All entries for Monday 22 October 2007

October 22, 2007

Operations Management Lesson 5 Exercise

Operations Management Lesson 5 Exercise

For this blog, regarding the SCM, I’ve chosen to talk about the “IBM Integrated Offer Management”, in case of presenting an offer to customer.

This is a de-integration process because all the IBM divisions involved in this process are considered as “independent”; each of them have to achieve their own targets that are not linked with the objectives of the others.

The main “actors” of the chain are:

-        “SECTOR”: it is represented by the IBM sales responsible for the “high level relationship” with customer;

-        The 4 main “IBM Divisions” (HW, SW, Services and Consultancy”): they are represented by the IBM sales brand responsible;

-        “DEAL HUB”: it is represented by IBM persons responsible for the collecting of the whole stuff to be aggregated in the offer.

Sector --->

IBM Divisions --->

Deal Hub --->

Customer Proposal

The Sector indicates the way for the IBM divisions to proceed, maintaining the control of the whole customer business.

IBM Divisions are responsible about the prices of the all Brands belonging to the single Division, the special bid requests and they are also responsible of the contractual form to be applied to the products or services they are managing and selling.

The Deal Hub is the “Collector” of the information and authorizations got from the Divisions.

The Deal Hub put all the information together and, at the end, is able to present the final offer to Sector, in order to formalize it to customer.


As each ring of the chain is assumed to have an internal (local) process to be respected, sometimes this causes “tremendous waste and delays” (Womack and Jones “Learn Thinking”, 1996).

The delay is often related to the huge amount of authorizations that a single “actor” has to put in place; sometimes the complexity of the offer requirements led to an energy dispersion in the pursuit of internal process optimization, rather than supply chain optimization.

Other disadvantage is represented by the rapid change of internal policies and the consequent adaptation of people working in; as per consequence, time to market is negatively effected by.


Overall, the collaboration between IBM divisions is guaranteed and the concentration of capabilities also guarantees the quality of job. That leads to a more efficient planning of demand and distribution, and to a consolidated view of global sales.

The cost of work is splitted by the rings of chain and it is under control.

Operations Management Lesson 4 Exercise

Operations Management Lesson 4 Exercise

This lesson is about QFD and how it can fit into the development process of new products or services for a company. The QFD matrix helps companies in focusing on customer needs and how these needs could evolve.

For this blog I have chosen the case of “Tourist Information Kiosks”.

Regarding the “Whats” I put the items related to the information that customers need and would like to know, rating their importance in a scale from 1 to 5. “Maps of the city” and “Hotels” are rated 5 because the information they provide are the most common and useful for the tourist expectations.

“Emergency Points” is also highly rated because it could transfer to tourist a sense of safety and respect for people in general.

Regarding the “Hows” the “Colours”, “User Friendly” and “Languages” items are the most important because they cross 4 times the related “Whats”. About “Colours”, it has absolutely strong relationship with “Maps of the city” because tourist could have a clear and highly detailed picture of the site, could appreciate the differences and could use the kiosk as a tool to find locations where he/she will meet people.

“Speed” is also a very important quality characteristic in order to call for an emergency or to have a taxi in short time.

Table below shows in details all the important relationships.


Operations Management Lesson 3 Exercise

Operations Management Lesson 3 Exercise

About the third blog, I’m going to talk about the contract management process in “IBM Software Group (SWG)”, valid for the whole IBM European locations.

After getting the agreement with customer about the kind of Software to be sold, a long process starts inside IBM.

1) First of all, we need the price configuration of SW products, indicating how many quantities of particular SW licenses have to be sold (in terms of number of processors, for example).

A price configuration is also generated for SW Maintenance, which could be sold apart (if we are selling renewal of existing SW licenses) or embedded with new licenses.

“Configuration task” is managed by the “Techline Division”, based in Dublin.

2) Once we have the prices, in order to achieve the final price agreed with customer after long negotiations, we have to submit a “Special Bid Request” to the approvers. There are al least 3 levels of approval and maximum 5 levels of approval, depending on the amount of the “Bid”, the kind of SW products and the discount requested.

“Special Bid Request task” is managed by Software Sales Representative of customer and the requests are introduced in a dedicated Tool.

Tasks 1) and 2) must be managed in SEQUENCE; tasks 3) and 4) could be managed in PARALLEL with themselves or with task 1) and 2).

3) In order to demonstrate customer solvency, we have to ask for a “credit check”, indicating the amount of money that customer will have to spend. This must be positive in order to continue the selling process.

“Credit Check task” is managed by a division based in Bratislava.

4) In parallel with the above activities, we have to ask authorization to proceed with the formalization of the contract, especially this is a requirement for customers who do not want to sign contract compliant with IBM standard conditions (for example, the majority of customers belonging to Public Sector).

This task is demanded to “Contract and Negotiations” division.

At the end of the 4 tasks, we can proceed with the offer to customer. At the sign of contract, we have to send the contract to the “Fulfillment division”, based in Madrid, which is responsible of:

-        verifying that order is compliant with the bid approved;

-        customer and internal documentation is complete;

-        order data entry.

Operations Management Lesson 2 Exercise

Operations Management Lesson 2 Exercise

For the second blog I’ve chosen to talk about the difference between the “Pizzeria/take away” and “Pizzeria/Restaurant”, pointing out the following items:




High repetition: every day several quantities of pizza are prepared and took out of the oven; high repetition about the prepared flavors of pizza; high number of output produced in terms of Kilos of Pizza per day

Capital Need: specialized ovens for mass production and high costs of energy

Specialization: capabilities in managing the peak times, knowledge of what quantity / kind of pizzas (and flavors) to be produced relating to specific time of the day / week/ month.



Low repetition: smaller quantity of pizza produced comparing to the “Pizza take away” (low # of output produced in terms of Kilos of Pizza per day). Less typology of pizza flavors.

Capital Needs: generally, wood-burning oven (most diffused in this kind of Pizzerias) is an asset which did not bring high maintenance costs; the row material (wood) is less expensive compared to the energy of the traditional oven and it generates and keeps higher level heat.

High unit cost: comparing to “Pizza take away”, unit cost is higher because the cost of ingredients to be used is higher in terms of quantity bought.



Flexibility: Flexibility means to be responsiveness to customer requests in short time and in preparing any kind of pizza flavors in each moment as per customer choice. That requires raw materials and variety always to be available.

Complexity: in a “Pizzeria/take away” you can choose any kind of pizzas, from the easiest and lightest one to the more “sophisticated” with particular ingredients (or more genuine ingredients) or particular kind of flours.



Routine / Standard: as Pizza is not the sole business you could not find the same choice than in the “Pizzeria/take away”.

Complexity: Low, because of fewer flavors.



Batch processes: pizzas are baked simultaneously or sequentially in a high number of quantities; frequently, more than one oven is present in order to have the counter full of products to sell.



Mass services: high output but variety is controlled because of many raw material could not remain for long time unused.

Operations Management Lesson 1 Exercise

For this first blog I have chosen the way of doing “Pizza” and the role of “Pizza Chef”, describing how this job is important in designing the operation model of doing pizza.

The “Pizza Chef” is responsible of the whole phases of making pizza, with great attention on these important stages:

-      kneading (dough), “leaven-balls” preparing, leavening, manipulation, spicing, baking;

-      managing of storehouse and stocks, raw material conservation;

-      using and taking care of equipments;

-      managing the activities from the financial and administrative point of view;

-      taking responsibility of the relationships with suppliers and customers.

A skilled “Pizza Chef” is also able in “playing” with pizza, rotating it in acrobatic and choreographic way, sometimes at rhythm of music (see photo below).

A “Pizza Chef” has to know the whole kind of flours (light, whole meal…) and how to handle them with the other ingredients in order to achieve a mixture of good quality, accordingly with the whether and the seasons (different temperature degrees and different levels of humidity lead to different ways of managing the dough).

A good “Pizza Chef” must be able in preparing different kind of Pizzas (thin, thick, soft), accordingly with customer tastes and he must know the ovens capabilities, in order to manage the cooking point.

A “Pizza Chef” is also responsible of the dough quantity to be prepared with regard to the day of the week and to the forecasted number of customers to be served.

Other important factor is the creativity; there are several recipes that offer an infinite series of “new pizzas” with innovative tastes and aromas.

The capabilities of a “Pizza Chef” are crucial for the development of the pizza-restaurant business;

in fact, as a perfect Operation Manager, he has to take care at “volume” and “characteristic” of pizzas (quantitative and qualitative approach) and he has to succeed in meeting customer requirements (performance objective).

Referring to the “Operation and Process Management” we can state that the job of the “Pizza Chef” covers all the tasks of an operation manager:

-      coordinating the design of the process,

-      planning the ongoing operations (delivering),

-      developing the process over time.

Pizza with potatoes

pizza preparationpizza preparation 2rotating

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