ISOM Midterm 1 || Already Graded A+.
In order to understand next-generation operating models, you have to be able to navigate which
things? correct answers Processes (lean and business process outsourcing), technology
(digitization and intelligent process automation) and data/analytics (advanced analytics)
...
Lean process redesign: streamline processes and minimize waste
Business process outsourcing: drive the next wave of processes outsourcing/offshoring
Digitization: digitize customer experience and day-to-day operations
Intelligent process automation: introduce intelligent automation to replace human tasks
Advanced analytics: provide intelligence to facilitate decisions
Willingness to pay (WTP) correct answers The maximum amount of money a customer would
spend in order to solve their problem
Is not about the features of the service; rather it is about some benefit that the customer is trying
to achieve
Price correct answers The amount of money a customer actually spends/pays to buy/acquire the
product or service
...
Higher than TC (or else the company is in trouble)
Total cost (TC) correct answers Total cost incurred by the company in order to make the service
or product available to the customer
Input costs plus the cost of all activities executed to deliver the product or service
What you're doing, what we added/created, input + what you do
Input cost (IC) correct answers The cost incurred/associated with getting access to basic
materials and equipment needed to create/deliver the service or product
Like variable, not creating/transforming yet, we don't manufacture or add value just spend
money you're given
,Consumer surplus (love) correct answers WTP - Price
Value created that is captured by customer
How much more the customer would have paid to solve their problem
Because they didn't have to pay as much as they were willing to pay, they have a positive view of
the service or product; the magnitude of this gap reflects how much the customer loves the
business
Profit or value captured (by firm) correct answers Price - TC
Depends on price AND cost
Profit (revenue streams and cost structure)
Value captured (from customer's perspective) correct answers WTP - TC
Value delivered (to customer) correct answers WTP - TC
LHS of BMC and cost structure
Cost of delivery (doing business), organization cost, or transaction cost correct answers TC - IC
Main focus of our class
Unique to each company
Core concern of the class correct answers Improving value delivered to the customer, or how we
can reduce total costs by focusing on the operating model
OEMs correct answers Original Equipment Manufacturing
Make
Make the finished product, don't own the brand
Or make parts that go into someone else's stuff
, Exceptions: automotive and auto parts
Order winner: cost
ODMs correct answers Original Design Manufacturing
Make + design
Make finished products that someone else brands
Provide more design services
OBMs correct answers Original Brand Manufacturing
Make + design + brand
Brand their own product
Efficient frontier correct answers Maps out the best possible level of one dimension (i.e.
flexibility) holding other dimensions constant (i.e. cost)
Start to finish (or flow or turnaround) time correct answers Measures total work content
How long a specific unit takes to complete the activities in the process
From a unit perspective
Cycle time correct answers The rate at which a process completes a unit of work; determined by
the bottleneck
How long a process takes to churn out a unit (rate that units finish)
Time between two consecutive units out of the process
From a process perspective
Measures the rate of completion of work once the system is at steady state
I.e. Once the system is up and running, a dozen cookies will be completed every 10 minutes
Resource capacity correct answers The capacity at a given resources
In order to understand next-generation operating models, you have to be able to navigate which
things? correct answers Processes (lean and business process outsourcing), technology
(digitization and intelligent process automation) and data/analytics (advanced analytics)
...
Lean process redesign: streamline processes and minimize waste
Business process outsourcing: drive the next wave of processes outsourcing/offshoring
Digitization: digitize customer experience and day-to-day operations
Intelligent process automation: introduce intelligent automation to replace human tasks
Advanced analytics: provide intelligence to facilitate decisions
Willingness to pay (WTP) correct answers The maximum amount of money a customer would
spend in order to solve their problem
Is not about the features of the service; rather it is about some benefit that the customer is trying
to achieve
Price correct answers The amount of money a customer actually spends/pays to buy/acquire the
product or service
...
Higher than TC (or else the company is in trouble)
Total cost (TC) correct answers Total cost incurred by the company in order to make the service
or product available to the customer
Input costs plus the cost of all activities executed to deliver the product or service
What you're doing, what we added/created, input + what you do
Input cost (IC) correct answers The cost incurred/associated with getting access to basic
materials and equipment needed to create/deliver the service or product
Like variable, not creating/transforming yet, we don't manufacture or add value just spend
money you're given
,Consumer surplus (love) correct answers WTP - Price
Value created that is captured by customer
How much more the customer would have paid to solve their problem
Because they didn't have to pay as much as they were willing to pay, they have a positive view of
the service or product; the magnitude of this gap reflects how much the customer loves the
business
Profit or value captured (by firm) correct answers Price - TC
Depends on price AND cost
Profit (revenue streams and cost structure)
Value captured (from customer's perspective) correct answers WTP - TC
Value delivered (to customer) correct answers WTP - TC
LHS of BMC and cost structure
Cost of delivery (doing business), organization cost, or transaction cost correct answers TC - IC
Main focus of our class
Unique to each company
Core concern of the class correct answers Improving value delivered to the customer, or how we
can reduce total costs by focusing on the operating model
OEMs correct answers Original Equipment Manufacturing
Make
Make the finished product, don't own the brand
Or make parts that go into someone else's stuff
, Exceptions: automotive and auto parts
Order winner: cost
ODMs correct answers Original Design Manufacturing
Make + design
Make finished products that someone else brands
Provide more design services
OBMs correct answers Original Brand Manufacturing
Make + design + brand
Brand their own product
Efficient frontier correct answers Maps out the best possible level of one dimension (i.e.
flexibility) holding other dimensions constant (i.e. cost)
Start to finish (or flow or turnaround) time correct answers Measures total work content
How long a specific unit takes to complete the activities in the process
From a unit perspective
Cycle time correct answers The rate at which a process completes a unit of work; determined by
the bottleneck
How long a process takes to churn out a unit (rate that units finish)
Time between two consecutive units out of the process
From a process perspective
Measures the rate of completion of work once the system is at steady state
I.e. Once the system is up and running, a dozen cookies will be completed every 10 minutes
Resource capacity correct answers The capacity at a given resources
