SYSTEMS DESIGN
Introduction
The problems, challenges, and opportunities faced by operations managers revolve around the
acquisition and utilization of resources for conversion. Their goals include both efficiency and
effectiveness. A number of issues and decisions must be addressed as operations systems are
designed. The most basic ones are product service mix, capacity, and facilities.
Product-service mix
Refers to how many and what kinds of products or services (or both) to offer. This decision
flows from corporate, business, and marketing strategies. Managers have to make a number of
decisions about their products and services, starting with how many and what kinds to offer.
Capacity
Refers to the amount of products, services, or both that can be produced by an organization.
Facilities
Refers to the physical locations where products or services are created, stored, and distributed.
Major decisions pertain to facilities location and facilities layout. Location is the physical
positioning or geographic site of facilities. Layout refers to the physical configuration of
facilities, the arrangement of equipment within facilities, or both. Product layout is a physical
configuration of facilities arranged around the product; used when large quantities of a single
product are needed
Process layout is a physical configuration of facilities arranged around the process; used in
facilities that create or process a variety of products.
Manufacturing and service system
The production system of an organization is that part, which produces products of an
organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the policies
communicated by management.
Some of the most important components of the service system are as follows: 1. The Service
Operations System 2. The Service Delivery System 3. The Service Marketing System.
1. The Service Operations System:
The service operations system comprises backstage activities, such as staff training, stock
replenishment, etc., as well as the front stage aspects of the operation experienced directly by the
customer, such as how they are treated by employees as soon as they enter the parlour, or how
quickly they are moved around from the washbasins to the cutting chair (if they are receiving a
cut and blow for example).
Although there is generally no need for the customer to see most aspects of service operations
(therefore they are kept backstage), some service providers deliberately expose customers to
backstage activities in an attempt to influence positively their perceptions of the quality of the
service provided.
Restaurants frequently invite customers to visit kitchens where the food is being prepared either
before or after they have eaten. This is designed to reinforce an image of fresh food prepared in a
hygienic cooking environment which may influence their perception of the overall quality of
their experience.
2. The Service Delivery System:
The service delivery system encompasses not only the visible elements of the service operating
system, employees and the physical facilities, but also includes exposure to other customers. In
many- service businesses, positive on-site interaction can have a significant impact on
customers’ overall perception of their experience. In the hairdressing parlour, customers may
find themselves waiting for a period of time for their particular stylist in a communal reception
area.
Conversations frequently take place at this point between customers who have never met prior to
entering the delivery system. Although the discussions may consist largely of banter and
pleasantries not directly connected with the hairdressing service (e.g. conversations about the
weather, traffic in town, etc.), the exchanges can for many customers improve their overall
experience by making the time pass more quickly.
Occasionally, when conversations turn to the service itself, the provider can benefit positively
from the exchange. For instance, one customer who has visited the parlour several times may
comment on the skill and expertise of a certain stylist, and the generally professional attitude of
all employees. To new customers attending for the first time the comments might have a positive
influence on their opinion of the parlour.
3. The Service Marketing System:
The service marketing system incorporates elements of the service experience which may
contribute to the customer’s overall view of the organisation but are not specifically part of the
delivery system. Clearly, many of these are the elements which the organisation may not be able
to control, such as conversations customers may have about the parlour with friends or relatives
at home, or exposure to the service they may get from reading a hairdressing editorial in the local
paper.
Lovelock feels that by conceptualising the service experience as three overlapping systems,
services managers are forced to consider their business from a customer’s rather than a purely
operations perspective. It highlights the importance of managing all elements of the business that
are visible to customers.
Factors that influence the choice of production/manufacturing system
There is no best manufacturing system for any product. The choice of the system depends on
various circumstances but it must meet two basic objectives, namely:
It must be able to meet the specifications of the final product, and
It must be cost effective
The product specifications can be met by choosing the right technology but that is not always an
easy task. Since stricter specifications add to the cost of the product, there is always a trade off
between the desired specifications and the cost to achieve such specifications. For example,
sophisticated injection moulding machines and high quality plastics can produce excellent dolls
cheaply provided they are produced in volume. However, if their demand is limited, they may
not be able to compete with “home made” dolls produced in small quantities and sold at a
fraction of the price of the moulded version. Various factors which determine the choice of the
manufacturing process are as follows:
Effect of volume/variety: One of the major considerations in the process selection is the
volume/variety of the products. High product variety require highly skilled labour, general
purpose machines, detailed production planning and control system. On the other hand low
product variety (i.e. one or few products produced in large volumes) enables the use of low
skilled labor, highly automated mass production processes using special purpose machines and
simple production planning and control systems.
Capacity of the plant: The projected sales volume is a major influencing factor in determining
whether the firm should go in for intermittent or continuous process. Fixed costs are high for
continuous process and low for intermittent process while variable costs are more for the
intermittent process and less for continuous process. Intermittent process therefore will be
cheaper to install and operate at low volumes and continuous process will be economical to use
at high volume.
Flexibility: Flexibility implies the ability of the company to satisfy varied customers
requirements. Flexibility and product variety are inter-related. If more variety is to be
manufactured, the manufacturing facilities will have to be commonised and depending upon the
volume, the extent of commonalities will require to be justified. Greater commonalities demands
intermittent manufacturing which is associated with higher inventories, large manufacturing lead
times and elaborate planning and control.
Lead time: Lead times more appropriately called delivery lead times expected by the customers
(i.e. how soon the demand has to be met without losing on sales) is another major influencing
factor in a competitive market. As a general rule, faster deliveries are expected in a competitive
market. The product, therefore, may require to be produced to stock using principles of batch
production/mass product
Efficiency: Efficiency measures the speed and the cost of the transformation process. Efficiency
is the greatest when the product is mass producted. But to mass produce a product, greater sales
volumes are required. Therefore, depending upon the sales volume, product variety will have to
be considered and the process which will give the best efficiency in terms of machine and
manpower utilization will have to be selected.
Environment: Environment brings in new technologies and forces the adoption of new process
of manufacturing. For example, wooden furniture is gradually being replaced by metals and
plastic. A furniture manufacturing unit will have to change its technology (i.e. change from one
off production to batch production) to fall in line with changing times. Similarly, as market
preferences change due fashions or other reasons, the manufacturing process has to be changed
accordingly.
Operations management design system
Customer relationship management
Customer relationship management (CRM) is the combination of practices, strategies and
technologies that companies use to manage and analyze customer interactions and data
throughout the customer lifecycle. The goal is to improve customer service relationships and
assist in customer retention and drive sales growth. CRM systems compile customer data across
different channels, or points of contact, between the customer and the company, which could
include the company's website, telephone, live chat, direct mail, marketing materials and social
networks. CRM systems can also give customer-facing staff members detailed information on
customers' personal information, purchase history, buying preferences and concerns.
Product life cycle management
Product lifecycle management (PLM) refers to the handling of a good as it moves through the
typical stages of its product life: development and introduction, growth, maturity/stability, and
decline. This handling involves both the manufacturing of the good and the marketing of it. The
concept of product life cycle helps inform business decision-making, from pricing and promotion
to expansion or cost-cutting.
Supplier relationship management
SRM is the systematic, enterprise-wide assessment of suppliers’ assets and capabilities with
respect to overall business strategy, determination of what activities to engage in with different
suppliers, and planning and execution of all interactions with suppliers, in a coordinated fashion
across the relationship life cycle, to maximize the value realized through those interactions. The
focus of SRM is to develop two-way, mutually beneficial relationships with strategic supply
partners to deliver greater levels of innovation and competitive advantage than could be achieved
by operating independently or through a traditional, transaction purchasing arrangement.
In many fundamental ways, SRM is analogous to customer relationship management. Just as
companies have multiple interactions over time with their customers, so too do they interact with
suppliers – negotiating contracts, purchasing, managing logistics and delivery, collaborating on
product design, etc. The starting point for defining SRM is a recognition that these various
interactions with suppliers are not discrete and independent – instead they are accurately and
usefully thought of as comprising a relationship, one which can and should be managed in a
coordinated fashion across functional and business unit touch-points, and throughout the
relationship life-cycle.
Production and operations personnel relationship management
Employee Relationship Management helps employees better deal with customers by providing
them with information on company products, services and customer orders. This information is
provided through a web browser which provides employees with a subset of CRM applications.
ERM helps employees due their job better by allowing them to have all necessary information at
their fingertips so that they can meet customer's needs.