Course Code: IS 203

Subject Name: Business Process II

Organizations Basic Funds

Finance

Marketing

Operations
Operations Management management of systems used to create goods or services. It affects the companys ability to compete in
the local market and a nations ability to compete in a global playing field.
Goods tangible items that can be produced in consistent quality, like electronics
Service intangible act that can be varied from person to person, such as consulting
Types of Operations

Goods producing

Storage producing

Exchange

Entertainment

Communication
Productivity capacity to produce output from effective use of resources
Outsourcing letting another business entity do a task, such as marketing company outsources its finances to an accounting
consultancy
Product Packages combination of goods or services i.e. not only a person purchases a website domain from a domain provider but
the person gets unlimited email accounts and a 24/7 customer support from the provider. It makes a company more competitive.
Models

Physical for example, a live model building made by an architecture student using cardboard and other materials.

Schematic for example, the flat blueprints of the architecture student of the building: the floorplan and furnishings, etc.

Mathematical for example, an economist using data to graph a financial forecast of a company for the next quarter
Quantitative Approaches

Linear Programming optimum allocation of scarce resources

Queuing techniques analyzing a situation in which waiting lines form

Forecasting Techniques planning and scheduling tasks based from previous statistics/records of a company

Performance Metrics measuring performance based on standards

Systems Approach The whole is greater than the sum of its parts. wherein the output of all the departments of a company
is better than the different outputs of the departments
Key Decisions of Operations Managers

What will my company produce?

When is the good time to produce?

Where is a good place to produce and store output?

How am I going to manufacture a product?

Who am I going place in charge of producing?

Inventory Models

PERT Program Evaluation and Review Technique

CPM Critical Path Method. Suited for Planning, controlling and coordinating large-scale projects.

Statistical Models used as a guide in producing goods or services for the next term
Analysis of Trade-offs situation in which a manager must choose option A or option B, or balance two things that are opposite

Course Code: IS 203

Subject Name: Business Process II
Supply Chain Management a process where raw materials are turned into a product and how the product is transported from
manufacturing plant to consumers.
1. Suppliers
2. Direct Suppliers
3. Producers
4. Distributors
5. Find Consumers
Competitiveness how effectively an organization meets the wants and needs of consumers relative to others that offer similar goods
or services.

Using marketing, a company can identify consumer wants and needs; and then tries to sell the product through advertising
and promotion.

Using operations, a company can set itself apart from designing a product or a service that is different from its competitors.

Other factors that affect a companys competitiveness is price, location, quality, inventory management and supply chain
management.

Mission explains the existence of a company

Mission Statement states the purpose of a company
Goals provides detail and scope of mission
Tactics methods and actions taken to accomplish strategies
Strategy designed to support the companys mission and plan for achieving company goals.
Types of Strategy

Low cost outsource operations to lower labor costs

Scale based achieve more with less

Flexible quick response and customization

High quality focus on higher quality than competitors

Service focus on various aspects of service

Distinctive Competencies special attributes or abilities that give an organization a competitive edge.
Strategy Factors

Price low cost to produce

Quality high quality output

Time quick to produce

Flexibility variety in output

Service superior than competitors

Location convenience of availing output

Global Strategy affected by political, social, cultural and economic differences.
Strategic Operations Management Decisions

Product and Service Design costs, quality, liability and environmental

Capacity cost structure and flexibility

Process selection and layout cost, flexibility, skill level and capacity

Work design quality of work life, employee safety and productivity

Location costs and visibility

Quality meet or exceed customer expectations

Inventory costs or shortages

Maintenance costs, reliability, production, scheduling, supply chains and projects

Course Code: IS 203

Subject Name: Business Process II
Quality-based Strategies improving the quality of an organizations products or services
Time-based Strategies focus on reduction of time needed to accomplish tasks

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Factors Affecting Productivity

Capital

Quality

Standardization

Quality differences

Scrap rates

Safety

Technology

New Works

IT infrastructure
Major Factors in Design Strategy
*translating customer wants and needs into product and service requirement

Cost

Quality

Time to market

Customer satisfaction

Competitive Advantage
Factors That Give Rise to Market Opportunities and Threats

Economic

Social and demographics

Competitiveness

Cost and availability

Technology
Factors That Affect Design Strategy

Legal

Ethical

Environmental
Product Liability manufacturer at fault when product malfunctions
Uniform Commercial Code products carry an implication of merchantability and fitness
Objectives of Product and Service Design
Primary

Customer Satisfaction

Understanding customer needs and wants

Secondary

Functionality of product or service

Cost/Profit

Course Code: IS 203

Subject Name: Business Process II

Quality
Appearance
Ease of Production
Ease of Maintenance

Failure to Take Account in the Capacity of a Company to Produce

Reduced productivity

Reduced quality

Increased costs
Product/Service Life Cycle
1) Introduction
2) Growth
3) Maturity
4) Decline
Standardization absence of variety in products
Mass Customization creating mass products with alterations
Reliability ability of a product, part or system to perform its intended function where a prescribed set of conditions
Failure a situation in which a product, part or system does not perform as intended
Robust Design results in products or services that can function over a broad range of conditions
Taguchis Approach/Parameter Design determining the specification settings for both product and process
Global Product Design consider cultural differences, ethics, law and other factors
Original Equipment Manufacturer company designs and manufactures a product and then sells to another company for branding
and distribution
Original Design Manufacturer company designs product according to purchasers specification
Original Brand Manufacturer company sells an entire product that is manufactured by a second company
Reverse Engineering dismantling and inspecting a competitors product to discover product improvement
Concurrent Engineering bringing together of engineering design and manufacturing personeel
Phases in Product Development Process
1. Ideation
2. Feasibility
3. Product Specifications
4. Process Specifications
5. Prototyping
6. Design Review
7. Market Test
8. Product Introduction
9. Follow-up/Feedback
Research and Development

Basic Research advancement of knowledge without expectation or application

Applied Research achieved commercial application

Course Code: IS 203

Subject Name: Business Process II

Development converts applied research into commercial application

Manufacturability the ease of fabrication or assembly of product

Cost

Productivity

Quality
Product Design

Design for manufacturing compatible with a companys capabilities

Design for assembly reducing number of parts in a product

Design for recycling facilitates recovery of materials and components for reuse

Design for Disassembly products that are easily taken apart

Quality Function Deployment voice of customer into both product and service development
CAD computer aided design using graphics
Recycling recovering materials for future use
Remanufacturing refurbishing used products by replacing worn-out or defective components
Benefits of Commonality

Reduced repair time and costs

Reduced training for assembly and installation

Service Design created and delivered at the same time
Service Delivery Systems

Facilities

Processes

Skills
Services Systems

Insulated technical core

Productions line

Personalized service

Consumer Participation

Self-service
Phases in Service Design

Conceptualization

Identify service package components

Determine performance specifications

Translate performance specifications into design specifications

Translate design specification into delivery specification

Service Blueprinting used to describe and analyze a proposed service and to conceptualize a service delivery system
Capacity Planning refers to limit or ceiling on the load on operating unit can handle

Equipment

Space

Employee Skills

Course Code: IS 203

Subject Name: Business Process II
Design Capacity maximum output role
Determinants of Effective Capacity

Facilities

Product and Services Factors

Process Factors

Human Factors

Policy Factors

Operational Factors

Supply Chain Factors

Supply Chain Factors

External Factors
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Effective Capacity design capacity minus allowances such as personal time, maintenance and scrap
Actual Capacity rate of output actually achieved
Steps for Capacity Planning
1. Estimate capacity requirements
2. Evaluate existing capacity
3. Identify alternatives
4. Conduct financial analysis
5. Asses key qualitative issues
6. Select one alternative
7. Implement alternative chosen
8. Monitor results
Forecasting Capacity Requirements

Long term forecasting demand over a time horizon then converting those forecasts into capacity requirements

Short term less concerned with trends with or cycles

Planning Service Capacity

Need to be near customers

Inventory matched with demand

Degree of volatility of demand

In-house or outsourcing?

Available capacity

Expertise

Quality considerations

Nature of demands

Cost

Risk
Bottleneck Operation operation in a sequence of operations whose capacity is lower that of other operations
Economies of Scale output rate less than the optimal level, increasing output results decreasing average unit costs

Course Code: IS 203

Subject Name: Business Process II
Diseconomies of Scale output rate is more than optimal level increasing the output rate results in increasing average unit costs
Ideal Scale cost per unit is lowest for the production per unit
Cost Volume Analysis focuses on relationship between costs, revenue and volume of output
Break Even Output the volume of output at which total cost and total revenue are equal
Financial Analysis

Cash flow difference between cash received from sales and other sources

Cash outflow labor, material, overhead and taxes

Present value the sum of cash flows

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Price = Quantity of Volume (Revenue Variable Cost) Fixed Cost
Process Selection deciding on the way of how goods will be produced or services will be organized
Capacity Intensity mix of equipment and that will be used by the organization
Process Flexibility adjustments into changes in processing requirements
Different Types of Technology (as these have a major impact on costs, productivity, and competitiveness)

Product and Service Technology discovery and development of new products and services

Process Technology methods, procedures and equipment used to provide goods and services

Information Technology storage, processing and sending of information

Process Strategy

Capital Intensive

Process Flexibility

Technology

Adjust to changes in:

o Design
o Volume
o Technology
Product Profiling linking product or service requirements to process capabilities
Automation machinery doing tasks without influence of a human

Fixed automation

Programmable automation
Computer Aided Design and Manufacturing use of computers in process control
Facilities Layout configuration of department, work center and equipment with emphasis on movement of work
Process Selection

Variety

Flexibility
Investment in
o Equipment
o Layout of facilities

Course Code: IS 203

Subject Name: Business Process II
Process Types

Job Shop
o Small scale
o Low volume of goods with high variety
o Example: Veterinarian clinic

Batch
o Moderate variety of volume
o Example: bakeries, theater productions

Repetitive
o High volumes of standardized goods
o Example: production lines and assembly lines

Continuous
o High volume of non-discrete goods
o Example: Water purification
Basic Layout Types

Product Layout uses standardized processing operations to achieve smooth, rapid, high volume/output flow

Process Layout can handle varied processing requirements

Fixed-position Layout product/project remains stationary, and workers, materials and equipment are moved as needed
Cellular Layouts machines grouped together that have similar processing requirements
Group Technology grouping into part families of items with similar design or manufacturing characteristics
Flexible Manufacturing System a group of machines designed to handle intermittent processing requirements and produce a variety
of similar products
Computer-Integrated Manufacturing a system for linking a broad range of manufacturing activities through an integrating computer
system
Line Balancing process of assigning tasks to workstations in such a way that workstations have equal time requirements
Cycle Time maximum time allowed to each workstation to complete tasks on a unit
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