All entries for Saturday 01 November 2008

November 01, 2008

Operations Management Lesson 3 Exercise

This is a good time to complete a process map of your own and comment upon the findings. If you work in an area with high levels of contact with customers, you should think about extending the analysis into a service blueprint, which will define degrees of visibility of the process.

I have chosen one of the process described in the blog of lesson 2, this is the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles). The activities that cover this process was implanted in Spain several years ago, but in the last years the strong competence of hypermarkets have forced to the company to redesign the activities and treat it as process. 

The main blocks of the process are shown in the following figure:

 Big Picture Booking Process

Each of these boxes are composed of several sub tasks (or sub-processes) and in the following figure are shown with more detail:


As it can be seen above, these flows describe the process of the service, but it is a service with some degree of product because one part of the service is to create a pack through a manufacture process. In the production phases are include the reception of material, in this case are books, and the picking and packing of them. Is important to remark that in its face of service is where there are defined some indicator of performance (KPIs) in order to know in which point of the process there are bottleneck or lost of efficiency. 

In terms of visibility, a very big part of the process has a low and medium visibility to customers.  For this type of services, is very important the interaction with the customer in order to reach accuracy with his requirements. In the reception is very important too the interaction, mainly when could be have some trouble in the process of packing. In adition is important to get the feedback of the customer and harvesting process.


Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

El Corte Ingles. Web site (

Operations Management Lesson 8 Exercise

Process map a process (or use one you have already compiled earlier) and assess each process step to decide whether or not each step adds value from a Lean thinking perspective. Pay particular attention to delays and to quality checking points. Assess the throughput efficiency of the process. Is a demand-pull or Kanban system used to control flow?

We are going to take the process of the booking and packing service of school books in a very well known big shopping company in Spain (El Corte Ingles), this process have already been defined in the others chapters (2,3 &4).

This process can be classified as a ‘pull’ style production control because the process does not start until a customer makes his purchase order with previous selection of “Bill of Materials” (his books or items). 

“Lean systems use ‘pull’ style production control, where downstream departments announce their requirements to upstream operations.” (OM Study Notes)

ECI process - Booking books

Each step of the process flows as follows:

  1. In the previous step to specifications phase, the company searches and receives the list of books required by the public school and the most important private schools for children from 3 to 17 years old.

  2. In the specification phase a saleswoman speak with the customer in order to determinate the school and years of his children. In this moment the saleswoman can reach an agreement with the customer and start the process through launching a order to the warehouse. In this step is important to remark as a lean thinking characteristic that depending of the date of booked or purchase order the customers have discount in price or no.  And only it is possible to make a order one month before the delivery of books.

  3. The responsible of filter the orders in the warehouse, approves or refuses the orders and after the orders are dispatched to specifics areas. In the case of booked orders of books is a pick and pack books area.

  4. Every day ERP system is verified by the responsible of this area in order to determinate the number of orders that can be completed the next days and launch the orders to the providers of books if the quantity per each provider is enough. In this point the system tries to increase the efficiency of the workers through of concentration of continuous days dedicated to do the packing.  One of the main measures against the stop the chain of packing is determinate the number of books remaining to complete the pack and establish a threshold from which the pack can be done assuming this situation.

  5. Once the group of pack is ready these are distribute to the stores the next step is make the notice and deliver to the customer and finally close the sale. In this case if the pack is complete the sale can be closed when is paid but if the pack is incomplete the process can be launch again.

From a lean thinking perspective the process we can say that is well defined, mainly for these reasons: the orders are launching when is needed, there are a specific levels of quality thinking in the completeness of the pack and finally the process tries to delete the waste in order to minimising the cost. Nonetheless the company could enhance this process in the following points:

Waste elimination

We have already said that is almost right but the process can be waste when there are problems in the reception of books and is impossible to complete the pack with the level of quality required. Another point is when the pack is incomplete, because cause duplication effort in the sales and production phase.

Employee involvement

Sometimes the delivery process can be better if the notice to mobile or telephone will be done  without forget to anybody. The employee involvement should help this company to enhance the throughput efficiency of the process and the customer satisfaction.

Continuous improvement

The company has some service levels agreements described in its proceses but this aspect can improve something. Some of them are the state of the books, the completeness or accuracy of the pack.

As we have comment the process looks efficient (for me is complicated to access at company data but in general terms is one of the more efficient Spain companies). We have commented too that until there aren't enough stock level the packing process don't start, that mode of management is appropriate for a Kanban system.


Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

El Corte Ingles. Web Site (

Operations Management Lesson 7 Exercise

Take a look at a material processing operation. What types of stock control methodologies (re-order point, MRP, ERP etc.) are used? Comment on the possible reasons for the choice of method. If you can, conduct a sample Pareto (80/20) analysis of stock levels and stock usage (by value). How effective is the stock management?

I will explain this blog based on my own experience with a factory bakery traditional and the knowledge of the process in the current manufactories. The activity of the bakery plant is based in a continuous process that only stops weekends and twice a year to maintenance activities. This is the typical layout of a current bread plant:


The main blocks of the process are Material intake, Production and Shipping. In all this process there are two main warehouse that are for the inputs and for the outputs. In this Blog we are going to see the inventory management choose in the material intake and shipping phase.
In order to hold the production line and satisfy the levels of demand the factory holds two inventories with very different characteristic. The first of them is the input inventory which one works under the Material Requirement Planning (MRP) pattern, and the second one is  the output inventory that works with the Reorder Point (ROP) pattern.
Each ingredient in the baking process have their own requirements when it comes to receiving and storage. For flour, for instance, the demands are to empty tanker trucks with as little dust as possible, record amounts exactly, and make intermediate storage in the silos transparent. All other ingredients must be recorded quickly and accurately, stored and managed appropriately, especially regarding expiration dates. For these reasons the use of MRP are justify, in this way they can hold fresh the ingredients.
The Output inventory follow the ROP pattern and when the stock level of the some kind of products reach the re-order point, the order to production stage is launched. The intention of adopt this method is to hold a constant the demand of production, that is only possible with the current style in the bakery process because the final output is frozen bread and is possible to hold a safety stock in the freezers.
If  we see the linking of the items of the input and output inventories with the stock control ABC or pareto analysis, we has the following relation:

A.- High Value Items: this can of item corresponding with the items of input inventory, although really only will be need for some of them.
B.- Medium Value Items: currently there are no items in this category, but will be good to have a better distribution of the items independently of the I/O inventories.
C.- Low Value Items: in this class are the output items, although some of then could be classified as medium value.


Finally my suggestion is that the stock management efficiency can improve if there are a different styles of inventory management per each type of ingredients (in the input inventory) and per each type of final product (in the output inventory).


Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

Backery Sector
BIMBO S.A. web Site (

Operations Management Lesson 6 Exercise

Find extreme or good examples of the following practices and justify the reasons for their adoption:

  • Level Capacity Management

The telephone network is  a good example of level capacity demand. The network are designed to satisfy very big capacity for a huge areas of population. The traffic of data varies a lot during the hours of the day and during the days of week. There are moments with a low traffic and others with almost “traffic jam”.

Now in Spain are increasing the use of ADSL lines due to the increasing of population and the currently needs. For these reasons the limits of capacity can be reach easily in a high demand hours although in others hours be fine.


  • Chase Capacity Management

We can consider a fast food restaurant close to cinema and business centre. As most of fast food restaurants, managing sales capacity is really difficult, the most sales occur during the lunch time or at the exit of cinema in week end. One of the main characteristic of this type of business is that their product must be fresh when are sold and it is not possible to produce large amounts during periods of low demand to be warehoused and sold during periods of high demand.

For these reason the restaurant use the variation in the labour to adjust the capacity and respond to the variability of demand. The variation of the labour is done through of the arrange the working times to adjust the capacity and the use of part-time and temporary employees.

  • Yield Management

We can consider the bank sector that in some of theirs services as open account, debts/credit cards or deposits follow a yield management strategy get the maximum revenue possible with demand fluctuations.

They launch specific marketing campaigns during Summer or Christmas in orden to get customers before the spendings in holidays or gifts. Other example is the offer of young card during the start of the students’ seasons to capture as much of them as possible to do the paid to the school or university.


Some of the characteristics of this type of business is that always doing market studies in order to better understand customer behaviour and launch new attractive ‘bank services'

  • Queue Design

We can see some examples in the airport (i.e. Barajas in Madrid) where we can see a lot of kind of queues. I am going to explain the queue of check in.


This queue has differents configurations depending the volume of people. Normally is one queue one server for each trip but if the flow of people increase new server are include with only one queue. At the moment that the stewardess or assistants appreciates that there are very different type of people then they open a new queue and change the design to one queue per server and several servers. 

Other kind of queue are when this service is offered by internet. In this case we are in front of a new casuistic because in this kind of services there are dependency of the technical infrastructure. At technical level we are speaking of the same configuration that before (1 or N queues or threats and 1 or N servers or processors) but from end user point of view they are in a race in order to put first in the queue.


Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London


Back Sector

Operations Management Lesson 5 Exercise

The IT Sector has a distinctive pattern of levels of integration. For one section of IBM BCS, write about the advantages and disadvantages of having an integrated supply chain. Comment on your impression of the levels of market force that apply to your chosen section.

In IBM BCS most of its projects are focus in technology consulting and this kind of services are possible with own consultants as main raw material. In this kind of professional services the supply chain start searching the proper resources depending on cost constraints, type of skills and availability of resources.

To analyse the advantages and disadvantages I am going to describe the different sources of resources in IBM GBS, that are the following:

  • IBM local resources: This kind of source is the primary option because the main target of all delivery organization in IBM BCS is to hold high levels of utilisation rates in its employees.

  • IBM Global Delivery Resources: that is the second level of prioritisation in the resource allocation process. The GD has different models, but although at the beginning of use this source the priority was over the offshore, currently the prioritisation is in this order nearshore, offshore and in the last onsite. The offshore has sense when is need a big mass of skills consultant to support projects around the world. And the onsite is right when is needed a very specific skills.

  • Other IBM Locations:In cases where is needed a very specific skills the next source of resources are others IBM locations, first to all in the same country or region  and after GD onsite.

  • Subcontractors: This source has been one of the main sources but now the prioritisation is in GD always after the local resources. Only when there are not available locally and there are local limitations to use IBM Global Delivery, the source of resources is to subcontract.

As we can see with this kind of sources, the processes of get it are different and each one has its advantages or disadvantages. The main disadvantage is the prioritisation of locally resources because is difficult to apply the market force, the advantage, of the use of the local resources, is the speed, the commitment, and the skills because this chsaracteristic are complicate to find outside.

Currently the customers are not familiarising with the use of Global Delivery resources even with subcontracted resources, for this reason the company should hold a important number of local resources and with consequent high degree of integration supply chain. The strategy of IBM GBS is to increase the use of Global Delivery in order to apply the market force and get better services with its subcontractors. 



Walley, P. (2008)  Operations Management Study Notes, Warwick Business School

Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London

IBM Global Services – Global Business Services

Operations Management Lesson 4 Exercise

For a product or service of your own choice, complete a QFD matrix that relates customer requirements to design characteristics

We are going to treat the process of the booking and packing service of school books in one of the most famous department stores in Spain, it is the El Corte Ingles.

El Corte Ingles

Now we are in the phase of the service design and we need to define the characteristics of the service. Some of these characteristics will be compared in the QFD Matrix with others competitor as Careforur, a international hypermarket, and with “La Casa del Libro”  traditional bookstore in Madrid.

After get multiples ideas and see the accuracy of it in term of feasibility, acceptability, and vulnerability criteria, the preliminary design has be done. Now we are going to evaluate this design and try to identify the gap between the  assessment of the customer’s needs and the specification of components in order to improve the design. For do that we are going to use the Quality function deployment (QFD) tool, listing and prioritizing the main features.


The QFD tool lets us to think in  ideal features rather than simply focusing on narrow technical specifications. For this process we will attend the characteristics at the first level analyzing of the “whats” and “hows” aspects.

The Whats

  • Box Shape: to avoid breakages and to make easy the transportation for the end users is a factor very important. The goal is that each user could bring his pack with a handle.  

  • Reusability: will be desirable the reuse of the box for example to keep the books of others years

  • Price: in an competition market is a very important factor, although the end users know that is a service with value added.

  • Communication: a good communication with the customer when is available the pack of books is desirable factor. 

  • Completeness: some times the pack is not complete because some books are not in stock and to complete the pack is need wait some weeks to receive it of the provider.

  • Accuracy: critical factor is to delivery the books that really corresponding with the school.

  • Delivery Speed: this a desirable factor and will be a advantage competitive.

The Hows

The way to answer to customers’ requirements is cover with following aspects:

  • Identification end users needs: The value added is to know the list of books corresponding for each schools, in this way the only requirement is to ask about the name and course of the each student (i.e. each children). 

  • SMS Technology: in order to satisfy the communication and delivery speed requirement the use of SMS technology will be the solution.

  • Sector/Industry Knowledge:a big retailer has enough knowledge about how explain the process to its customers, thought customer care point and call centres.

  • Warehouse: to have a warehouse with a very good process of picking and packing is essential to completeness.

  • Cardboard box: the books will be safe with a packing in a removable cardboard box and after transport its the cardboard box can be saved or reused for keep others books.

The QFD Matrix

All of this has been summarized in the following figure



  • Walley, P. (2008)  Operations Management Study Notes, Warwick Business School
  • Slack, N. et al. (2006) Operations and process management, FT Prentice Hall, London
  • El Corte Ingles.

  • Carrefour

  • Case del Libro

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