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Upstream - ������� Student's Book, Workbook, ����� ��������� Please add more items in addition to the below bullet points. For detailed understanding read chapter-7 from the attached and answer the below situation. You have been assigned to a project risk team of five members. Because this is the first time your organization has formally set up a risk team for a project, it is hoped that your team . Password requirements: 6 to 30 characters long; ASCII characters only (characters found on a standard US keyboard); must contain at least 4 different symbols;. Nov 13, �� Rochester graduate Emma Chang �20 is a classically trained musician. She's also a YouTube star. The channel she created�ReacttotheK (@reacttothek_official), named for the way classical musicians react to the music of K-pop�has grown to more than half a million subscribers and million-plus views since launching in It was even featured on MTV's Facebook live show .
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You are embarking on a journey that is interesting and useful no matter what career you choose! All organizations for-profit and nonprofit thrive by producing and delivering a good or a service deemed to be of value to customers. Value is the tangible and intangible benefits that customers derive from consuming a good or service at a price they are willing to pay. The preeminent worldwide professional association for supply chain management professionals, whose vision is to lead the evolving supply chain management profes- sion by developing, advancing, and dis-.

The global leader and premier source of the body of knowledge in operations management, including production, inventory, the supply. For example, value in a pair of shoes may be shoes that are good looking and comfortable and will last a long time at a price you can afford.

What is of value to one customer or set of customers may not be of value to another. Flying in first class may be of value to business travelers, but for leisure travelers flying in first class may not be of value because of the price of first-class seats. Value, thus, is always defined in the eyes of the customer or set of customers relative to the price paid. Organizations that are successful strive to identify the value inherent in the goods or services being offered to customers.

They then deploy this understanding to guide the deci- sions that affect the production and delivery of those goods and services. These decisions have an impact on the design, execution, and performance of operations and should be coordinated with decisions made by managers of the sourcing and the logistics functions.

The sourcing function also called purchasing or procurement is responsible for finding other organizations to serve as sources and then buying the material and service inputs for the transformation process of the organization.

Collectively, the operations, sourcing, and logistics functions manage the production of the goods or services that are moved through the production process and delivered to customers.

Most organizations exist as part of a larger supply chain. The supply chain is the net- work of manufacturing and service operations often multiple organizations that supply one another from raw materials through production to the ultimate customer.

The supply chain consists of the physical flow of materials, money, and information along the entire chain of sourcing production, and distribution. For example, the food supply chain reaches. In addition to the importance of the operations func- tion at Dell, sourcing and logistics activities are critical. Sourcing managers source the many components required to manufacture Dell products, and logistics managers handle the global movement of components and finished goods to satisfy customer demand.

The company offers a range of products beyond personal desktop and mobile computing products; servers, storage, and networking products; print-. In Dell was taken private in a stock buyout by Michael Dell and investors.

In Dell bought EDS ser- vices to expand its offerings to services, and the cloud. This approach signals a com- mitment to delivering new products and services that are valued by customers and that address customer needs. This approach explains how Dell pioneered the direct-selling system to allow customer orders to be placed over the Internet or over the phone and, since.

The supply chain links together the work and output of many different organizations. In this book we discuss operations management in the supply chain.

This means we deal with operations in the larger context of its supply chain, including external suppliers and customers. Before discussing the larger supply chain implications, we define operations management as follows:.

The above definition refers to decision making as an important element of operations management. Since all managers make decisions, it is natural to focus on decision making as a central theme in operations. Within the broader context of supply chain, this decision focus provides a basis for identifying major decision types. In this text, we specify the five major decision responsibilities of operations and supply chain management as process, quality, capacity, inventory, and supply chain.

These deci- sions provide the framework for organizing the text and describing what operations and supply chain managers do. We will discuss these decisions in greater detail in subse- quent chapters. Operations is a major function in any organization, along with marketing and finance. In a manufacturing company, the operations function typically is called the manufacturing or production department. In service organizations, the opera- tions function may be called the operations department or some name peculiar to the particular industry e.

Operations managers plan and control the transformation process and its in- terfaces in organizations as well as across the supply chain. This process view pro- vides common ground for defining service and manufacturing operations as transformation processes and is a powerful basis for the design and analysis of opera- tions in an organization and across the supply chain.

Using the process view, we con- sider operations managers as managers of the conversion process in the firm. But the process view also provides important insights for the management of productive pro- cesses in functional areas outside the operations function.

For example, a sales office may be viewed as a production process with inputs, transformation, and outputs. The same is true for an accounts payable office and for a loan office in a bank. In terms of the process view, operations management concepts have applicability beyond the functional area of operations. Toyota, for example, uses lean thinking to improve pro- cesses throughout the firm, including processes in human resources, accounting, fi- nance, information systems, and even the legal department.

Process improvement is not restricted to operations. Since the field of operations and supply chain management can be defined by decisions, function, and processes, we will expand on these three elements in detail in this chapter. But first we provide an example of the decisions that would be made by operations and supply chain management in a typical company that makes and markets pizzas. Pizza U. The firm consists of 85 company-owned and franchised outlets each called a store in the United States.

The oper- ations function in this company exists at two levels: the corporate level and the level of the individual store. The major operations and supply chain decisions made by Pizza U.

Process Corporate staff makes some of the process decisions, since uniformity across different stores is desirable. They have developed a standard facility design that is sized to fit a particular location. Each store incorporates a limited menu with equipment that is designed to produce high volumes of pizza. As pizzas are made, customers can watch the process through a glass window; this provides entertainment for both children and adults as they wait for their orders to be filled.

Because this is a service facility, special care is taken to make the layout attractive and convenient for the customers. Within the design parameters established by the corporate operations staff, the store managers seek to improve the process continually over time.

This is done both by addi- tional investment in the process and by the use of better methods and procedures, which often are developed by the employees themselves.

For example, a store might re-arrange its layout to speed up the process of producing pizzas. Quality Certain standards for quality that all stores must follow have been set by the corporate staff. The standards include procedures to maintain service quality and ensure the quality and food safety of the pizzas served. While perceptions of service quality may differ by customer, the quality of the pizzas can be specified more exactly by using criteria such as temperature at serving time and the amount of raw materials used in relation to standards, among others.

Service-quality measures include courtesy, cleanliness, speed of service, and a friendly atmosphere. Service quality is monitored by store manager observation, comment cards, and occasional random surveys. Each Pizza U. All employees are responsible for the quality of their work to ensure that service quality and food quality are meet- ing the standards of the company. Capacity Decisions about capacity determine the maximum level of output of pizzas.

The capacity available at any point in time is determined by the availability of equipment and labor inputs for the pizza-making pro- cess at that time. First, when the initial location and process decisions are made, the corporate staff deter- mines the physical capacity of each facility.

Individual store managers then plan for annual, monthly, and daily fluctuations in capacity within the available physical facility. During peak periods, they may employ part-time help, and advertising is used in an.

In the short run, individual personnel are scheduled in shifts to meet demand during store hours. Inventory Each store manager buys the ingredients required to make the recipes provided by corpo- rate staff. The store managers decide how much flour, tomato paste, sausage, and other ingredients to order and when to place orders. Store operators must carefully integrate sourcing and inventory decisions to control the flow of materials in relation to capacity.

For example, they do not want to purchase ingredients for more pizzas than they have the capacity to bake. They also do not want to run out of food during peak periods or waste food when demand is low. Supply Chain The supply chain decisions consist of sourcing and logistics. Sourcing is done by the corpo- rate office. They select the specific suppliers for all inputs, negotiate prices, write contracts, and issue blanket purchase orders that stores use to order individual ingredients and items as.

This individual will participate in the development of strategic implementation plans and related objectives. Coordi- nating with the Plant Manager, this Plant Lead executes plans for sustainability, develops and maintains training and tracking standards, and coaches sites on improve- ment methodologies.

This position serves as a key devel- opment role for a future Plant Manager. Responsibilities include reducing raw materials costs yearly, analyzing market intelligence for trends in commodity markets, and making strategic recommendations to senior management for each category of raw materials.

This job also requires maintaining appropriate inventory levels and developing strategic supplier relationships. Responsibilities include prod-.

The orders are then fulfilled by the suppliers, and a logistics provider ensures the orders are delivered on time. Logistics is handled by a third-party provider who secures transportation and uses its distribution centers to make deliveries to Pizza U.

Because Pizza U. The Monster. The descriptions have been greatly simplified for purposes of illustration. As the Operations Leader box indicates, there is a great variety of management positions in operations and the supply chain.

These range from entry-level supervisory positions to middle- and top-management positions with considerable responsibility. These positions also show the breadth of operations and apply to both manufacturing and service operations. There are many opportunities for international employment in operations management since operations are located around the world.

Many operations in other countries are seek- ing to implement world-class best practices, and so what is learned in this course can be applied globally. The five decision groupings showcased in the Pizza U. Although many different frameworks are possible, the primary one used here is a conceptual scheme for grouping decisions according to decision responsibilities.

This novel and useful decision framework is shown in Figure 1. In the table, examples are given of key decisions in each area. Careful attention to the five decision areas in the framework is the key to the successful management of operations and the associated supply chain.

Indeed, well-managed opera- tions and its supply chain can be defined in terms of this decision framework. If decisions in each of the five groupings support the strategy of the firm, provide value, and are well integrated with the other functions of the organization, the operations function and its asso- ciated supply chain can be considered well managed.

Each major section of this text is devoted to one of the five decision categories. Analytics is the analysis of data to make better decisions.

Analytics uses many tech- niques for the analysis including those from operations research, statistics, data sciences, and computer science. Analytics can be descriptive, predictive, or prescriptive in nature. A descriptive analysis typically summarizes the present situation from data.

The data can be used to go one step further and predict what will happen in the future. Prescrip- tive analytics typically uses mathematical models to find an optimal or best decision. Ana- lytics are used in operations and supply chains for a variety of decisions, including quality control, forecasting, capacity, scheduling, inventory, logistics, and sourcing. Throughout the text, best practices are presented. Additionally, discussion and examples of firms in which the best practice is not the best for their particular situation are included.

These contingencies, situations, or conditions that require different solutions offer a more nuanced view of operations decision making. For example, successful implementation of a new method such as lean or Six Sigma is contingent on top management support. If there was a single best practice that works for all firms, then operations would not be the chal- lenging function to manage that it is.

Therefore, by offering insight into specific conditions in which best practices may not be best, the text addresses the various contingencies or prerequisites or situaitons that need to be considered.

The operations function is a critical element in every business. No business can survive without good decisions being made by operations managers. The operations function is one of the three primary functions in an organization, along with marketing and finance.

In addition, an organization has supporting functions that include human resources, informa- tion systems, and accounting. Some organizations also have separate sourcing and logistics. In others, the operations, sourc- ing and logistics functions are joined together to become the supply chain function. Functional areas are concerned with a particular focus of respon- sibility or decision making in an organization. The marketing func- tion is typically responsible for creating demand and generating sales revenue; the operations function is responsible for the produc- tion and distribution of goods or services generating supply ; and finance is responsible for the acquisition and allocation of capital.

Within for-profit businesses, functional areas tend to be closely associated with organizational departments because businesses typ- ically are organized on a functional basis. Supporting functions are essential to provide staff support to the three primary functions. Every function must be concerned not only with its own. The five areas of operations and supply chain decisions, for example, cannot be made separately; they must be carefully integrated with one another and, equally important, with decisions made in marketing, finance, and other parts of the organization.

In the Pizza U. Also, if finance cannot raise the necessary capital, operations may have to redesign the process to require less capital or manage pizza-related inventories more efficiently. This in turn may affect the response time to serve customers, costs, and so on. Decision making is therefore highly interactive and systemic in nature. Unfortunately, functional silos have developed in many organizations and impede cross-functional deci- sion making.

As a result, the overall organization suffers due to an emphasis on functional prerogatives. But some companies are different. Texas Instruments, for example, has been a leader in fostering cross-functional integration. They do this by forming cross-functional manage- ment teams for new-product introductions and for day-to-day improvement.

Each member of the team is trained in common methodologies, and the team is given responsibility for achieving its own goals. Some of the key cross-functional decision-making relationships are shown in Table 1. Operations can be defined as a transformation system or process that converts inputs into outputs. Inputs to the system include energy, materials, labor, capital, and information see Figure 1.

Process technology is then used to convert inputs into outputs. The pro- cess technology is the methods, procedures, and equipment used to transform materials or inputs into products or services. Viewing operations as a process is very useful in unifying seemingly different opera- tions from different industries.

For example, the transformation process in manufacturing is one of material conversion from raw materials into finished products. When an automo- bile is produced, steel, plastics, aluminum, cloth, and many other materials are transformed into parts that are then assembled into the finished automobile.

Labor is required to operate and maintain the equipment, and energy and information are also required to produce the finished automobile. In service industries a transformation process is also used to transform inputs into ser- vice outputs. For example, airlines use capital inputs of aircraft and equipment and human. Marketing Market segment and needs Quality design and quality management Market size volume Type of process selected assembly line, batch, or.

Finance and Accounting Availability of capital Inventory levels, degree of automation, process type. Human Resources Skill level of employees Process type selected and automation Number of employees and part-time or.

Training of employees Quality improvement and skills Job design Process and technology choice Teamwork Cross-functional decisions in operations. Information Systems Determination of user needs Systems should support all users in operations Design of information systems Systems should help streamline operations and support. Transformations of many different types occur in all industries, as indicated in Table 1.

By studying these different types of transformation processes, you can learn a great deal about how to analyze and manage any operation. Operations as a process provides a basis for seeing an entire business as a system of interconnected processes.

This makes it possible to analyze an organization and improve it from a process point of view. All work, whether in finance, marketing, accounting, or other functions, is accomplished by processes. For example, financial analysis of a stock, closing the books at the end of the year, or conducting market research are each conducted by car- rying out an appropriate process.

Thus, process principles and tools can be applied in every function in a business. All of these processes and systems interact with their internal and external environ- ments. We have indicated the nature of internal interaction through cross-functional decision making. Interaction with the external environment occurs through the economic, physical, social, and political environment of operations.

Each of these can mean that the operations function and associated supply chain will have to change the way it was producing products and services. Operations is surrounded by both internal and external environments and constantly interacts with them. The interactive nature of these relationships makes it necessary to constantly monitor the environment and make decisions related to corresponding changes in operations and the supply chain when needed.

Viewing operations as a process or a constantly updating transformation system helps us understand how operations and the supply chain cannot be insulated from changes in the environment but rather must adapt to them. Several challenges are important for operations and supply chain managers today and will be addressed repeatedly throughout this text. These challenges make operations and supply chain management an exciting and interesting place for aspiring managers and those who want the challenge of leadership in a fast-moving career.

Operations concepts and ideas have been applied in service operations for years. Yet, service operations lag behind manufacturing in applying the latest ideas in supply chain management, lean operations, and quality improvement.

This represents a challenge and tremendous oppor- tunity to apply what is learned in this course. Also, service-specific ideas such as service recovery, web-enabled service and globalization of service still represent implementation challenges.

Nevertheless, some leading service businesses do excel in operations including Walmart, Nordstrom, Starbucks, Amazon. They excel by applying many of the operations concepts that are presented in this text. A key point is that operations efficiency need not be sacrificed in the pursuit of meeting customer needs.

Rather, the customer can be a powerful driver for reducing waste and improving the efficiency of all processes as firms reduce or eliminate activities that customers do not value. This is an ongoing challenge for operations and supply chain managers to put the customer first, and we provide tools and concepts for doing so.

One of the most difficult challenges facing all managers is cross-functional integration within the organization. Some organizations are managing functions as separate depart- ments with little integration across them. The best operations are now seeking increased integration through the use of cross-functional teams, information systems, management coordination, rotation of employees and other methods of integration.

Most of the imple- mentation problems of new systems or new approaches can be traced to lack of cross-func- tional internal cooperation. The same thing can be said about interorganizational change in supply chains.

Even when companies partner with their suppliers or customers the partner- ships are often not successful. Adequate information systems may also be lacking for supply chain integration. The focus on sustainability of the natural environment has been heightened in recent years with concerns over global warming, water contamination, air pollution, and so on.

Organiza- tions are increasingly being asked to produce and deliver products or services while minimiz- ing the negative impact on the global ecosystem and not endangering the ability to meet the needs of future generations. Operations and supply chain partners have made tremendous strides in reducing pollution of the envi- ronment from air to ground to water, but there is still a long way to go. Operations and their supply chains are finding they can reduce pollution, conserve resources, recycle products and be socially responsible to provide a sustainable world for future generations.

Sustainabil- ity is a challenge that progres- sive operations and supply chain organizations are accepting. Coke is produced and sold globally. Here, workers unload bottles of Coca Cola from a truck in Caracas, Venezuela.

Finally, the globalization of operations and supply chains is a pervasive theme in business today. One can hardly avoid information on the accelerating nature of global business. Strategies for operations and its supply chain partners should be formulated with global effects in mind and not only consider narrow national interests.

Even many small busi- nesses compete globally, sourcing or selling goods and services in markets with global competitors. Facility location must be considered in view of its global implications. Tech- nology can be transferred rapidly across national borders.

All decisions in operations and its associated supply chains are affected by the global nature of business. This text provides a broad overview of the challenging and dynamic field of operations management and the supply chain. It stresses decision making in operations, its associated supply chain, and the relationship of these decisions to other functions. It is not a perfect system, as it still requires some newly extracted raw mate- rials, but they believe they are moving in the right direction for achieving sustainability.

With production on four conti- nents and offices in more than countries, Interface Inc. Since undertaking the goal of sustainability, Inter- face Inc. They have achieved a series of major milestones at the European man- ufacturing facility in The Nether-. As of , the plant is operating with percent renewable energy, using virtually zero water in manufactur- ing processes and has attained zero waste to landfill.

Target 24, no. Interest in sustainability contin- ues to grow, and the operations function of most organizations is deeply involved in such efforts. Or, in their words: People, Planet, and Profit. A typical operations transfor- mation process requires a con- tinuous supply of new raw mate- rial input. Interface Inc. They found that the most benign materials to use in manufacturing new products are their own used products.

Creating a closed-loop supply chain, they use their own. The operations function is es- sential for both for-profit and nonprofit organizations. These decisions are intended to maximize the value inher- ent in goods or services delivered to customers throughout the entire supply chain.

The supply chain connects many different organizations. These decisions need to utilize analytics when appropriate and account for contingencies, or special situations, because a best practice may not be best in all circumstances.

Decisions may impact or be impacted by activities in other functions such as marketing and finance. Often, cross- functional teams are formed to undertake complex decisions.

These challenges are services, customer- directed operations, integration of decisions internally Upstream Downstream Word Problems Worksheet Name and externally, environmental sustainability, and globalization of operations and the supply chain.

Create a presentation that explains the five operations and supply chain decisions relevant to the sourcing, production and delivery of a product of your choosing. Come to class prepared to discuss one or two jobs in operations that you found interesting not necessarily an entry-level job. Discussion Questions 1. Why study operations management in the supply chain? What is the difference between operations management. How is the operations management function related to activities in human resources, information systems, and accounting?

Describe the nature of operations management in the following organizations. In doing this, first identify the outputs of the organization and then use the five deci- sion types to identify important operations decisions and responsibilities.

For the organizations listed in question 7, describe the inputs, transformation process, and outputs of the production system. Describe the decision-making view and the view of operations as a process.

Why are both views useful in studying the field of operations management? Write a short paper on some of the challenges facing operations management in the future. Use newspapers, business magazines, or the Internet as your sources. Review job postings from various sources for management positions that are available for operations management graduates.

Summarize the responsibilities of these positions. Describe how the view of operations as a process can be applied to the following types of work:. Acquisition of another company. Closing the books at the end of the year. Marketing research for a new product. Design of an information system. Hiring a new employee. This can be done by contributing distinctive capability or competence to the business and continually improving the products, services, and processes.

The Operations Leader box on Insignia Athletics discusses the way it competes through a strategy of flexible manufacturing and just-in-time delivery for both customized and standard products.

Operations should be fully connected to the business strategy. Operations strategies and decisions should fulfill the needs of the business and add competitive advantage to the firm. Material costs, mostly leather, make up 55 percent of manufacturing costs. The com- pany developed an automated cutting system to get higher yields from irregularly shaped raw materials and the system can be very quickly updated for new styles.

While U. Firms use their operations strategy to compete in a variety of ways. Insignia balances the cost of labor with other product charac- teristics that customers value, like fast delivery, unique designs, prod- uct quality, and customer prefer- ences.

Gloves can be customized with your choice of colors and your embroidered name, and delivered in ten days. Operations strategy helps this firm compete. Insignia uses the advantages of a flexible just- in-time manufacturing process to quickly make, ship, and sell what customers want, without old.

The operations function is a key value creator for the firm. All functions of the firm must be well coordinated for value to be created and competitive advantage to occur. The cross-functional coordination of deci- sion making is facilitated by an operations strategy that is developed by a team of managers from across the entire business. The following definition of operations strategy is a starting point for our discussion:. Operations strategy is a consistent pattern of decisions for operations and the associated supply chain that are linked to the business strategy and other functional strategies, leading to a competitive advantage for the firm.

This definition will be expanded throughout this chapter as a basis for guiding all deci- sions that occur in operations and its supply chain with decisions in other functions. Never before had customers been served food so fast in a clean and courteous environment. Every detail of the system is designed to provide fast and efficient food and service. For example, the menu has been expanded to offer many more food and beverage items, but always within the capability of the existing restaurants.

They have updated their information systems in operations, and responded to environmental challenges by replac- ing, for example, the foam boxes previously used for sandwiches with biodegradable paper wrappers. In response to healthy food trends, they added salads, apple slices, and grilled chicken. The operations strategy for global expansion has been to replicate the service system design and supply chain in each country with minimum modifications to the menu or processes.

However, a few local international options are pro- vided. They have also extended their supply chain forward by developing a franchise system that maintains strong control over the product and service.

Now we will describe the elements of operations strategy in detail. Since operations strategy is a functional strategy, it should be guided by the business and corpo- rate strategies shown in Figure 2. The other elements in the figure are inputs or outputs from the process of develop- ing operations strategy. The outcome of using the operations strategy is a consistent pattern of operations decisions that are well connected with the other functions in the business. Corporate strategy and business strategy are at the top of Figure 2.

The corporate strat- egy defines the business that the company is pursuing. Business strategy follows from the corporate strategy and defines how each particular business will compete. Most large corporations have several different businesses, each competing in different market segments. Michael Porter describes three generic business strategies: differentiation, low cost, and focus. Differentiation is associated with a unique and frequently innovative product or service, while low cost is pursued in commod- ity markets where the products or services are imitative.

Focus refers to the geographical or product portfolio being narrow or broad in nature. Focus can be combined with either a differentiation or a low-cost strategy. Every operation should have a mission that is connected to the business strategy and is coordinated with the other functional strate- gies. For example, if the business strategy is differentiation through innovative products, the operations mission should emphasize new-product introduction and flexibility to adapt products to changing market needs.

Other business strategies lead to other oper- ations missions, such as low cost or fast de- livery. The operations mission is thus derived from the particular business strat- egy selected by the business unit.

See the Medtronic Operations Leader box for another example of a mission-driven firm. Operations objectives, sometimes called competitive priorities, are the second ele- ment of operations strategy. The four com- mon objectives of operations are cost, quality, delivery, and flexibility.

In certain situations, other objectives may be added, such as innovation, safety, and sustainable operations. The objectives should be derived from the operations mission, and they constitute a restatement of the mission in quantitative and measurable terms. The objectives should be long-range-oriented 5 to 10 years to be stra- tegic in nature and should be treated as goals.

Definitions of the four common operations objectives follow:. Table 2. The objectives for five years into the future are com- pared to the current year and also to a current world-class competitor. The comparison to a world-class competitor is for benchmarking purposes and may indicate that operations is behind or ahead of the competition.

However, the objectives should be suited to the particular business, which will not necessarily exceed the competition in every category. These objectives are pursued using extensive standards and are frequently measured for compliance. Strategic decisions constitute the third element of operations strategy. These decisions determine how the operations objectives will be achieved.

A consistent pattern of strategic decisions should be made for each of the major operations decision categories process, quality, capacity, inventory, and supply chain. These decisions must be well integrated. Customer satisfaction percentage satisfied with products Percentage of scrap and rework Warranty cost as a percentage of sales. This coordination and consistency is one of the most dif- ficult things to achieve in business. Note that these decisions may require trade-offs or choices.

For example, in the capacity area there is a. This is well established and documented. Unfortunately, the top peo- ple represent only a small fraction of the people doing the work of the organization. The purpose of a company boils down to one thing: serving the customers.

If it is superior in serving its cus- tomers to everyone else in the field, and can sustain this advantage over the long term, that company will create ultimate shareholder value. In the end, motivating employees with a mission and a clear sense of purpose is the only way I know of to deliver innovative products, superior service, and unsurpassed quality to customers over an extended period of time.

Over time, an innovative idea for a product or a service will be copied by your competitors. Creating an organization of highly motivated people is extremely hard to duplicate. I have developed a deep conviction that the widely accepted philosophy, that the primary mission of a for-profit corporation is to maximize shareholder value, is flawed at its core.

While that philosophy may result in short-term increases in shareholder value, it is simply not sustainable over the long term. Over time, shareholder value will stag- nate and eventually decline for companies that drive their strategy simply from financial considerations.

The best path to long-term growth in shareholder value comes from having a well-articulated mission. Compa- nies that pursue their mission in a consistent and unre- lenting manner in the end will create shareholder value far beyond what anyone believes is possible.

While the large facility may require less total investment due to economies of scale, the smaller facilities can be located in their markets and provide better customer service. Thus, the strategic decision depends on what objectives are being pursued in operations, the availability of capital, marketing objectives, and so forth.

Process: Specialized equipment and work flows ensure meals are delivered to cus- tomers quickly. For example, the special French fry scoop puts the right amount of fries in each serving with little effort. Also, servers use information technology to instantly communicate orders to food preparers. Quality: More than 2, quality, food safety, and inspections monitor food as it moves from farms to suppliers to restaurants.

Capacity: Restaurant capacity is carefully designed to control customer waiting times. Employees are scheduled to meet the fluctuating demand during the day.

Inventory: Just-in-time replenishment ensures food and packaging are available when needed. Food and packaging are highly standardized across restaurants. Supply Chain: Each restaurant is connected to its supply chain for fast replenish- ment. The supply chain is designed for frequent deliveries and to avoid stockouts. All operations should have a distinctive competence or operations capability that differ- entiates it from the competitors.

The distinctive competence is something that operations does better than anyone else. It may be based on unique resources human or capital that are difficult to imitate. Distinctive competence can also be based on proprietary or pat- ented technology or any innovation in operations that cannot be copied easily.

The distinctive competence should match the mission of operations. For example, it is a mismatch to have a distinctive competence of superior inventory management systems when the operations mission is to excel at new-product introduction.

Likewise, the distinc- tive competence must be coordinated with marketing, finance, and the other functions so that it is supported across the entire business as a basis for competitive advantage. High or low levels of inventory Centralized or decentralized warehouse Control in greater or less detail.

Distinctive competence may be used to define a particular business strategy in an ongoing business. Both a viable market segment and a unique capa- bility to deliver the product or service offered must be present for the firm to compete. Walmart has a mission to be the low-cost retailer. To achieve this mission it has developed a distinctive competence in cross-docking aimed at lowering the costs of shipping.

Walmart also has a sophisticated inventory control system and more purchasing power than its competitors and therefore can minimize inventories and related costs. These distinctive competencies help Walmart compete on the basis of low cost. Since other firms have copied this system over time, the distinctive competence has shifted to continuous improvement of the transformation system along with the brand.

We will now use the four operations objectives discussed above to describe different ways to compete through operations. Most firms choose one or a few objectives to focus on, so that the strategic decisions made in operations can be aligned with and support these focused objectives. Suppose we start with the idea of competing through a quality objective. Delivering quality means satisfying customer requirements.

Operations processes must be capable of meeting those requirements. For example, expectations for customer service in a moderately priced hotel differ from those for a high-end luxury hotel. Now, suppose we decide to pursue a low-cost objective. By preventing errors through continuous improvement, costs can be lowered. A low-cost objective may require more than just an emphasis on conformance qual- ity.

Investment in automation and information systems may also be needed to reduce costs. If we select a delivery objective, strategic decisions should support fast or on-time deliv- ery, depending on the expectations of customers. Industrial business customers often want on-time delivery because they schedule loading docks at warehouses or retail stores and do not want several trucks delivering at the same time.

Fast delivery may be desirable for con- sumers ordering products online they will order from the company that can deliver the product soonest. For services, fast delivery could take the form of the shortest wait for a fast food meal during the lunch rush. In manufacturing, when quality improvement efforts.

Walmart has distinctive competencies to support its low-cost strategy. Time can also be directly reduced by improving process changeover times, simpli- fying complex operations, and redesigning the product or service for fast production. Finally, we could choose to emphasize a flexibility objective. If we reduce delivery time, flexibility will automatically improve. For example, if it originally took 16 weeks to make a product and we reduce production time to 2 weeks, then it is possible to change the schedule within a 2-week time frame rather than 16 weeks, making operations more flexi- ble to changes in customer requirements.

Other types of flexibility can be directly improved by adding capacity, buying more flexible equipment, training workers to perform a wider variety of tasks, or redesigning the product or service for high variety. We can see that operations objectives are connected. If we stress a quality objective, we also naturally get some cost reduction, time improvement, and more flexibility.

Quality is often a good place to start for improving operations. Then other objectives may be tackled by directing strategic decisions to impact them.

Sometimes operations objectives require trade- offs. Designing more quality into the transformation processes may cost more when the best technology is used, and designing in flexibility to make future changes may also cost more. We use a few company examples to illustrate the effect of focusing on certain operations objectives. Zara, a giant European fashion retailer, is able to achieve fast replenishment of hot-selling items within a few weeks by holding spare capacity and supporting rapid supply chain manage- ment practices.

Lexus is renowned for high quality in its cars, which results from both its design and its manufacturing process. Chipotle uses a highly flexible serving process that allows each customer to self-customize a meal.

Not only should objectives be linked to an operations mission, operations strategic deci- sions should be linked to business strategy and to marketing and financial strategies as well. The first one is the product imitator low-cost business strategy, which is typical of a mature, price-sensitive market with a standardized product or service.

In this case, the operations objective should emphasize cost as the dominant objective, and operations should strive to reduce costs through strategic decisions such as superior process technology, low personnel costs, low inventory levels, a high degree of vertical integration, and quality improvement aimed at saving cost.

Marketing and finance would also pursue and support the product imitator business strategy, as shown in Table 2. This strategy typically is used in emerging and possibly growing markets where advantage can be gained by bringing to mar- ket superior-quality products in a short amount of time.

Price is not the dominant form of competition, and higher prices are charged, thereby putting a lower emphasis on costs. In this case, the operations and supply chain objective is flexibility to introduce superior new products rapidly and effectively. Operations strategic decisions include the use of new-prod- uct introduction teams, flexible automation that is adapted to new products, a workforce with flexible skills, and rapidly responding to marketplace changes. Once again, finance and mar- keting also need to support the business strategy to achieve an integrated whole.

What Table 2. Flexibility and superior-quality products may cost more for the product innovator strategy. There is no such thing as an all-purpose operation. Thus, when asked to evaluate operations, one must imme- diately ask, what is the business strategy, mission, and objective of operations? For example, in the product imitator strategy, marketing should focus on mass distribution, repeat sales, a national sales force, and maximization of sales oppor- tunities.

In contrast, in the product innovator strategy, marketing should focus on selec- tive distribution, new-market development, product design, and perhaps sales through agents. It is not enough for just operations to be integrated with the business strategy; all. Integrating marketing and operations and clearly laying out a particular mission and objective for operations is essential to meet customer preferences for order winners and order qualifiers.

An order winner is an objective that will cause customers in a par- ticular segment that marketing has selected as the target market to choose a particular product or service.

In the product imitator strategy, the order winner for the customer is price; this implies the need for low cost in operations, marketing, and finance. Other objectives in this case flexibility, quality, and delivery are order qualifiers in that the company must have acceptable lev- els of these three objectives to qualify to get. Superior processes Dedicated automation Slow reaction to changes Economies of scale Workforce involvement.

Superior products Flexible automation Fast reaction to changes Economies of scope Use of product development teams. Marketing Strategies Mass distribution Repeat sales Maximizing of sales opportunities National sales force. Insufficient levels of performance on order qualifiers can cause the business to lose the order, but higher performance on order qualifiers cannot by themselves win the order.

In the product innovator strategy, the order winner is flexibility to introduce superior products rapidly and effectively; the order qualifiers are cost, delivery, and quality. Note how the order winner depends on the particular strategy selected and that all functions must pursue superior levels relative to the competition on the order winner while achieving levels acceptable to the customer on order qualifiers.

What is the order winner at Walmart? The same cannot be said about Nordstrom, which competes on upscale merchandise and superior customer service. Since the order winners in these stores are different, so are the operations strategies. While these actions are important, the strategy must provide a competitive advantage. This requires a strategy that is difficult to imitate or substitute and that is rare and valuable to the firm. A competitive advantage can be provided by operations through developing capabilities that are a distinctive competence.

There are many kinds of distinctive competencies that can be developed that are unique and difficult to copy. We categorize these by using the operations strategic decision types already discussed. Process: Patented or proprietary technology or equipment. Also, having a process that is innovative, for example, producing en- ergy from corn, waste products, or algae.

Finally, unique practices and culture that encourage low turnover and high productivity of employees. Quality: Innovative quality practices, for example, the ability to implement Six Sigma in-depth or winning the Malcolm Baldrige National Quality Award. Capacity: Being the first to have capacity in a particular region or market.

For exam- ple, Volkswagen was the first foreign company to make cars in China. Also, having more capacity when others are lagging behind can be a distinctive competence. Xcel Energy, for example, is ahead on installing wind-generated electricity capacity. Inventory: The ability to have sufficient inventory to meet demand. For example, Seagate Technologies could meet demand for its disk drives, while competitors could not due to floods in Southeast Asia in A distinctive competence in one or more of the above areas can lead to a competitive advantage but, of course, it must also meet a customer need.

If a distinctive competence does not meet a customer need, it is worthless. It must also align with the business strategy. Note that distinctive competencies such as unique advertising or creative financing plans can come from outside of operations. Distinctive competencies can be difficult to imitate because they are often path dependent.

In this case, one step leads to the next and the path of development is critical and may take many years or even decades. For example, the capability to explore and drill for oil offshore. Distinctive competencies can also be idiosyncratic and may be difficult to examine or understand. This is particularly true in the case of culture, or where learning is involved. Thus, distinctive competencies may appear to be easy to copy but may be more difficult to imitate than they first appear.

See the Operations Leader box on Under Armour for an example of using operations strategy to create competitive advantage.

In the remainder of this chapter, we expand oper- ations strategy to a global scope and also consider supply chain strategy and environmental factors. These are, of course, emerging topics of considerable interest to business. Every day we hear that markets are becoming global in nature. Many products and services are global in nature, including soft drinks, DVD players, TVs, fast food, banking, travel, automobiles, motorcycles, farm equipment, machine tools, and a wide variety of other products.

To be sure, there are still market niches that are national or even local but the trend is toward more global markets and products. When operating in global markets, a company needs to be organized properly to pro- duce and market its products.

As a result, the global corporation has emerged with the following characteristics. Facilities and plants are located on a worldwide basis, not coun- try by country. Products and services can be shifted between countries. Components, parts, and services are sourced on a global basis. The best worldwide suppliers are sought, regardless of their national origin. The entire supply chain is global in nature. Engineers and design- ers from around the world will rotate and collabo- rate at headquarters in Baltimore, Maryland, to develop the new manufac- turing processes.

Under Armour hopes to improve response times with their. Source: L. Under Armour, maker of sports clothing and acces- sories, has an operations mission to develop advanced manufacturing processes with the goal of producing products on a small scale in local markets where they are sold.

They plan to manufacture in the United States for U. Under Armour currently manufactures in 14 countries, mostly China, Jordan, and Vietnam. But shipping times to key markets are typically weeks and sometimes longer. The global corporation uses global product design and process technol- ogy. A basic product or service is designed, whenever possible, to fit global tastes.

When a local variation is needed, it is handled as an option rather than as a separate product or service. Process technology is also standardized globally. Even fast food, clothing, and soft drinks have become global products. In the global corporation, demand for products or services is consid- ered on a worldwide, not a local, basis. Therefore, the economies of scale are greatly magnified, and costs can be lower. The iPhone came out as a worldwide product and was marketed globally.

Its demand and cost were scaled for a global market right from the start. Logistics and inventory control systems are also global in nature. This makes it possible to coordinate shipments of products and compo- nents on a worldwide basis.

Some services have taken on a global scope of operations. For example, consulting firms, fast food, telecommunications, air travel, entertainment, financial services, and software programming have global operations. Global consolidation has taken the place of these formerly fragmented service industries.

Certainly, not all service is global. There remain services that are delivered on a local basis to serve local markets, but the trend toward globalization is undeniable. A few of the service companies that are globally oriented are British Airways, Starbucks, Microsoft, and Walmart. Some firms have adopted a hybrid approach with global economies of scale but a local touch. In this case certain functions, for example, product design, are handled on a local basis, while other functions, such as logistics and inventory control systems, are standard- ized around the world.

The implications for operations strategy of this change toward global business are pro- found. Operations and supply chains must be conceived of as global in nature, including very broad searches for both suppliers and customers. A global distinctive competence should be developed for operations, along with a global mission, objectives, and strategic decisions.

Product design, process design, facility location, workforce policies, and virtu- ally all decisions in operations and the supply chain are affected.

In the same way that operations are being expanded to a global context, operations strategy can be expanded to supply chain strategy.

Supply chain strategy includes consideration of customers, suppliers, sourcing, and logistics in addition to operations. There is a focus on flows of inventory, materials, and information throughout the supply chain from the suppli- ers to the ultimate customer. The equipment staff sends supplies months in advance. All total, the Seahawks ended up shipping 21, pounds of gear and products, including 1, rolls of athletic tape, 2 tons of medical supplies, power adapters, and pairs of shoes!

Many of the players and staff had never been overseas. London would be a strange, exciting experience. This would allow players to better adjust their sleep patterns while providing some free time to explore London. Coach Carroll and his staff sat in the first row of business class. Rookies and members of the practice squad sat behind them. Regardless of class, everyone got the same menu: beef filet, Cajun chicken, or herb-roasted salmon. For the London trip, though, Ramsden reversed the program: he told players to sleep as much as possible on the flight so when they arrived in London on Thursday afternoon, they would have enough energy to stay up until 9 or 10 p.

Some players took melatonin or Ambien, while others used headphones that played the sounds of wind and rushing water to induce sleep. Seattle time. Buses took them to a golf course resort north of London. At night, the players let off some steam at a Topgolf facility. Here organized into groups of four, they tried to hit golf balls into giant holes to score points. Jeers rang out every time they were wildly off target. They scattered to the various corners of London.

On returning to the resort before the p. At p. The field appeared slick, so the equipment manager had longer screw-in cleats available for the players. The Hawks returned to their resort for their normal pregame evening routine. The Seahawks dominated the game, winning 27�3. Belson, K. Taking class notes Writing a term paper Daily entering sales receipts into the accounting ledger. Each project within a program has a project manager.

The major differences lie in scale and time span. Program management is the process of managing a group of ongoing, interdepen- dent, related projects in a coordinated way to achieve strategic objectives. For exam- ple, a pharmaceutical organization could have a program for curing cancer. The cancer program includes and coordinates all cancer projects that continue over an extended time horizon Gray, Coordinating all cancer projects under the oversight of a cancer team provides benefits not available from managing them individually.

Although each project retains its own goals and scope, the project manager and team are also motivated by the higher program goal. Program goals are closely related to broad strategic organization goals.

The Project Life Cycle Another way of illustrating the unique nature of project work is in terms of the project life cycle. The life cycle recognizes that projects have a limited lifespan and that there are predictable changes in level of effort and focus over the life of the project.

There are a number of different life-cycle models in project management literature. Many are unique to a specific industry or type of project. A generic cycle is depicted in Figure 1.

The project life cycle typically passes sequentially through four stages: defining, planning, executing, and closing. The starting point begins the moment the project is given the go-ahead. Project effort starts slowly, builds to a peak, and then declines to delivery of the project to the customer.

Defining stage. Specifications of the project are defined; project objectives are established; teams are formed; major responsibilities are assigned. Planning stage. The level of effort increases, and plans are developed to deter- mine what the project will entail, when it will be scheduled, whom it will benefit, what quality level should be maintained, and what the budget will be. Executing stage. A major portion of the project work takes place�both physical and mental.

The physical product is produced e. Time, cost, and specification measures are used for control. Is the project on schedule, on budget, and meeting specifications? What are the forecasts of each of these measures? Closing stage.

Closing includes three activities: delivering the project product to the customer, redeploying project resources, and conducting a post-project review. Delivery of the project might include customer training and transferring documents. Post-project reviews include not only assessing performance but also capturing lessons learned. In practice, the project life cycle is used by some project groups to depict the timing of major tasks over the life of the project.

For example, the design team might plan a major commitment of resources in the defining stage, while the quality team would expect their major effort to increase in the latter stages of the project life cycle. The Project Manager At first glance project managers perform the same functions as other managers. That is, they plan, schedule, motivate, and control. However, what makes them unique is that they manage temporary, nonrepetitive activities to complete a fixed-life proj- ect.

Unlike functional managers, who take over existing operations, project managers create a project team and organization where none existed before. They must decide what and how things should be done instead of simply managing set processes. They must meet the challenges of each phase of the project life cycle and even oversee the dissolution of their operation when the project is completed.

Project managers must work with a diverse troupe of characters to complete projects. They are typically the direct link to the customer and must manage the tension between customer expectations and what is feasible and reasonable. Project managers. They often must work with a cadre of outsiders�vendors, suppliers, and subcontractors�who do not necessarily share their project allegience. Project managers are ultimately responsible for performance frequently with too little authority.

They must ensure that appropriate trade-offs are made among the time, cost, and performance requirements of the project. At the same time, unlike their functional counterparts, project managers often possess only rudimentary technical knowledge to make such decisions. Instead, they must orchestrate the completion of the project by inducing the right people, at the right time, to address the right issues and make the right decisions.

While project management is not for the timid, working on projects can be an extremely rewarding experience. Life on projects is rarely boring; each day is differ- ent from the last. Since most projects are directed at solving some tangible problem or pursuing some useful opportunity, project managers find their work personally meaningful and satisfying. They enjoy the act of creating something new and innovative. Project managers and team members can feel immense pride in their accomplishment, whether it is a new bridge, a new product, or a needed service.

Project managers are often stars in their organization and well compensated. Good project managers are always in demand. Every industry is looking for effective people who can get the right things done on time. Clearly project management is a challenging and exciting profession.

This text is intended to provide the necessary knowledge, perspective, and tools to enable students to accept the challenge. Sometimes this work is full time, but in most cases people work part time on one or more projects. They must learn how to juggle their day-to-day commitments with additional project responsibilities. They may join a team with a long history of working together, in which case roles and norms are firmly established. Alternatively their team may consist of strangers from different departments and organizations.

As such, they endure the growing pains of a group evolving into a team. They need to be a positive force in helping the team coalesce into an effective project team. Not only are there people issues, but project members are also expected to use project management tools and concepts. They develop or are given a project char- ter or scope statement that defines the objectives and parameters of the project.

They work with others to create a project schedule and budget that will guide project execution. They need to understand project priorities so they can make independent decisions. They must know how to monitor and report project progress. Although much of this book is written from the perspective of a project manager, the tools, concepts, and methods are critical to everyone working on a project.

Project members need to know how to avoid the dangers of scope creep, manage the critical path, engage in timely risk management, negotiate, and utilize virtual tools to communicate. Upon completion of my business degree at Oregon State University, I was recruited by a Fortune food products company for a first-line production supervi- sor position. In that role, an opportunity came up for me to manage a project that involved rolling out a new statistical package-weight-control program throughout the factory.

Successfully completing that project was instrumental in accelerating my career within the com- pany, advancing from supervisor to product manager in less than three years.

After four years in food products I accepted an offer to join a wood products manufacturing company. Initially my role in this company was human resource manager. My HR responsibilities included managing several proj- ects to improve safety and employee retention. Success- ful completion of these projects led to a promotion to plant manager. In the plant manager role, I was tasked with building and managing a new wood door manufac- turing factory. After successfully taking that factory to full production, I was promoted again, to corporate man- ager of continuous improvement.

Shortly after we successfully ingrained this new culture in the company, the owner passed away, leading me to look for other employment. I was able to leverage my previous experience and success to convince the owner of a struggling glass fabrication company to hire me. In this new role as general manager, I was tasked with turning the com- pany around.

This was my largest project yet. Turning a company around involves a myriad of smaller improve- ment projects spanning from facilities and equipment improvements to product line additions and deletions to sales and marketing strategy and everything in between. In four years we successfully turned the com- pany around to the extent that the owner was able to sell the company and comfortably retire. Successfully turning that glass company around got the attention of a much larger competitor of ours, resulting in an offer of employment.

We were able to take that facility from a dirt field to the highest- volume manufacturing facility of its kind in the world in just three years. After building and operating this factory at a world-class benchmark level for eight years, I came across a new and exciting oppor- tunity to help expand a strong glass fabrication. Traditional project management focuses on thorough planning up front. Planning requires predictability. For plans to be effective, managers have to have a good under- standing of what is to be accomplished and how to do it.

For example, when it comes to building a bridge, engineers can draw upon proven technology and design princi- ples to plan and build the bridge. Not all projects enjoy such predictability.

Figure 1. Project uncertainty varies according to the extent the project scope is known and stable and the technology to be used is known and proven. Many projects, like the bridge project, product extensions, events, marketing campaigns, and so forth have well-established scopes and use proven technology, which provide the predictabil- ity for effective planning. I spent four years successfully transitioning this Canadian company from a medium- sized glass fabrication facility to one of the largest and most successful of its kind in North America.

This new project. Success in this role, although still far from being certain, will eventually revolutionize the glass industry through the intro- duction of a product that dramatically improves the energy efficiency and occupant comfort of buildings around the world. Looking back on my career, it is apparent that my degree of success has largely been the result of taking on and successfully completing successively larger and increasingly impactful projects.

I like my tool bag filled with gener- alist tools: things like communication skills, leader- ship, common sense, judgment, reasoning, logic, and a strong sense of urgency. I often wonder how much more I could have accomplished, had I actually studied project management and had more of that toolset in my bag. With a bag full of strong generalist tools, you can tackle any problem in any business. Project man- agement is clearly one of those skills where the better you are at it, the higher your chances of success in any business environment.

Having the tools is only part of the equation, though. Enter Agile project management Agile PM. Agile methodologies emerged out of frustration with using traditional project management processes to develop software. Software projects are notorious for having unstable scopes in which end user requirements are discovered not defined up front.

Agile PM is now being used across industries to manage projects with high levels of uncer- tainty. Examples of people encountering high-uncertainty work include software systems engineers, product designers, explorers, doctors, lawyers, and many problem-solving engineers.

Instead of trying to plan for everything up front, the scope of the project evolves. Iterations typically last from one to four weeks. The goal of each iteration is to make tangible progress such as define a key. Search pmi. At the end of each iteration, progress is reviewed, adjustments are made, and a different iterative cycle begins. Each new iteration subsumes the work of the previ- ous iterations until the project is completed and the customer is satisfied.

Agile PM focuses on active collaboration between the project team and customer representatives, breaking projects into small functional pieces, and adapting to chang- ing requirements.

Agile methods are often used up front in the defining phase to establish specifications and requirements, and then traditional methods are used to plan, execute, and close the project. Agile methods may be used to address certain technical issues on a project while most of the project work is being managed in the traditional way.

The internal dynamics on Agile projects is quite different from the traditional PM approach. Agile works best in small teams of four to eight members.

Instead of directing and integrating the work of others, the project manager serves as a facilita- tor and coach. The team manages itself, deciding who should do what and how it should be done. Project management is no longer a special-need management. It is rapidly becoming a standard way of doing business. The future promises an increase in the importance and role of projects in contributing to the strategic direction of organizations.

Several reasons for this are discussed briefly in this section. Compression of the Product Life Cycle One of the most significant driving forces behind the demand for project management is the shortening of the product life cycle. For example, today in high-tech indus- tries the product life cycle is averaging 6 months to 3 years. Only 30 years ago, life cycles of 10 to 15 years were not uncommon. Time-to-market for new products with short life cycles has become increasingly important. A common rule of thumb in the world of high-tech product development is that a 6-month project delay can result in a 33 percent loss in product revenue share.

Speed, therefore, becomes a competitive advantage; more and more organizations are relying on cross-functional project teams to get new products and services to the market as quickly as possible. Knowledge Explosion The growth in new knowledge has increased the complexity of projects because projects encompass the latest advances.

For example, building a road 30 years ago was a somewhat simple process. Today, each area has increased in complex- ity, including materials, specifications, codes, aesthetics, equipment, and required specialists. The same is likely to be true soon for artificial intelligence AI. Product complexity has increased the need to integrate divergent technologies.

Project management has emerged as the key discipline for achieving this task. Triple Bottom Line Planet, People, Profit The threat of global warming has brought sustainable business practices to the fore- front. Businesses can no longer simply focus on maximizing profit to the detriment of the environment and society.

Efforts to reduce carbon imprint and utilize renewable resources are realized through effective project management. The impact of this move- ment toward sustainability can be seen in changes in the objectives and techniques used to complete projects. For example, achieving a high LEED certification award is often an objective on construction projects.

Increased Customer Focus Increased competition has placed a premium on customer satisfaction. Customers no longer simply settle for generic products and services. They want customized products and services that cater to their specific needs. This mandate requires a much closer working relationship between the provider and the receiver. Account executives and. Increased customer attention has also prompted the development of customized products and services.

For example, 25 years ago buying a set of golf clubs was a relatively simple process: you picked out a set based on price and feel. Today there are golf clubs for tall players and short players, clubs for players who tend to slice the ball and clubs for those who hook the ball, high-tech clubs with the latest metallurgic discovery guaranteed to add distance, and so forth. Project management is critical both to developing customized products and services and to sustaining lucrative relation- ships with customers.

Small Projects Represent Big Problems The velocity of change required to remain competitive or simply keep up has created an organizational climate in which hundreds of projects are implemented concurrently.

This climate has created a multiproject environment and a plethora of new problems. Businesses and nonprofits thrive and survive based on their ability to manage projects that produce prod- ucts and services that meet market needs. Here is a small sample of. Intuitive hopes to one day use robots to not only diagnose but also treat lung cancer.

The film stars Academy Award�winner Brie Larson in the title role. The SB-1 Defiant is being built to travel faster, longer, and more quietly than other models. At stake is a billion-dollar-plus contract with the U.

Department of Defense. It is a fully equipped, luxury SUV with a mile range. The Dominican restoration project involves manually removing ferns and planting native trees and shrubs. Sharing and prioritizing resources across a portfolio of projects is a major challenge for senior management. Many firms have no idea of the problems involved with inefficient management of small projects. Small projects typically carry the same or more risk as large projects. Because so many small projects are going on concurrently and because the perception of the inefficiency impact is small, measuring inefficiency is usually nonexistent.

Unfortu- nately, many small projects soon add up to large sums of money. Many customers and millions of dollars are lost each year on small projects in product and service organiza- tions. Small projects can represent hidden costs not measured in the accounting system. Organizations with many small projects going on concurrently face the most difficult project management problems.

A key question becomes one of how to create an organizational environment that supports multiproject management. A pro- cess is needed to prioritize and develop a portfolio of small projects that supports the mission of the organization. Managing a project is a multidimensional process see Figure 1.

The first dimension is the technical side of the management process, which consists of the formal, disci- plined, purely logical parts of the process. This technical dimension includes plan- ning, scheduling, and controlling projects. Clear project scope statements are written to link the project and customer and to facilitate planning and control.

Creation of the deliverables and work breakdown structures facilitates planning and monitoring the progress of the project. The work breakdown structure serves as a database that links. Understand that manag- ing projects involves bal- ancing the technical and sociocultural dimensions of the project.

Effects of project changes are documented and traceable. Thus, any change in one part of the project is traceable to the source by the integrated linkages of the system. This integrated information approach can provide all project managers and the customer with decision information appropriate to their level and needs.

A suc- cessful project manager will be well trained in the technical side of managing projects. The second and opposing dimension is the sociocultural side of project manage- ment. In contrast to the orderly world of project planning, this dimension involves the much messier, often contradictory and paradoxical world of implementation.

It centers on creating a temporary social system within a larger organizational environ- ment that combines the talents of a divergent set of professionals working to complete the project. Project managers must shape a project culture that stimulates teamwork and high levels of personal motivation as well as a capacity to quickly identify and resolve problems that threaten project work. Things rarely go as planned and project managers must be able to steer the project back on track or alter directions when necessary.

The sociocultural dimension also involves managing the interface between the proj- ect and external environment. Project managers have to assuage and shape the expec- tations of customers, sustain the political support of top management, and negotiate with their functional counterparts, monitor subcontractors, and so on. Overall, the manager must build a cooperative social network among a divergent set of allies with different standards, commitments, and perspectives.

To be successful, a manager must be a master of both. Unfortunately, some project managers become preoccupied with the planning and technical dimension of project management. Often their first real exposure to project management is through project management software, and they become infatuated with network charts, Gantt diagrams, and performance variances; they attempt to manage a project from a distance. Good project managers work with others to balance their attention to both the technical and sociocultural aspects of project management.

A project is defined as a nonroutine, one-time effort limited by time, resources, and performance specifica- tions designed to meet customer needs. One of the distinguishing characteristics of project management is that it has both a beginning and an end and typically consists of four phases: defining, planning, executing, and closing.

Successful implementation requires both technical and social skills. Project managers have to plan and budget projects as well as orchestrate the contributions of others. Text Overview This text is written to provide the reader with a comprehensive, socio-technical under- standing of project management.

The text focuses on both the science and the art of managing projects. Following this introductory chapter, Chapter 2 focuses on how organizations go about evaluating and selecting projects. Special attention is devoted. The organizational environment in which projects are implemented is the focus of Chapter 3.

The discussion of matrix management and other organizational forms is augmented by a discussion of the significant role the culture of an organization plays in the implementation of projects. The next six chapters focus on developing a plan for the project; after all, project success begins with a good plan. Chapter 4 deals with defining the scope of the project and developing a work breakdown structure WBS. The challenge of formulating cost and time estimates is the subject of Chapter 5.

Chapter 6 focuses on utilizing the infor- mation from the WBS to create a project plan in the form of a timed and sequenced network of activities. Risks are a potential threat to every project, and Chapter 7 examines how organiza- tions and managers identify and manage risks associated with project work.

Resource allocation is added to the plan in Chapter 8, with special attention devoted to how resource limitations impact the project schedule. After a resource schedule is estab- lished, a project time-phased budget is developed. Throughout all these technical discussions, the sociocultural aspects are highlighted. Chapters 10 through 12 focus on project implementation and the sociocultural side of project management. Chapter 10 focuses on the role of the project manager as a leader and stresses the importance of managing project stakeholders within the organization.

Chapter 12 continues the theme of managing project stakeholders by discussing how to outsource project work and negotiate with contrac- tors, customers, and suppliers. Chapter 13 focuses on the kinds of information managers use to monitor project progress, with special attention devoted to the key concept of earned value. The proj- ect life cycle is completed with Chapter 14, which covers closing out a project and the important assessment of performance and lessons learned.

Agile project management, a much more flexible approach to managing projects with high degree of uncertainty, is the subject of Chapter Finally, so many projects today are global; Chapter 16 focuses on working on projects across cultures. Throughout this text you will be exposed to the major aspects of the project management system. However, a true understanding of project management comes not from knowing what a scope statement is, or the critical path, or partnering with contractors, but from comprehending how the different elements of the project management system interact to determine the fate of a project.

If by the end of this text you come to appreciate and begin to master both the technical and sociocultural dimensions of project management, you should have a distinct competitive advantage over others aspiring to work in the field of project management. Define a project. What are five characteristics that help differentiate projects from other functions carried out in the daily operations of the organization?

What are some of the key environmental forces that have changed the way projects are managed? What has been the effect of these forces on the management of projects? Describe the four phases of the traditional project life cycle. Which phase do you think would be the most difficult one to complete? What kinds of projects is Agile PM best suited for and why? The technical and sociocultural dimensions of project management are two sides. Review the front page of your local newspaper and try to identify all the projects contained in the articles.

How many were you able to find? Now share your list with three to five other students in the class and come up with an expanded list. Review these great achievements in terms of the definition of a project. What does your review suggest about the importance of project management?

Individually, identify projects assigned in previous terms. Were both sociocultural and technical elements factors in the success or difficulties in the projects? Review general information about PMI as well as membership information.

See if there is a local PMI chapter. If not, where is the closest one? Use the search function at the PMI home page to find information on Project. Explore other links that PMI provides. What do these links tell you about the nature and future of project management? If you were a student interested in pursuing a career in project management,.

How valuable do you think being certified PMP is? Why was it important to give players and staff a chance to explore London one. Benko, C.

Cohen, D. Darnell, R. Derby, C. Jonas, D. Mortensen, M. Peters, T. Schwaber, K. Stewart, T. A Day in the Life� Troi, the project manager of a large information systems project, arrives at her office early to get caught up with work before her co-workers and project team arrive.

However, as she enters the office she meets Neil, one of her fellow project managers, who also wants to get an early start on the day. Neil has just completed a project overseas. They spend 10 minutes socializing and catching up on personal news. Troi walks to her desk and opens her laptop.

She has 2 voicemails, 16 e-mails, and 10 posts on her team Slack channel. See slack. Troi spends the next 25 minutes going over project reports and preparing for the weekly standup meeting.

Her manager who just arrived at the office, interrupts her. They spend 20 minutes discussing the project. The a. The team members arrive, and the remaining 45 minutes of the progress review meeting surface project issues that have to be addressed and assigned for action.

After the meeting Troi goes down the hallway to meet with Victoria, another IS project manager. They spend 30 minutes reviewing project assignments, since the two of them share personnel.

Troi returns to her office and makes several phone calls and returns several e-mails before walking downstairs to visit with members of her project team. Her intent is to follow up on an issue that had surfaced in the status report meeting. She tells her people that she will get on this right away.

Returning to her office, she tries to call her counterpart, John, at the client firm but is told that he is not expected back from lunch for another hour.

She is surprised to hear that Jonah Johnson, the director of systems projects, may join another firm. Jonah has always been a powerful ally. She returns to her office, answers a few more e-mails, catches up on Slack, and finally gets through to John. They spend 30 minutes going over the problem.

The con- versation ends with John promising to do some investigating and to get back to her as soon as possible. Troi then takes the elevator to the third floor and talks to the purchasing agent assigned to her project. They spend the next 30 minutes exploring ways of getting necessary equipment to the project site earlier than planned.

She finally authorizes express delivery. When she returns to her desk, her watch reminds her that she is scheduled to participate in a conference call at It takes 15 minutes for everyone to get online due to problems with the technology. During this time, Troi catches up on some e-mail. She spends the next hour exchanging information about the technical requirements associated with a new version of a software package they are using on systems projects like hers.

Troi decides to stretch her legs and goes on a walk down the hallway, where she engages in brief conversations with various co-workers. She goes out of her way to thank Chandra for his thoughtful analysis at the status report meeting.

Troi thanks John for the information and immediately takes the stairs to where the marketing group resides. She asks to see Mary, a senior marketing manager. She catches up on Slack updates on her phone while she waits for 10 minutes before being invited into her office.

After a heated discussion, she leaves 40 minutes later with Mary agreeing to talk to her people about what was promised and what was not promised. She goes downstairs to her people to give them an update on what is happening.

She also shares with them the schedule changes she and Victoria had agreed to. She returns to her office and spends 30 minutes reviewing e-mails, her team Slack channel, and project documents. How effectively do you think Troi spent her day? What does the case tell you about what it is like to be a project manager?

She was early and took the time to catch up on her e-mail. Jasper worked as a software engineer for a start-up company that wanted to expand the boundaries of sharing economy.

Viktoria was an electrical engineer who worked for a German healthcare company in San Francisco. They had met each other at a Silicon Valley alumni reception hosted by Virginia Tech. Each of them felt a bit like a fish out of water on the West Coast, so they decided to have lunch together each month. The lunch evolved into a professional support group. A major part of each of their jobs was managing projects, and they found it useful to share issues and seek advice from each other.

Fatma worked for a very successful Internet company whose founders believed that everyone in the firm should devote three days a year to community service projects. The company was partnering with several companies in the construction industry to renovate abandoned buildings for low-income families.

The next project was the renovation of an empty warehouse into eight two-bedroom apartments. Fatma was part of the core team in charge of scheduling and managing work assignments.

Viktoria and Jasper entered the restaurant together. Viktoria was the first to move to the Bay Area. In the past, patients would have to have an operation to replace the stimulator battery every 10 years. PAX 2 was being designed to take advantage of new battery technologies and 1Hokies is the name associated with Virginia Tech athletic teams. In concept, this battery system would eliminate the need for replacement surgeries and allow the implanted battery to be recharged externally.

It had been tricky trying to predict the lifespan of the new rechargeable battery without testing it in real time. She was anxious to begin seeing the test results.

Jasper was working for a start-up company after doing contract work for his first nine months in San Francisco. He was sworn to secrecy about the project and all Fatma and Viktoria knew was that the project had something to do with sharing economy. He was working with a small development team that included colleagues from Bangalore, India, and Malmo, Sweden.

After ordering and chit-chatting a bit, Fatma started the discussion. At first glance our project seems relatively simple, build eight two-bedroom apartments in an old warehouse. But there are a lot of unanswered questions. What kind of community space do we want to have? How efficient should the energy system be?

What kind of furniture? Everybody wants to do a good job, but when does low-income housing morph into middle-income housing? Before a project is authorized, a detailed scope statement is developed that clearly defines the project objectives, priorities, budget, requirements, limits, and exclusions.

All of the key stakeholders sign off on it. It is really important to identify priorities up front. I know on the PAX 2 project that scope is the number one priority. I know that no matter how long it takes it is imperative that my work is done right. I guess that one of the things you have to do as a project manager is end discussions. He is going to make the tough calls and finalize the project scope so we can begin planning.

In my work the scope is constantly changing. You show the founders a feature they wanted, and they say, well, if you can do that, can you do this? We have to demonstrate we are ahead of the pack if we are going to continue to get VC funding. Jasper said that despite the pressure, his project had been a lot of fun.

He especially liked working with his Swedish and Indian counterparts, Axel and Raja. They worked like a global tag team on their part of the project. Jasper would code and then pass his work on to Raja, who would work on it and pass it on to Axel, who would eventually hand it off to Jasper. Given the time zones, they were able to have at least one person working on the code around the clock.

Trust was an issue. Everyone was trying to prove himself. Eventually a friendly competition arose across the team. The programmers exchanged funny cartoons and YouTube videos. He showed Fatma and Viktoria a YouTube video about scope creep that got a chuckle from everyone. The bad news is that our first pro- totype failed its tests miserably. The good news is that I have a smart project manager. She knew this could happen, so she mitigated the risk by having us working on two alternative battery technologies.

The alternative technology is passing all of the tests. Instead of falling behind months, we are only days behind schedule. This precipitated a discussion of risk management. Fatma reported that there had been a two-day session on risk management for the renovation project. They spent the first day brainstorming what could go wrong, and the second day coming up with strategies for dealing with risks. A big help was the risk report that was generated after the last project.

The report detailed all of the problems that had occurred on the last renovation project as well as recommendations. Jasper reported that on his project they spent very little time on risk management. His project was driven by a build-test mentality. Jasper went on to say that things were not going well at work.

They had missed their second straight milestone, and everyone was feeling the pressure to show results. Jasper showed them a cartoon that was being circulated across his team. Well, some of my colleagues have been pretty aggressive lobbying for choice assignments. Everyone wants to work alongside Bruno or Ryan. I am sure they think it will influence my decisions.

You need to ask your- self what Bruno and Ryan would want you to do. Jasper had canceled the last meeting because of work, so Viktoria and Fatma saw a movie together instead. Jasper was the last person to arrive and it was clear from the look on his face that things were not going well. Jasper explained after months and months of work they had been unable to demon- strate a functional product. I just spent the best six months of my programming life for nothing.

Fatma and Viktoria tried to comfort their friend. Fatma asked Jasper how the others were taking the news. Jasper said the Swedish programmer, Axel, took the news very hard. He started blaming us for mistakes we never made. There are lots of opportunities here in Bangalore. My company is always looking for top-notch programmers and it is a really great company. Can you believe it, the two founders, Bruno and Ryan, are working side by side with everyone on renovating the warehouse?

In fact, people were amazed at how good Bruno was with sheet rock. A big part of my job now is scheduling their time so they can work with as many different people as possible.

They really want to use the project to get to know their employees. I have had to juggle their calendars, their abilities, and work opportunities. Now I just use the Project master schedule and each of their calendars to schedule their work. This seems to work best.

Sometimes all you need is an Excel sheet and common sense. Viktoria felt awkward, given what had happened to Jasper. She was just wrap- ping up the successful PAX 2 project. She was also getting ready for a well-deserved holiday in Vietnam paid for by her project bonus.

Document, document, document! I keep kicking myself for not tracking things when they happened. I am spending most of my time scouring my computer for files. For example, one of the things we learned was that we needed to bring the manufacturing people on board a lot sooner in the design process. We focused on designing the very best product possible, regardless of cost. We found out later that there were ways for reducing production costs without compromising quality.

I did good work. I am sure someone will want me for their project. A little while later, they walked out of the restaurant and gave each other hugs.

Fatma reminded Jasper to send her his latest resume. What are two important things you learned about working on projects from the case? Why are they important? Strategy is fundamentally deciding how the organization will compete.

Organiza- tions use projects to convert strategy into new products, services, and processes needed for success. Intel relies on projects to create specialty chips for products other than com- puters, such as autos, security, cell phones, and air controls. Another strategy is to reduce project cycle times. Toyota and other auto manufacturers are now able to design and develop new cars in two to three years instead of five to seven.

Projects and project management play the key role in supporting strategic goals. It is vital for project managers to think and act strategically. Aligning projects with the strategic goals of the organization is crucial for business success. For these reasons project managers will find it valuable to have a keen under- standing of strategic management and project selection processes, which are discussed next.

Constant scanning of the external environment for changes is a major requirement for survival in a dynamic competitive environment. The second dimension is the internal responses to new action programs aimed at enhancing the competitive position of the firm. The nature of the responses depends on the type of business, environment volatility, competition, and the organizational culture. Strategic management provides the theme and focus of the future direction of the organization.

It supports consistency of action at every level of the organization. It encourages integration because effort and resources are committed to common goals and strategies. See Snapshot from Practice 2. Strategic management is a continuous, iterative process aimed at developing an integrated and coordinated long-term plan of action. It positions the organization to meet the needs and requirements of its customers for the long term. With the long-term position identified, objectives are set, and strategies are developed to achieve objectives and then translated into actions by implementing projects.

Strategy can decide the survival of an organization. Most organizations are success- ful in formulating strategies for the course s they should pursue.

However, the prob- lem in many organizations is implementing strategies�that is, making them happen. Integration of strategy formulation and implementation often does not exist. The components of strategic management are closely linked, and all are directed toward the future success of the organization. Strategic management requires strong links among mission, goals, objectives, strategy, and implementation.

The mission gives the general purpose of the organization. Goals give global targets within the mission. Objectives give specific targets to goals. Objectives give rise to the formulation of strategies to reach objectives. Finally, strategies require actions and tasks to be implemented. In most cases the actions to be taken represent projects. Figure 2. Four Activities of the Strategic Management Process The typical sequence of activities of the strategic management process is outlined here; a description of each activity then follows.

Review and define the organizational mission. Analyze and formulate strategies. Set objectives to achieve strategies. Implement strategies through projects. Identify the significant role projects contribute to the strategic direction of the organization. Watson performed at human expert levels in terms of precision, confidence, and speed during the show. Does Watson represent a new strategic direction for IBM? Not really. The Watson project is simply a manifestation of the move from computer hardware to a service strategy over a decade ago.

Chess is finite, logical, and reduced easily to mathematics. The IBM Watson project took three intense years of research and development by a core team of about Eight university teams working on specific challenge areas augmented these researchers. Watson depends on over million pages of structured and unstructured data and a program capable of running trillions of operations per second.

With this information backup, it attacks a Jeopardy question by parsing the question into small pieces. With the question parsed, the program then searches for relevant data. Using hundreds of decision rules, the program generates possible answers.

These answers are assigned a confidence score to decide if Watson should risk offering an answer and how much to bet. Now that the hype is over, IBM is pursuing their service strategy and applying the knowledge gained from the Watson project to real business applications. For example, it would be able to. Although the system holds tremendous poten- tial, it is humanmade and depends on the database, data analytics, and decision rules to select options.

The Watson project provides IBM with a flexible component to continue their decade-old strategy, moving IBM from computer hardware to service products.

Ferrucci, E. Brown, J. Chu-Carroll, J. Fan, D. Gondek, A. Kaylanp, A. Lally, J. Murdock, E. Nyborg, J. Prager, N. Schaefer, and C. Mission statements identify the scope of the organization in terms of its product or service. A written mission statement provides focus for decision making when shared by organizational managers and employees. For example, at one large consulting firm, partners who fail to recite the mission statement on demand are required to buy lunch.

The mission statement communicates and identifies the purpose of the organization to all stakeholders. Mission statements can be used for evaluating organization performance. Traditional components found in mission statements are major products and services, target customers and markets, and geographical domain.

In addition, state- ments frequently include organizational philosophy, key technologies, public image, and contribution to society. Including such factors in mission statements relates directly to business success. Mission statements change infrequently. However, when the nature of the business changes or shifts, revised mission and strategy statements may be required.

More specific mission statements tend to give better results because of a tighter focus. Mission statements decrease the chance of false directions by stakeholders. For example, compare the phrasing of the following mission statements:. Provide hospital design services.

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