Value Driven Approach
The second approach is a value drive approach to operations management. The value driven approach starts by recognizing that a business is a set of processes each of which has inputs outputs, and structure. Each process has a job to do and each process should be measured on how effective it is in achieving the desired outcomes.
The core process model as shown in table below is a simple model, based on the four core business processes describing the functioning of a business organization. There can be many more core processes depending upon the business and how it is structured.
1) Determine Customer Needs: It is critical for the organization to know the customer’s needs in order to support the firm demand, its forecasting needs its product design and development activities. In order to do this it is necessary to monitor the competitive environment. The supporting business processes are involved in marketing products and providing after sales service. There has to be a measure of customer satisfaction. There is also a requirement to understand the specific needs of different market segments and the nature of the competitive environment.
2) Develop Product Strategy: This involves marketing, operations and engineering activities in order to create products that customer desire. This requires an ability to evaluate product concepts so that there is support to design new products or introduce product improvements. The slower the pace, the more is the focus on delighting customers by finding better ways to incrementally improve products that already exist. But as the pace of business increases, the greater is the need to be aware of the competitive challenges that new technologies and competitors introduce into the marketplace.
3) Secure Processes and Materials to Satisfy Demand: Management activities involve selection of raw materials from vendors and the ultimate delivering and servicing of the product for the customer. These activities include operations planning and control processes and managing the product transformation processes. In addition the business logistics and the supply chain process play a critical part and have to be managed effectively.
4) Manage strategic Planning Processes: Support business processes are essential to all organizations. The strategic planning process defined the firm s as well as its own operations resource management function creates an organization design that is suited to the competitive environment and provides and/or enhances the human capital needed by other functions to effectively carry out their tasks.
Operations management activities are mostly involved in the second and third core processes. Operations management as a value creating activity contributes to the customer satisfaction processes by assisting to design and develop products that possess the capability to satisfy the customer’s functional need with the desired level of design quality and cost.