Operations and process management

noter
Module 11 & 12: Lean operations and thinking
Terminology

Process flows

Flow units (Anything that has a flow to it, things that are being processed)

The 5 performance objectives ( Quality, Speed, Dependability, flexibility, cost), alsp called
performance dimensions

Inventory

Throughput time

Overall lead time (Also called throughput time or flow time

Throughput rate

Cycle time

Takt time (Time available to work/Average demand)

Work in process inventory (number of flow units in the process)

Littles’ law (Throughput time = WIP* Cycle time)

Throughput efficiency (Work content/Throughput time)

Law of bottlenecks (The minute you create a sequence where there is variations, there will come a
bottleneck)

There is an positive exponential relationship between throughput time and utilization

Process mapping (Creating a flow chart of a certain process)

Value stream maping (Tool in Lean to identify value creating activities and throughput time)

Line balancing (Every stage in the process, shall have the same cycle time, so there is no bottlenecks)

Balancing loss (The idle time that is created because of a bottleneck)

Long thin arrangement of stages

Intermediate configuration

Short-fat arrangement of stages

Process time variability (The variation in the single activities in a sequential process)

The efficiency paradox (Issues with long throughput times, many restart and many flow units –
Eliminating these will create a focus on resource efficiency)

Outcome measures (Satisfaction, waiting time, net promoter score etc.)

Paretos law (20% of the work are responsible for 80% of the result
ABC inventory management

Voice of the customer (Make the customer say their needs. Let them express what they want in
some form)

Designing and managing processes

Performance dimensions (Speed, cost, dependability, flexibility quality)

The 4 Vs (Volume, variety, variation in demand, visibility)

Arrival rate (Number of flow units going in to the process in a given amount of time

Resource efficiency

Flow efficiency

Process analysis

Process synthesis (How processes interact)

Inventory management

Demand uncertainty

Independent demand

Dependent demand

Finished goods inventoy tie up more capital, and have less alternative uses

Periodic review (Restock to predetermined level=

Continuous review (Use EoQ to order)

Single period inventory model

Reorder-point for safety stock

Determining service level

Economic order quantity model (EOQ)

Decoupling point (Separate the part of the supply chain where items are still generic and can serve
multiple purposes and where they are customized for the customers need)

Centralizing inventory reduce the need for safety stock

Queuing models
Structured curriculum
- Operations managers communicates to support functions, and the support function
processes the request.
- Operations management uses resources to appropriately create outputs that fulfil defines
market requirements
- Smaller organisations will most likely uses mostly fat lineups (Cause the company cant afford
to hire a lot of specialists
- The input-tranformation-output model is about transforming resources that uses
transformed resources to create outputs that gives value to customers
- When the transformed resources is the customers themselves, it can be beneficial to
distinguish between back office and front office
- The IHIP (Intangibility, Heterogeneity, inseperability, perishability) can help identify whether
something is a product or a service
- SIPOC analysis is about identifying a process at a relatively general level. This can both be
external for the firm or internal (Where the customer and supplier are internal in the firm)
- The process hierarchy is where you really zoom into the processes in the processes in the
processes and so on.
- The 4 Vs (Volume, Variety, Variation, Visibility) highlight how different processes (Operations)
differ from each other. Example of Ski Verbier and Hotel F1
- The 4 Vs have different impliciations depending on the scope of each V. This will affect
inventory, capacity, demand, utilization and so on.
- The operation manager has to Direct the overall strategy of the operation (Ch. 1-5) and
Design the operation’s services, product and processes (Ch. 6-9) and plan & control process
delivery and lastly Develop process performance
Examples of all model with mcdonalds:

Module 1 operations management

The transformation model:

The transforming resources will most likely be the employees, and the machines behind the desk
while the transformed resources most of the time will be the raw materials to create the food

The 4 Vs

The 4 Vs is about how you structure your operation.

For Mcdonals, the 4 Vs would most likely be:

High volume

Low variety

Low variation (On day to day basis, you could definitely argue that the variation in Mcdonalds is high
interday as lunch and dinner will most likely spike demand)

Visibility would most likely be high as you are interacting with the customers, and the customers can
see the restaurant all the time

Chapter 2: operations performance

The 5 performance objectives: Speed, Quality, Cost, Flexibility, Dependability

Mcdonalds would be high speed, medium quality, low cost, high flexibility and high dependability

You can make the polar diagram depending on how you rank the different perimeters

Chapter 3: Operations strategy

Chapter 5: Structure and scope of operations

Strategic roles of operations (Hayes and wheelwright)

It is hard to argue that mcdonalds is not at stage for in regards to the model, as the operations of
McDonalds is the foundation for their strategic success. It would be hard to argue otherwise with any
other gigantic company.

Qualifying and order winning

A qualifying factor for mcdonalds would definitely be their cleaning and happy smiley. When they are
at the point of the happy smiley, they wont really get any further

A competitive advantage for mcdonalds would definitely be their cost and flexibility

The decision logic of keeping the activity in house

Mcdonalds
Chapter 1: Operations management

The four Vs

Tranformational model:

Chapter 2: Operations performance:

5 different metirics: Speed, flexibility, quality, dependability and cost

The framwork were you can map the 5 performance objectives

Fore at Huske kapitlerne

OpMaFirV Transformes

(OpPerf)(fiveObj)(PerfdiffLev)
I kapitel 1 har vi Operations managerment, hvilket skelner mellem de 4 V’er: Volume, variety in
demand, variation og Visbility, which is all different way for at company to differentiate itself.
Furthermore in chapter one we have the Transformation model.

In chapter 2: Operational performance we have the 5 performance objectives and its polar diagram.
From there performance objectives, there are internal and external benefits. Furthermore in
chapter 2, there is also the performance at different levels (Triangle)
Spørgsmål til Agon:

Hvad er en operations managers rolle i forhold til virksomhedens supportfunktion? (S. 7 figur 1.2)

Can you please elaborate – what is the role of an operations manager (Figure 1.4)

Can you please elaborate the input-transformation-output process? (Figure 1.6)

Can you please give me some examples of firms, that use the 3 different types of transformed
ressources? (Figure 1.2)

When is it important to distinguish between “front office” and “back office” in relation to a process?

Can you please elaborate – what is the concept of IHIP and how do we use it (Intagibility,
heterogeneity, inseperatbility, perishability)? Figure 1,8

Please elaboerate- what is service dominant logic? P 17

Please elaborate the concept of “co-creation” in relation to making a product P 17

Please elaborate – what is a SIPOC analysis (Figure 1.9)

Please elaborate – what is a process hierarchy, and what can we use it for? (Figure 1.10)

Please explain what characterises the difference in operations – everything else equal (The 4 Vs)

What are the 3 levels of operational performance? Figure 2.2

How is operations judged on a strategic level? Figure 2.4 (Essential in terms of understanding the
wheelwright model

What performance objective is the key to obtaining mass customization? S 52 (My muesli)

What is the important performance matrix

What are the 3 strategies in a top down approach? Figure 3.4

What is the difference between correspondence and coherence? Page 78

What is the difference between a business model and a operating model? Figure 3.5

What is an outside in approach to strategy?

How will the Customers, competitors, order winners, order qualifyers and performance objectives,
change over a product life cycle? (Figure 3.8)

What are the four stages in a product life cycle? (Page 84)

What is a bottom up approach to strategy?

What is a reinforcing strategy? Figure 9

What is a inside out perspective, and why cant many companies actually use it? (RBV perspective,
needing to have a competitive advantage

What is the line of fit in relations to operations strategy? Figure 3.13

What are the stages of the process of operations strategy?