Operations management/ Lee Krajewski

CHAPTER 1 Operations As a Competitive
FedEx 3
Weapon 3
Operations Management Across the Organization 4
A Process View 5
How Processes Work 5
Nested Processes 6
Customer-Supplier Relationships 7
Service
and Manufacturing Processes 7
Adding Value: The Value Chain 8
Core Processes 9
Support Processes 10
Adding Value with Processes 10
Operations Management As a Set of Decisions 10
Managerial Practice 1.1
Operational Innovation Is a Competitive Weapon at
Progressive insurance 11
Decis/on-Mafe;ng Tools 12
Supporting the Firm's Goals 12
Trends in Operations Management 12
Productivity Improvement 13
Global Competition 14
Rapid Technological Change 15
Ethical, Workforce Diversity, and Environmental
Issues 16
Addressing the Challenges in Operations
Management 17
Managerial Practice 1.2
High-Tech Operations Help Recycle High-Tech
Equipment 17
Part 1: Using Operations to Compete 17
Part 2; Managing Processes 18
Part 3: Managing Value Chains
Student CD-ROM
and Internet Resources 18
Key Equation 18
Managerial Challenge
Operations Asa Competitive Weapon at Starwood 19
Key Terms 19
Solved Problems 20 //
Discussion Questions 20
Problems 21
Active Model Exercise 22
Case Chad's Creative Concepts 23
Selected References 24
CHAPTER 3 Project Management 69
Bechtel Group, Inc. 69
Project Management Across The Organization 70
contents xi
L/smg Projects to Implement Operations Strategy 71
Cross-Functional Interaction 71
Defining and Organizing Projects 72
Defining the Scope and Objectives Of a Project 72
Select/ng the Project Manager and Team 72
Organizational Structure 73
Managerial Practice 3.1
Virtual Global Teaming at Baxter International 74
Planning Projects 75
Defining the Work Breakdown Structure 75
Diagramming the Network 76
Developing the Schedule 78
Analyzing Cost-Time Trade-Offs 84
Managerial Challenge
Project Management at the Phoenician 85
Assessing Risks 91
Managerial Practice 3.2
Boston's Big Dig Project Poses Many Challenges 92
Critical Chain 97
Resource-Related Problems 97
The Critical Chain Approach 98
Monitoring and Controlling Projects 98
Monitoring Project Status 98
Monitoring Project Resources 99
Controlling Projects 100
Student CD-ROM and Internet Resources 101
Key Equations 101
Key Terms 102
Solved Problems 102
Discussion Questions 106
Problems 106
Active Model Exercise 113
Case The Pert Studebaker 115 ' " "
Selected References 117
PART II Managing Processes 118
CHAPTER 4 Process Strategy 119
Duke Power 119
ProcessStrategy Across the Organization 120
Process Strategy 121
Major Process Decisions 121
Process Stojcture in Sen/ices 122
Nature of Sen/ice Processes: Customer Contact 122
Customer-Contact Matrix 125
Sen/ice Process Structuring 126
Embedding Strategy into Service Processes 127
CONTENTS
IVIanageriai Practice 4.1
'Processes in the Front and Back Office •
at the Ritz-Carlton 128
Process Structure in Manufacturing 128
Product-Process Matrix 129
Manufacturing Process Structuring 129
Production and Inventory Strategies 131
Embedding Strategy into Manufacturing
Processes 132
Customer Involvement 133
Possible Disadvantages 133
Possible
Advantages 134
Resource Flexibility 134
Workforce 135
Equipment 135
Capital Intensity 136
Automating Manufacturing Processes 136
Automating Service Processes 137
Managerial Practice 4.2
Flexible Automation at R.R. Donnelley 137
Economies ofScope 138
Strategic Fit 138
Decision Patterns for Service Processes 139
Decision Patterns for Manufacturing Processes 139
Gaining Focus 140
Strategies for
Change 141
Process Reengineering 141
Process
Improvement 142
Student CD-ROM and Internet Resources 142
Key Terms 143
Discussion Questions 143
Problems 143
Case Custom Molds, Inc. 145
Selected References 148
CHAPTER 5 Process Analysis 151
Omgeo 151
Process Analysis Across the Organization 153
A Systematic Approach 153
Step 1: Identify Opportunities 153
Step 2: Define the Scope 154
Step 3: Document the Process 154
Step 4: Evaluate Performance 154
Step 5: Redesign the Process 155
Step 6: Implement Changes 155
Documenting the Process 155
Flowcharts 155
Managerial Pra^ice 5.1
Evaluating Performance at McDonald's 156
Serv/ce Blueprints 158
Process Charts 159
Evaluating Performance 161
Data Analysis Tools 161
Managerial Challenge
Process Analysis at Stanwood 162
Data Snooping 166
Simulation 168
Redesigning the Process 169
Generating Ideas: Questioning and
Brainstorming 169
Managerial Practice 5.2
Redesigning Processesat Baptist Memorial Hospital 170
Benchmarking 171
Managing Processes 172
Student CD-ROM and Internet Resources 173
Key Terms 173
Solved Problems_173
Discussion Questions 176
Problems 177
Active Model Exercfse 183
Case Jose's Authentic Mexican Restaurant 184
Selected References 185
SUPPLEMENT B Simulation 187
Reasons for Using Simulation 188
The Simulation Process 188
Data Collection 188
Random-Number Assignment 190
Model Formulation 191
Analysis 192
Computer Simulation 193
Simulation w/'th Excel Spreadsheets 193
Simulation with More Advanced Software 196
Student CD-ROM and Internet Resources 198
Key Terms 193
Solved Problem 198
Problems 199
Selected References 203
CHAPTER 6 Process Performance
and Quality 205
Crowne Plaza Christchurch 205
Process Performance and Quality Across the
Organization 206
Costs of Poor Process Performance and Quality 206
Prev(snt/on Costs 207
Appraisal Costs 207
Internal Failure Costs 207
External Failure Costs 207
Total Quality Management 208
Customer Sat/sfact/on 208
Emp/oyee'/nvo/vement 270
Cont/nuous Improvement 211
Statistical Process Control 213
Variation of Outputs 213
Managerial Practice 6.1
TQM and SPC Help ADM Cocoa Maintain a Sweet
Business 214
Managerial Practice 6.2
Quality Measures in the Health Care Industry 215
Control Charts 218
Statistical Process Control Methods 220
Control Charts for Variables 220
Control Charts for Attributes 224
Process Capability 227
Defining Process Capability 227
Using Continuous Improvement to Determine the
Capability ofa Process 229
Quality Engineering 230
Six Sigma 230
Managerial Practice 6.3
Applying the Six-Sigma Process at Scottsdale
Healthcare's Osborn Hospital 232
Six Sigma Improvement Model 233
Implementation 233
International Quality Documentation Standards 234
The /SO 9000 Documentation Standards 234
ISO 14000: AnEnvironmental Management
System 234
Managerial Challenge
Process Performance and Quality at Starwood 235
Benefits of/SO Cert/ficat/on 236
Malcolm Baldrige National Quality Award 236
Student CD-ROM and Internet Resources 237
Key Equat/'ons 237
Key Terms 237
Solved Problems 238
Discussion Questions 240
Problems 240
Active Model Exercise 248
Experiential Learning Statistical Process Control
with a Coin
Catapult 249
Selected References 251
CHAPTER 9 Lean Systems 347
Toyota Production System 347
Lean Systems Across the Organization 349
Characteristics of Lean Systems for Services and
Manufacturing 349
Pu// /Wethod of Work Flow 349
Qua//ty at the Source 350
Small Lot Sizes 350
Uniform Workstation Loads 351
Standardized Components and Work
Methods 351
Close Supplier Ties 352
Flexible Workforce 352
Line Flows 353
Automation 353
Five S 353
Preventive Maintenance 354
Continuous Improverrient Using a Lean Systems
Approach 354
Managerial Practice 9.1
Lean Systems at New Balance Athletic Shoe
Company 355
The Kanban System 356
Genera/ Operating Rules 357
Determining the Number of Containers 357
Other Kanbah Signals 359
Managerial Practice 9.2
CONTENTS
Lean Systems at University of Pittsburgh Medical Center
Shadyside 359
Value Stream Mapping 360
JIT II 362
Operational Benefits and Implementation Issues 362
Organizational Considerations 362
Managerial Practice 9.3
Implementing Manufacturing Principles at Cessna 363
Process Considerations 364
Inventoryand Scheduling 364
Student CD-ROM and Internet Resources 365
Key Equation 365
Key Terms 365
Solved Problem 365
Discussion Questions 366
Problems 366 y>.
Case Copper Kettje Catering 368 \\
Selected References 369 V
xiv CONTENTS
PART III Managing Value Chains 370
CHAPTER,10 Supply Chain Strategy 371
Dell Inc. 371
Supply Chain Strategy Across the Organization 372
SupplyChainsfor Services and Manufacturing 373
Services 373
Manufacturing 374
Managerial Practice 10.1
Supply Chain Excellence at 7-Eleven Japan 375
Measures of Supply Chain Performance 376
Inventory Measures 376
Process Measures 379
Links to Financial Measures 379
Supply Chain Dynamics 380
External Causes 381
Internal Causes 382
Integrated Supply Chains 383
The Customer Relationship Process 383
E-Commerce and the Marketing Process 383
E-Commerce and the Order Placement Process 384
The Order Fulfillment Process 385
Inventory Placement 386
Vendor-Managed Inventories 386
Continuous Replenishment Program 387
Radio Frequency Identification 387
Distribution Processes 387
Managerial Practice 10.2
Continuous Replenishment at the Campbell Soup
Company 388
Supplier Relationship Process 389
Supplier Selection and Certification 390
Supp//er Relations 390
Electronic Purchasing 391
Centralized Versus Localized Buying 392
ValueAnalysis 393
Supply Chain Strategies 393
Strategic Focus 393
Managerial Challenge
Supply Chain Strategy at Starwood 394
Managerial Practice 10.3
AResponsive Supply Chain Helps a European Clothing
Retailer DelightCustomers 396
Mass Customization 397
Managerial Practice 10.4
MassCustomization at Lands' End 399
Lean Supply Chains 400
Outsourcing and Offshoring 401
Virtual Supply Chains 403
Managerial Practice 10.5
HCL Corporation Provides Service Processes in Virtual
Value Chains 405
Student CD-ROM and fnternet Resources 406
Key Equatfons 406
Key Terms 406
Solved Problem 406
Discussion Questions 407
Problems 408
Experiential Learning Sonic Distnbutors 410
Case 1 Wolf Motors 412
Case 2 Brunsw/ck D/str/but/'on, Inc. 412
Selected References 417
CHAPTER 12 Inventory Management 461
Inventory Management at W/al-Mart 461
Inventory Management Across
the Organization A62
Inventory Basics 463
Pressures for Low Inventories 463
Pressures for High Inventories 464
Types of Inventory 465
Inventory Reduction Tactics 466
Managerial Practice 12.1
Improving Customer Service Through Inventory
ManagementatAmazon.com 467
Placement ofInventories 468
identifying Critical Inventory Items with ABC
Analysis 469
Economic Order Quantity 470
Ca/culating
the EOQ 477
Understanding the Effectof Changes 474
EOQ and Lean Systems 475
Inventory Control Systems 475
Continuous Review System 475
Periodic Review System 484
Managerial Practice 12.2
Implementing a Periodic Review Inventory System at
Hewlett-Packard 486
Comparative Advantages ofthe G and P
Systems 488
Hybrid Systems 489
Inventory Record Accuracy 489
\ Student CD-ROM and Internet Resources 489
Key Equations 490
KeyTefms 490
Solved Problems 490
CONTENTS
D/scuss/on Questfons 496
Problems 496
Active Model Exercise 501
Experiential Learning Swift Electronic
5upply„tnc. 502
Case Parts Emporium 504
Selected References 506
SUPPLEMENT D Special Inventory Models 507
Noninstantaneous Replenishment 508
Quantity Discounts 510
One-Period Designs 512
Student CD-ROM and Internet Resources 515
Key Equations 515
Key Term 515
Solved Problems 515
Problems 517
Selected References 519
CHAPTER 15 Resource Planning 623
Starwood 623
Resource Planning Acrossthe Organization 624
Enterprise Resource Planning 624
What an ERPSystem
Does 624
How ERPSystems Are
Designed 625
Planning
and Controlling Systems for Manufacturers 626
Dependent Demand 626
Managerial Practice 15.1
ERP at VFCorporation 627
Possible Planning and Control Systems 628
Material Requirements Planning 629
6j7/of Materials 629
Master Production Scheduling 630
Inventory Record 636
Planning Factors 639
Outputs from MRP 642
MRP and the Environment 645
Drum-Butfer-Rope System 646
Resource Planning for Service Providers 647
Dependent Demand for Services 647
Managerial Practice 15.2
The Drum-Buffer-Rope System at a U.S. Marine Corps
Maintenance Center 648
6/71of Resources 649
Student CD-ROM and Internet Resources 650
Key Terms 650
So/ved Prob/ems 65? ^
D/scuss/on Questions 655