II. Operations Strategy and Process Choice
1. Operations Management and Competitive Advantages
–
–
“An Efficiency Drive”
“Case Study: Burger Time”
2. Process Types and The Product-Process Matrix
3. Case Discussion: Kristen’s Cookies
4. Process Flow Diagram and Gantt Chart
1
An Efficiency Drive
• How critical is time for drive-through?
• Is drive-through a good deal for the restaurants?
• What are the efforts to save time?
• Implications
2
Case Discussion: Burger Time
• What are the major operational differences between McDonald’s
and Burger King?
• How do these differences relate to each company’s competitive
strategies?
• What implications do these differences have for the management
of operations?
3
4
Competitive Advantages and Operations
Management
Competitive Advantages
• Price
– Cost
• Quality
– Customer service
– Consistent quality
• Time
– Rapid, reliable delivery
• Variety
Operations Management
• Match supply with demand
• Quantitative methods and
qualitative strategies to
• ensure efficient use of
resources
• find the right balance between
competing objectives
• improve performance along
multiple dimensions
simultaneously
5
Performance Dimensions in Retail Banking
• Quality: courteous services, consistency (reliability),
accurate information (credibility), empathy, timely
information (customer responsiveness), conformance,
employee skill and knowledge
• Time: delivery speed (waiting time), convenient services
(access), on time delivery (account statements),
handling customer complaints
• Flexibility: a broad line of financial products, system
responsiveness, new product introduction speed, rapid
staff changes, customizations
• Cost: cost effective back and front-office labor
productivity, cost effective back-office technology
innovations, transaction processing costs
6
The changing sources of competitive advantage
• Low Cost & Scale Economies (< 1960s)
• Focused Factories (mid 1960s)
• Flexible Factories and Product variety (1970s)
• Quality (1980s)
• Time (late 1980s-1990s--> )
7
Process types: Match Supply with Demand
• Economics
• Two options
• Make supply after demand: Make to order (MTO)
• Make supply before demand: Make to stock (MTS)
• Matching supply with demand means
8
Process Types: Resource Types and Layout
• Job Shop process
– General purposed/flexible resources
– Process focused layout: Jobs have flexible routing, go from one resource
to another as needed
– Wide variety of products, customized products
• Batch process
– Similar to JS, but with larger lot sizes, some EOS, more commonality in
the resources required, still not cost effective to build a dedicated
assembly line.
• Discrete flow process
– Product focused layout: Fixed (possibly automated) flow of products,
tightly connected stages (WIP is automatically managed), specialized
tasks
– Heavily capitalized
– High volume
• Continuous flow process
– Product focused layout
– heavily capitalized
– Product is a commodity – no discrete units, minimal variety, high volume
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Matching Products and Processes
Product
Process
Jumbled Flow.
Process segments
loosely linked.
Low volume
Low Standardization
One of a kind
Low volume
Higher volume
Many Products
Few Major Products
High volume
High Standardization
Commodity Products
Scheduling,
Materials Handling,
Shifting Bottlenecks
JOB SHOP
(Commercial Printer,
Ph.D program)
Disconnected Line
Flow/Jumbled Flow
but a dominant flow
exists.
BATCH
Worker Motivation,
Balance,
Maintaining Flexibility
(Heavy Equipment,
MBA program)
DISCRETE
FLOWS
Connected Line
Flow (assembly line)
(Auto Assembly)
CONTINUOUS
FLOW
Continuous, automated,
rigid line flow.
Process segments tightly
linked.
(Oil Refinery)
Bidding, delivery,
product design flexibility
Quality & Product Differentiation,
output volume flexibility
Price
Capital Investment for big
chunk capacity,
Technological Change,
Vertical Integration
Managerial
Challenges
10
11
Process Flow Diagram: Kristen’s Cookies
Mix
Time
6
(minutes/dozen)
Spoon
2
Set Bake
oven
1
9
Cool
Pack
Pay
5
2
1
Capacity
(dozen/minute, for orders of 1 dozen)
Max batch 3d
d
Resources K
K
d
d
R, Oven Oven
R
R
12
13
Gantt Chart
Mix and Spoon
Bake
Cool
Pack
Pay
Kristen
Room-mate
Tray #1
Tray #2
Tray #3
Tray #4
5
10
15
20
25
30
35
40
45
50
14
15
2nd Stage
FB Reactor
CFB
Preheater
1st Stage
CFB Reactor
~ 110 m
Inclined
Bucket Elevator
Briquetting
Plant
Process
Gas
Heat
Exchanger
Iron
Ore
Fines
Process Gas
Compressor
Electrical
Substation&
Control
Room
Fired Gas Heaters
HBI Product
~ 160 m
16
Pre-Heater
Lock
Hoppers
1st
Reactor
Discharge
2nd
Reactor
Flash
heater
Briquetting
Pile of Iron
ore fines
Finished
goods
17
Process Flow Diagram and Gantt Chart
•
Process Flow Diagram: Illustrates the flow of product or service from input to
final output (stages).
– Software (Visio et al.)
•
Gantt Chart: Illustrates the interplay between resources at all time
– Important for scheduling and coordinating production
– Software (Microsoft Project)
18
Today’s Takeaways
1. Operations management and competitive advantages
2. Process Types and The Product-Process Matrix
–
Process Types
•
•
–
Matching supply with demand: MTO vs. MTS
Resource types and layout: job shop, batch, discrete flow,
continuous flow
The Product-Process Matrix: Diagonal
3. Case discussion: Kristen’s Cookies
4. Process Flow Diagram and Gantt Chart
–
–
Flow Diagram: stages products flow through
Gantt Chart: interplay of resources Operational Measures
19