Revision -06
26/11/2011
Describe the relationship between a Supply Network, a Supply
Chain and a Supply Pipeline. (2009 March)
A supply network perspective means setting an operation
in the context of all the other operations with which it
interacts. For example suppliers, customers, materials,
parts, information, ideas and people. So, supply
network means the network of supplier and customer
operations that have relationships with an operation. A
supply chain is a strand of linked operations. In other
words a linkage or strand of operations that provides
goods and services through to end customers. A supply
chain pipeline is a linkage or strand of operations that
provides goods and services through to end customers
A supply network is all the operations linked together to provide
goods and services. A chain is a strand of the operations that
provides goods and services through to the end customer. There
can be a number of supply chains within a network. Within a
network several chains can cross. A supply pipeline is a linkage
of operations that provides goods and services to the end
customer.
Reference
Text Book – 402
You are the owner of an interior design shop. You sell interior design
services as well as furniture, soft furnishings, wallpaper and paint. You
specialize in designing the interiors for rich and famous clients. Your
clients like always to have the most fashionable interiors; they have
large budgets and expect a “cutting edge” finish to your work. Your
clients will often re-decorate whilst they are on holiday or overseas and
so you are often able to plan the work in advance. The factors that you
would consider when selecting suppliers are outlined in the table in C)
below. WHY are these factors important to the success of your
business?
Question March 2009 marks -02
The central objective of taking these factors is to have a proper supplier
evaluation, and thereby make sure that the customer will be satisfied.
We have to consider 5 objectives while considering every
single factor. They are:
Quality
Speed
Dependability
Flexibility
Cost
So to make sure that the customer will be satisfied and the
main objectives are met, we will have to consider
different factors regarding the suppliers.
How could the “Bullwhip Effect” affect a supply chain? Give an
example related to the interior design shop. ( march 2009)
The bullwhip effect is the tendency of supply chains to
create small changes at the demand side of a supply chain
so that there is a disruption at the supply end of the chain.
The main cause is an understandable desire by the
different links in the supply chain to manage their
production rates and inventory levels sensibly.
In other words, the changes of production levels along
supply chain in response to a small change in end
customer demand. For example a television manufacturer
having a change in demand due to the ongoing Foot ball
matches, where all the third tier supplier will have to meet
the exceeding demand to fulfill the market requirements.
How can organisations reduce the bullwhip effect?
(September 2009)
• A combination of three strategies could be used:
• Information sharing – efficient sharing of information can
reduce demand fluctuations. For example in the case of
Interior design business, having a proper communication
with the supplier regarding the wants and needs or
requirements of customer will have a huge impact.
• Channel alignment – adopting the same or similar decision
making processes. Throughout the chain to co-ordinate why
and how decisions are made. This will save the business
from irregular decision processes.
• Operational efficiency – eliminating sources of inefficiency
or ineffectiveness in the chain.
Consider capacity planning and control in relation to the
house design and build project……
Before answering this question, I would like
you to understand the term capacity.
Capacity planning and control
(remember that you can draw this diagram related to
any question from capacity planning).
Capacity planning and
control
The market requires …
the availability of
products and services
The operation supplies ...
the capacity to deliver
products and services
Operations
strategy
Design
Operations
managemen
t
Planning and
control
Improvement
So, capacity is a measure of the ability to manufacture or operate.
For example:
Number of KFC chicken that a KFC outlet make during the lunch
time – will be the capacity of KFC
Number of patients, who can be treated during the emergency period
in a hospital – will be the capacity of a hospital
Number of passengers that an airplane can accommodate for a fly –
will be the capacity of an airlines
Hope you understand
Answer (10 marks)
Capacity is the maximum level of value-added activity that an
operation, or process, or facility is capable of over a period of time.
Capacity is usually measured by the amount of output that can be
produced in a particular time period.
Capacity should be planned and controlled, because capacity shortages
can be costly.
Here we need to use forecasting the demand accurately, then match
capacity and demand.
A site manager of a house building and design project might face
number of problems related to capacity.
1. The resources available to the organization is the first consideration
in capacity. - here as a site manager you will have facilities,
equipments/machines, the labor, the layout and design, work
methods all will determine the capacity.
2. There should be sufficient capacity and be coordinated with other stages and
processes to ensure that the flows of material, information, and customers
occurs smoothly. - for house building and design project a site manager must
ensure the sufficient capacity, failing to do the same will create problems such
as delays, excessive inventory and higher costs.
3. Another main issue will be related to job forecasting
4. Decision on the number of permanent staff/employees – For a site manager it is
critical to decide the number of employees to satisfy the customer demands.
5. Decision on sub-contract staff must be made - for a site manager it will be how
many ?, which skill? & how long? Failing to do so will lead to problems such as
insufficient capacity, delays and customer dissatisfaction.
6. The number and type of various machines or equipments required will be the other
concern. For a site manager diggers, lorries, and other necessary equipments should
be sufficient to meet the demand.
7. Other issue is related to the size and location – for site manager this is a critical
decision to be made, here the whole operation is depending on the size and location
of a construction site.
8. Issues relating to different capacity at different times, e.g. extra demand for labourers
during site clearing, etc.
9. Can the facility, process, or equipment accommodate new goods and services and
adapt to changing demand.
10. When should capacity change take place? – this will
be another point for the site manager to plan.
Again, site manager must decide on the appropriate levels of capacity
to meet current and future demand. Capacity decisions must be
made for short and long term to allow customer satisfaction.
Capacity decisions are often influenced by economies and
diseconomies of scale.
Economies of scale means average cost decreasing as the capacity and
volume of throughput increases. Diseconomies of scale is the
opposite where the cost increases, as the capacity and throughput
increases.
For the site manager also the same situation may happen, for example
the design and construction cost decreases as the facility getting
larger with more capacity. But the continues increase in the size of
house will make an increase in the cost with high overhead and
operating cost.
Another decision to be made is related to the safety capacity – means
an amount of capacity reserved for unanticipated events such as
demand surges, materials shortages, and equipment breakdowns.
For a site manager considering this safety capacity is always a
must to meet with the uncertainties. For example is materials
facing shortage or breakdown of machines will cost high, if
the safety capacity is ignored.
End of the answer !!
Reference
New reference book – page 402, 403, 404, 405,
406 , 407 …..
Text Book – 322- 350( last paragraph)
Remember?
I made this answer more generic with the
example separate, so that you can use the
same format for the same type of questions.
What control measures might be relevant to the overall project?
Justify your answers. ( September 2011)
Control measures help to achieve the objectives and quality. The central
objective is the satisfaction of customers. To check this we have to
follow the steps below:
1. Compliance with specifications or designs – for project it should
comply with the building regulations.
2. There should be accurate measures in operation or process – for the
project it is vital such as correct amount of concrete, mortar e.t.c
3. Minimizing the ‘down time’ is another measure . For project this would
help to meet with the inclement weather.
4. Another measure should be checking the number of unfulfilled delays or
orders.
5. Another measure should be following the quality standards.
6. Again, importantly measuring the inventory levels can be used as
another tool.
7. checking the timely arrival of materials would be another option.
Reference
This question is a generic question, where your knowledge
related to the OM should be used, and little to do with any
chapters we have gone through.
But, try to cover up project management chapter 16 in the Text
book and mix the same with capacity.
Discuss capacity issues that the Bar Manager might face over
time………
Check this question!!
Same, very same!!
Just the example is the different one.
Please include some extra information as follows:
• Number of cash registers
• Number of beer pumps
• The stock level of different drinks
Please remove the site manager term from the previous question(2011
September) and insert ‘Mar Manager’.
What control measures might be relevant to both the Bar and
Restaurant? Justify your answers
This question also the same, as the one we saw before.
Control measures help to achieve the objectives and quality. The
central objective is the satisfaction of customers. To check this we
have to follow the steps below:
• Portion sizes in restaurant
- to make sure the consistent quality, and
ensure customer satisfaction.
• Accurate “measures” for beer/wine, etc - to implement controlling in bar stock.
• Customer waiting times in both the bar and restaurant – from this measurement we
can understand the capacity of facilities & layout.
• Number of unfulfilled customer orders - this measure helps to plan the job demand.
• Adherence to quality standards • Inventory levels (not excessive)
• Customers served per hour/day
• Cooking temperature ranges for restaurant, etc
• Storage temperature ranges for uncooked food and wines/beer, etc.
Now you can choose the general ones
here and add.
1. Compliance with specifications or designs – for project it should
comply with the building regulations.
2. There should be accurate measures in operation or process – for the
project it is vital such as correct amount of concrete, mortar e.t.c
3. Minimizing the ‘down time’ is another measure . For project this
would help to meet with the inclement weather.
4. Another measure should be checking the number of unfulfilled
delays or orders.
5. Another measure should be following the quality standards.
6. Again, importantly measuring the inventory levels can be used as
another tool.
7. checking the timely arrival of materials would be another option.
What problems might be encountered in setting performance
targets and measuring performance in a hospital? (June 2010)
Measurement is the act of quantifying the performance criteria of
organizational units, goods and services, processes, people,
and other business activities. In other words the activity of
measuring and assessing the various aspects of a process or
whole operation’s performance.
A performance measurement is possible only when it is compared
against some kind of target.
The main objective of both setting performance targets and
measuring is to satisfy the market requirements or customer
satisfaction.
Setting performance targets transforms performance measures
into performance judgments.
There are several approaches for setting targets such as:
Historically – based targets
Strategic targets
External performance – based targets
Absolute performance targets
One of the problems for in setting targets is that different targets can
give very different messages, regarding the improvement achieved.
If the strategy is not well defined, it is difficult to target key
performance indicators.
For example according to the historical targets the hospital performance
may be higher than the previous year, however the problem is that
the present year target set might be higher than the target achieved in
that case the performance is poor and not good.
Benchmarking is another method for setting the performance target.
(Benchmarking critical commentary page 586 - Text Book)
Next issue is to evaluate if the targets are realistic or not. For a hospital
it is of high importance as unrealistic targets will give the wrong idea.
• How to set “qualitative” targets, e.g. what may contribute to
enhancing “customer satisfaction” and what are appropriate targets
to set? - this is important for the hospital to concentrate on
‘qualitative’ targets to make sure the satisfaction of customers.
• What is the timescale for targets? – targets must have a timescale
for the proper measurement.
• Are the targets set realistic in terms of similar organizations? – this
is an example for the type of bench marking where a hospital can
observe practicality of the set targets.
• Another important issue is related to the changes that happens over
the time. Definitions and standards that you set today may change
by tomorrow, so how to handle this situation. For example in a
hospital heart transplant surgery procedures, technologies may
change over the time. So how to handle this situation is an issue.
The next part is about measurement. Good performance measures enable
managers to control processes and make decisions on the basis of facts, not
opinions. They provide a scorecard of performance, help identify
performance gaps, and make accomplishments visible to the work force, the
stock market, and other stakeholders. Knowing that one is doing a good job
– or a better job than before – is a powerful motivator for most workers.
However, the wrong kind of performance metric can be dangerous.
Major measures used to measure the performance
1. CSI – customer satisfaction index
• Qualitative, quantitative or both? – hospital must decide if the measurement
should either be quantitative or qualitative.
• Targets that can “pull” against each other (e.g. improving performance against one
target can negatively affect another, for example faster treatment of emergency
cases may delay routine appointments)
• How to capture data/information – this may create another problem in
measurement.
• How to present data/information – the best method to represent data also going
to be a question.
• The problems of historical comparisons if definitions/ calculations change over
time.
• What is acceptable/achievable improvement? Can this be sustained year on year?
• What are the reporting periods and can this skew perceptions/understanding?
Students looking for higher grades can look into the following
points too. (reference New reference book 72, 73, 74, 75, 76, 77, 78
Performance measures can be classified into several key categories:
Financial measures
Customer and market measures
Safety measures
Quality measures
Time measures
Flexibility measures
Innovation and learning measures
Productivity measures
Identify THREE micro-operations that might exist in a hospital.
Remember Micro-operations, hierarchy of operations, internal
customer concept are the same.
Main this to understand here is the simple theory – inside one
organization there are suppliers and customers.
Reference – Text Book 12, 13 table 1.3
Now let us answer this question.
For a hospital the micro-operations are :
• patient admissions and registrations
• staff recruitment and training,
• scheduling of clinics and patient appointments,
• information and guidance services on disease prevention
State the likely capacity plan that may be used for each of THREE of
the micro-operations that you have identified in (a). Give reasons for
your answer. (Text Book 333)
There are three levels of capacity plans:
Level capacity plan – ignore the fluctuations or changes and keep the
activity levels constant.
Chase capacity plan – adjust capacity to reflect the fluctuations in demand.
Demand management - attempt to change demand to fit capacity
availability.
For example, a focus on admissions may lead to look at a capacity plan
that allows for the adjustment of capacity in line with demand such as
the Chase Demand plan.
However, if routine appointments are considered separately from
emergencies and it is feasible to reschedule appointments at short
notice, there may be justification for selecting a different plan, such as
the Level capacity plan.
Alternatively, a focus on the use of triage systems of scheduling may lead
candidates to suggest a level capacity or demand management plan.
Outline the drawbacks of ONE of the plans that you have
identified (June 2010)
Chase demand Capacity Plan – increased costs associated with
the need to adjust production to meet demand (employing
additional staff on a short term basis, over-time,
subcontracting)
The associated issues of maintaining quality levels, adherence to
company procedure, labour relations etc.
( Those who want higher grades, please refer Text Book page 338
critical commentary)