anand_operationsmanagement_module1.pdf

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LESSON 1-1

Role of Operations


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VIDEO 1-1.1

Lesson Objectives


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LESSON 1-1 OBJECTIVES

By the end of this lesson you will beable to:

Describe what operations management is

Understand the process view ofoperations management

Illustrate operations management basedsuccesses in different types ofbusinesses

Connect operations management tobusiness performance


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OPERATIONS MANAGEMENT

MODULE 1

Operations Strategy

with Gopesh Anand


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VIDEO 1-1.2

Describing Operations Management


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RECOGNIZING OPERATIONSMANAGEMENT

Take the device that you are using toview this


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RECOGNIZING OPERATIONSMANAGEMENT

Operations management impacted:

Product design

Assembly

Supplier selection

Employee training

Sales outlet

Troubleshooting support

Safe disposal


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OPERATIONS MANAGEMENTIN EVERYDAY PRODUCTS

Furniture that you are sitting on

Restaurant you eat at

Car or bicycle you use

(Mercat, 2009)


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OPERATIONS MANAGEMENTIN EVERYDAY PRODUCTS

Furniture that you are sitting on

Restaurant you eat at

Car or bicycle you use

Recyclable waste you dispose

News that you listen to or read

(U.S. Department of Defense, 2013)


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DEFINING OPERATIONSMANAGEMENT

Operations Management is aboutorganizations effectively andefficiently using their resources andactivities to transform materials andinformation into goods and services

for customers.


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PROCESS VIEW OF OPERATIONS MANAGE


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PROCESS VIEWREFLECTION

Consider any organization – in otherwords, a company, business, or anon-profit entity.

Apply the Process View ofOperations to think of the main

inputs, processes, and outputs.

(commons.wikimedia.org/Pluke, 2011)


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IN-VIDEO QUESTION 1

Reflect on the sub-processes related

to the main products – goods andservices – of the business and thesupport processes that support theexistence of the business.

Left: (commons.wikimedia.org/Pluke, 2011) Right: (flickr.com/taymazvalley, 2015)


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IN-VIDEO INSIGHTS 1

Reflect on the sub-processes related

to the main products – goods andservices – of the business and thesupport processes that support theexistence of the business.


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FEATURES OF OPERATIONSMANAGEMENT

All goods, services, and informationexchanges involve operations.

We assess operations in relation toexpectations.

Many areas of an organization andmany organizations are involved.

Processes range from long-termstrategic to day-to-day operational,and can be completely internal.


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Image CreditsDorm room [Online image]. 2011. Retrieved September 10, 2015 fromhttps://www.flickr.com/photos/uofdenver/5710501931

Famous Dave's interior [Online image]. 2008. Retrieved September 10, 2015 fromhttps://commons.wikimedia.org/wiki/File:Famous_Dave's_interior.jpg

Hostutler, A. (2013). Woodruff interviews Chuck Hagel for PBS NewsHour [Online image]. Retrieve2015 from https://commons.wikimedia.org/wiki/File:Judy_Woodruff_interviews_Chuck_Hagel_for_PB

Mercat, C. (2009). Cambridge CMS bicycle racks [Online image]. Retrieved September 10, 2015 fhttps://commons.wikimedia.org/wiki/File:Cambridge_CMS_Bicycle_Racks.jpg

Ong, T. (2006). NEA recycling bins along Orchard road [Online image]. Retrieved September 10, 2

https://commons.wikimedia.org/wiki/File:NEA_recycling_bins,_Orchard_Road.JPGPluke, (2011). CPT Hardware Input output [Online image]. Retrieved September 10, 2015 fromhttps://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svg

Valley, T. (2010). Think [Online image]. Retrieved September 10, 2015 from

https://www.flickr.com/photos/taymazvalley/5209251530/

"Bass Vibes" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attributiohttp://creativecommons.org/licenses/by/3.0/

REFERENCE

https://www.flickr.com/photos/uofdenver/5710501931https://commons.wikimedia.org/wiki/File:Famous_Dave's_interior.jpghttps://commons.wikimedia.org/wiki/File:Judy_Woodruff_interviews_Chuck_Hagel_for_PBS_NewsHour.jpghttps://commons.wikimedia.org/wiki/File:Cambridge_CMS_Bicycle_Racks.jpghttps://commons.wikimedia.org/wiki/File:NEA_recycling_bins,_Orchard_Road.JPGhttps://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/https://commons.wikimedia.org/wiki/File:CPT_Hardware-InputOutput.svghttps://commons.wikimedia.org/wiki/File:NEA_recycling_bins,_Orchard_Road.JPGhttps://commons.wikimedia.org/wiki/File:Cambridge_CMS_Bicycle_Racks.jpghttps://commons.wikimedia.org/wiki/File:Judy_Woodruff_interviews_Chuck_Hagel_for_PBS_NewsHour.jpghttps://commons.wikimedia.org/wiki/File:Famous_Dave's_interior.jpghttps://www.flickr.com/photos/uofdenver/5710501931


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MODULE 1

Operations Strategy

with Gopesh Anand


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LESSON 1-1

Role of Operations


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VIDEO 1-1.3

Operations Based Successes


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Faster claims turnaround

Better fraud detection

Lower costs of claims processing

Owed to operations managementfeature:

Customer claims process using mobilevans for adjusters

(Farris, Thompson, and Steenburgh, 2015; Hammer, 2004)

(progressive.com)


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Lower costs

Better utilization

Better labor productivity

Faster airplane turnaround

southwest.com


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Owed to operations managementfeatures:

Point-to-point routes

Smaller airports

One type of aircraft

Cross-trained staff

(Schmenner, 2004)


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Customized product – messengerbags

Quick delivery

Owed to operations management

features:Combining make-to-stock with make-to-order production

Efficient capacity utilization

(Cattani, Dahan, and Schmidt, 2005)

(timbuk2.com)


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Lower prices

Lower costs

Lower inventories

Owed to operations management

features:Cross-docking

Supply chain relationships

Information technology(Lu, 2014)

(walmart.com)


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Keeping up with changing fashions

Consistent reasonable pricing

Fewer inventory-clearance discounts

Owed to operations managementfeatures:

Quick response from design toproduction to distribution

Systematic timing of product release,followed by frequent updates

(Caro and Margalef, 2014)

(zara.com)

SUCCESS TIED WITH OTHER


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SUCCESS TIED WITH OTHERBUSINESS DECISIONS

Business strategy

Marketing

Economics

Finance

Human resource management

Managerial accounting

Information systems

IN VIDEO QUESTION 2


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IN-VIDEO QUESTION 2

What aspects of Dell’smanufacturing operations forpersonal computers could havecontributed to its past success?

Left: (dell.com) Right: (flickr.com/taymazvalley, 2015)

IN VIDEO QUESTION 2


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IN-VIDEO QUESTION 2


Left: (dell.com) Right: (flickr.com/taymazvalley, 2015)

IN VIDEO INSIGHTS 2


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IN-VIDEO INSIGHTS 2


ULTIMATELY ABOUT


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ULTIMATELY ABOUTBUSINESS PERFORMANCE

ULTIMATELY ABOUT


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ULTIMATELY ABOUT


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Adapted from: (Johnson, Christensen an

REFERENCE


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Academic CitationsCaro, F., & Martínez de Albéniz Margalef, V. (2014). How fast fashion works: Can it work for you, to(21), 58-65. Retrieved from http://www.ieseinsight.com/review/articulo.aspx?doc=114445&seccion=

Cattani, K., Dahan, E., & Schmidt, G. (2005). Offshoring versus "spackling". MIT Sloan managemeRetrieved from http://sloanreview.mit.edu/article/offshoring-versus-spackling/

Farris, P. W., Steenburgh, T. J., & Maiden, S. E. (2015). Progressive insurance: Making pay as youconsumers. Charlottesville, VA: Darden Business Publishing Case Collection.

Hammer, M. (2004). Deep change: How operational innovation can transform your company. HarvReview, 82(4), 84-93. Retrieved from https://hbr.or g/2004/04/deep-change-how-operational-innova

your-company/ar/1

Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Hreview, 86(12), 57-68. Retrieved from https://hbr.or g/2008/12/reinventing-your-business-model/ar/1

Lu, C. (2014, May 08). Incredibly successful supply chain management: How does walmart do it? from https://www.tr adegecko.com/blog/incredibly-successful-supply-chain-management-Walmart

Schmenner, R. W. (2004). Service businesses and productivity. Decision Sciences, 35(3), 333-3477315.2004.02558.x

REFERENCE

REFERENCE

http://www.ieseinsight.com/review/articulo.aspx?doc=114445&seccion=6http://sloanreview.mit.edu/article/offshoring-versus-spackling/http://sloanreview.mit.edu/article/offshoring-versus-spackling/https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1https://hbr.org/2008/12/reinventing-your-business-model/ar/1https://hbr.org/2008/12/reinventing-your-business-model/ar/1https://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-Walmarthttps://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-Walmarthttps://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-Walmarthttps://hbr.org/2008/12/reinventing-your-business-model/ar/1https://hbr.org/2004/04/deep-change-how-operational-innovation-can-transform-your-company/ar/1http://sloanreview.mit.edu/article/offshoring-versus-spackling/http://www.ieseinsight.com/review/articulo.aspx?doc=114445&seccion=6


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Image CreditsDell [Online image]. Retrieved September 10, 2015 from https://reader015.{domain}/reader015/htm

Progressive [Online image]. Retrieved September 10, 2015 from https://www.progressive.com/

Southwest [Online image]. Retrieved September 10, 2015 from https://www.southwest.com/

Timbuk2 [Online image]. Retrieved September 10, 2015 from http://www.timbuk2.com/

Walmart [Online image]. Retrieved September 10, 2015 from http://www.walmart.com/

Zara [Online image]. Retrieved September 10, 2015 from http://www.zara.com/us/


REFERENCE

http://www.pngimage.net/dell-logo-png-2547/https://www.progressive.com/https://www.southwest.com/http://www.timbuk2.com/http://www.walmart.com/http://www.zara.com/us/http://www.zara.com/us/http://www.walmart.com/http://www.timbuk2.com/https://www.southwest.com/https://www.progressive.com/http://www.pngimage.net/dell-logo-png-2547/


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MODULE 1

Operations Strategy

with Gopesh Anand


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LESSON 1-1

Role of Operations


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VIDEO 1-1.4

Impact on Return on Assets

RETURN ON EQUITY


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RETURN ON EQUITY

SalesEBITx

AssetsSalesx

EquityAssets=ROE

Equity

multiplier

Asset

turnover

Operating

margin

ROAImpacted by operations

Relates tofinancialleverage

EquityEBIT=ROE

Broken into components using DuPont Analysis

(Bodie, Kane

ASSET TURNOVER


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SS U O

AssetsSales=

Ratio depicts revenues generatedrelated to assets employed

Ratio indicates efficiency orproductivity of assets

OPERATING MARGIN


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Sales

IncomeOperatingorEBIT

=

Ratio depicts profits related to sales

Ratio indicates profitability ofoperations

EFFECTS OF BETTER


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More sales from same assets

Equipment uptime

Overall equipment effectiveness

Set-up time

Part commonality

Inventory control

Higher operating margin from lowercosts

Yields and reject rates

IN-VIDEO QUESTION 3


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LET’S DO THE NUMBERS

Compute the return on assets, asset

turnover, and operating margin forHiTech and Luxor.

Reflect on the differences betweenthe two companies.

(Dugdale, 2010)

IN-VIDEO INSIGHTS 3


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Compute the return on assets, asset

turnover, and operating margin forHiTech and Luxor.

Reflect on the differences betweenthe two companies.

HiTech Luxor

Sales 2,000,000 1,000,000

Operating Income 200,000 60,000

Assets 1,650,000 495,000


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COMPARING ANHEUSER-


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BUSCH OVER TIME

2008 2009 2014

Asset Turnover 19.8% 32.7% 33.0%

Operating Margin 13.0% 16.0% 24.0%

Return on Assets 2.6% 5.2% 7.9%

(ab-inbev.com)

2008 Takeover By InBev

REFERENCE


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Academic Citations Amigobulls. (2015, July 31). Anheuser-Busch Balance Sheet - Annual (NYSE:BUD). Retrieved fromhttp://amigobulls.com/stocks/BUD/balance-sheet/annual

Bodie, Z., Kane, A., & Marcus, A. J. (2004). Essentials of investments (5th ed.). Columbus, OH: Mde la Merced, M. J. (2008, July 14). InBev to buy Anheuser-Busch for $52 billion, The New York T

http://www.nytimes.com/2008/07/14/business/worldbusiness/14iht-14beer.14460585.html?_r=1&

Leonard, D. (2012, October 25). The Plot to Destroy America’s Beer. Bloomberg Business. Retrievhttp://www.bloomber g.com/bw/articles/2012-10-25/the-plot-to-destroy-americas-beer

Image Credits Anheuser-Busch InBev [Online image]. Retrieved September 10, 2015 from

https://en.wikipedia.org/wiki/File:AB_InBev_logo.svg

Dugdale, D. (2010). Analyzing financial data [Online image]. Retrieved September 10, 2015 fromhttps://flic.kr/p/8LCNW2


http://amigobulls.com/stocks/BUD/balance-sheet/annualhttp://amigobulls.com/stocks/BUD/balance-sheet/annualhttp://www.nytimes.com/2008/07/14/business/worldbusiness/14iht-14beer.14460585.html?_r=1&http://www.bloomberg.com/bw/articles/2012-10-25/the-plot-to-destroy-americas-beerhttp://www.bloomberg.com/bw/articles/2012-10-25/the-plot-to-destroy-americas-beerhttps://en.wikipedia.org/wiki/File:AB_InBev_logo.svghttps://flic.kr/p/8LCNW2https://flic.kr/p/8LCNW2https://en.wikipedia.org/wiki/File:AB_InBev_logo.svghttp://www.bloomberg.com/bw/articles/2012-10-25/the-plot-to-destroy-americas-beerhttp://www.nytimes.com/2008/07/14/business/worldbusiness/14iht-14beer.14460585.html?_r=1&http://amigobulls.com/stocks/BUD/balance-sheet/annual


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MODULE 1

Operations Strategy

with Gopesh Anand


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LESSON 1-1

Role of Operations


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VIDEO 1-1.5

Lesson 1-1 Recap

LESSON 1-1 RECAP


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In this lesson you learned how to:

Define operations management

Understand the prevalence of the input-process-output view in the way things getdone

Appreciate the role of operationsmanagement in different types ofbusinesses

Connect operations managementobjectives to financial performance


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MODULE 1

Operations Strategy

with Gopesh Anand


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VIDEO 1-2.1

Lesson Objectives

LESSON 1-2 OBJECTIVES(1 OF 2)


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(1 OF 2)

By the end of this lesson you will:

See the relationship between operationsstrategy, business strategy, and otherfunctional strategies

Relate through examples misalignmentsin strategy to business failures

Better understand the deliberate choicesfor formulating and implementingoperations strategy

LESSON 1-2 OBJECTIVES(2 OF 2)


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(2 OF 2)

By the end of this lesson you will:

Comprehend how some unconventionalchoices can be used to compete throughoperations

Recognize the differences betweenmanufacturing and service operations


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MODULE 1

Operations Strategy

with Gopesh Anand


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LESSON 1-2

Formulation and Implementation


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VIDEO 1-2.2

Focused Operations

STRATEGY


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“An integrated and coordinated set of

commitments and actions designedto exploit core competencies andgain a competitive advantage”

(Hitt, Ireland and Hoskisson, 1997; p. 115)

“Competitive strategy is about beingdifferent. It means deliberatelychoosing a different set of activitiesto deliver a unique mix of values.”

(Porter, 1996; p. 64)

ALIGNMENT AMONG STRATEGIES


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CHALLENGE OFALIGNMENT


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“… a fully consistent set of manufacturing policies resulti

congruent system is highly rare”(S

Reasons:

Focus on professional/functional goals and lack of coordination

Strategic direction never clarified/codifiedProduct proliferation without concern of focus

ALIGNMENT

ASKING THE RIGHTQUESTIONS


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QUESTIONS

How can we compete?

Not just how can we increase productivity

How can we improve systemefficiency?

Not just how can we improve labor

efficiencyWhat should we focus on?

Not just what else should we produce

(Skinner, 1974)

OPERATIONS STRATEGY ELEMENTS


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FORMULATINGOPERATIONS STRATEGY


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Begin with the customer

What does the market want?What do targeted customers value in each of the markets that weto pursue?

How is the market changing?

How are customer needs changing?

ORDER QUALIFIER &WINNER


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Order Qualifier

Minimum selection criterion that permitsproducts or service to be evenconsidered by potential customers

Order Winner

Criterion that differentiates the productsor services from competitors, thusresulting in winning orders of customers

(Hill, 1993)

COMPETITIVECAPABILITIES


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What is the current capability of the process?

What should the targeted capability of the process be?

In light of targeted customers

And considering competitors

Should we be targeting different customers?

Is the current market that we are serving changing and/oor declining?

TWO SIDES OF A COIN


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Order Qualifiers and

Winners Attractiveto Customers

Competitive

Capabilit ies Neededfrom Operations

Example

Companies

Low price Cost Walmart

Conformance quality Quality control Rolls Royce Added features Quality improvement Apple

Fast delivery Speed Amazon

Reliable delivery Dependability Southwest

Variety Mix flexibility Ikea

Personalization Customization Subway

IN-VIDEO QUESTION 4


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Take any fast food chain and luxurious sit-down restaura

Upper left: (mcdonalds.com) lower left: (subway.com) right: (Royan, 2008)

IN-VIDEO QUESTION 4


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Take any fast food chain and

luxurious sit-down restaurant.List the order qualifiers – essentialcriteria sought by customers – andorder winners – additional featuresthat would delight customers – forboth businesses.

Compare the two lists.

(flickr.com/taymazvalley, 2015)

IN-VIDEO INSIGHTS 4


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Take any fast food chain and

luxurious sit-down restaurant.List the order qualifiers – essentialcriteria sought by customers – andorder winners – additional featuresthat would delight customers – forboth businesses.

Compare the two lists.

OPERATIONS STRATEGYDECISION AREAS (1 OF 2)


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Size of facility and its capacity

Location and layout of facilityChoice of technology

Vertical integration(Hayes, Pisano, Upton, and Wheelwright, 2005)

OPERATIONS STRATEGYDECISION AREAS (2 OF 2)


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Salaries and incentives, and

employee trainingQuality management

Scheduling of production

Centralized versus decentralized

control (Hayes, Pisano, Upton, and Wheelwright, 2005)

MISALIGNMENTS WITHFATAL CONSEQUENCES


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Kmart

Product mix and sales process mismatchEmpty and overcrowded shelves

(Leinwand and Mainardi, 2010; Williams and Summer, 2010)

(kmart.com)



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Kmart



Kodak

Changing technology(Anderson, 2012)

(kodak.com)



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Kmart



Kodak

Changing technology(Anderson, 2012)

Nokia

Failure to be flexible for customers andemployees

(Anderson, 2012)

(nokia.com)


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MISALIGNMENTS AS WAKE-UP CALLS


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Starbucks

Temporarily lost sight of changing order qualifiersand winners of customers after expansion

Increased number of stores rapidly without consideration of delive

Toyota

Product choices and production competencies mismatch(MacDuffie

(toyota.com)

Academic Citations

REFERENCE


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cade c C tat o s Anderson, H. (2012, January 12). Why did Kodak, Motorola, and Nortel fail? Information Week. Rehttp://www.informationweek.com/it-leadership/why-did-kodak-motorola-and-nortel-fail/d/d-id/110224

Cooke, J. A. (2010). From bean to cup: How Starbucks transformed its supply chain. Supply Chain

55. Retrieved from http://www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/

Hayes, R. H., Pisano, G. P., Upton, D. M., & Wheelwright, S. C. (2005). Operations, strategy, and tthe competitive edge. Hoboken, NJ: Wiley.

Hill, T. (1993). Manufacturing strategy. Basingstoke, UK: MacMillan.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (1997). Strategic management: Competitiveness andCincinnati, OH: Southwestern Publishing.

Leinwand, P., & Mainardi, C. (2010). Why can’t Kmart be successful while Target and Walmart thriv

Business Review. Retrieved from https://hbr.org/2010/12/why-cant-kmart-be-successful-wPorter, M. E. (1996). What is a strategy? Harvard Business Review, (November-December), 61-78https://hbr.or g/1996/11/what-is-strategy/ar/1

Quelch, J. (2008, July 9). Starbucks: How growth destroyed brand value. Bloomberg Business. Rehttp://www.bloomber g.com/bw/stories/2008-07-09/starbucks-how-growth-destroyed-brand-valuebusbusiness-news-stock-market-and-financial-advice

Academic Citations

REFERENCE

http://www.informationweek.com/it-leadership/why-did-kodak-motorola-and-nortel-fail/d/d-id/1102245http://www.informationweek.com/it-leadership/why-did-kodak-motorola-and-nortel-fail/d/d-id/1102245http://www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/https://hbr.org/2010/12/why-cant-kmart-be-successful-whttps://hbr.org/2010/12/why-cant-kmart-be-successful-whttps://hbr.org/1996/11/what-is-strategy/ar/1https://hbr.org/1996/11/what-is-strategy/ar/1http://www.bloomberg.com/bw/stories/2008-07-09/starbucks-how-growth-destroyed-brand-valuebusinessweek-business-news-stock-market-and-financial-advicehttp://www.bloomberg.com/bw/stories/2008-07-09/starbucks-how-growth-destroyed-brand-valuebusinessweek-business-news-stock-market-and-financial-advicehttp://www.bloomberg.com/bw/stories/2008-07-09/starbucks-how-growth-destroyed-brand-valuebusinessweek-business-news-stock-market-and-financial-advicehttp://www.bloomberg.com/bw/stories/2008-07-09/starbucks-how-growth-destroyed-brand-valuebusinessweek-business-news-stock-market-and-financial-advicehttps://hbr.org/1996/11/what-is-strategy/ar/1https://hbr.org/2010/12/why-cant-kmart-be-successful-whttp://www.supplychainquarterly.com/topics/Procurement/scq201004starbucks/http://www.informationweek.com/it-leadership/why-did-kodak-motorola-and-nortel-fail/d/d-id/1102245


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Skinner, W. (1974). The focused factory. Harvard Business Review, (May-June), 113-121. Retrievehttps://hbr.or g/1974/05/the-focused-factory/ar/1

University of Pennsylvania. (2010, March 31). Under the hood of Toyota’s recall: ‘A tremendous ex

complexity.’ Retrieved from http://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-reexpansion-of-complexity/

Williams, A. B., & Sumner, G. (2010). Kmart: A capstone case. Academic Forum (27), 39-48. Retrihttp://www.hsu.edu/academicforum/2009-2010/WilliamsSumner.pdf

Image Credits

REFERENCE

https://hbr.org/1974/05/the-focused-factory/ar/1https://hbr.org/1974/05/the-focused-factory/ar/1http://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-recall-a-tremendous-expansion-of-complexity/http://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-recall-a-tremendous-expansion-of-complexity/http://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-recall-a-tremendous-expansion-of-complexity/http://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-recall-a-tremendous-expansion-of-complexity/http://www.hsu.edu/academicforum/2009-2010/WilliamsSumner.pdfhttp://www.hsu.edu/academicforum/2009-2010/WilliamsSumner.pdfhttp://www.hsu.edu/academicforum/2009-2010/WilliamsSumner.pdfhttp://knowledge.wharton.upenn.edu/article/under-the-hood-of-toyotas-recall-a-tremendous-expansion-of-complexity/https://hbr.org/1974/05/the-focused-factory/ar/1


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gKmart [Online image]. Retrieved September 10, 2015 from http://www.kmart.com/

Kodak [Online image]. Retrieved September 10, 2015 from http://www.kodak.com/ek/US/en/corp/default.htm

Manske, M. (2009). 1937 Wheat penny front back [Online image]. Retrieved September 10, 2015 from

https://commons.wikimedia.org/wiki/File:1937-Wheat-Penny-Front-Back.jpg

Mcdonalds [Online image]. Retrieved September 10, 2015 from https://en.wikipedia.org/wiki/McDonald's#/m90s-logo.svg

Nokia [Online image]. Retrieved September 10, 2015 from http://company.nokia.com/en

Royan, J. (2008). Obecni dum restaurant Prague [Online image]. Retrieved September 10, 2015 fromhttps://commons.wikimedia.org/wiki/File:Obecni_Dum_Restaurant,_Prague_-_8377.jpg

Starbucks [Online image]. Retrieved September 10, 2015 from http://www.starbucks.com/

Subway [Online image]. Retrieved September 10, 2015 from

https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svgToyota [Online image]. Retrieved September 10, 2015 from http://www.toyota.com/

Valley, T. (2010). Think [Online image]. Retrieved September 10, 2015 fromhttps://www.flickr.com/photos/taymazvalley/5209251530/

"Bass Vibes" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 3.0http://creativecommons.org/licenses/by/3.0/


http://www.kmart.com/http://www.kodak.com/ek/US/en/corp/default.htmhttps://commons.wikimedia.org/wiki/File:1937-Wheat-Penny-Front-Back.jpghttps://commons.wikimedia.org/wiki/File:1937-Wheat-Penny-Front-Back.jpghttps://en.wikipedia.org/wiki/McDonald'shttps://en.wikipedia.org/wiki/McDonald'shttps://en.wikipedia.org/wiki/McDonald'shttp://company.nokia.com/enhttps://commons.wikimedia.org/wiki/File:Obecni_Dum_Restaurant,_Prague_-_8377.jpghttps://commons.wikimedia.org/wiki/File:Obecni_Dum_Restaurant,_Prague_-_8377.jpghttp://www.starbucks.com/https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svghttp://www.toyota.com/https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/http://www.toyota.com/https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svghttp://www.starbucks.com/https://commons.wikimedia.org/wiki/File:Obecni_Dum_Restaurant,_Prague_-_8377.jpghttp://company.nokia.com/enhttps://en.wikipedia.org/wiki/McDonald'shttps://commons.wikimedia.org/wiki/File:1937-Wheat-Penny-Front-Back.jpghttp://www.kodak.com/ek/US/en/corp/default.htmhttp://www.kmart.com/


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MODULE 1Operations Strategy

with Gopesh Anand


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LESSON 1-2Formulation and Implementation


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VIDEO 1-2.3Tradeoffs and Combinations

NOTION OF TRADE-OFFS INOPERATIONS CAPABILITIES


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Cannot achieve one capability

without sacrificing another To achieve high quality production, costswill increase

To achieve flexibility, costs will increaseand quality will decrease

PERFORMANCE FRONTIER


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Cost efficiency

R e s p o n s i v e n e s s

Emergency Room

SpecialtyHospital

Low

High

High

= Healthcare unit or organization

SACRIFICING ONE CAPABILITY FOR ANOT


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Cost efficiency

R e

s p o n s i v e n e s s

Low

High

Low High

= unit or organization

Tradeoffs

NOTION OF CUMULATIVECAPABILITIES


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Dependability

BUILDING ONCAPABILITIES


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Cost efficiency

R e

s p o n s i v e n e s s

Low

High

Low High

Cumulative

= unit or organization

MASS CUSTOMIZATION


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Modular designs

Postponement of finishing Assemble to order

Customer involvement

Using customer intelligence(Pine, 1999)

IN-VIDEO QUESTION 5


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You have probably come acrossproducts that are produced usingmass customization – combinationof mass production andpersonalization. Reflect on a coupleof these and relate to their

production processes.


IN-VIDEO QUESTION 5


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IN-VIDEO INSIGHTS 5


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MASS CUSTOMIZED PRODUCTS (1 0F 5)


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Hallmark’s recordable story books

(hallmark.com)



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Nike’s customized shoes

(nike.com)


H ll k’ d bl b k


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Nike’s customized shoesFord Fiesta’s combinations ofexterior appearances and interiortrims

(ford.com)


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H ll k’ d bl t b k


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Nike’s customized shoesFord Fiesta’s combinations ofexterior appearances and interiortrims

Personalized M&Ms with messageand photo

Subway sandwiches

(subway.com)

Academic CitationsPine, B. J. (1999). Mass customization: The new frontier in business competition. Boston, MA: Ha

REFERENCE


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, ( ) p ,Press.

Image CreditsFord [Online image]. Retrieved September 10, 2015 from http://www.autobytel.com/ford/fiesta/2011guides/2012-ford-fiesta-gets-new-options-for-better-customization-105941/

Hallmark [Online image]. Retrieved September 10, 2015 from http://www.hallmark.com/recordable-

Mymms [Online image]. Retrieved September 10, 2015 from http://www.mymms.com/

Nike [Online image]. Retrieved September 10, 2015 from http://store.nike.com/us/en_us/pw/n/1j7?snikeid

Subway [Online image]. Retrieved September 10, 2015 from

https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svg


"Bass Vibes" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attributio

http://creativecommons.org/licenses/by/3.0/


http://www.autobytel.com/ford/fiesta/2011/car-buying-guides/2012-ford-fiesta-gets-new-options-for-better-customization-105941/http://www.autobytel.com/ford/fiesta/2011/car-buying-guides/2012-ford-fiesta-gets-new-options-for-better-customization-105941/http://www.autobytel.com/ford/fiesta/2011/car-buying-guides/2012-ford-fiesta-gets-new-options-for-better-customization-105941/http://www.hallmark.com/recordable-storybooks/http://www.mymms.com/https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svghttps://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/https://commons.wikimedia.org/wiki/File:Subway_Eat_Fresh_Logo.svghttp://www.mymms.com/http://www.hallmark.com/recordable-storybooks/http://www.autobytel.com/ford/fiesta/2011/car-buying-guides/2012-ford-fiesta-gets-new-options-for-better-customization-105941/


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MODULE 1Operations Strategy

with Gopesh Anand


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LESSON 1-2Formulation and Implementation


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VIDEO 1-2.4Manufacturing and Service Orientation

MANUFACTURING & SERVICE ORIENTEDOPERATIONS


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Zeithaml, V. A

IN-VIDEO QUESTION 6

Consider Starbucks


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What are the physical goods andwhat are the intangible services thatcustomers expect?Left: (starbucks.com) Right: (flickr.com/taymazvalley, 2015)

IN-VIDEO QUESTION 6

Consider Starbucks


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What are the physical goods andwhat are the intangible services thatcustomers expect?Left: (starbucks.com) Right: (flickr.com/taymazvalley, 2015)

IN-VIDEO INSIGHTS 6

Consider Starbucks


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What are the physical goods andwhat are the intangible services thatcustomers expect?

EXAMPLE OF BUNDLINGSERVICES WITH GOODS

“At Caterpillar, service doesn't end


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t Cate p a , se ce does t e dat the sale. With every purchase,

Caterpillar offers you the full extentof our experience and legendarycustomer service. The deal and thehandshake isn't the end, it's thebeginning of a beautiful partnership.”

(caterpillar.com)

CHALLENGES FOROPERATIONS MANAGEMENT

Dimensions of quality


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q y

InventoryProduction & consumption

Customer involvement

Employee role

Returns and repairs

FRONT AND BACK OFFICE OPERATIONS


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Top: (Ortiz, 2012) Bottom: (www.flickr.com/star/star5122, 2007)

IMPLICATIONS OF FRONTOFFICE

Direct customer encounters


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Provide opportunities to delight

Increase uncertainties in service deliveryparameters

Result in inefficiencies in service delivery

Provide openings for hybrid strategies

SERVICE-PROFIT CHAIN


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(

SERVICE ENCOUNTER TRIAD


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(Co

TRADING OFF SERVICE LEVEL & COST


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SOURCES OF CUSTOMERVARIABILITY IN SERVICES

Arrival


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RequestCapability

Effort

Subjective preference

(Frei, 2006)

CLASSIC TRADEOFF IN SERVICES – EFFICVERSUS SERVICE


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BREAKING THE TRADEOFF


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Academic CitationsCook, L. S., Bowen, D. E., Chase, R. B., Dasu, S., Stewart, D. M., & Tansik, D. A. (2002). Human design. Journal of Operations Management, 20(2), 159-174. doi: http://dx.doi.org/10.1016/0162288

Frei F X (2006) Breaking the trade off between efficiency and service Harvard business review

REFERENCE


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Frei, F. X. (2006). Breaking the trade-off between efficiency and service. Harvard business review, 101.Retrieved from https://hbr.or g/2006/11/breaking-the-trade-off-between-efficiency-and-service/a

Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser, W. E., & Schlesinger, L. A. (2008). Putting thto work. Harvard Business Review, 118-129. Retrieved from https://hbr.or g/2008/07/putting-the-serwork/ar/1

Zeithaml, V. A. (1981). How consumer evaluation processes differ between goods and services. M

9(1), 25-32. Retrieved from http://www2.fiu.edu/~ereserve/010019222-1.pdf

Image CreditsMario. (2012). Juan Valdez Cafe store at El Dorado Airport, Bogota [Online image]. Retrieved Sepfrom https://commons.wikimedia.or

g/wiki/File:BOG_04_2012_Juan_Valdez_1334.JPG

In the Ad Hoc kitchen [Online image] (2007) Retrieved September 10 2015 from

REFERENCE

https://hbr.org/2006/11/breaking-the-trade-off-between-efficiency-and-service/ar/1https://hbr.org/2006/11/breaking-the-trade-off-between-efficiency-and-service/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1http://www2.fiu.edu/~ereserve/010019222-1.pdfhttp://www2.fiu.edu/~ereserve/010019222-1.pdfhttp://www2.fiu.edu/~ereserve/010019222-1.pdfhttps://hbr.org/2008/07/putting-the-service-profit-chain-to-work/ar/1https://hbr.org/2006/11/breaking-the-trade-off-between-efficiency-and-service/ar/1https://commons.wikimedia.org/wiki/File:BOG_04_2012_Juan_Valdez_1334.JPGhttps://commons.wikimedia.org/wiki/File:BOG_04_2012_Juan_Valdez_1334.JPGhttps://commons.wikimedia.org/wiki/File:BOG_04_2012_Juan_Valdez_1334.JPG


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In the Ad Hoc kitchen [Online image]. (2007). Retrieved September 10, 2015 fromhttps://www.flickr.com/photos/24509941@N00/1437458598/

Thomas, A. (2005). Starbucks [Online image]. Retrieved September 10, 2015 fromhttps://www.flickr.com/photos/anyaka/22331380



https://www.flickr.com/photos/24509941@N00/1437458598/https://www.flickr.com/photos/anyaka/22331380https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/taymazvalley/5209251530/https://www.flickr.com/photos/anyaka/22331380https://www.flickr.com/photos/24509941@N00/1437458598/


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LESSON 1-2

Formulation and Implementation


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VIDEO 1-2.5

Lesson 1-2 Recap

LESSON 1-2 RECAP

In this lesson you learned how to:

A i h i f li


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Appreciate the importance of alignment

of business and functional strategies

Identify the need for tradeoffs inoperations strategy

Make operations strategy choices tocompete

Recognize the goods and servicescontinuum and its implications for makingoperations strategy choices

anand_operationsmanagement_module1.pdf

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