2022 T3 Mmm710 W06 Operations Planning .Pptx

Presentation name or heading here 1 Deakin University CRICOS Provider Code 00113B MMM710 Business Process and Operations Management Week 1 Introduction Deakin University CRICOS Provider Code 00113B 2[.]

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Week 1 - Introduction

Week 2 - Innovation Perspective on Operations Management

Week 3 - Sustainability Perspective on Operations Management

Week 4 - Strategic Perspective on Operations Management

Week 5 - Mid-term Review

Week 6 - Operations Planning – and Creating Value

Week 7 - Forecasting

Week 8 - Resource Management

Week 9 - Quality Management (Assessment Task 1 due on 16 January 2023)

Week 10 - Operations Resilience

Week 11 - Unit Review

MMM710 Weekly Learning Schedule

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LEARNING OUTCOMES

1 Distinguish between goods and services and define the concept of value

•VALUE!

2 Describe a customer benefit package

3 Explain the five key competitive priorities

4 Understand the role of operations/ supply chain management in strategic planning

5 Explain the concept of a global supply chain and describe the key design decisions

6 Understand how to evaluate outsourcing decisions

•via the break-even analysis model

7 Explain the types of decisions required and criteria

•for locating facilities in supply chains

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Goods versus Services

LO 1-3

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Goods versus Services (cont’d.)

LO 1-3

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• Look beneath the surface;

•let not the several qualities of

• neither the thing,

• nor its worth

•escape thee.

• Marcus Aurelius Antoninus

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What is Value?

• ‘It is essential to recognize that value

is not just price

• Value is a much richer concept

•Fundamentally, the notion of customer value

• is fairly basic and relatively simple to understand;

•However, implementing this concept

• can prove to be tremendously challenging

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Five Types of Value

Faster – cleaner - smoother Connected – Impressive - Status Comforting – Exciting - Assuring

Latest – European – Hi Tech Traveling – Hungry – Partying

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Value

• Perception of the benefits

• associated with a good, service, or bundle of goods and services

• in relation to what a buyer pays

• Goods or services are perceived favourably by customers if

• the ratio of perceived benefits to price to the customer is high

• IMPORTANT TO NOTE:

• The Value is TEMPORAL

• What was valuable yesterday may not be valuable today

LO 1-4

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Discussion question 1

Value = Perceived benefits

Price (cost) to the customer

YOUR THOUGHTS

Do you think the above ratio universally captures the essence

of what an individual may consider to be of ‘value’?

Why or why not?

This is an heuristic : an imprecise shortcut

to simplify a complex process

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Customer Benefit Packages (CBP)

• Clearly defined set of tangible and intangible features that a customer recognizes, pays

for, then uses or experiences

LO 1-5

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Competitive Advantage

Firm’s ability to achieve market and financial superiority

over its competitors

• Requires:

• Understanding customer needs and expectations

• Building and leveraging operational capabilities

– to support desired competitive priorities

LO 3-1

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Customers’ Expectations

Understood by segmenting customers based on their unique wants

and needs

•Order qualifiers: Basic customer expectations

• Minimum performance level required to stay in business (must meet these -

‘hygiene elements’)

•Order winners: Goods and service features and performance characteristics that

differentiate one customer benefit package from another

• Help win the customers’ business (helps to stand out from the crowd –

‘motivator elements’

• NOTE These are dynamic and change over time

– sometimes very quickly

LO 3-2

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Competitive Priorities

Strategic emphasis that a firm places on certain performance

measures and operational capabilities within a value chain

• These are the things that the customer VALUES

• What are the key Values

• Your Industry and Organisation

• Argos

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Strategy

• Pattern or plan that integrates an organization’s major goals,

policies, and action sequences into a cohesive whole

• Note the different emphasis to Richart RumeltEffective strategies

•Develop around competitive priorities

•Provide focus for an organization and exploit its core competencies

• Core competencies: Strengths unique to an organization

LO 3-5

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Strategic Planning

Process of determining long-term goals, policies, and plans for an

organization

• Helps an organization build a strong position to achieve its goals,

despite unforeseen external forces

• Again note the difference between this and Rumelt

LO 3-5

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Levels of Strategy

Corporate strategy

• Defines businesses in which corporations participate and develop plans for:

• Acquisition and allocation of resources among strategic business units (SBUs)Business strategy

• Helps make decisions about the competitive priorities that SBUs need to pursue to

gain competitive advantage

LO 3-5

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Levels of Strategy

Functional strategy - Set of decisions that each functional area

develops to support its particular business strategy

Operations strategy

• Set of decisions made across value chains that supports implementation of

higher-level business strategies

• Developed by translating competitive priorities into operational capabilities

LO 3-5

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Sustainability

Type of an organizational strategy and is also considered a

corporate strategy by some companies

• Requires innovation in value chains, operations design, and day-to-day management

activities

Dimensions

• Environmental (Planet perspective)

• Social (People perspective)

• Economic (Profit perspective)

LO 3-5

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Operations strategy components

- Operations Design Choices

- Infrastructure

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Operations Design Choices

Decisions made for determining the process structures that are

best suited for producing goods or creating services

Address:

• Types of processes

• Value chain integration and outsourcing

• Technology

• Capacity and facilities

• Inventory and service capacity

• Strategy – Innovation - Sustainability

LO 3-6

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Infrastructure

Focuses on non-process features and the capabilities

of an organization Includes:

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Supply Chain

Key subsystem of a value chain that focuses on physical storage

& movement of goods and materials

• Supports information through the supply, production, and distribution processes

LO 6-1

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Value Chain

Supply Chain

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Multinational Enterprise

Sources, markets, and produces goods and services in

several countries as part of a global supply chain

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Supply Chain Visualized as a Network

LO 6-1

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Outsourcing

Process of having suppliers provide goods and services that were

previously procured internally

• Many organizations use contract manufacturing as part of their outsourcing strategy

• Contract manufacturer: Specializes in producing customized design, manufacturing,

assembly, and packaging on a contract basis

LO 6-3

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Keys to Successful Partnerships

Strong supplier partnerships

• Important to achieving win-win competitive performance for the buyer and

supplier these require a strategic perspective as opposed to a tactical position

• Involve “a mutual commitment over an extended time to work together to the

mutual benefit of both parties, sharing relevant information and the risks and

rewards of the relationship”

LO 6-3

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Keys to Successful Partnerships (cont’d.)

Performance metrics

You can’t improve what you can’t measure

• Measures related to quality, cost, delivery, & flexibility are used to evaluate suppliers

• Metrics should be:1) understandable, 2) easy to measure, & 3) focused on real

value-added results

• A multi-criteria approach is best

• Total cost of ownership (TCO), is made up of all costs associated w/acquisition, use, &

maintenance of a good or service

LO 6-3

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Keys to Successful Partnerships (cont’d.)

Continuous improvement

• Making a series of small improvements over time results in the elimination of

waste in a system

• Buyers & suppliers must be willing to continuously improve their capabilities in

meeting customer requirements of cost, quality, delivery, & technology

LO 6-3

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Keys to Successful Partnerships (cont’d.)

Monitoring supplier relationships

• The organization should have a firm grasp of the key issues surrounding supplier

relationships which may include:

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Supplier Evaluation & Certification

• A process to identify best & most reliable suppliers

• Sourcing decisions are made on facts & not on perception

• Frequent feedback can help avoid surprises & maintain good relationships

• Suppliers should be allowed to provide constructive feedback to the customer

•Supplier Certification refers to “an organization’s process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections.” -

Institute for Supply Management

LO 6-3

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Supplier Evaluation & Certification (cont’d.)

The Weighted-Criteria Evaluation System

1 Select the key dimensions of performance mutually acceptable to both customer & supplier.

2 Monitor & collect performance data.

3 Assign weights to each of the dimensions.

4 Evaluate performance measures between 0 & 100.

5 Multiply dimension rating by weight & sum of overall score.

6 Classify vendors based on their overall score e.g., Unacceptable (<70), Conditional (>=70 but <80),

Certified (>=80 but <90), & Preferred (>= 90).

7 Audit & perform ongoing certification review.

LO 6-3

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Supplier Evaluation & Certification (cont’d.)

Sample Scorecard Used for the XYZ Company

LO 6-3

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Performance Measure Rating x Weight = Weighted Rating

Technology 80 0.10 8.00 Quality 90 0.25 22.50 Responsiveness 95 0.15 14.25 Delivery 90 0.15 13.50 Cost 80 0.15 12.00 Environmental 90 0.05 4.50Business 90 0.15 13.50

Overall score 1 88.25

Based on the overall score of 88.25 what is the supplier rating of XYZ Co?

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Offshoring and Re-shoring

LO 6-3

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Location Decisions, Part 1

Depend on determining the best network structures and

geographical locations to:

• Maximize service and revenues

• Minimize costs

Significant in case large numbers of similar facilities are operated

• Multisite management: Process of managing geographically widely dispersed

facilities

LO 6-4

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Location Decisions, Part 2

Based on:

•Economic factors

• Facility costs, operating costs, and transportation costs

•Noneconomic factors

• Availability of labour, transportation services and utilities

• Climate, community environment and quality of life

• State and local legal and political factors

LO 6-4

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EPIC Framework

Helps assess supply chain readiness through perspectives of economic

(E), political (P), infrastructural (I), and competence (C)

• Levels of maturity held by a geographic region is assessed with respect to the region’s ability

to support supply chain activities

•Economy – GDP and GDP Growth Rate, Population Size, FDI, Exchange Rate

• Stability & CPI, Balance of Trade

•Politics – Ease of Doing Business, Legal & Regulatory Framework, Risk of Political

• Stability, Intellectual Property Rights

•Infrastructure – Transportation Infrastructure, Utility Infrastructure (Electricity),

• Telecommunications & Connectivity

•Competence – Labour Relations, Education Level, Logistics Competence, Customs & Security

LO 6-4

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Week 6 Operations Planning

Seminar Slides

MMM710

Business Process and

Operations Management

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In-seminar exercise: Case Vignette Part I

• Read the case vignette and identify the important quantitative

information

• Try and think of a logical process to apply the information in taking the

decisions outlined in Decision problem(s) – Part I

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In-seminar exercise: Case Vignette Part II

• Read the case vignette and identify the important quantitative

information

• Try and think of a logical process to apply the information in taking the

decisions outlined in Decision problem(s) – Part II.

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Self-learning exercise 1

• In view of the basic structure of a make-or-buy decision problem centred on

costs as seen in case vignette I and II, what do you think are the strategic and other considerations that may drive these decisions in reality, following from section 4.1.1 of Medina-Serrano et al (2020)?

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Self-learning exercise 2

• What might some key considerations be in optimal facilities location

decisions in a competitive business environment?

• What co-factors have been identified in Section 4.1 of Mishra, Singh &

Gupta (2022) that may be important in optimal location decisions?

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The Problem of the Subject

• Understand the nature of Global Value Chains

• Identify the forces that are shaping and changing GVC’s

• Imagine the ways that your industries,

•and their GVC’s

• Will evolve over the life of your career