Ops MGT Ch 3 & 20
Sales Forecast
Demand Prediction for a new product/service
Flow Rate
MIN {Demand, Process Capacity}
Tertiary Needs
Needs that are at the bottom of the needs hierarchy. This says nothing about their importance
Primary Needs
Needs that are at the top of the needs hierarchy. Note that this implies that they are more aggregated. This says nothing about importance
Secondary Needs
Needs that are at the top of the needs hierarchy. This implies they are less aggregated than primary needs. Says nothing about importance
Delighters
Needs that will lead to customer satisfaction when fulfilled but will not lead to dissatisfaction when not fulfilled. Frequently associated with latent needs
Contextual Observation
Observing the user in the context in which he/she would be most likely to use the new product or service. The emphasis is on observation and discussion with the user and can take multiple hours, during which time the developer takes notes and photos
Concept Selection
Prioritization of the concepts generated so far in the development
The Impersonator
created using mostly parts or system elements from an existing product/service
User Action-Based Decomposition
decomposition of a product or service into the activities the user goes through when using the product
In the case of a demand-constrained process.....
even the bottleneck would not be working at 100%
Buffer Inventory
flow units waiting in the process without being worked on and is depicted as a triangle
Non-bottleneck Resource
has some extra capacity relative to the bottleneck
Resources
help the flow units move from being a unit of input to becoming a unit of output
horizon 1
innovations tend to be refinements of existing technologies and solutions that we serve to our existing customers
Linear Satisfiers
needs that will lead to customer satisfaction when fulfilled and dissatisfaction when not fulfilled. Utility grows more or less linearly in the extent to which customer needs are met. Also called performance needs.
Performance Needs:
needs that will lead to customer satisfaction when fulfilled and dissatisfaction when note fulfilled. Utility grows more or less linearly in the extent to which customer needs are met. Also called linear satisfiers
Must-Haves
needs that will not really drive customer satisfaction upward when fulfilled by could drive customer satisfaction substantially downward when not fulfilled
The Fake Door
offering something you don't yet have
Interviews
one or multiple team members, discuss user needs with one customer at a time
Upstream
parts of the unit that at the beginning of Process
Low Fidelity Prototype
really rough representations of the final solution... this makes them imperfect and noisy predictor of how well customer need will be fulfilled. Advantage: Fast and Cheap to make
The One-Night Stand
testing something for a very limited time only.
Capacity- Constrained
the case in which demand exceeds supply and the flow rate is equal to process capacity
User Needs
the drivers of customer utilities
Product Awareness
the faction of the relevant population that is aware of the new product/service
Attribute-Based Decompostition
we focus on a subset of attributes of a new product/service and try to generate a concept that performs well on these attributes, even at the risk of performing poorly on others
Sales Forecast=
(Market Size)*(Awareness probability)*(Purchase Probability)
Time through an empty machine paced process
# of stations * Cycle Time ; the time it takes the first flow unit to flow through an empty process; a process that has no inventory
Purchase Probability=
(Cdefinite*Fraction "definitely buy*)+(Cprobably*Faction "defintely buy")
It takes a color printer 10 seconds to print a large poster. What is the capacity of the printer expressed in posted per hour?
1/10 poster/second OR 360 posters/hour
A call center has one operator who answers incoming calls. It takes the operator 6 minutes to answer one call. What is the capacity of the call center expressed in calls per hour?
1/6 calls per minute OR 10 calls/ hour
Cycle Time
1/Flow Rate ; the time between completing two consecutive flow units. Expressed in units of time/unit
Kano Model
A frame work that distinguishes between 3 types of needs: performance needs, delighters, and must haves ; first described by Noriaki Kano a Japanese design professor
Value Curve
A graphic depiction of a new product's relative performance across the key attributes, comparing it with existing offerings in the market
Process Flow Diagram
A graphical way to describe the process. It uses boxes to depict resources, arrows to depict flows, and triangles to depict inventory location
Incremental Innovation
A horizon 1 innovation; uses existing technology and serves existing customers
Radical Innovation
A horizon 3 innovation, oftentimes serves new markets and/or employs new technology
Innovation
A match between customer needs (foundation of demand) and solutions in the form of physical goods/services (supply) that create value. <- HAS to create Value
Double Diamond
A metaphor describing the design thinking approach
Focus Group
A moderated group discussion of 4 to 8 customers that typically lasts for about 2 hours
Purchase Probability
A prediction on the likelihood with which a given consumer would purchase the product/service
Product Concept
A preliminary articulation of a solution for a given set of user needs: WHAT are the needs that this particular concept fulfills really well HOW are we going to fulfill these needs
Machine-Paced
A process in which all steps are connected through a conveyor belt and all of the steps must work at the same rate even if some of them have more capacity than others
Iterative Process
A process in which one of several of the activities are repeated one or multiple times : indicated by arrows looping back from the activities in the figure
Worker-Paced System
A process line in which each resource is free to work at its own pace; if the first resource finishes before the next one is ready to accept the flow unit, then the first resource puts the completed flow unit in the inventory between the two resources
The Product Development Process
A process that takes an opportunity as its input and translates this into a new product or service. The process includes needs identification, the generation of product concepts, an empirical validation of the concepts, and a business analysis, involving a sales forecast
Concept Generation
A product development team generates a large and diverse set of product concepts in the hope that one or several of these concepts will be the foundation for our new product/service
Lean Startup
A product-development process that rapidly iterates with real customers using very simple and inexpensive prototypes. Also known as pretotyping
Minimum Viable Product: MVP
A prototype of a new product or service that allows the team to collect the maximum amount of learning about customer preferences with the least amount of effort
Prototype
A representation of the final product or service that allows the product development team to predict how well a particular product concept might fulfill the customer needs
Process Analysis
A rigorous framework for understanding the detailed operations of a business. It Determines how many flow units can be processed per unit of time ( The process capacity) and how busy the resources of the process are (utilization)
Throughput
A synonym for flow rate; the number of flow units flowing through the process per unit of time
Selection Matrix
A table that compares product concepts. The rows in the selection matrix are the concepts, with the columns being the 3 dimensions of comparison: need fulfillment, feasibility, and wow factor
Decompostition
Breaking up a problem into smaller, manageable subproblems and solving these subproblems first.. Based on the idea of divide & conquer
Time to make Q units
Cycle Time * Q
Utilization
Flow Rate/ Capacity ; Can be defined at the level of entire process or an individual resource
3 Methods of gathering customer needs
Interviews, Contextual Observation, and Focus Groups
The Fake Back-End
Like Amazon FBA: the customer doesn't notice that you're offering something you don't have yet
Bottleneck
Resource with the lowest capacity in a process. It is not possible to get more customers through the process than what we have capacity for
Demand Constrained
The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate
Fidelity
The extent to which a prototype approximates the actual user experience
Most Common Forms of MVP:
The fake door, The fake back-end, the impersonator, the one-night stand
Process Capacity
The maximum flow rate a process can provide per unit of time. Determines the maximum supply of the process. The process capacity is the smallest capacity of all resources in the process
Capacity
The maximum number of flow units that can flow through that resource per unit of time. = 1/Processing Time
Market Size
The number of customers who are in the market that we aim to serve
Demand Rate
The number of flow units that customers want per unit of time
Hierarchy of Needs
The organization of user needs into primary, secondary, and tertiary needs
Downstream
The parts of the process that are at the end of the process flow
Opportunity Idenification
The process of generating opportunities. Oftentimes located in specific organizational units-- such as R&D
Processing Time
The time is takes a resource to complete one flow unit
Time that is required to produce a given quantity X starting with an empty system
Time through an empty process * [(X-1)*Cycle Time] ; the time it takes a process with no inventory to produce a given quantity
Utility=
U(Consumption Utility, Price, Convenience)
What is critical for improving the process?
Understanding the location of the bottleneck
Slack Capacity
Utilization levels that are strictly less than 100%
Innovation Horizon
a measure of the novelty of an innovation, with horizon 1 being less novel than horizon 2, which in turn is less novel than horizon 3
Purchase Intent Survey
a survey that communicates the product concept with the customer and then asks the customer how likely he/she is to purchase the product
Service Blueprint
a user interaction-based decomposition that breaks up the flow of activities required to serve the customer. Also distinguishes which activities are carried out "on stage" (which means during the interaction of us with the customer) and which activities we do without the involvement of the customer
High Fidelity Prototype
almost perfect representations and therefore give us a very accurate prediction about real customer response. Very expensive to make and we typically can not afford to create a high-fidelity prototype for every concept we consider
Design Thinking
an approach to product development consisting of contextual observation, problem definition, concept generation, and rapid validation
Opportunity
an idea- it is a new product or service at the embryonic state