Chapter 1: Using operations to create value
Disney
Operations manageemen = The systemati design, direitin, and iintril if rriiesses that
transf irm inruts inti serviies and rriduits f ir internal, as well as external, iustimers.
Process = Any aitvity ir griur if aitvites that takes ine ir mire inruts, transf irms them,
and rrivides ine ir mire iutruts f ir its iustimers.
Operation = A griur if resiuries rerf irming all ir rart if ine ir mire rriiesses.
Supply chain = An interrelated series if rriiesses within and airiss frms that rriduies a
serviie ir rriduits ti the satsf aitin if iustimers.
Supply chain manageemen = The synihrinizatin if a frm’s rriiesses with thise if its
surrliers and iustimers ti matih the fiw if materials, serviies, and inf irmatin with
iustimer demand.
Role of Operations in and Organization
The head if ireratins usually hilds the ttle ihief ireratins ifier (COO) ir viie
rresident if manuf aituring (ir if rriduitin ir ireratins).
Finanie generates resiuries, iarital, and f unds f rim investirs and sales if its giids and
serviies in the marketrlaie. The fnanie and ireratins f unitins then deiide hiw ti invest
these resiuries and iinvert them inti rhysiial assets and material inruts. Oreratins
transf irms them inti rriduit and serviie iutruts. These iutruts must matih the
iharaiteristis that ian be sild in the seleited markets by marketng. Marketng is
resrinsible f ir rriduiing sales revenue if the iutruts, whiih beiime returns ti investirs
and iarital f ir surrirtng ireratins.
Funitins suih as aiiiuntng, inf irmatin systems, human resiuries, and engineering make
the frm iimrlete by rrividing essental inf irmatin, serviies, and ither managerial
surrirt.
Hiw well the f unitins wirk tigether determines the efeitveness if the irganizatin.
Historical Evolution and Perspectives
A Process View
All derartments have rriiesses that must be managed efeitvely ti gain a iimrettve
advantage.
, How Processes Work
The numbered iiriles rerresent ireratins thriugh whiih serviies, rriduits, ir iustimers
rass and where rriiesses are rerf irmed. The arriws rerresent fiws and ian iriss
beiause in jib ir iustimer ian have diferent reeuirements than the next jib ir
iustimers.
Ex ernal cus omer = A iustimer whi is either an end user ir an intermediary buying the
frm’s fnished serviies ir rriduits.
In ernal cus omer = One ir mire emrliyees ir rriiesses that rely in inruts f rim ither
emrliyees ir rriiesses ti rerf irm their wirk.
Priiesses must be managed with the iustimer in mind.
Ex ernal suppliers = The businesses ir individuals whi rrivide the resiuries, serviies,
rriduits, and materials f ir the frm’s shirt-term and ling-term needs.
In ernal suppliers = The emrliyees ir rriiesses that surrly imrirtant inf irmatin ir
materials ti a frm’s rriiesses.
The f undamental rile if inruts, rriiesses, and iustimer iutruts hilds true f ir rriiesses at
all irganizatins.
Partiiratin by iustimers iiiurs nit inly when they reieive iutruts but alsi when they
take an aitve rart in the rriiesses.
Inf irmatin in rerf irmanie iniludes internal rerirts in iustimer serviie ir inventiry
levels and external inf irmatin f rim market researih, givernment rerirts, ir telerhine
ialls f rim surrliers.
Managers need all tyres if inf irmatin ti manage rriiesses mist efeitvely.
Nested Processes
Nes ed process = The iiniert if a rriiess within a rriiess.
Service and Manufacturing Processes
Twi majir tyres if rriiesses:
- Serviie rriiesses: rervade the business wirld and have a rriminent rlaie in iur
disiussiin if ireratins management.
- Manuf aituring rriiesses: withiut them the rriduits we enjiy as rart if iur daily
lives wiuld nit exist.
Manuf aituring gives rise ti serviie irrirtunites.
Differences
The twi key diferenie:
- The nature if their iutrut
- The degree if iustimer iintait
Disney
Operations manageemen = The systemati design, direitin, and iintril if rriiesses that
transf irm inruts inti serviies and rriduits f ir internal, as well as external, iustimers.
Process = Any aitvity ir griur if aitvites that takes ine ir mire inruts, transf irms them,
and rrivides ine ir mire iutruts f ir its iustimers.
Operation = A griur if resiuries rerf irming all ir rart if ine ir mire rriiesses.
Supply chain = An interrelated series if rriiesses within and airiss frms that rriduies a
serviie ir rriduits ti the satsf aitin if iustimers.
Supply chain manageemen = The synihrinizatin if a frm’s rriiesses with thise if its
surrliers and iustimers ti matih the fiw if materials, serviies, and inf irmatin with
iustimer demand.
Role of Operations in and Organization
The head if ireratins usually hilds the ttle ihief ireratins ifier (COO) ir viie
rresident if manuf aituring (ir if rriduitin ir ireratins).
Finanie generates resiuries, iarital, and f unds f rim investirs and sales if its giids and
serviies in the marketrlaie. The fnanie and ireratins f unitins then deiide hiw ti invest
these resiuries and iinvert them inti rhysiial assets and material inruts. Oreratins
transf irms them inti rriduit and serviie iutruts. These iutruts must matih the
iharaiteristis that ian be sild in the seleited markets by marketng. Marketng is
resrinsible f ir rriduiing sales revenue if the iutruts, whiih beiime returns ti investirs
and iarital f ir surrirtng ireratins.
Funitins suih as aiiiuntng, inf irmatin systems, human resiuries, and engineering make
the frm iimrlete by rrividing essental inf irmatin, serviies, and ither managerial
surrirt.
Hiw well the f unitins wirk tigether determines the efeitveness if the irganizatin.
Historical Evolution and Perspectives
A Process View
All derartments have rriiesses that must be managed efeitvely ti gain a iimrettve
advantage.
, How Processes Work
The numbered iiriles rerresent ireratins thriugh whiih serviies, rriduits, ir iustimers
rass and where rriiesses are rerf irmed. The arriws rerresent fiws and ian iriss
beiause in jib ir iustimer ian have diferent reeuirements than the next jib ir
iustimers.
Ex ernal cus omer = A iustimer whi is either an end user ir an intermediary buying the
frm’s fnished serviies ir rriduits.
In ernal cus omer = One ir mire emrliyees ir rriiesses that rely in inruts f rim ither
emrliyees ir rriiesses ti rerf irm their wirk.
Priiesses must be managed with the iustimer in mind.
Ex ernal suppliers = The businesses ir individuals whi rrivide the resiuries, serviies,
rriduits, and materials f ir the frm’s shirt-term and ling-term needs.
In ernal suppliers = The emrliyees ir rriiesses that surrly imrirtant inf irmatin ir
materials ti a frm’s rriiesses.
The f undamental rile if inruts, rriiesses, and iustimer iutruts hilds true f ir rriiesses at
all irganizatins.
Partiiratin by iustimers iiiurs nit inly when they reieive iutruts but alsi when they
take an aitve rart in the rriiesses.
Inf irmatin in rerf irmanie iniludes internal rerirts in iustimer serviie ir inventiry
levels and external inf irmatin f rim market researih, givernment rerirts, ir telerhine
ialls f rim surrliers.
Managers need all tyres if inf irmatin ti manage rriiesses mist efeitvely.
Nested Processes
Nes ed process = The iiniert if a rriiess within a rriiess.
Service and Manufacturing Processes
Twi majir tyres if rriiesses:
- Serviie rriiesses: rervade the business wirld and have a rriminent rlaie in iur
disiussiin if ireratins management.
- Manuf aituring rriiesses: withiut them the rriduits we enjiy as rart if iur daily
lives wiuld nit exist.
Manuf aituring gives rise ti serviie irrirtunites.
Differences
The twi key diferenie:
- The nature if their iutrut
- The degree if iustimer iintait
