order
fulfillment
process
New service/
product
development
process
Customer
relationship
process
Support processes provide key resources, capabilities and
other inputs that allow core processes to function
Support ProcessesInternal Value-Chain Linkages
Firms have many processes that support the core processes.
CORE
PROCESSES
Presentation materials supplemented by Jennifer Edmonds, PhD
InputsTransformation Processes
(Adding value)Outputs
Operations Management is…
“The systematic design, direction and control of processes that transform inputs into goods and services for internal, as well as external, customers.”
Presentation materials supplemented by Jennifer Edmonds, PhD
Goods Services
Most firms provide both
goods and services.
Chapter 1
Operations as a Competitive Weapon 3
Presentation materials supplemented by Jennifer Edmonds, PhD
Goods Production Tangible Can be inventoried Low customer contact Capital Intensive Quality easily
measured
Service Production Intangible Can’t be inventoried High customer contact Labor Intensive Quality hard to
measure
The key differences between service & manufacturing processes are OUTPUT and
CUSTOMER CONTACT
The output of a manufacturing process can be produced, stored
and transported
The output of a service process is typically
perishable
Presentation materials supplemented by Jennifer Edmonds, PhD
Service Processes and Manufacturing Processes
Manufacturing processes change materials in one or more of the following dimensions:
Physical properties
Shape
Fixed dimensions
Surface finish
Joining parts and materials
If a process isn’t doing at
least one of these, then it is a service process.
Service processesprovide changes in one or more of the following dimensions:
Physiological
Psychological
Informational
Presentation materials supplemented by Jennifer Edmonds, PhD
Progressive Insurance
Grew from $1.3 billion to $11 in 13 years.
How did they do it? 1, 2
Operational Innovation
(Designing new processes)
Immediate Response Claims Handling (24 hours a day).
Streamlined claims processing, from 7-10 days to 9 hours.
Web site for agents only.
Web site for customer information, inquiries and routine
processing.
Agents quickly go to scene of accident.
Presentation materials supplemented by Jennifer Edmonds, PhD
InputsTransformation Processes
(Adding value)Outputs
Operations Management is…
“The systematic design, direction and control of processes that transform inputs into goods and services for internal, as well as external, customers.”
External Customers are those who purchase the goods and services.
Internal Customers are those who receive the output of others within the firm. They are part of the transformation process.
Chapter 1
Operations as a Competitive Weapon 4
Presentation materials supplemented by Jennifer Edmonds, PhD
Strategic Decisions
Decisions or plans designed to favorably impact the key
factors of the desired outcomes of an organization…
Operations as a Set of Decisions
Development of new capabilities
Maintenance of existing capabilities
Design of new processes Development and
organization of value chains Key performance measures
Tactical Decisions
Process improvement and performance measures
Management and planning of projects
Generation of production and staffing plans
Inventory management Resource scheduling
Involving or pertaining to actions, ends, or means that
are immediate …
Defin
ition
s from
Bu
sinessD
ction
ary.co
m
Presentation materials supplemented by Jennifer Edmonds, PhD
What Decisions do OMs make?
Service, product design
Quality management
Process, capacity design
Location
Layout design
Human resources, job design
Supply-chain management
Inventory management
Scheduling
Maintenance
Operations managers decisions must support corporate strategy
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change
Ethical Issues Across Cultures
Increasing Diversity Of The Workforce
Environmental Impact Issues
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity
Productivity is the value of outputs (services and products) produced, divided by the value of input resources (wages, costs of equipment, etc.)
Is this easy to measure? (measures of productivity must be linked
to measures of output)
OutputProductivity =
Input
How do we measure
productivity?
How do we measure output?
What inputs are there?
Chapter 1
Operations as a Competitive Weapon 5
Presentation materials supplemented by Jennifer Edmonds, PhD
Productivity Improvements
Achieving more output for the same input
Achieving the same output from less input
Achieving much more output for slightly more input
Getting slightly less output for much less input
Trends in Operations Management
http://www.accel-team.com/index.html
Typical inputs: LABOR,
CAPITAL, MGMT
Presentation materials supplemented by Jennifer Edmonds, PhD
Productivity Improvements
Achieving more output for the same input
Achieving the same output from less input
Trends in Operations Management
http://www.accel-team.com/index.html
Lower costsFaster cycle timesMore consistency
10%
Six Sigma
Lean Operations
SCOR
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Businesses accept the fact that, to prosper, they must view customers, suppliers, facility locations, and competitors in global terms
Most products today are composites of materials and services from all over the world
Presentation materials supplemented by Jennifer Edmonds, PhD
Global Competition
Forces that created increased global competition:
Improved Transportation and Information Technologies
Loosened regulations on Financial Institutions
Increased Demand for Imported Services and Goods
Reduced Import Quotas and other Trade Barriers
Comparative Cost Advantages
Disadvantages
May have to relinquish proprietary technology.
Political risks.
Alienate U.S. customers by sending jobs overseas.
Lower skill levels in some areas.
Difficulty with cross-functional coordination.
Harder to produce products and services that can compete.
Chapter 1
Operations as a Competitive Weapon 6
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change The impact of technological change is highlighted by the fact
that industries generally are becoming more innovative.
This trend is reflected in higher investment, especially in
R&D.
Technological developments have resulted many new industries:
Biopharmaceuticals
Environmental technologies
Aerospace
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change
Ethical issues across cultures
Doing business globally opens the arena for
conflicts in norms
Many multinational companies have (local) codes of ethics, mission statements, etc. guiding their practices.
when operating outside of their boundaries they confront different sets of norms which sometimes
conflict with their home based ones
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change
Ethical issues across cultures
Increasing diversity of the workforceo A diverse workforce adds to the appeal of products and
services, particularly in new and emerging markets.
o There is evidence that managing a diverse work force well can contribute to increased staff retention and productivity.
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change
Ethical issues across cultures
Increasing diversity of the workforceo It can enhance the organization's responsiveness
an increasingly diverse world of customers,
improve relations with the surrounding community,
increase the organization's ability to cope with change, and
expand the creativity of the organization.
Chapter 1
Operations as a Competitive Weapon 7
Presentation materials supplemented by Jennifer Edmonds, PhD
Trends in Operations Management
Productivity Improvement
Global Competition
Rapid Technological Change
Ethical issues across cultures
Increasing diversity of the workforce
Environmental impact
What is ‘green’?
Why go green?
Who’s going green?
Presentation materials supplemented by Jennifer Edmonds, PhD
Addressing the Challenges in Operations Management
Managing Processes
Process Strategy
Process Performance & Quality
Constraint Management
Process Layout
Lean Systems
Process Analysis
Using Operations
to Compete
Operations As a Competitive Weapon
Operations Strategy
Project Management
Managing Value Chains
Supply Chain Strategy
Inventory Management
Location
Forecasting
Sales & OperationsPlanning
Scheduling
Human Resources
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