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Chapter OutlineWhat is a process?
Nested processCustomer-supplier relationshipsService and manufacturing processes
Differences and similaritiesDegree of customer contacts
Traditional Organizational Chart
(How traditional organizations are managed)
CEO
Sales Marketing Engineering Manufacturing Distribution Customer service
Information flows upward
Policy and decisions are deployed downward
Process view (How process-focused organizations work)
Orderplaced
ProductDelivered
Chain of events is horizontal
Core Process Map
Customer
Sales
Marketing
Finance
Distribution
Fieldengineering&Customerservice
CustomerOrder
1.1 Order placement
1.2 Order entry
1.3 Credit check
1.4 Pick and Pack
1.5 Schedule 1.7 Ship
1.6 Site prep
1.9 Invoice
1.8 Install
Deliveryacceptance
Process Hierarchy
Order fulfillment
Orderprocessing Production
Staging and installation
Order entry
Creditcheck
VerifyCustomeraddress
AssignCustomer
IdentificationNumber
EnterProduct
code
Core process (1)
Functional process (8 to 12)
Subprocesses (20 to 50))
Work steps (hundreds to thousands)
Five Process Groups with 12 Subprocesses
Process group A,Order processing
Process group B,contracting
Process group C, delivery
Process group D, billing
Process group E,Customer service
1 23
45 6 7
8
9 10
11 12
External
customersExternal
suppliers
Chapter OutlineWhat is a process?
Nested processCustomer-supplier relationshipsService and manufacturing processes
Differences and similaritiesDegree of customer contacts
Nature of ServicesIntangibleNo inventorySimultaneous production and consumptionVariety of servicesLabor intensive
Continuum of Continuum of CharacteristicsCharacteristics
More like a manufacturing organization
More like a service
organization
• Physical, durable product• Output can be inventoried• Low customer contact• Long response time• Regional, national or
International markets• Large facilities• Capital intensive• Quality easily measured
• Intangible, perishable product
• Output cannot be inventoried• High customer contact• Short response time• Local markets• Small facilities• Labor intensive• Quality not easily measured
Internal Value-Chain Linkages Showing Work and Information
Flows
Figure 1.3Figure 1.3
Ext
ern
al s
up
pli
ers
Extern
al custo
mers
Support processes
Supplier relationship process
Order fulfillment process
New service/ product development process
Customer relationship process
Support Processes
Capital Acquisition The provision of financial resources for the organization to do its work and to execute its strategy
Budgeting The process of deciding how funds will be allocated over a period of time
Recruitment and Hiring
The acquisition of people to do the work of the organization
Evaluation and Compensation
The assessment and payment of the people for the work and value they provide to the company
Human Resource Support and Development
The preparation of the people for their current jobs and future skill and knowledge needs
Regulatory Compliance
The process that insure the company if meeting all laws and legal obligations
Information Systems
The movement and processing of data and information to expedite business operations and decisions
Enterprise and Functional Management
The systems and activities that provide strategic direction and ensure effective execution of the work of the business
Table 1.1 Examples of Support ProcessesTable 1.1 Examples of Support Processes
International Benchmarking Clearinghouse’s Standard Process
Classification
1. Understand markets and customers
2. Develop vision and strategy
3. Design products and services
4. Produce and deliver5. Manage
improvement and change
6. Develop and manage human resources
7. Manage information8. Market and sell9. Invoice and service
customers10. Execute environmental
management program11. Manage financial and
physical resources12. Manage external
relationships13. Manage improvement
and change
Chapter OutlineWhat is a process?Value ChainWhat is operations management?
Broad and narrow interpretationsOM as a set of decisionsOM as a function
The Operations The Operations Management SystemManagement System
Outputs• Goods• Services
External environment
Customer or client participation
Operations and processes
Information on performance
5
1
2
3
4
Inputs• Workers• Managers• Equipment• Facilities• Materials• Services• Land• Energy
Operations As The Technical Core
Operations
Finance
Capital Markets, Stockholders
Marketing
Customers
Wor
kers
Sup
plie
rs
Pur
chas
ing
Per
sonn
el
Chapter OutlineWhat is a process?Value ChainWhat is operations management?ProductivityRoad map for competitive operationsOperations management as a competitive weapon
Operations Roadmap
Figure 1.6Figure 1.6
Competing with Operations
Operations As a Competitive Weapon
1
Operations Strategy2
Process Design Strategy3
Designing Value Chains
Supply Chain Design
9
Lean Systems11
Location10
Designing and Improving Processes
Process Analysis4
Process Performance and
Quality5
Process Capability
6
Process Layout
7
Planning andManaging Projects
8
Operating Value Chains
Information Technologyand Value Chains
12
Forecasting13
InventoryManagement
15
ResourcePlanning
16
Scheduling17
Aggregate Planning14
Outcomes