1 Instructor’s Manu al/Solutions Manual – OSCM2e – Collier/Evans – C1 Oper ations Management and Value Chains The first chapter introduces students to the basic concepts of operations management and value chains in both goods -producing and service -providing organizations. We explain the importance of OM, what operations managers do, the differences between goods and services, the concept of value, customer benefit packages, differences between value and supply ch ains, value chain frameworks, historical developments of OM, and current challenges. Questions are provided in two categories: 1. Review questions 2. Discussion questions and experiential activities There are no computational or Excel -based problems and exercises. While analytics and big data are discussed in the historical developments section, there are no computational or Excel -based problems or exercises in this chapter . Exhibit 1.14 summarizes Excel spreadsheet templates available on MindTap that w ill be used in the rest of the book . The chapter has three cases: 1. Mickey Mouse: To Talk or Not? is the first case study. It focuses on service operations, service encounters, and job and process design. 2. Zappos: A Subsidiary of Amazon allows stud ents to consider what operations and logistic managers do in a modern supply chain. 3.The integrative case study, Hudson Jewelers , with case assignment questions in all chapters, requires the student to characterize the jewelry store in terms of one of three value chain frameworks, research major diamond producers and their sustainability practices, and write a short paper on “blood or ethical diamonds, and how this fits with social sustainability and the role operations and supply chain managers. KEY TERMS Biztainment is the practice of adding entertainment content to a bundle of goods and services in order to gain competitive advantage. Business analytics is a process of transforming data into actions through analysis and insights in the context of organizational decision making and problem solving. A customer benefit package (CBP ) is a clearly defined set of tangible (goods content) and intangible (service -content) features that the customer recognizes, pays for, uses, or experiences. 2 Distribution centers (DCs) are warehouses that act as intermediaries between factories and customers, shipping directly to customers or to retail stores where products are made available to customers. Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. A durable good is one that does not quickly wear out and typically lasts at least three years. Economic sustainability is an organization’s commitment to address current business needs and economic vitality, and to have the agility and strategic management to prepare successfully for future business, markets, and operating environments. Environmental sustainability is an organization’s commitment to the long term quality of our environment. A good is a physical product that you can see, touch, or possibly consume. Inventory refers to raw materials, work -in-process, or finished goods that are maintained to support production or satisfy customer demand. Moments of truth are episodes, transactions, or experiences in which a customer comes into contact with any aspect of the de livery system, however remote, and thereby has an opportunity to form an impression. A nondurable good is one that is no longer useful once it’s used, or lasts for less than three years. Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. Peripheral goods or services are those that are not essential to the primary good or service but enhance it. A primary good or service is the “core” offering that attracts customers and responds to their basic needs. A process is a sequence of activities that is intended to create a certain result. A service is any primary or complementary activity that does not directly produce a physical product. A service encounter is an interac tion between the customer and the service provider. 3 Service management integrates marketing, human resources, and operations functions to plan, create, and deliver goods and services, and their associated service encounters. Social sustainability is an organization’s commitment to maintain healthy communities and a society that improves the quality of life. A supply chain is the portion of the value chain that focuses primarily on the physical movement of goods and materials, and supporting flows of information and financial transactions through the supply, production, and distribution processes. Sustainability refers to an organization’s ability to strategically address current business needs and successfully develop a long -term strategy that em braces opportunities and manages risk for all products, systems, supply chains, and processes to preserve resources for future generations. Value is the perception of the benefits associated with a good, service, or bundle of goods and services in relatio n to what buyers are willing to pay for them. A value chain is a network of facilities and processes that describes the flow of materials, finished goods, services, information, and financial transactions from suppliers, through the facilities and process es that create goods and services, and those that deliver them to the customer. A variant is a CBP feature that departs from the standard CBP and is normally location or firm specific. REVIEW QUESTIONS 1. Explain the concept and importance of operations management. Creating and delivering goods and services to customers depends on an effective system of linked facilities and processes, and the ability to manage them effectively around the world. Operation s management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. OM includes the design of goods, services, and the processes that create them; the day -to-day management of those processes; a nd the continual improvement of these goods, services, and processes. Three issues are at the core of operations management: efficiency, cost, and quality. 2. Describe how operations management is used in work throughout business organizations. 4 Many people who are considered “operations managers” have titles such as chief operating officer, hotel or restaurant manager, vice president of manufacturing, customer service manager, plant manager, field service manager, or supply chain manager. The concept s and methods of OM can be used in any job, regardless of the functional area of business or industry, to better create value for internal customers (within the organization) and for external customers (outside the organization). OM principles are used in accounting, human resources management, legal work, financial activities, marketing, environmental management, and every type of service activity. 3. State three of the key activities that operations managers perform and briefly explain them. Students should describe three of the following in their own words. Forecasting: Predict the future demand for raw materials, finished goods, and services. Supply chain management: manage the flow of materials, information, people, and money from suppliers to cus tomers. Facility layout and design: determine the best configuration of machines, storage, offices, and departments to provide the highest levels of efficiency and customer satisfaction. Technology selection: use technology to improve productivity and respond faster to customers. Quality management: ensure that goods, services, and processes will meet customer expectations and requirements. Purchasing: coordinate the acquisition of materials, supplies, and services. Resource and capacity management: ens ure that the right amount of resources (labor, equipment, materials, and information) is available when needed. Process design: select the right equipment, information, and work methods to produce high -quality goods and services efficiently. Job design: de cide the best way to assign people to work tasks and job responsibilities. Service encounter design: determine the best types of interactions between service providers and customers, and how to recover from service upsets. Scheduling: determine when resour ces such as employees and equipment should be assigned to work. Sustainability: decide the best way to manage the risks associated with products and operations to preserve resources for future generations. 4. Define a good and a service . Companies de sign, produce, and deliver a wide variety of goods and services that consumers purchase. A good is a physical product that you can see, touch, or possibly consume. A service is any primary or complementary activity that does not directly produce a physical product. See the key terms below for the difference between durable and nondurable goods.
