management 11e john schermerhorn chapter 19 operations and services management
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Management 11e John Schermerhorn
Chapter 19Chapter 19
Operations andOperations andServices ManagementServices Management
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Planning Ahead — Chapter 19 Study Questions
What are the essentials of operations and services management?
What is value chain management? How do organizations manage service
and product quality? How can work processes be designed for
productivity?
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Study Question 1: What are the essentials of operations and services management?
Operations management Managing productive systems that transform
resources into finished products, goods, and services for customers.
Typical operations management decisions include: Resource acquisition Inventories Facilities Workflows and technologies Product quality
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Study Question 1: What are the essentials of operations and services management?
Manufacturing Organizations Produce physical
goods
Service Organizations Produce services
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Study Question 1: What are the essentials of operations and services management?
Productivity Quantitative measure of the efficiency with
which inputs are transformed into outputs. Productivity = Output / Input.
Competitive advantage A core competency that clearly sets an
organization apart from competitors and gives it an advantage over them in the marketplace.
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Study Question 1: What are the essentials of operations and services management?
Companies may achieve competitive advantage in many ways, including:
Product innovations Customer service Speed to market Manufacturing flexibility Product/service quality
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Study Question 1: What are the essentials of operations and services management?
Technology The combination of knowledge, skills,
equipment, computers, and work methods used to transform resource inputs into organization outputs. Manufacturing technology. Service technologies.
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Study Question 1: What are the essentials of operations and services management?
Core manufacturing technologies:
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Study Question 1: What are the essentials of operations and services management?
Manufacturing technology trends Robotics Flexible manufacturing systems Mass customization Cellular layouts Computer-integrated manufacturing Lean production Design for disassembly Remanufacturing
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Study Question 1: What are the essentials of operations and services management?
Service-Profit chain All activities involved in the direct link
between an organization’s service providers and customers or clients
Should produce Satisfied and loyal customers Efficient and productive use of resources
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Study Question 1: What are the essentials of operations and services management?
Core service technologies:
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Study Question 2: What is value chain management?
Value chain Sequence of step-by-step activities resulting
in finished goods or services with customer value.
Supply chain management Supply chain management is the strategic
management of all operations relating to an organization’s resource suppliers.
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Figure 19.1 Elements in an organization’s value chain.
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Study Question 2: What is value chain management?
Inventory management Goal is to ensure that inventory is just the
right size to meet performance needs, thus minimizing the cost.
Methods of inventory control: Economic order quantity Just-in-time scheduling
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Study Question 2: What is value chain management?
Inventory control Economic order quantity (EOQ)
Inventory replenished with fixed quantity order when inventory falls to predetermined level.
Just-in-time scheduling Materials arrive at workstation or facility ‘just-in-
time’ for use. Virtually eliminates carrying costs of inventories.
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Figure 19.2 Inventory control by economic order quantity (EOQ).
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Study Question 2: What is value chain management?
Break-even analysis Determination of the point at which
sales revenues are sufficient to cover costs. Break-Even Point =
Fixed Costs / (Price – Variable Costs) Used in evaluating:
New products New program initiatives
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Figure 19.3 Graphical approach to break-even analysis.
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Study Question 3: How do organizations manage service and product quality?
Customer relationship management Establishes and maintains high standards of
customer service in order to strategically build lasting relationships with and add value to customers. External customers purchase the organization’s
goods or utilize its services. Internal customers are the persons and groups
within an organization who depend on the results of others' work to do their own jobs.
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Study Question 3: How do organizations manage service and product quality?
Customer Relationship Management (CRM) Uses latest technologies for intensive
customer communication and collection of data regarding customer needs and desires.
Establishes and maintains high standards of customer service.
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Figure 19.4 The importance of external and internal customers.
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Study Question 3: How do organizations manage service and product quality?
Total quality management (TQM) Quality principles are an integral part of
organization’s strategic objectives. Applying them to all aspects of operations. Committing to continuous improvement. Striving to meet customers’ needs by doing things
right the first time.
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Study Question 3: How do organizations manage service and product quality?
ISO (International Standards Organization) certification Adopted by many countries as quality
benchmark. Companies undergo rigorous audit to
determine if ISO requirements are met. Focus is on customer service and product
quality.
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Study Question 3: How do organizations manage service and product quality?
Quality and Continuous Improvement W. Edwards Deming emphasized:
Constant innovation. Use of Statistical methods. Training in the fundamentals of quality assurance.
Continuous improvement Quality circles
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Study Question 3: How do organizations manage service and product quality?
Continuous improvement Constant search for new ways to improve
current performance. Reduce cycle time between order receipt and
delivery.
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Study Question 3: How do organizations manage service and product quality?
Quality circle Small group of workers who meet to improve
quality Assumes responsibility for quality Taps into members’ creativity
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Study Question 3: How do organizations manage service and product quality?
Statistical quality control Uses rigorous statistical analysis for
checking processes, materials, products, and services to ensure that they meet high standards. Takes random work samples Measures quality in samples Determines acceptability Unacceptable quality results in corrective action “Six Sigma” common example of SQC
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Figure 19.5 Sample control chart showing upper and lower control limits.
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Study Question 4: How can work processes be designed for productivity?
Process reengineering Systematic and complete analysis of work
processes. Design of new and better work processes.
Work process “A related group of tasks that create a result of value
for the customer.” (Michael Hammer)
Workflow Movement of work from one point to another in the
manufacturing or service delivery process.
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Study Question 4: How can work processes be designed for productivity?
Process value analysis Core processes are identified and evaluated
for their performance contributions. Each step in workflow is examined Step is eliminated if not found to be important,
useful, and contributing to the value added
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Study Question 4: How can work processes be designed for productivity?
Steps in reengineering core processes: Identify core processes. Map core processes in respect to workflows. Evaluate all tasks for core processes. Search for ways to eliminate unnecessary tasks or
work. Search for ways to eliminate delays, errors, and
misunderstandings. Search for efficiencies in how work is shared and
transferred among people and departments.
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Figure 19.6 How reengineering can streamline work processes.
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