Competing with Operations

Shahedul Alam Khan

Senior Lecturer
Department of Business Administration
Leading University

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Process

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Process

INPUT OUTPUT

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Supply Chain
Suppliers Manufacturers Customers

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Operation

• Machines
• Human Resources
• Plant Space
• IT
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Operations Management

Systematic Design

Direction Process

Control

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Process View Versus Firm/Department View
• Provides much more relevant picture of the way firms actually works.
• Firm / department has their own set of objectives, set of resources,
but process has more specific objective and require more specific
resources
• Process provides much more broader concept of the firm.

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Process: Customers And Suppliers

INPUT OUTPUT
Supplier Customer
Internal External Internal External

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Nested Process
The concept of process within a process.

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Service process and Manufacturing Process
• Physical properties
Manufacturing Physical Durable Output • Shape
Process Output can be inventoried • Size
• Surface finish
Low customer contact • Joining parts or
materials
Long response time

Capital intensive

Quality easily measured

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Service process and Manufacturing Process

Intangible, perishable output

Service Process
Output can not be inventoried
High customer contact
Short response time
Labor intensive
• Active role in the
process
• Close contact with the
service provider to
communicate specific
needs

Quality not easily measured

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Supply Chain View
• Supply Chain is the interrelated series of processes within a firm and
across different firms that produce a service or product to the
satisfaction of customer.
• A firm can have multiple supply chain, which vary by the product and
services provided.
• Benefits of Supply chain view:
• Helps to identify value adding and most importantly non-value adding
activities.
• Reinforce the link between processes and performance including the
processes of both internal and external customers and suppliers.
• Focuses on both core and supportive processes.

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 Core Processes identifies, attract and builds
relationships with external customer

facilitates the placement of orders

New Service/
Customer
Product

External Customers
Relationship
External Suppliers

Development
Process
Process

Supplier Order
Relationship fulfillment
Process Process

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 Core Processes
design and develop new products
and services

New Service/
Customer
Product

External Customers
Relationship
External Suppliers

Development
Process
Process

Supplier Order
Relationship fulfillment
Process Process

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 Core Processes activities required to produce and
deliver the service or product to the
external customer

New Service/
Customer
Product

External Customers
Relationship
External Suppliers

Development
Process
Process

Supplier Order
Relationship fulfillment
Process Process

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 Core Processes selects supplier of services, materials
and information

facilitates timely and efficient flow

of these items into the firm

New Service/
Customer
Product

External Customers
Relationship
External Suppliers

Development
Process
Process

Supplier Order
Relationship fulfillment
Process Process

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 Core Processes

Supportive Processes

New Service/
Customer
Product

External Customers
Relationship
External Suppliers

Development
Process
Process

Supplier Order
Relationship fulfillment
Process Process

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Competitive Priority and Competitive
Capability
• Competitive priorities are the
critical operational dimensions a
process or supply chain must
posses to satisfy internal and
external customer.
• Competitive capabilities are the
cost, quality, time, and flexibility
dimensions that a process or supply
chain actually possesses and is able
to deliver.

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 Competitive Priority and Competitive
Capability
Priority Specific priority Definition Considerations
groups
COST Low Cost Delivering a service or • Efficient process
product at a lowest possible • Rigorous process analysis to address workforce,
cost methods, scrap or rework, overhead

QUALITY Top Quality Delivering an outstanding Service process

service or product High level of customer contact, helpfulness,
courtesy and availability of servers
Manufacturing process
Superior product feature, close tolerances,
greater durability
Consistent Producing service or product Reduce error,
Quality that meet design prevent defect,
specifications on a
consistent basis.
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 Competitive Priority and Competitive
Capability
Priority Specific priority Definition Considerations
groups
TIME Delivery Speed Quickly filling customer order • Reduce lead time
• Keeping backup capacity cushion
• Storing inventory
• Premier transportation options

On-time Meeting delivery time • Reduce lead time

Delivery promises • Planning process properly through forecasting,
appointments, scheduling, order promising, and
capacity planning

Development Quickly introducing a new • Cross functional integration

Speed product or service • Involving critical supplier

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 Competitive Priority and Competitive
Capability
Priority Specific Definition Considerations
groups priority
Flexibility Customization Satisfying the unique needs of • Low volume
each customer by changing • High customer contact
service or product design • Reconfigure process to meet diversified needs

Varity Handling a wide assortment of • Must be capable of handling larger volume

service or product efficiently

Volume Accelerating or decelerating the • Excess capacity

Flexibility rate of production of services or • Excess inventory
products quickly to handle large • Adjust capacity without accumulation of capacity
fluctuations in demand and inventory

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Productivity
• A basic measure for performance for economies , industries, firms
and processes.
• Productivity is the value of outputs (services and products) produced
and divided by the values of input resources (wages, cost of
equipment and so on) used.

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 How to measure productivity

The money customer pays Number of products produced Number of Customers served

Output can be measured

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 How to measure productivity

Cost of Input
Resources

Number of
hours worked

Input can be measured

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How to measure productivity
• Ways of measurement:
• Labor productivity, which is an index of output person or per hour work.
• Machine productivity, which is an index of output per machine or per hour
work by the machine.
• Multifactor productivity, which is the index of the output provided by more
than one of the resources used in production; it may be value of the output
divided by the sum of labor, materials and overhead costs.

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