Chapter 1 – Business Process Design

Operations management refers to the direction and control of inputs that transform processes into products and services.

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As a functional area of a business, Operations translates materials and services into outputs.

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The three main line functions of any business include Operations, Finance and Marketing.

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Support functions in an organization include Operations, Finance and Marketing.

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Support functions in an organization include Accounting, Human Resources and Engineering.

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A process involves transforming inputs into outputs.

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Inputs to a process can include human resources.

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Every process has a customer.

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A nested process refers to a process within a process.

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At the level of the firm, service providers offer just services and manufacturers offer just products.

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At the process level, it is much easier to distinguish whether the process is providing a service or manufacturing a product.

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In a service process, output can be inventoried.

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Manufacturing processes tend to be capital intensive, while service processes tend to be more labor intensive.

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Quality is more easily measured in a service process than in a manufacturing process.

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Manufacturing processes usually have long response times compared to service processes.

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Contact with the customer is usually higher in a manufacturing process than in a service process.

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A core process is a set of activities that delivers value to external customers..

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A supply chain is the cumulative work of a firm’s processes.

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The supplier relationship process selects the suppliers of services, materials and information, while the order fulfillment process facilitates the timely and efficient flow of these items into the firm.

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Environmental scanning refers to the unique resources and strengths that an organization’s management considers when formulating a strategy.

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A firm’s core competencies should determine its core processes.

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Competitive priorities are the means by which operations implements the firm’s corporate strategies.

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Flexibility is a possible competitive priority.

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Consistent quality is not important to today’s consumers.

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Delivery speed is measured by the elapsed time between receipt of a customer’s order and filling it.

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Volume flexibility involves accelerating or decelerating the rate of production of services or products to handle large fluctuations in demand.

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A firm once made purchasing decisions based on which supplier had the lowest cost. But once cash flow was healthy, purchasing decisions were made based on which company could provide the goods and services the fastest. In this case, delivery speed is clearly the order qualifier.

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Strategic plans are developed farther into the future than tactical plans.

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Productivity is measured as input divided by output.

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Labor productivity is an index of the output per person or hours worked.

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Most products today are composites of global materials and services from throughout the world.

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The increased global presence of many firms has lessened the burden to behave ethically.

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Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an organization, they are all linked together through:

A) stakeholders.
B) management.
C) customers.
D) processes.

Which one of the following statements regarding operations management is true?

A) Customer participation and information on performance are two special types of inputs to a production system.

B) Operations management deals only with manufacturing organizations because service organizations do not have tangible outputs.

C) Inputs to a production system include capital and materials, but not human resources.

D) Typical inputs to a production system are processes and consumer goods.