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Professor Mellie Pullman Week 1 1

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2 How are we going to _________ the product or service? Other functional areas: Marketing Accounting Finance Human Resources Information Systems

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A sequence of activities that is intended to achieve some result. A process perspective: Links together all necessary activities and increase ones understanding of the entire system, rather than focusing on only one small part. 3

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CEOVice President Department Manager Vice President Department Manager Process A Process B Process D Process E Process C 4

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Sales places order Marketing enters order into system Finance does credit check Pick, Pack and Ship by distribution Invoiced by Finance Installation by Field Engineer 5

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6 Transformation (Conversion) Process InputOutput

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Physical: manufacturing Location: transportation Exchange: retailing Storage: warehousing or disk Physiological: health care Informational: insurance, telecommunications, etc. 7

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8 Transformation (Conversion) Process Energy Materials Labor Capital Information Goods or Services Feedback information for control of process inputs and process technology

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How many liters of water does it take to make 1 Liter bottle of Coke? 9

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In bottle itself: Roughly 1 liter of water Add Bottling plant operations, cleaning, cooling, and other needs Roughly 2.7 liters of water for 1 liter of Coke Add raw materials: the growing of Sugar Cane, one of the thirstiest crops in the world Roughly 250 liters of water to make 1 liter of Coke. 10

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Water is to Coca-Cola as clean energy is to BP We need to mange this issue (fresh water availability and use) or it will manage us. Jeff Seabright, VP of Environment and Water Resources, Coca-Cola Corporation Actions: influence the process Local targets established to improve water efficiency and energy use Commitment to rainwater harvesting 11

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12 Lid = 2.5 L Cup = 5.5 L Coffee = 143 L Milk = 49 L Sugar = 7.5 L Water =.5 L Energy 208 L Water per Cup A Caf Latt

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13 Buildings or Facilities People Processes Planning & Scheduling Parts, Data & Equipment

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14 Think of a company that you believe has a sustainability focus: What activities have they done any of the 5 Ps to improve their sustainability? People Parts & Equipment Processes Plants or Facilities (Buildings) Planning & Scheduling (Measuring/Monitoring) Is there an area where they are particularly weak? Why?

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Strategy without tactics is the slowest route to victory; Tactics without strategy is the noise before defeat. Sun Tzu (2001) 15

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16 The firms long-range plan based on an understanding of the marketplace Defines how a company intends to differentiate itself from competitors Individual employees & functional units use the strategy to align their efforts with each other to accomplish the overall game plan

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17 Consistent pattern of decisions Internal analysis External analysis Mission Distinctive Competence Objectives (cost, quality, flexibility, delivery, etc) Policies (process, quality systems, capacity, and inventory) Operations Strategy Business strategy Functional strategies in marketing, finance, engineering, human resources, and information systems Results Corporate strategy

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How is the business strategy different from the mission statement? Southwest airlines? 18

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19 Southwest Airlines Co. ("Southwest") is a major domestic airline that provides primarily short haul, high-frequency, point-to-point, low-fare service.

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20 The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.

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21 What does Southwest do better than most (if not all) of their competitors? Southwest has the lowest operating cost structure in the domestic airline industry, consistently offers the lowest and simplest fares, has one of the best overall Customer Service records.

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These dimensions of value enable firms to win customers: Cost (Price) low production costs enables the company to price its product below competitors Quality higher performance or a more consistent product can support a price premium Delivery Time faster delivery or consistent on-time delivery can support a price premium Flexibility (variety) highly customized products or choice flexibility can support a price premium Innovation or Sustainability: products that connect with consumers on social, environmental, and other values. 22

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23 Fresh, Natural Ingredients Toppings & Crust Choice Slow to Cook Expensive Ingredients Low Volume Ovens QUALITY QUALITY & DESIGN FLEXIBILITY VOLUME FLEXIBILITY TIMECOST

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24 The long-range plan for the design & use of the operations function to support the overall business strategy: The location, size, & type of facilities The worker skills & talents required The technology & processes to be used How product & service quality will be controlled

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26 Policies about Process How to produce & deliver Quality Criteria, measurement & process for achieving Capacity Physical facilities (where, size, activities) & labor (what kind, how many, when) Inventory What, when & how much?

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27 Policy TypePolicy AreaStrategy ChoiceNetflix ProcessAutomationHand-made or machine-made Span of ProcessMake or Buy Quality Systems ApproachPrevention or Inspection SuppliersSelected on quality or cost CapacityFacility SizeOne large or several small LocationNear markets, labor, or materials InventoryAmountHigh or low levels Control SystemsControl in great or limited detail

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Process Mindset Operations fit with the strategy of an organization as a competitive advantage as the key to addressing sustainability 28