Page 19 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes Flexibility is the input to the value equation relating to the ability of the Operations Management
system to give the customer the desired product.
Operations managers evaluate cost, measured in money terms, for its contributions in two
important roles:

 Enhancing value, and
 Serving as a performance metric for evaluating business processes.
The element in the value equation that is of primary importance is often called the order winner.
Order winners are attributes that reflect a customer’s preference and dominate the other elements
of value. Excellent food offered by a restaurant may be an order winner. Over time, order
winners often evolve into order qualifiers, as the value provided by competition improves.

Example: Sony’s Trinitron picture tube that was an order winner became an order qualifier
as the quality of competition improved. Having a high-quality picture tube was no longer
enough for Sony to win the customer.
Sometimes, a value equation component has a trait that can make the consumer decide in not
purchasing the product. Such traits are called order losers. Human rights activists dissuade
people from buying products made through child labour. In this case, products identified as
being produced by children become order losers.

Self Assessment

Fill in the blanks:
7. The concept of ……………… customer has profoundly changed Operations Management
thinking.
8. ……………… is a measure of the extent the product, when properly used, is able to
accomplish the intended feat.
9. The element in the value equation that is of primary importance is often called the
……………… .

1.4 The Operations Manager’s Role

A modern operations manager performs many roles. Figure below reflects the relationships
between the various process components of the business environment. As will be seen from the
figure, unlike the transformation approach, the organizational relationship starts with the
external environment that includes suppliers and customers. There is a continuous feedback
into the system which makes the environment dynamic.

Figure 1.4: Value Driven Concept of Operations Management
Feedback

Inputs:
Materials Processes
Capital
Equipment
Suppliers People Customers
Information
Energy

Operations
Management

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