How to operate a Businesses


Question Description

Discussion 1.Customer Service - Zappos

  • From the e-Activity, analyze the role that customer service plays and determine the service management skills at Zappos. Evaluate the different way(s) that Zappos creates a superior customer service.
  • Choose at least two OM activities in Exhibit 1.1 from Chapter 1 of the text. Evaluate how each of the activities impacts the management of goods and services that Zappos provides. Include one to two examples from each activity to support your position.

Discussion 2.Value Chains

  • Choose an example of a global value chain and an example of domestic value chain. Compare and contrast the key challenges that the managers would face. Then, propose the ways to confront these challenges.
  • Utilizing the Exhibit 2.4 from Chapter 2 of the text, evaluate how each value chain you chose from Part 1 of this discussion can be described from a pre- and post-production service perspective. Provide at least two examples for each perspective.

Discussion 3.Assessing Stakeholder Positions

  • Apple is about to release its latest technology. The company needs to develop a plan to communicate with key stakeholders about the release. You have been tasked with identifying those main stakeholders and selecting the method for communicating with each group. Summarize your plan in a two to three paragraph post.

I have provided you with both chapters 1 and 2 for discussion 1 and 2 below.

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OM 4 Operations Management Part 1 Chapter 1 GOODS, SERVICES, AND OPERATIONS MANAGEMENT i want to be a director of a museum like this one day,” Carol said to her mom as they walked through Chicago Museum of Science and Industry. Carol’s family had just finished a tour of the 1944 German submarine known as the U-505 that was captured during World War II. They had spent the day learning about coal mines, the science of the human body, Dr. Seuss, and much more. As they walked past the museum offi ces, Carol noticed a directory of eight departments: t #VTJOFTT0QFSBUJPOT t (VFTU$BMM$FOUFS t 'BDJMJUJFT t (VFTU0QFSBUJPOT t 'PPE4FSWJDF t *OGPSNBUJPO4FSWJDFT t &YIJCJU.BJOUFOBODF t 1SPUFDUJWF4FSWJDFT 4IFBTLFE i%BE XIZEPFTBNVTFVNOFFEBMMUIFTF "MM*TFFBSFUIFFYIJCJUTw learning outcomes After studying this chapter you should be able to: 1-1 Explain the concept and importance of operations management. 1-2 Describe what operations managers do. 1-3 Explain the differences between goods and services. 1-4 Describe a customer benefit package. 1-5 Explain the role of processes in OM and identify three general types of processes. 1-6 Summarize the historical development of OM. 1-7 Describe current challenges facing OM. Can you provide examples of the type of work activities and decisions that are made in each of these eight departments at the Chicago Museum of Science and Industry? Limited What do you think? 2 72417_ch01_ptg01_hr_002-023.indd 2 09/08/12 10:55 AM CHAPTER o 1-1 Operations Management 1 perations 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; and the continual improvement of these goods, services, and processes. Why is OM important? To answer this, we might first ask the question: What makes a company successful? In 1887, William Cooper Procter, grandson of the founder of Procter & Gamble, told his employees, “The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share.” Procter’s statement—which is still as relevant today as it was over 100 years ago—addresses three issues that are at the core of operations management: efficiency, cost, and quality. Efficiency (a measure of how well resources are used in creating outputs), the cost of operations, and the quality of the goods and services that create customer satisfaction all contribute to profitability, and ultimately, the long-run success of a company. A company cannot be successful without people who understand how these concepts relate to each other, Operations management which is the essence (OM) is the science and art of ensurof OM, and can aping that goods and services are creply OM principles ated and delivered successfully effectively in makto customers. ing decisions. Hemis/Alamy . A variety of departments, including Security, Exhibit Maintenance, and Guest Operations, are required to keep a museum running smoothly. OM OM4 72417_ch01_ptg01_hr_002-023.indd 3 Chapter 1: Goods, Services, and Operations Management 3 09/08/12 10:55 AM The opening description of Chicago’s Museum of Science and Industry suggests that the way in which goods and services, and the processes that create and support them, are designed and managed can make the difference between a delightful or unhappy customer experience. That is what OM is all about! Operations management is the only function by which managers can directly affect the value provided to all stakeholders— customers, employees, investors, and society. The eight departments at Chicago’s Museum of Science and Industry highlight the importance of OM in designing and managing the museum. Each of these departments uses one or more processes to create customer value and ensure efficient operations. The guest call center, for example, must design processes to handle a wide variety of customer inquiries, forecast call volume, determine the number (capacity) of customer service representatives (CSRs) to have on duty by time of day, schedule them, design their jobs, and train them to deliver superior customer experiences. In fact, the museum does all of the activities described in the box “What Do Operations Managers Do?” m 1-2 OM in the Workplace any 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 concepts 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. Thus, everyone should understand OM and be What Do Operations Managers Do? Some of the key activities that operations managers perform include the following: t Forecasting: Predict the future demand for raw materials, finished goods, and services. t Supply Chain Management: Manage the flow of materials, information, people, and money from suppliers to customers. t Facility Layout and Design: Determine the best configuration of machines, storage, offi ces, and departments to provide the highest levels of effi ciency and customer satisfaction. t Technology Selection: Use technology to improve productivity and respond faster to customers. t Quality Management: Ensure that goods, services, and processes will meet customer expectations and requirements. t Purchasing: Coordinate the acquisition of materials, supplies, and services. t Resource and Capacity Management: Ensure that the right amount of resources (labor, equipment, materials, and information) is available when needed. t Process Design: Select the right equipment, information, and work methods to produce high-quality goods and services effi ciently. t Job Design: Decide the best way to assign people to work tasks and job responsibilities. t Service Encounter Design: Determine the best types of interactions between service providers and customers, and how to recover from service upsets. t Scheduling: Determine when resources such as employees and equipment should be assigned to work. t Sustainability: Decide the best way to manage the risks associated with products and operations to preserve resources for future generations. able to apply its tools and concepts. Following are some examples of how our former students (who were not OM majors!) are using OM in their jobs. The concepts and methods of OM can be used in any job, regardless of the functional area of business or industry. 4 OM4 Part 1: Understanding Operations 72417_ch01_ptg01_hr_002-023.indd 4 09/08/12 10:55 AM SMART TRASH CONTAINERS & OPERATIONS A new solar-powered trash container on a Florida public road not only compacts the trash but also sends an e-mail for pickup when full. One side of the container is for recycling and the other for trash. Regular trash containers must be picked up several times a week. Each 300-pound solar-powered trash container costs about $3,800 but reduces the overall carbon footprint by lowering transportation costs, in addition to offering the environmental benefits of recycling. Compacting the trash also results in less pickups. The covered containers also protect animals from foraging through the trash and harming themselves and the environment. Cash-strapped cities such as Philadelphia and Chicago have bought hundreds of these “smart trash containers.” This smart and new way of collecting trash and recycling has a major impact on the operation of this government service (see box “What Do Operations Managers Do?”). First, there is less need to forecast when the containers are full, and better quality because the containers don’t overflow and contaminate the surroundings. In addi- r Scheduling: Production schedules are created to ensure that enough product is available for both retail and wholesale customers, taking into account such factors as current inventory and soap production capacity. r Quality management: Each product is inspected and must conform to the highest quality standards. If a product does not conform to standard (for example, wrong color, improper packaging, improper labeling, improper weight, size, or shape), then it is removed from inventory to determine where the process broke down and to initiate corrective action. tion, less trucks (resources) are required Richard Graulich/ZUMA Press/Newscom Without an understanding of OM, the company would never have gotjobs and processes are streamlined and ten off the ground! more efficient, the scheduling of trucks Tom James is a senior software (called vehicle routing) is more efficient developer for a small software develand reduces total miles travelled, and the opment company that creates sales trash collection system is more sustainproposal automation software. Tom uses OM skills in dealing with quality able in preserving resources for future and customer service issues related to generations. the software products he is involved Source: “Jupiter’s new solar-powered trash bins already having effect across Florida,” The Palm Beach Post in developing. He is also extensively News, October 24, 2011, involved in project management activities related to the development process, including identifying tasks, assigning developers to tasks, estimatSoap Box Soap Company ( ing the time and cost to complete projects, and studymanufactures and sells natural soaps and body proding the variance between the estimated and actual time ucts. The company was created as an entrepreneurial it took to complete the project. He is also involved in venture by Shelly Decker and her sister. Shelly was an continuous improvement projects; for example, he seeks accounting and information systems major in college, to reduce development time and increase the efficiency of but she is involved in using OM skills every day: the development team. Tom was an information technology and management major in college. r Process design: When a new product is to be inBrooke Wilson is a process manager for JPMorgan troduced, the best way to produce it must be deChase in the credit card division. After several years working termined. This involves charting the detailed steps as an operations analyst, he was promoted to a production needed to make the product. supervisor position overseeing “plastic card production.” r Inventory management: Inventory is tightly conAmong his OM-related activities are the following: trolled to keep cost down and to avoid production r Planning and budgeting: Representing the plastic that isn’t needed. Inventory is taken every four card production area in all meetings, developing weeks and adjusted in the inventory management annual budgets and staffing plans, and watching system accordingly. for the total trash collection system, OM4 72417_ch01_ptg01_hr_002-023.indd 5 Chapter 1: Goods, Services, and Operations Management 5 09/08/12 10:55 AM UNITED PERFORMANCE METALS: THE LIFE OF AN OPERATIONS MANAGER U nited Performance Metals, formerly known as Ferguson Metals, located in Hamilton, Ohio, is a supplier of stainless steel and high-temperature alloys for the specialty metal market. Ferguson’s primary production operations include slitting coil stock and cutting sheet steel to customer specifications with rapid turnaround times from order to delivery. With only 78 employees, about half of whom are in operations, the Director of Operations and Quality is involved in a variety of daily activities that draw upon knowledge of not only OM and engineering, but also finance, accounting, organizational behavior, and other subjects. He typically spends about 50 percent of his time working with foremen, supervisors, salespeople, and other staff through e-mail and various meetings, discussing such issues as whether or not the company has the capability to accomplish a specific customer request, as well as routine production, quality, and shipping issues. Although he makes recommendations to his direct reports, his interaction is more like a consultant than a manager; his people are fully empowered to make key decisions. The remainder of his time is spent investigating such issues as the technical feasibility and cost implications of new capital equipment or changes to existing processes, trying to reduce costs, seeking and facilitating design improvements on the shop floor, and motivating the workforce. For example, one project involves working with the Information Technology group to reduce the amount of paperwork required to process orders. Understanding specialty metals is certainly a vital part of this job, but the ability to understand customer needs, apply approaches to continuous improvement, understand and motivate people, work cross-functionally across the business, and integrate processes and technology define the job of an operations manager. In 2008, Ferguson Metals merged with AIM International as Coiled steel awaiting processing. Slitting coils into finished strips. technology that might affect the production of plastic credit cards. r Inventory management: Overseeing the management of inventory for items such as plastic blank cards; inserts such as advertisements; envelopes, postage, and credit card rules and disclosure inserts. r Scheduling and capacity: Daily to annual scheduling of all resources (equipment, people, 6 Courtesy of Ferguson Metals Courtesy of Ferguson Metals Courtesy of Ferguson Metals United Performance Metals. Some of Ferguson’s finished products. inventory) necessary to issue new credit cards and reissue cards that are up for renewal, replace old or damaged cards, as well as cards that are stolen. r Quality: Embossing the card with accurate customer information and quickly getting the card in the hands of the customer. Brooke was an accounting major in college. OM4 Part 1: Understanding Operations 72417_ch01_ptg01_hr_002-023.indd 6 09/08/12 10:55 AM A senior executive of the Hilton Corporation stated, “We sell time. You can’t put a hotel room on the shelf.” ompanies design, 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. Examples of goods include cell phones, appliances, food, flowers, soap, airplanes, furniture, coal, lumber, personal computers, paper, and industrial machines. A durable good is one that does not quickly wear out and typically lasts at least three years. Vehicles, dishwashers, and furniture are some examples. A nondurable good is one that is no longer useful once it’s used, or lasts for less than three years. Examples are toothpaste, software, clothing and shoes, and food. Goods-producing firms are found in industries such as manufacturing, farming, forestry, mining, construction, and fishing. A service is any primary or complementary activity that does not directly produce a physical product. Services represent the nongoods part of a transaction between a buyer (customer) and seller (supplier).1 Serviceproviding firms are found in industries such as banking, lodging, education, health care, and government. The services they provide might be a mortgage loan, a comfortable and safe place to sleep, a college degree, a medical procedure, or police and fire protection. Designing and managing operations in a goodsproducing firm is quite different from that in a service organization. Thus, it is important to understand the nature of goods and services, and particularly the differences between them. Goods and services share many similarities. They are driven by customers and provide value and satisfaction to customers who purchase and use them. They can be standardized for the mass market or customized to individual needs. They are created and provided to customers by some type of process involving people and technology. Services that do not involve significant interaction with customers (for example, credit card processing) can be managed much the same as goods in a factory, using proven principles of OM that have been refined over the years. Nevertheless, some very significant differences exist between goods and services that make the management of service-providing organizations different from goods-producing organizations and create different demands on the operations function.2 Dmitriy Shironosov/Shutterstock c 1-3 Understanding Goods and Services 1. Goods are tangible, whereas services are intangible. Goods are consumed, but services are experienced. Goods-producing industries rely on Stephen Coburn/Shutterstock A good is a physical product that you can see, touch, or possibly consume. OM4 72417_ch01_ptg01_hr_002-023.indd 7 A durable good is one that does not quickly wear out and typically lasts at least three years. A nondurable good is one that is no longer useful once it’s used, or lasts for less than three years. A service is any primary or complementary activity that does not directly produce a physical product. Chapter 1: Goods, Services, and Operations Management 7 09/08/12 10:56 AM Customers judge the value of a service and form perceptions through service encounters. Andersen Ross/Getty Images In addition, the customer and service provider often co-produce a service, meaning that they work together to create and simultaneously consume the service, as would be the case between a bank teller and a customer to complete a financial transaction. This characteristic has interesting implications for operations. For example, it might be possible to off-load some work to the customer by encouraging self-service (supermarkets, cafeterias, libraries) and self-cleanup (fast-food restaurants, campgrounds, vacation home rentals). The higher the customer participation, the more uncertainty the firm has with respect to service time, capacity, scheduling, quality performance, and operating cost. A service encounter is an interaction between the customer and the service provider. Some examples of service encounters are making a hotel reservation, asking a grocery store employee where to find the pickles, or making a purchase on a Web site. Service encounters consist of one or more moments of truth —any episodes, transactions, or experiences in which a customer comes into contact with any aspect of the delivery system, however remote, and thereby has an opportunity to form an impression.4 A moment of truth might be a gracious welcome by an employee at the hotel check-in counter, a grocery store employee who seems too impatient to help, or trying to navigate a confusing Web site. Customers judge the value of a service and form perceptions through service encounters. Therefore, employees who interact directly with customers, such as airline flight attendants, customer service representatives, and bank tellers, need to understand the importance of service encounters. Also, those who design Web sites and telephone menus that customers use in service encounters must also understand how they may influence customer perceptions. machines and “hard technology” to perform work. Goods can be moved, stored, and repaired, and generally require physical skills and expertise during production. Customers can often try them bef ...
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Business Operations
Institutional Affiliations
7th October 2017


Discussion 1 a: Zappos' strategic plan included investing heavily on research regarding
customer needs and requirements to create a superior customer service. The ideals that Zappos
believed in included the fact that a human touch could not be compared or replaced with
technological interaction, therefore, it was better to put their resources in developing the best
customer service rather than investing heavily in marketing campaigns.
Zappos achieved superior customer services since their website has been designed with the
best human and computer interface. This means that the website is easy to use and supports
customers operation, therefore it easy for them to navigate through and get what they want. The
website has also contributed to superior customer care in that it portrays the vast quantities of items
that are for sale. The customer service representatives have excellent interpersonal skills which
relate to great customer services.
The CEO of Zappos treats his staff with respect which affects the way the staff, in turn,
treats their customers. Employee satisfaction increases productivity which in this case is the value
of customer service offered. Zappos customers are also offered free shipping for goo...

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