Vlerick Business School

EFFECTIVE MANUFACTURING AND SERVICE DELIVERY

OPERATIONS MANAGEMENT
PROF. DR. ROBERT BOUTE

INTRODUCTION & STRATEGY MODULE

Introduction & Administrative
Goals and Key Paradigms of Course
Process view of Manufacturing & Service Delivery
Effective Manufacturing & Service Delivery and Value Creation

A Strategic Framework for Effective Manufacturing & Service

Delivery
Strategy: Product attributes and the Competitive Product Space

Mfg & Service Delivery: competencies and Processes

Aligning strategy and operations:

Focus
Case: Benihana of Tokyo

Vlerick Business School

AS A COURTESY TO OTHERS PLEASE:

Turn off your cell phones

Close your computers (unless you make notes)

Minimize comings and goings from class

Vlerick Business School

REQUIRED MATERIAL FOR CLASS

Cases on ForClass
Textbooks
Managing Business Process Flows (MBPF)
Optional: The Goal (light reaching novel) by E.
Goldratt

Edu-web
Handouts of class slides
Syllabus in pdf
Vlerick Business School

ASSESSMENT

Case preparations
No write-ups required
In-class discussions

Final Exam
Open book (textbook, cases and class notes)

Grading
Team assignment

40%

Individual final exam

60%

Class contribution
Vlerick Business School

TEAM ASSIGNMENT
Objective: gain insight in the current issues in Operations
Management
Pick a topic that is currently actual/topical/hot
Discussion of case
Description of the issue: what is the problem/ solution?
Evaluation of the proposed solution

Search for alternative solutions

Benchmark with peers / other countries
Link with the course
Personal opinion on the problem/solution
Discuss global perspective
(be creative)
Vlerick Business School

TEAM ASSIGNMENT EXPECTED OUTPUT

Presentation in final session

Pecha Kucha format: 20 slides, each 20 sec., only
images
Focus on core message

Report (deadline: last class)

3-4 pages

Vlerick Business School

ROBERT BOUTE
Professional Experience
Associate Professor Vlerick Business School and KU Leuven
Visiting Professor Kellogg School of Management

Teaching
Operations Management
Supply Chain Management
Research
Supply chain collaboration

Production inventory models

Managing volatility in Global Supply Chains

Vlerick Business School

WHAT IS YOUR EXPOSURE TO

OPERATIONS MANAGEMENT?

Vlerick Business School

PROCESS VIEW OF MANUFACTURING &

SERVICE DELIVERY
Process
Management

Inputs

Network of
Activities and Buffers

Outputs
Goods
Services

Flow units/Entities

(customers, data,
material, cash, etc.)

Resources
Labor & Capital
Vlerick Business School

Information
structure

ADVANTAGES OF ADOPTING A PROCESS VIEW

OF ORGANIZATIONS
Applies to any organization
Applies at any level

Is always customer aware and focused on outcomes

horizontal, i.e., across functions, view of the
organization in contrast to the usual vertical views along
the lines of functional departments
Highlights externalities
Highlights integration and problems

the process view is a unified, customer-centric model of the

organization that facilitates analysis and improvement in a
systematic manner

Vlerick Business School

Lets copy Toyota

Cutting production
costs and
EXAMPLES OF MFG & SERVICE
DELIVERY
speeding assembly is a vital step
Bitter rivals Airbus and Boeing Co.indon't
agree on much,
these days
the Airbus-Boeing
duel but
to stay
their production gurus chant a common
mantra: Let's copy Toyota, the
competitive
company that reinvented car making. The giant jet makers and their
suppliers are going back to school to learn about efficient production
from companies that churn out vehicles that are just a fraction of a
plane's size and complexity. Cutting production costs and speeding
assembly is a vital step in the Airbus-Boeing duel to stay competitive..
-- WSJ April 1, 2005.

The truly remarkable thing about Marriott is how well it has weathered
the economic downturn and post-Sept. 11 travel fears. All hotel chains
fell hard in 2001. The difference is that Marriott has recovered nicely.
[K]ey to the company's success is an attention to detail. . It has a 66item checklist for how to make up a room. Marriott last year began
rolling out a system called At Your Service that records a guest's every
little desire. If you want a foam pillow or areThe
irked
noise, the
keyby
to street
the company's
computer remembers for your next stay at that hotel--and soon,
success hotel
is an attention
to
anywhere in the chain. At Marriott's new 358-room
overlooking
detail
Elliott Bay in Seattle, manager Daniel Banchiu
has trained bartenders to
quiz guests about their stays and then to enter particular cravings, like
runnier room-service eggs, into the computer. -- Forbes, May 10, 2004
Vlerick Business School

THE KEYS TO CREATING VALUE

Some companies focus
exclusively on.

Sales
growth

Enterprise
value

Margin

and completely forget

about .and thus do
not create value!!!!

Resource
utilization

Myopic behavior of companies in value creation is visible in: reporting systems, incentive
systems and lack of prominence of logistics and operations managers in Excoms.
Vlerick Business School

Source: H. Daems (2008)

GOALS OF THIS COURSE

1. Manufacturing and Service Delivery as a managerial
integration function
2. Evaluation and Improvement [What? Where? How?]

We will adopt process view of Manufacturing and

Service Delivery

Vlerick Business School

WHAT IS MANUFACTURING AND SERVICE

DELIVERY?
Management of business processes
Improvement of business processes to create value
How to structure processes and manage resources to
develop the appropriate capabilities to convert inputs
to outputs.
What is an appropriate capability?
What is a good process?

Vlerick Business School

WHAT DEFINES EFFECTIVE MANUFACTURING

& SERVICE DELIVERY?

Delivered value of process =

benefit to process customers total process cost

Benefit driven by customer

value
Variety V
(flexibility)

Price p
(Cost)

Quality Q:
of product or outcome
of service

Vlerick Business School

Time T:
Rapid, reliable delivery
New product development

A STRATEGIC FRAMEWORK FOR OPERATIONAL

EXCELLENCE
1.

competitive
strategy

Given our strategic position, what must

operations do particularly well?

operations
strategy

Which competencies must ops develop?

Rank (c, T, Q, Flex)

3.

Vlerick Business School

What is the value proposition to our customers?

Rank (p, T, Q, V)

2.

Process
structure & mgt

What is our strategic position: how do we

compete & provide value in the market?

Given needed competencies, how should

operations processes be structured to develop
competencies that support strategy?
Process choice (structure) and management

RYANAIRS FEE TO PEE

Vlerick Business School

 Vlerick Business School

 Vlerick Business School

REPRESENTATION OF STRATEGY:

CURRENT POSITION AND STRATEGIC DIRECTIONS OF MOVEMENT

IN THE COMPETITIVE PRODUCT SPACE

Responsiveness

A
High

Low

Price
Vlerick Business School

STRATEGY VS. OPERATIONAL EFFECTIVENESS:

THE OPERATIONS FRONTIER AS THE MINIMAL CURVE
CONTAINING ALL CURRENT POSITIONS IN AN INDUSTRY

Responsiveness

A
B

operations
frontier

High

Price

Low

The Operations Frontier as the minimal curve containing

all current positions in an industry
Vlerick Business School

DESIGNING PROCESSES ALIGNED TO SPECIFIC

VALUE PROPOSITION: THE ADVANTAGES OF
FOCUSED PROCESSES

Basic facts:

Focused processes therefore are hard to beat

But what do you do if you want to serve different customer types with
different needs (values)? The choice:

1. there are many other dimensions of value besides low cost,

2. a process cannot perform well on every yardstick,
3. simplicity and repetition breeds competence

Different focused processes, each focused on one type

+: it is easier to be best in class

- : Yet this requires each customer type to have sufficient scale to justify the
financial investment

One integrated process:

+: pools over different low volume types typically smaller investment

+: It must be designed for the average type, and hence is never on the
frontier

Vlerick Business School

CASE BENIHANA OF TOKYO

Vlerick Business School

DISCUSSION QUESTIONS

What is Benihana selling?

What are the keys to Benihanas success
(comparing operating ratios with those of typical
restaurants, see Exhibit 1)?
What is the process flow at Benihana?
What is the role of the bar?

What dessert would you offer?

How has Benihana built control into its system?

How do you feel about Benihanas future? (would

you buy its shares?)

Vlerick Business School

WHAT IS BENIHANA SELLING?

See company profile video:
http://www.youtube.com/watch?v=epoIPgQrAy
Q&feature=related
Benihana London UK TV advertisement:

http://www.youtube.com/watch?v=c_Z845W_d
2k

Vlerick Business School

LEARNINGS
A well-designed operating system supports the
business strategy and helps to deliver superior
financial performance
The process must help ADD VALUE from the
customers perspective
Strategic mix of cost, quality, speed and flexibility
Operational control to improve profitability and
consistency
Ideally, we want a tightly focused process

Vlerick Business School

34

WRAP-UP

WHAT IS A EFFECTIVE MANUFACTURING AND

SERVICE DELIVERY?
A good process maximizes delivered value, which is the difference
between the benefit delivered to the customer minus total process
cost
Value improves when process competencies are aligned with targeted
customer value proposition. A simple framework asks three
questions:
1. What is the value proposition to our patients? Rank (p, T, Q, V)
2. Given this proposition, which competencies must the process have?
Rank (c, T, Q, Flex)

3. Given needed competencies, which process design is best? design

process

How to design the process?

Focused processes are easiest to get to the frontier; one
integrated may be needed because of financial investments
Its all about tradeoffs!

Vlerick Business School