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  • So welcome to my Coursera course in Introduction to Operations Management.

  • This is a 6-week long course, and today is the first session.

  • What I thought we would do in this first session is, instead of me bombarding you

  • with the logistics for this course, including the homework assignments, the

  • format of the course, the exam, the course book and all these other good things, we

  • just get started. I promise I make up for the logistics

  • later on. So, what is operations management about?

  • The purpose of this first session is to think a little bit about what operations

  • management does and how it relates to the business strategy of a firm.

  • This will also help us think about what type of goals management might set for an

  • operation, and that, in turn, guides what performance measures that we're gonna

  • track. So let's get started.

  • Let's start with two various specific examples.

  • It's soon lunch time. And so consumers are thinking about where

  • shall we go for lunch today? So we have our consumer here who is

  • heading to a restaurant. And now ask yourself what does the

  • consumer want out of the operations of this restaurant?

  • But first of all they want to get. Their sandwich quickly.

  • Lunch break is short, people are hungry. And so the time that they have to wait in

  • order to get the sandwich is a pretty important variable for the consumer.

  • Second, consumers differ in what type of sandwiches that they like.

  • And so the ability of the restaurant to really make sandwiches that are appealing

  • to customers is important. They have to be able to provide a variety

  • of sandwiches. Which means either having a big menu, or

  • being able to make these sandwiches to very specific customer instructions.

  • Third, the customer cares about quality. Now, quality, that could be the ambiance

  • of the restaurant, the friendliness of the staff.

  • It could be the hygiene of the place. It could be making sure that the cheese

  • weighs exactly what it says on the recipe. Quality will have a number of dimensions

  • that we will [inaudible] later on in this course.

  • And then finally, of course, price matters.

  • And so the consumer doesn't want to spend too much money for this lunch.

  • Now. Let's go from the restaurant here, and

  • let's look at the operations of a hospital.

  • Same thing, we have a consumer arriving to, for example, the emergency room of, of

  • a hospital. So we have our unhappy consumer here who's

  • coming to the hospital. And we're now asking ourselves, "Well,

  • what does the consumer want the operations of this hospital to do?" Again time is

  • critical. Wait times in emergency rooms in this

  • country can often take as long as five hours.

  • And so, the peo, person want to be seen quickly.

  • They want to make sure that they get the care that is right for them, instead of

  • the care that is right for the person in the bed next to them.

  • They want to receive this care in a high quality manner, making sure that it is in

  • accordance to the latest evidence-based medicine.

  • That the doctors and nurses have washed their hands.

  • That the place is clean and everything else.

  • And then finally there are the charges, and the co pay that the consumer and, or

  • his insurance will have to pay for the service.

  • So sandwich store or emergency room. We see that an operation has to be able to

  • perform well along four dimensions. The first one is the, the cost dimension.

  • That's probably what most of us associate with operations management.

  • It's just providing a high efficient operation.

  • The second dimension is variety. Now to be fair, consumers don't care about

  • variety per se. They just want something that they like.

  • So really variety measures the flexibility of an operation to provide goods and

  • services to a heterogeneous customer base. The third dimension is quality.

  • The quality dimension is broken up into two sub-dimensions.

  • The first one is called performance quality, the second one is called

  • conformance quality. Performance quality measures how good of a

  • product or service we provide. Most of us would agree that a BMW is a

  • high-performing car. Not because how it is built, but primarily

  • because how it has been designed. The second dimension then is conformance

  • quality. It really captures to what extent we're

  • able to deliver on the promise that we have made to the customer.

  • And then finally there's timeliness. Our ability to provide a quick response to

  • demand. Those four dimensions are important for

  • two reasons. First of all, they are the goals that we

  • strive for in an operation. And so they will guide what type of

  • performance measures we track. And then, they're really also at the heart

  • of defining the business strategy. These four dimensions give us opportunity

  • to differentiate our operations from other, thereby potentially providing us

  • with a competitive advantage. Now imagine you get hired to consult to

  • Subway. And you would be asked to come up with a

  • performance measurement system that tracks these four dimensions that we just

  • discussed. What would you measure?

  • Well, on the plus side, you would start potentially looking at the labor

  • productivity. You could imagine measures such as the

  • sandwiches per employees, or the customers served per employee, or the minutes it

  • takes you to make a sandwich or other measures like that.

  • You could also look at the customers per restaurant to measure.

  • To what extent your gonna efficiently use the real estate investment, that you have

  • by renting the, the restaurant. Now, how about the variety?

  • On the variety side, again, our idea of varieties that we will look at.

  • Are we be able to meet the heterogenous customer preferences?

  • Well, a simple measure for that would simply be looking at the number of items

  • that we have on the menu. Beyond that, if we're making the c-,

  • sandwiches to order, we could imagine looking at the percentage of customer

  • requests that we're able to fill. So customers come in, they want extra

  • lettuce, extra tomato, and the percentage of customer requests that we meet would be

  • another good measure of variety. How about quality?

  • Remember on the quality side, we had the two dimensions, conformance quality and

  • performance quality. So performance quality we will probably

  • have to do some customer research. Some survey looking for things about to

  • what extent they like the ambiance of the restaurant, to what ex-, extent they found

  • the courtesy of the staff in line with their expectations or other things.

  • On the conformance side we would probably look are we really delivering what we

  • promised? And so that means we could look at the

  • freshness of the ingredients of the sandwiches.

  • We could in extreme case even go as far as putting the sandwiches on the scale and

  • just measure whether we put the exact appropriate amount of grams of cheese on

  • the, the subway ham and cheese sandwich and so that would give us Good measure of

  • conformance quality. And then timing this is relatively easy to

  • measure. Customers care about the time that it

  • would takes them to get to the sandwich. And so, we could go and measure how many

  • minutes a customer has to wait between entering the store and leaving the store

  • with a sandwich in their hand. So finally let's talk about strategy.

  • Strategy guru, Michael Porter, suggested there are two ways in which an

  • organization can get a competitive advantage.

  • Either through cost leadership or through differentiation.

  • The dimensions that we discussed -- variety, quality and timeliness -- are

  • three ways in which your operation can differentiate itself from others.

  • Thereby, by coming up with a great operation, you are really creating your

  • firm competitive advantage.

So welcome to my Coursera course in Introduction to Operations Management.

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A2 US quality customer consumer sandwich restaurant variety

Intro Session 1 - Coursera - Operations Management

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    Darren posted on 2017/05/23
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