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1. Definition: Operations Management is defined as the design and management of the set of activities that create goods and services through transformation of inputs into outputs. Outputs: goods or services Inputs: people, raw materials, equipment, facility, capital, etc. In general, transformation processes can be categorized as follows: Physical (manufacturing) Location (transportation) Exchange (retailing) Storage (warehousing) Physiological (health care) Informational (telecommunications)

Customer feedback


Transformation Process



2. Competitiveness and Strategy

1. Importance of Strategy Some reasons why organizations fail: Too much emphasis on short-term financial performance Failing to take advantage of strengths and opportunities Failing to recognize competitive threats Failing to establish good internal communications Failing to consider customer wants and needs The strategy process allows a firm to reconcile activities with the ultimate goal of satisfying customers. 2. Operations Strategy Strategy Process Customer Needs Example Low Cost

Corporate Strategy

Best Price

Operations Strategy Decisions on Processes and Infrastructure

Lower Operations Cost

Outsource operations to third-world countries

3. Strategy Formulation Assess your distinctive competencies What are you good at doing? Environmental scanning SWOT Analysis Strength, Weakness, Opportunity, Threat Identify your order qualifiers & order winners Position the firm

4. Competitiveness Definition: Competitiveness refers to how effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services. Competitive Dimensions:

Trade-offs Since an operation cannot excel simultaneously on all competitive dimensions, it has to focus the resources of the firm on the parameters of performance that are critical to the firms success.

5. Order qualifiers and winners Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers. Order winners are the criteria that differentiates the products and services of one firm from another. Examples (i) What is an order winner for Burger King?

(ii) What is an order qualifier for McDonalds?

Over time, what used to be an __________________ could become an __________________ !

6. SWOT Analysis


Competitor A Improve Process

Current frontier In the industry

Competitor C

Competitor B

Benchmarking shows the pattern above OM can help provide tools to improve process


Improve Process

Current frontier In the industry

New frontier

OM could help evaluate system designs and propose changes (e.g. New technologies, process redesign)

7. Key Factors for Strategy Formulation External Factors Assess your distinctive competencies Economic conditions Political conditions Legal environment Technology Competition Markets Internal Factors Human Resources Facilities and equipment Financial resources Customers Products and services Technology Suppliers 8. The Changing Business Environment Emphasis on customer service Time-based competition - Shortening life cycle Globalization - Sourcing and Demand

A. Quality-based strategies: Focuses on maintaining or improving the quality of an organizations products or services Quality at the source B. Time-based strategies - Focuses on reduction of time needed to accomplish tasks and respond to unforeseen situation

Strategy Process should involve all functions within the organization and all entities across the supply chain (e.g. suppliers and customers)!

9. Operations Strategy Framework

Customer Needs

New product : Old product

Competitive dimensions & requirements

Quality, Dependability, Speed, Flexibility, and Price

Enterprise capabilities
Operations & Supplier capabilities

Operations and Supplier Capabilities Systems Systems Technology People People Distribution Distribution



Support Platforms Financial management Human resource management Information management