Revision -06

26/11/2011

Describe the relationship between a Supply Network, a Supply Chain and a Supply Pipeline. (2009 March)

A supply network perspective means setting an operation in the context of all the other operations with which it interacts. For example suppliers, customers, materials, parts, information, ideas and people. So, supply network means the network of supplier and customer operations that have relationships with an operation. A supply chain is a strand of linked operations. In other words a linkage or strand of operations that provides goods and services through to end customers. A supply chain pipeline is a linkage or strand of operations that provides goods and services through to end customers

A supply network is all the operations linked together to provide goods and services. A chain is a strand of the operations that provides goods and services through to the end customer. There can be a number of supply chains within a network. Within a network several chains can cross. A supply pipeline is a linkage of operations that provides goods and services to the end customer.

Reference

Text Book – 402

You are the owner of an interior design shop. You sell interior design services as well as furniture, soft furnishings, wallpaper and paint. You specialize in designing the interiors for rich and famous clients. Your clients like always to have the most fashionable interiors; they have large budgets and expect a “cutting edge” finish to your work. Your clients will often re-decorate whilst they are on holiday or overseas and so you are often able to plan the work in advance. The factors that you would consider when selecting suppliers are outlined in the table in C) below. WHY are these factors important to the success of your business?

Question March 2009 marks -02

The central objective of taking these factors is to have a proper supplier evaluation, and thereby make sure that the customer will

be satisfied.

We have to consider 5 objectives while considering every single factor. They are:

Quality

Speed

Dependability

Flexibility

Cost

So to make sure that the customer will be satisfied and the main objectives are met, we will have to consider different factors regarding the suppliers.

How could the “Bullwhip Effect” affect a supply chain? Give an example related to the interior design shop. ( march 2009)

The bullwhip effect is the tendency of supply chains to create small changes at the demand side of a supply chain so that there is a disruption at the supply end of the chain. The main cause is an understandable desire by the different links in the supply chain to manage their production rates and inventory levels sensibly.

In other words, the changes of production levels along supply chain in response to a small change in end customer demand. For example a television manufacturer having a change in demand due to the ongoing Foot ball matches, where all the third tier supplier will have to meet the exceeding demand to fulfill the market requirements.

How can organisations reduce the bullwhip effect? (September 2009)

• A combination of three strategies could be used:• Information sharing – efficient sharing of information can reduce

demand fluctuations. For example in the case of Interior design business, having a proper communication with the supplier regarding the wants and needs or requirements of customer will have a huge impact.

• Channel alignment – adopting the same or similar decision making processes. Throughout the chain to co-ordinate why and how decisions are made. This will save the business from irregular decision processes.

• Operational efficiency – eliminating sources of inefficiency or ineffectiveness in the chain.

Consider capacity planning and control in relation to the house design and build project……

Before answering this question, I would like you to understand the term capacity.

Capacity planning and control (remember that you can draw this diagram related to

any question from capacity planning).

Operations strategy

Improvement

Planning and control

Operations managemen

t

Capacity planning and control

The operation supplies ... the capacity to deliver products and services

The market requires … the availability of

products and servicesDesign

So, capacity is a measure of the ability to manufacture or operate.

For example:Number of KFC chicken that a KFC outlet make during the lunch

time – will be the capacity of KFC Number of patients, who can be treated during the emergency period

in a hospital – will be the capacity of a hospital Number of passengers that an airplane can accommodate for a fly –

will be the capacity of an airlines

Hope you understand

Answer (10 marks)

Capacity is the maximum level of value-added activity that an operation, or process, or facility is capable of over a period of time.

Capacity is usually measured by the amount of output that can be produced in a particular time period.

Capacity should be planned and controlled, because capacity shortages can be costly.

Here we need to use forecasting the demand accurately, then match capacity and demand.

A site manager of a house building and design project might face number of problems related to capacity.

1. The resources available to the organization is the first consideration in capacity. - here as a site manager you will have facilities, equipments/machines, the labor, the layout and design, work methods all will determine the capacity.

2. There should be sufficient capacity and be coordinated with other stages and processes to ensure that the flows of material, information, and customers occurs smoothly. - for house building and design project a site manager must ensure the sufficient capacity, failing to do the same will create problems such as delays, excessive inventory and higher costs. 3. Another main issue will be related to job forecasting

4. Decision on the number of permanent staff/employees – For a site manager it is critical to decide the number of employees to satisfy the customer demands.

5. Decision on sub-contract staff must be made - for a site manager it will be how many ?, which skill? & how long? Failing to do so will lead to problems such as insufficient capacity, delays and customer dissatisfaction.

6. The number and type of various machines or equipments required will be the other concern. For a site manager diggers, lorries, and other necessary equipments should be sufficient to meet the demand.

7. Other issue is related to the size and location – for site manager this is a critical decision to be made, here the whole operation is depending on the size and location of a construction site.

8. Issues relating to different capacity at different times, e.g. extra demand for labourers during site clearing, etc.

9. Can the facility, process, or equipment accommodate new goods and services and adapt to changing demand.

10. When should capacity change take place? – this will be another point for the site manager to plan.

Again, site manager must decide on the appropriate levels of capacity to meet current and future demand. Capacity decisions must be made for short and long term to allow customer satisfaction. Capacity decisions are often influenced by economies and diseconomies of scale.

Economies of scale means average cost decreasing as the capacity and volume of throughput increases. Diseconomies of scale is the opposite where the cost increases, as the capacity and throughput increases.

For the site manager also the same situation may happen, for example the design and construction cost decreases as the facility getting larger with more capacity. But the continues increase in the size of house will make an increase in the cost with high overhead and operating cost.

Another decision to be made is related to the safety capacity – means an amount of capacity reserved for unanticipated events such as demand surges, materials shortages, and equipment breakdowns.

For a site manager considering this safety capacity is always a must to meet with the uncertainties. For example is materials facing shortage or breakdown of machines will cost high, if the safety capacity is ignored.

End of the answer !!

Reference

New reference book – page 402, 403, 404, 405, 406 , 407 …..

Text Book – 322- 350( last paragraph)

Remember? I made this answer more generic with the

example separate, so that you can use the same format for the same type of questions.

What control measures might be relevant to the overall project? Justify your answers. ( September 2011)

Control measures help to achieve the objectives and quality. The central objective is the satisfaction of customers. To check this we have to follow the steps below:

1. Compliance with specifications or designs – for project it should comply with the building regulations.

2. There should be accurate measures in operation or process – for the project it is vital such as correct amount of concrete, mortar e.t.c

3. Minimizing the ‘down time’ is another measure . For project this would help to meet with the inclement weather.

4. Another measure should be checking the number of unfulfilled delays or orders.

5. Another measure should be following the quality standards.

6. Again, importantly measuring the inventory levels can be used as another tool.

7. checking the timely arrival of materials would be another option.

Reference

This question is a generic question, where your knowledge related to the OM should be used, and little to do with any chapters we have gone through.

But, try to cover up project management chapter 16 in the Text book and mix the same with capacity.

Discuss capacity issues that the Bar Manager might face over time………

Check this question!!

Same, very same!!

Just the example is the different one.

Please include some extra information as follows:

• Number of cash registers • Number of beer pumps • The stock level of different drinks Please remove the site manager term from the previous question(2011

September) and insert ‘Mar Manager’.

What control measures might be relevant to both the Bar and Restaurant? Justify your answers

This question also the same, as the one we saw before.

Control measures help to achieve the objectives and quality. The central objective is the satisfaction of customers. To check this we have to follow the steps below:

• Portion sizes in restaurant - to make sure the consistent quality, and ensure customer satisfaction.

• Accurate “measures” for beer/wine, etc - to implement controlling in bar stock. • Customer waiting times in both the bar and restaurant – from this measurement we can

understand the capacity of facilities & layout. • Number of unfulfilled customer orders - this measure helps to plan the job demand.• Adherence to quality standards - • Inventory levels (not excessive) • Customers served per hour/day • Cooking temperature ranges for restaurant, etc • Storage temperature ranges for uncooked food and wines/beer, etc.

Now you can choose the general ones here and add.

1. Compliance with specifications or designs – for project it should comply with the building regulations.

2. There should be accurate measures in operation or process – for the project it is vital such as correct amount of concrete, mortar e.t.c

3. Minimizing the ‘down time’ is another measure . For project this would help to meet with the inclement weather.

4. Another measure should be checking the number of unfulfilled delays or orders.

5. Another measure should be following the quality standards.

6. Again, importantly measuring the inventory levels can be used as another tool.

7. checking the timely arrival of materials would be another option.

What problems might be encountered in setting performance targets and measuring performance in a hospital? (June 2010)

Measurement is the act of quantifying the performance criteria of organizational units, goods and services, processes, people, and other business activities. In other words the activity of measuring and assessing the various aspects of a process or whole operation’s performance.

A performance measurement is possible only when it is compared against some kind of target.

The main objective of both setting performance targets and measuring is to satisfy the market requirements or customer satisfaction.

Setting performance targets transforms performance measures into performance judgments.

There are several approaches for setting targets such as:Historically – based targets Strategic targets External performance – based targets Absolute performance targets

One of the problems for in setting targets is that different targets can give very different messages, regarding the improvement achieved. If the strategy is not well defined, it is difficult to target key performance indicators.

For example according to the historical targets the hospital performance may be higher than the previous year, however the problem is that the present year target set might be higher than the target achieved in that case the performance is poor and not good.

Benchmarking is another method for setting the performance target.

(Benchmarking critical commentary page 586 - Text Book)

Next issue is to evaluate if the targets are realistic or not. For a hospital it is of high importance as unrealistic targets will give the wrong idea.

• How to set “qualitative” targets, e.g. what may contribute to enhancing “customer satisfaction” and what are appropriate targets to set? - this is important for the hospital to concentrate on ‘qualitative’ targets to make sure the satisfaction of customers.

• What is the timescale for targets? – targets must have a timescale for the proper measurement.

• Are the targets set realistic in terms of similar organizations? – this is an example for the type of bench marking where a hospital can observe practicality of the set targets.

• Another important issue is related to the changes that happens over the time. Definitions and standards that you set today may change by tomorrow, so how to handle this situation. For example in a hospital heart transplant surgery procedures, technologies may change over the time. So how to handle this situation is an issue.

The next part is about measurement. Good performance measures enable managers to control processes and make decisions on the basis of facts, not opinions. They provide a scorecard of performance, help identify performance gaps, and make accomplishments visible to the work force, the stock market, and other stakeholders. Knowing that one is doing a good job – or a better job than before – is a powerful motivator for most workers. However, the wrong kind of performance metric can be dangerous.

Major measures used to measure the performance

1. CSI – customer satisfaction index • Qualitative, quantitative or both? – hospital must decide if the measurement should

either be quantitative or qualitative. • Targets that can “pull” against each other (e.g. improving performance against one

target can negatively affect another, for example faster treatment of emergency cases may delay routine appointments)

• How to capture data/information – this may create another problem in measurement. • How to present data/information – the best method to represent data also going to

be a question. • The problems of historical comparisons if definitions/ calculations change over time.• What is acceptable/achievable improvement? Can this be sustained year on year?• What are the reporting periods and can this skew perceptions/understanding?

Students looking for higher grades can look into the following points too. (reference New reference book 72, 73, 74, 75, 76, 77, 78

Performance measures can be classified into several key categories:

Financial measures

Customer and market measures

Safety measures

Quality measures

Time measures

Flexibility measures

Innovation and learning measures

Productivity measures

Identify THREE micro-operations that might exist in a hospital.

Remember Micro-operations, hierarchy of operations, internal customer concept are the same.

Main this to understand here is the simple theory – inside one organization there are suppliers and customers.

Reference – Text Book 12, 13 table 1.3

Now let us answer this question.

For a hospital the micro-operations are : • patient admissions and registrations• staff recruitment and training,• scheduling of clinics and patient appointments,• information and guidance services on disease prevention

State the likely capacity plan that may be used for each of THREE of the micro-operations that you have identified in (a). Give reasons for your answer. (Text Book 333)

There are three levels of capacity plans:

Level capacity plan – ignore the fluctuations or changes and keep the activity levels constant.

Chase capacity plan – adjust capacity to reflect the fluctuations in demand.

Demand management - attempt to change demand to fit capacity availability.

For example, a focus on admissions may lead to look at a capacity plan that allows for the adjustment of capacity in line with demand such as the Chase Demand plan.

However, if routine appointments are considered separately from emergencies and it is feasible to reschedule appointments at short notice, there may be justification for selecting a different plan, such as the Level capacity plan.

Alternatively, a focus on the use of triage systems of scheduling may lead candidates to suggest a level capacity or demand management plan.

Outline the drawbacks of ONE of the plans that you have identified (June 2010)

Chase demand Capacity Plan – increased costs associated with the need to adjust production to meet demand (employing additional staff on a short term basis, over-time, subcontracting)

The associated issues of maintaining quality levels, adherence to company procedure, labour relations etc.

( Those who want higher grades, please refer Text Book page 338 critical commentary)