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Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)

One of the reasons why operations management is so important to organizations and managers is that it plays a strategic
role in an organization's competitive success.

1)

_______
Answer

True

False

2)

In a manufacturing process, an organization creates value by turning inputs such as people, capital and equipment into
outputs such as goods or services.

2)

_______
Answer

True

False

3)

The transformation process is as evident in service organizations as it is in manufacturing organizations.

3)

_______
Answer

True

False
4)

The Arab economy, and to a large extent the global economy, is dominated by the creation and sale of physical goods.

4)

_______
Answer

True

False

5)

A service organization, such as the Arab Bank, does not transform inputs into outputs because such transformation only
happens in manufacturing firms.

5)

_______
Answer

True

False

6)

For individual organizations, increased productivity gives them a more competitive cost structure and the ability to offer
more competitive prices.

6)

_______
Answer

True

False

7)

High productivity can come solely from good people management.


7)

_______
Answer

True

False

8)

In companies such as Dubai Aluminum, improvements in quality would be aided by employee empowerment, although
such empowerment is not a necessity.

8)

_______
Answer

True

False

9)

Before the late 1970s, U.S. manufacturers were able to make better quality goods less expensively than foreign companies.

9)

_______
Answer

True

False

10)

Value is provided to customers through transforming raw materials and other resources into some product or service that
end users need or desire when, where, and how they want it.

10)

______
Answer
True

False

11)

Value chain management is internally oriented and focuses on efficient flow of incoming materials to organizations.

11)

______
Answer

True

False

12)

Despite its importance, value chain analysis is not frequently used in the Arab region.

12)

______
Answer

True

False

13)

Managing an organization from a value chain perspective is easy.

13)

______
Answer

True

False
14)

The goal of value chain management is to create a value chain strategy that meets and exceeds customers' needs and
desires and allows for full and seamless integration among all members of the chain.

14)

______
Answer

True

False

15)

Better demand forecasting is necessary and possible because of closer ties with customers and suppliers.

15)

______
Answer

True

False

16)

Selected functions may need to be done collaboratively with other partners in the value chain.

16)

______
Answer

True

False

17)

Old measures are adequate for evaluating performance of various activities along the value chain.

17)
______
Answer

True

False

18)

It is important that managers outline expectations for what is involved in the organization's pursuit of value chain
management.

18)

______
Answer

True

False

19)

The organization's hiring process must be designed to identify those employees who have the ability to learn and adapt.

19)

______
Answer

True

False

20)

When there's too much trust, partners in a value chain will be reluctant to share information, capabilities, and processes.

20)

______
Answer

True
False

21)

Managers must motivate high levels of effort from employees.

21)

______
Answer

True

False

22)

New generations of internet-compatible equipment contain embedded web servers that can communicate proactively.

22)

______
Answer

True

False

23)

Quality improvement initiatives aren't possible without having some way to monitor and evaluate their progress.

23)

______
Answer

True

False

24)
There are very few Arab companies that implement Six Sigma as it is irrelevant to the Arab context.

24)

______
Answer

True

False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
25)

________ management oversees the transformation process that converts resources such as labor and raw materials into
finished goods and services.

25)

______
A)

Operations

B)

Control

C)

Planning

D)

Systems
Answer

26)

Which of the following is an example of an input as described by an


organization's operations system?

26)

______
A)
innovative products

B)

sales
C)

capital

D)

accounting reports
Answer

27)

All organizations produce goods or services through the ________ process.

27)

______
A)

engineering

B)

manufacturing

C)

operations

D)

transformation
Answer

28)

It is easy to see the operations management process at work in ________.

28)

______
A)
manufacturing organizations

B)

service organizations
C)

financial organizations

D)

consulting organizations
Answer

29)

Service organizations produce ________ in the form of services.

29)

______
A)

nonphysical inputs

B)

nonphysical outputs
C)

physical inputs

D)

physical outputs
Answer

30)

Which of the following is not an example of a service organization?

30)

______
A)

a manufacturing plant
B)

military forces
C)

a university

D)

a hospital
Answer

31)

For organizations to improve productivity, they should focus on which of the following?

31)

______
A)

operations variables only


B)

people and operations variables


C)

people only
D)

people or operations variables, depending on the industry


Answer

32)

United Pharmaceutical (Jordan) uses a(n) ________ to better manage its operations.

32)

______
A)

product demand forecast information system


B)

enterprise resource planning system


C)
joint marketing system
D)

inventory management system


Answer

33)

Deming believed which of the following?

33)

______
A)

Employees should learn movement efficiency, not statistical methods.


B)

Training is generally wasted time.


C)

High productivity comes from good people management.


D)

Managers are the primary source of increased productivity.


Answer

34)

Where did the modern era of manufacturing primarily begin?

34)

______
A)

southern cotton mills

B)

northeastern textile mills


C)

the coal industry

D)

Detroit automobile factories


Answer

35)

After World War II, as U.S. executives neglected production, managers in other countries took the opportunity to develop
modern, computer-based, and technologically advanced facilities that fully integrated manufacturing operations into
________.

35)

______
A)

strategic planning decisions

B)

Deming's 14 points
C)

productivity decisions

D)

value chain management


Answer

36)

By the late 1970s, U.S. executives responded to their manufacturing crisis by ________.

36)

______
A)

focusing on improving finance and marketing


B)

investing heavily in improving manufacturing technology


C)

incorporating former production requirements into the organization's overall strategic plan
D)

minimizing corporate authority and visibility of manufacturing executives


Answer
B

37)

________ is the performance characteristics, features and attributes, and any other aspects of goods and services for which
customers are willing to give up resources.

37)

______
A)

Cost

B)

Performance

C)

Convenience

D)

Value
Answer

38)

The ________ is the entire series of organizational work activities that add value at each step, beginning with the
processing of raw materials and ending with finished product in the hands of end users.

38)

______
A)

ethical chain

B)

value chain

C)

financial chain

D)

supply chain
Answer

39)

In its entirety, the ________ can encompass the supplier's suppliers to the
customer's customers.

39)

______
A)

value chain

B)

financial chain

C)

supply chain

D)

ethical chain
Answer

40)

________ is the process of managing the facilities, functions, and activities involved in producing and delivering a product
or service from suppliers to customers.

40)

______
A)

Value chain management

B)

Supply chain management


C)

Financial chain management

D)
Ethical chain management
Answer

41)

________ is externally oriented and focuses on both incoming materials and outgoing products and services.

41)

______
A)

Financial chain management

B)

Value chain management


C)

Supply chain management

D)

Ethical chain management


Answer

42)

________ is the process of managing the entire sequence of integrated activities and information about product flows
along the entire value chain.

42)

______
A)

Supply chain management

B)

Ethical chain management


C)

Value chain management

D)

Financial chain management


Answer

43)

All of the following are characteristics of value chain management except ________.

43)

______
A)

it is efficiency oriented
B)

it is effectiveness oriented
C)

it is externally oriented
D)

it focuses on both incoming materials and outgoing products and services


Answer

44)

In value chain management, ultimately the ________ are the ones with the power.

44)

______
A)

suppliers

B)

buyers

C)

employees

D)

customers
Answer

D
45)

The better the ________ the various chain participants, the better the ________.

45)

______
A)

collaboration among; customer solutions

B)

commitment of; employee relations


C)

attitudes of; customer relations

D)

cooperation among; productivity


Answer

46)

According to a survey of manufacturers who have embarked on value chain management initiatives, ________ was a
benefit that companies reported.

46)

______
A)

cost savings

B)

increased sales
C)

increased market share

D)

improved logistics
Answer

D
47)

A ________ is a strategic design for how a company plans to profit from its strategies, processes, and activities.

47)

______
A)

supply chain

B)

value chain
C)

business model

D)

just-in-time inventory model


Answer

48)

Which of the following is a main requirement for successful value chain


management?

48)

______
A)

R&D

B)

competition
C)

coordination

D)

organizational structure
Answer

C
49)

For the value chain to achieve its goal of exceeding customer needs, ________ must be developed.

49)

______
A)

standards

B)

technology
C)

new products and services

D)

collaborative relationships
Answer

50)

The payoff from ________ is that it can be used to restructure the value chain to better serve end users.

50)

______
A)

an organizational process

B)

an investment in information technology


C)

leadership

D)

coordination and collaboration


Answer

51)
Value chain management radically changes ________.

51)

______
A)

corporate goals and objectives

B)

mission statements
C)

organizational processes

D)

ethical issues
Answer

52)

The ways in which organizational work is done are described as ________.

52)

______
A)

organizational processes

B)

goals and objectives


C)

corporate visions

D)

policies and procedures


Answer

53)

Which of the following is a question that should be asked for each and every organizational process?
53)

______
A)

"How can we improve customer service?"


B)

"How can the cash flow be improved?"


C)

"How can we better configure our product to satisfy manufacturers?"


D)

"Where can external knowledge be leveraged to improve the flow of material and information?"
Answer

54)

Ideally, when managers outline expectations for what's involved in the organization's pursuit of value chain
management, they should start with ________.

54)

______
A)

a plan

B)

the requirements
C)

a vision or mission statement

D)

a goal
Answer

55)

The main human resource requirements for value chain management include ________.

55)

______
A)

flexible approaches to job design

B)

one-time training
C)

diversity

D)

an effective firing process


Answer

56)

________ is the key description of job design in a value chain organization.

56)

______
A)

Innovation

B)

Strategy

C)

Flexibility

D)

Structure
Answer

57)

Which of the following is a cultural attitude that supports the successful implementation of value chain management?

57)

______
A)

benchmarking

B)

competition
C)

collaborating

D)

business intelligence
Answer

58)

Which of the following is an obstacle in managing the value chain?

58)

______
A)

managerial attitudes

B)

required capabilities
C)

individual barriers

D)

systems
Answer

59)

Which of the following obstacles to value chain management is among the


m o s t d i ffi c u l t f o r m a n a g e r s t o h a n d l e ?

59)

______
A)

organizational barriers

B)

cultural attitudes
C)

people

D)

required capabilities
Answer

60)

Organizational barriers that are difficult for managers to handle include ________.

60)

______
A)

privacy issues

B)

refusal to share information


C)

incompetent employees

D)

reluctance to conform to the status quo


Answer

61)

Since value chain management relies heavily on substantial information technology infrastructure, ________ should
always be addressed.

61)

______
A)

standardized information exchange protocols


B)

personal identity theft


C)

software compatibility
D)

system security
Answer

62)

Unsupportive cultural attitudesespecially trust and ________can be obstacles to value chain management.

62)

______
A)

respect

B)

control

C)

communication

D)

commitment
Answer

63)

________ can cause a problem because your organization's valuable assets can be compromised.

63)

______
A)
Too much trust

B)

Too much control


C)

Too little control

D)

Too little trust


Answer

64)

Proprietary company information that is critical to a company's efficient and effective functioning and competitiveness is
called ________.

64)

______
A)

real property

B)

management property
C)

tangible property

D)

intellectual property
Answer

65)

________ is allowing organizations to control costs particularly in the areas of predictive maintenance, remote diagnostics,
and utility cost savings.

65)

______
A)
Quality control

B)

Just-in-time inventory practice


C)

Continuous quality

D)

Technology
Answer

A Lesson in Operations Management (Scenario)

Hana had been asked to attend training in operations management. Her background and training had previously been in
accounting, but with the reorganization looming, it was either learn a new skill or be downsized. She was actually looking
forward to the training. She felt her background with numbers should prove valuable in operations management, but she
admitted that she knew little about the field. Until now, she had been in a support staff function and had little feel for how
the organization's product went from raw materials to finished product. Hana's first class would be tonight at Central
University, and she was excited about the opportunity.

66)

On the first night of class, Hana learned that the central focus of operations management was ________.

66)

______
A)

the transformation process

B)

goods
C)

capital

D)

people
Answer

67)
Hana realized that inputs include which of the following?

67)

______
A)

accounting reports

B)

sales
C)

capital

D)

motivated employees
Answer

68)

Hana had to know what factors were considered inputs versus those considered outputs. Outputs included which of the
following?

68)

______
A)

technology

B)

goods

C)

information

D)

materials
Answer

69)
Hana must remember that productivity is a composite of ________ variables.

69)

______
A)

task and relationship

B)

unpredictable
C)

structural and procedural

D)

people and operations


Answer

Solutions (Scenario)

Ramzy is the new strategic manager for Solutions Tech, Inc., a management consulting firm dedicated to assisting small
businesses in the pursuit of success. He is currently in a meeting with Jassem, who is the owner of a successful small
business that creates computer displays for big companies. Ramzy is reviewing the business strategy at Jassem's business
and has some recommendations.

70)

Before making any recommendations, Ramzy informed Jassem that a ________ is the entire series of organizational work
activities that add value at each step, beginning with the processing of raw materials and ending with finished product in
the hands of end users.

70)

______
A)

ethical chain

B)

financial chain

C)

supply chain
D)

value chain
Answer

71)

Noticing that Jassem seemed a bit confused, Ramzy informed him that ________ is the process of managing the entire
sequence of integrated activities and information about product flows along the entire value chain.

71)

______
A)

value chain management

B)

supply chain management


C)

financial chain management

D)

ethical chain management


Answer

72)

Ramzy told Jassem that the value chain management approach radically changes organizational processes. Jassem asked
Ramzy if he could elaborate on this point a bit more. Ramzy said, "When managers decide to manage operations using
value chain management, old processes are no longer appropriate. Managers must critically evaluate all organizational
processes to determine ________."

72)

______
A)

where value is being added

B)

where there are gaps in the value chain


C)
the needed critical skills

D)

the organization's core competencies


Answer

73)

Jassem seemed to understand the theory behind value chain management, but was curious about the requirements for a
successful value chain. Ramzy informed Jassem that the main requirements for successful value chain management
include all of the following except ________.

73)

______
A)

competition

B)

collaboration

C)

leadership

D)

employees
Answer

74)

Jassem asked Ramzy about the role of human resources in the value chain management process. Ramzy replied,
"Employees are the most important resource of any organization, so not surprisingly, employees play a vital role in value
chain management. The three main human resource requirements for value chain management are flexible job design, an
effective hiring process, and ________."

74)

______
A)

goal compatible compensation plans


B)
a commitment to management by objectives (MBO)
C)

ongoing training
D)

an effective firing process


Answer

75)

Ramzy told Jassem that flexibility in job design means that jobs should be redesigned around work processes that
________.

75)

______
A)

help organizations learn more about their customers


B)

solidify the commitment of members to the goals of their respective work unit
C)

reveal customers' flexibility


D)

link functions charged with creating value to customers


Answer

76)

Ramzy told Jassem that an effective hiring process is important to value chain management because ________.

76)

______
A)

flexible job designs require flexible people to fill them


B)

value chain management requires highly experienced and knowledgeable employees


C)

employees have to have the knowledge and tools they need to do their jobs efficiently
D)

value chain management requires a diverse group of highly specialized employees


Answer

77)

Ramzy told Jassem, "Organizational culture is also a very important component of value chain management. Those
cultural attitudes include sharing, openness, respect, and trust, and these attitudes must encompass not only employees,
but ________ as well."

77)

______
A)

their families

B)

extend to external partners


C)

extend to management

D)

extend to customers
Answer

78)

Ramzy wanted to convince Jassem that the value chain was very important and practical. Ramzy briefly reviewed the
results of a survey of manufacturers that had embarked on value chain management. Sharing the results of the survey
with Jassem, Ramzy indicated that ________ was a benefit that companies reported on this survey.

78)

______
A)

increased sales

B)

enhanced customer order management


C)
cost savings

D)

increased market share


Answer

79)

Jassem asked Ramzy about the barriers commonly faced by organizations looking to implement value chain management.
Ramzy replied that organizational barriers are among the most difficult for managers to reconcile. An example of such a
barrier might include ________.

79)

______
A)

employees' refusal to be flexible


B)

mutual trust
C)

reluctance to share information


D)

the belief that when an organization collaborates, it no longer controls its own destiny
Answer

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
80)

I n a s h o r t e s s a y , d e fi n e o p e r a t i o n s m a n a g e m e n t a n d b r i e fl y d i s c u s s t h e
importance of this management process.
Answer

The term operations management refers to the design, operation, and control of the transformation process that converts
such resources as labor and raw materials into goods and services that are sold to customers. The system takes in
inputspeople, technology, capital, equipment, materials, and informationand transforms them through various
processes, procedures, and work activities into finished goods and services. Marketing, finance, research and
development, human resources, and accounting convert inputs into outputs such as sales, increased market share, high
rates of return on capital, new and innovative products, motivated and committed employees, and accounting reports.
Operations management is important because it encompasses both services and manufacturing, it's important in
effectively and efficiently managing productivity, and it plays a strategic role in an organization's competitive success.

81)
In a short essay, describe the goal of value chain management.
Answer

The goal of value chain management is to create a value chain strategy that meets and exceeds customers' needs and
desires and allows for full and seamless integration among all members of the chain. A good value chain is one in which a
sequence of participants work together as a team, each adding some component of valuesuch as faster assembly, more
accurate information, better customer response and service, and so forthto the overall process. The better the
collaboration among the various chain participants, the better the customer solutions. When value is created for customers
and their needs and desires are satisfied, everyone along the chain benefits. For example, Eros Group, the sole distributor
of many world-renowned brands in the Middle East, launched a "Delivery on Demand" Service for Samsung mobile
products. Eros Group runs vans with Samsung mobile stocks to serve independent retail outlets on a real-time basis.
Deepak Babani, CEO of Eros Group, indicated that "with the launch of this service the turnaround time will be reduced
for stock availability, benefiting the dealers and ultimately the end consumers."

82)

In a short essay, describe the coordination and collaboration that is necessary for successful value chain management.
Answer

For the value chain to achieve its goal of meeting and exceeding customers' needs and desires, collaborative relationships
must exist among all chain participants. Each partner must identify things they may not value but that customers do. And
sharing information and being flexible in terms of who in the value chain does what are important steps in building
coordination and collaboration.
This sharing of information and analysis requires open communication among the various value chain partners.
For example, Kraft Foods believes that better communication with customers and with suppliers has facilitated timely
delivery of goods and services. Dulsco Qatar, which outsources manpower to Qatar's oil and gas, construction, and
logistics sectors, relies on constant feedback to facilitate quality and optimizing processes.

83)

In a short essay, identify and discuss the leadership requirements for successful value chain management.
Answer

Successful value chain management is not possible without strong and committed leadership. From top organizational
levels to lower levels, managers must support, facilitate, and promote the implementation and ongoing practice of value
chain management. Managers must seriously commit to identifying what value is, how that value can best be provided,
and how successful those efforts have been. A culture where all efforts are focused on delivering superb customer value is
not possible without serious commitment on the part of the organization's leaders.
Also, it is important that managers outline expectations for what is involved in the organization's pursuit of value chain
management. Ideally, this starts with a vision or mission statement that expresses the organization's commitment to
identifying, capturing, and providing the highest possible value to customers. Then, managers should clarify expectations
regarding each employee's role in the value chain. But clear expectations are not important only for internal partners.
Being clear about expectations also extends to external partners.

84)

In a short essay, identify and explain the three main human resource requirements for value chain management.
Answer

The three main human resource requirements for value chain management are flexible approaches to job design, an
effective hiring process, and ongoing training. Flexibility is the key to job design in a value chain management
organization. Traditional functional job rolessuch as marketing, sales, accounts payable, customer service, and so
forthare inadequate in a value chain management environment. Instead, jobs must be designed around work processes
that create and provide value to customers. But it takes more than flexible jobs; flexible employees are needed as well. In a
value chain organization, employees may be assigned to work teams that tackle a given process and may be asked to do
different things on different days depending on need. In such an environment where customer value is best delivered
through collaborative relationships that may change as customer needs change and where there are no standardized
processes or job descriptions, an employee's ability to be flexible is critical. Therefore, the organization's hiring process
must be designed to identify those employees who have the ability to learn and adapt. Finally, the need for flexibility also
requires that there be a significant investment in continual and ongoing employee training. Whether training involves
learning how to use information technology software, how to improve the flow of materials throughout the chain, how to
identify activities that add value, how to make better decisions faster, or how to improve any other number of potential
work activities, managers must see to it that employees have the knowledge and tools they need to do their jobs efficiently
and effectively.

85)

In a s h o r t e s s a y , l i s t a n d d i s c u s s f o u r o b s t a c l e s t h a t m a n a g e r s m u s t d e a l w i t h
in managing the value chain.
Answer

a. Organizational barriersthese are among the most difficult obstacles that managers handle. These barriers include
refusal or reluctance to share information, reluctance to shake up the status quo, and security issues. Without shared
information, close coordination and collaboration are impossible. And, the reluctance or refusal of employees to shake up
the status quo can impede efforts toward value chain management and prevent its successful implementation. Finally,
because value chain management relies heavily on a substantial information technology infrastructure, system security
and internet security breaches are issues that need to be addressed.
b. Cultural attitudesunsupportive cultural attitudes also can be obstacles to value chain management. The trust issue is
a critical one, both lack of trust and too much trust. To be effective, partners in a value chain must trust each other. There
must be a mutual respect for, and honesty about, each partner's activities all along the chain. When that trust doesn't exist,
the partners will be reluctant to share information, capabilities, and processes. But, too much trust also can be a problem.
A study by the American Society for Industrial Security found that those cultivating a trusting relationship with a
company pose the most serious threat for intellectual property loss.
c. Required capabilitiesthere are a number of capabilities that value chain partners must have. Several of these,
including extreme coordination and collaboration, the ability to configure products to satisfy customers and suppliers,
and the ability to educate internal and external partners, aren't easy to develop. But they're essential to capturing and
exploiting the value chain.
d. Peoplethe final obstacles to successful value chain management can be an organization's members. Without their
unwavering commitment and willingness to do whatever it takes, value chain management isn't going to be successful. If
employees refuse or are reluctant to be flexible, it's going to be difficult to make the necessary changes to meet changing
situational demands. In addition, value chain management takes an incredible amount of time and energy by an
organization's employees. Managers must motivate those high levels of effort from employees.

86)

In a short essay, discuss technology's role in manufacturing.


Answer

Although an organization's production activities are being driven by the recognition that the customer is king, managers
still need to be more responsive. For instance, operations managers need systems that can reveal available capacity, status
of orders, and product quality while products are in the process of being manufactured, not just after the fact. To connect
more closely with customers, production must be synchronized across the enterprise. To avoid bottlenecks and
slowdowns, the production function must be a full partner in the entire business system. What's making this type of
extensive collaboration possible is technology. Technology is also allowing organizations to control costs, particularly in
the areas of predictive maintenance, remote diagnostics, and utility cost savings. For instance, how is technology affecting
the equipment maintenance functionan important operations management activity? New generations of internet-
compatible equipment contain embedded web servers that can communicate proactivelythat is, if a piece of equipment
breaks or reaches certain preset parameters indicating that it's about to break, it can ask for help. But technology can do
more than sound an alarm or light up an indicator button. For instance, some devices have the ability to initiate e-mail or
signal a pager at a supplier, the maintenance department, or contractor describing the specific problem and requesting
parts and service. How much is such e-enabled maintenance control worth? It can be worth quite a lot if it prevents
equipment breakdowns and subsequent production downtime.

1)

TRUE
2)

FALSE
3)

FALSE
4)

FALSE
5)

FALSE
6)

TRUE
7)

FALSE
8)

FALSE
9)

FALSE
10)

TRUE
11)

FALSE
12)

TRUE
13)

FALSE
14)

TRUE
15)

TRUE
16)

TRUE
17)

FALSE
18)

TRUE
19)

TRUE
20)

FALSE
21)

TRUE
22)

TRUE
23)

TRUE
24)

FALSE
25)

A
26)

C
27)

D
28)

A
29)

B
30)

A
31)

B
32)

B
33)

D
34)

D
35)

A
36)

B
37)

D
38)

B
39)

A
40)

B
41)

B
42)

C
43)

A
44)

D
45)

A
46)

D
47)

C
48)

C
49)

D
50)

B
51)

C
52)

A
53)

A
54)

C
55)

A
56)

C
57)

C
58)

B
59)

A
60)

B
61)

D
62)

B
63)

A
64)

D
65)

D
66)

A
67)

C
68)

B
69)

D
70)

D
71)

A
72)

A
73)

A
74)

C
75)

D
76)

A
77)

B
78)

B
79)

C
80)

The term operations management refers to the design, operation, and control of the transformation process that converts
such resources as labor and raw materials into goods and services that are sold to customers. The system takes in
inputspeople, technology, capital, equipment, materials, and informationand transforms them through various
processes, procedures, and work activities into finished goods and services. Marketing, finance, research and
development, human resources, and accounting convert inputs into outputs such as sales, increased market share, high
rates of return on capital, new and innovative products, motivated and committed employees, and accounting reports.
Operations management is important because it encompasses both services and manufacturing, it's important in
effectively and efficiently managing productivity, and it plays a strategic role in an organization's competitive success.
81)

The goal of value chain management is to create a value chain strategy that meets and exceeds customers' needs and
desires and allows for full and seamless integration among all members of the chain. A good value chain is one in which a
sequence of participants work together as a team, each adding some component of valuesuch as faster assembly, more
accurate information, better customer response and service, and so forthto the overall process. The better the
collaboration among the various chain participants, the better the customer solutions. When value is created for customers
and their needs and desires are satisfied, everyone along the chain benefits. For example, Eros Group, the sole distributor
of many world-renowned brands in the Middle East, launched a "Delivery on Demand" Service for Samsung mobile
products. Eros Group runs vans with Samsung mobile stocks to serve independent retail outlets on a real-time basis.
Deepak Babani, CEO of Eros Group, indicated that "with the launch of this service the turnaround time will be reduced
for stock availability, benefiting the dealers and ultimately the end consumers."
82)

For the value chain to achieve its goal of meeting and exceeding customers' needs and desires, collaborative relationships
must exist among all chain participants. Each partner must identify things they may not value but that customers do. And
sharing information and being flexible in terms of who in the value chain does what are important steps in building
coordination and collaboration.
This sharing of information and analysis requires open communication among the various value chain partners.
For example, Kraft Foods believes that better communication with customers and with suppliers has facilitated timely
delivery of goods and services. Dulsco Qatar, which outsources manpower to Qatar's oil and gas, construction, and
logistics sectors, relies on constant feedback to facilitate quality and optimizing processes.
83)

Successful value chain management is not possible without strong and committed leadership. From top organizational
levels to lower levels, managers must support, facilitate, and promote the implementation and ongoing practice of value
chain management. Managers must seriously commit to identifying what value is, how that value can best be provided,
and how successful those efforts have been. A culture where all efforts are focused on delivering superb customer value is
not possible without serious commitment on the part of the organization's leaders.
Also, it is important that managers outline expectations for what is involved in the organization's pursuit of value chain
management. Ideally, this starts with a vision or mission statement that expresses the organization's commitment to
identifying, capturing, and providing the highest possible value to customers. Then, managers should clarify expectations
regarding each employee's role in the value chain. But clear expectations are not important only for internal partners.
Being clear about expectations also extends to external partners.
84)

The three main human resource requirements for value chain management are flexible approaches to job design, an
effective hiring process, and ongoing training. Flexibility is the key to job design in a value chain management
organization. Traditional functional job rolessuch as marketing, sales, accounts payable, customer service, and so
forthare inadequate in a value chain management environment. Instead, jobs must be designed around work processes
that create and provide value to customers. But it takes more than flexible jobs; flexible employees are needed as well. In a
value chain organization, employees may be assigned to work teams that tackle a given process and may be asked to do
different things on different days depending on need. In such an environment where customer value is best delivered
through collaborative relationships that may change as customer needs change and where there are no standardized
processes or job descriptions, an employee's ability to be flexible is critical. Therefore, the organization's hiring process
must be designed to identify those employees who have the ability to learn and adapt. Finally, the need for flexibility also
requires that there be a significant investment in continual and ongoing employee training. Whether training involves
learning how to use information technology software, how to improve the flow of materials throughout the chain, how to
identify activities that add value, how to make better decisions faster, or how to improve any other number of potential
work activities, managers must see to it that employees have the knowledge and tools they need to do their jobs efficiently
and effectively.
85)

a. Organizational barriersthese are among the most difficult obstacles that managers handle. These barriers include
refusal or reluctance to share information, reluctance to shake up the status quo, and security issues. Without shared
information, close coordination and collaboration are impossible. And, the reluctance or refusal of employees to shake up
the status quo can impede efforts toward value chain management and prevent its successful implementation. Finally,
because value chain management relies heavily on a substantial information technology infrastructure, system security
and internet security breaches are issues that need to be addressed.
b. Cultural attitudesunsupportive cultural attitudes also can be obstacles to value chain management. The trust issue is
a critical one, both lack of trust and too much trust. To be effective, partners in a value chain must trust each other. There
must be a mutual respect for, and honesty about, each partner's activities all along the chain. When that trust doesn't exist,
the partners will be reluctant to share information, capabilities, and processes. But, too much trust also can be a problem.
A study by the American Society for Industrial Security found that those cultivating a trusting relationship with a
company pose the most serious threat for intellectual property loss.
c. Required capabilitiesthere are a number of capabilities that value chain partners must have. Several of these,
including extreme coordination and collaboration, the ability to configure products to satisfy customers and suppliers,
and the ability to educate internal and external partners, aren't easy to develop. But they're essential to capturing and
exploiting the value chain.
d. Peoplethe final obstacles to successful value chain management can be an organization's members. Without their
unwavering commitment and willingness to do whatever it takes, value chain management isn't going to be successful. If
employees refuse or are reluctant to be flexible, it's going to be difficult to make the necessary changes to meet changing
situational demands. In addition, value chain management takes an incredible amount of time and energy by an
organization's employees. Managers must motivate those high levels of effort from employees.
86)

Although an organization's production activities are being driven by the recognition that the customer is king, managers
still need to be more responsive. For instance, operations managers need systems that can reveal available capacity, status
of orders, and product quality while products are in the process of being manufactured, not just after the fact. To connect
more closely with customers, production must be synchronized across the enterprise. To avoid bottlenecks and
slowdowns, the production function must be a full partner in the entire business system. What's making this type of
extensive collaboration possible is technology. Technology is also allowing organizations to control costs, particularly in
the areas of predictive maintenance, remote diagnostics, and utility cost savings. For instance, how is technology affecting
the equipment maintenance functionan important operations management activity? New generations of internet-
compatible equipment contain embedded web servers that can communicate proactivelythat is, if a piece of equipment
breaks or reaches certain preset parameters indicating that it's about to break, it can ask for help. But technology can do
more than sound an alarm or light up an indicator button. For instance, some devices have the ability to initiate e-mail or
signal a pager at a supplier, the maintenance department, or contractor describing the specific problem and requesting
parts and service. How much is such e-enabled maintenance control worth? It can be worth quite a lot if it prevents
equipment breakdowns and subsequent production downtime.