Operations Management

• Sustainability and Green Operations

  • reduce waste, recycle and reuse products and parts
• Competitiveness

  • the ability and performance of a firm to sell and supply goods and services in a given market, in relation to the ability and performance of other firms.
• Competitive Advantage

  • is the leverage a business has over its competitors. This can be gained by offering clients better and greater value.
• Key Purchasing Criteria

  • the factors which customers evaluate and consider when making a product choice.
• 4 factors of Key Purchasing Criteria: Price, Quality, Variety, Timeliness
• Order Qualifiers and Order Winners

  • two concepts related to key purchasing criteria, first introduced by Terry Hill
• Order qualifiers

  • characteristics that are “the nonnegotiable requirements” of the customer.
• Order winner

  • characteristics that win the order.
• Competitive Priorities

  • are the ways in which the Operations Management function focuses on the characteristics of cost, quality, flexibility, and speed.
  • the firm’s customers will determine which of the competitive priorities are emphasized.
• Cost

  • Minimizing product costs and waste, maximizing productivity
• Quality

  • Designing superior, durable products. Minimizing defects
• Flexibility

  • Adaptability in product design and output, utilizing general-purpose machinery and multi-skilled workers
• Delivery

  • Maintaining reliable and speedy delivery services
• Core Competency (Core Capabilities)

  • is a management theory that originated in a 1990 Hazard Business Review article, “The Core Competence of the Corporation”
• Core competencies are the defining characteristics that make a business or an individual stand out from the competition.
• Three conditions a business activity must meet in order to be a core competency:

  ● The activity must provide superior value or benefits to the customer

  ● It should be difficult for a competitor to replicate or imitate it

  ● It should be rare
• Strategic management

  • highest level of management, is the broadest, and applies to all parts of the firm while also incorporating the longest time horizon.
  • it gives direction to corporate values, corporate culture, corporate goals, and corporate missions.
• Corporate strategy

  • refers to the overarching strategy of the diversified firm.
• Business strategy

  • refers to the aggregated strategies of a single business firm or a strategic business unit in a diversified corporation.
• Functional strategies

  • encompass marketing, product development, human resource, financial, legal, supply-chain, and IT management, focusing on short- and medium-term plans within each department to meet overall corporate objectives.
• Strategic business unit

  • is a semi-autonomous unit that is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting.is treated as an internal profit center by corporate headquarters.
• Operational strategy

  • an additional level of strategy encouraged by Peter Drucker in his theory of Management by Objectives.
  • it is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria.
• 10 Critical Decisions in Operations Management

  1. Design of Goods and Services
  2. Quality
  3. Process and Capacity Design
  4. Location
  5. Layout Design and Strategy
  6. Human Resources and Job Design
  7. Supply Chain Decisions
  8. Inventory
  9. Scheduling
  10. Maintenance
• Common Operations Strategies

  1. Quality-based strategies
  2. Time-based strategies
• Quality-based strategies

  • commonly used when companies wish to elevate their reputation in the marketplace
• Time-based strategies

  • used to reduce lead time, which is the amount of time elapsed from the receipt of the customer’s order until the products are shipped.
• Productivity

  • referred to as a relative measure.
• Output

  • is always a reflection of how much the firm was able to produce.
• Inputs

  • typically used as the measure
• 3 types of strategies

  1. Corporate strategy
  2. Business strategy
  3. Functional strategy