1 Explain the role of value-chain management in achieving superior quality, efficiency, and responsiveness to customers.

1. Value-chain Management and Competitive Advantage
   1. Value chain – the functional activities that transform inputs into outputs of goods and services that customers value.
      1. Production function – creates the goods and services of a company.
      2. Service function – provides after-sale service and support.
      3. Materials management function – the movement of physical materials through the value chain.
      4. Information systems function – electronic systems for inventory, sales tracking, pricing products, and selling products.
   2. Functional strategies and competitive advantage – functional managers need to be sure that the organization attains superior efficiency, quality, speed, flexibility, innovation, and responsiveness to customers.

2 Describe what customers want, and explain why it is so important for managers to be responsive to their needs.

2. Improving Responsiveness to customers
   1. What do customers want?
      1. A lower price
      2. High-quality products
      3. Quick service
      4. Products with many features
      5. Customized products
   2. Designing operating systems responsive to customers – the ability of an organization to satisfy its customers depends on its operating system.

3 Explain why achieving superior quality is so important.

3. Improving quality
   High quality products are reliable, dependable, and satisfying to customers. Customers usually prefer a higher quality product. Also, higher product quality can increase production efficiency and lower production costs and increase profit.

4 Describe the challenges facing managers and organizations that seek to implement total quality management.

1. Total Quality Management (TQM) – improving the quality of products and services should be the focus of everyone in the organization.
   1. Build commitment to quality.
   2. Focus on the customer.
   3. Find ways to measure quality.
   4. Set goals and create incentives to reach them.
   5. Obtain input from employees.
   6. Find defects and trace them to their source.
   7. Use a JIT inventory system.
   8. Work closely with suppliers.
   9. Design for ease in the production process.
   10. Break down barriers between the different functional areas.

5 Explain why achieving superior efficiency is so important.

4. Improving efficiency
   The fewer inputs required to produce an output, the higher the efficiency of the operating system.

6 Differentiate among facilities layout, flexible manufacturing, just-in-time inventory, and process reengineering.

1. Facilities layout, flexible manufacturing, and efficiency
   1. Facilities layout – the way in which machines and people are grouped in production.
      1. Product layout – workers stay in one place and the product comes to them (e.g. mass production in a Ford automobile plant)
      2. Process layout – workers stay in one place, but the product comes to whichever worker is needed to do the next operation.
      3. Fixed-position layout – the product in production stays in one place, and components produced elsewhere are brought to it (e.g. jet planes).
   2. Flexible manufacturing – if production setup time can be reduced, production time will become more efficient.
2. Just-in-time inventory and efficiency – efficiency increases if the raw materials or components can be supplied in production very close to the time when they are actually needed in the production process.
3. Self-managed work teams and efficiency – these teams provide a flexible workforce and reduce the need for supervision.
4. Process reengineering and efficiency – radical redesign of business processes can improve performance.
5. Information systems, the Internet, and efficiency – the Internet can significantly reduce a company's ordering and customer service functions.
5. Value-chain management: some remaining issues
   1. Boundary-spanning roles – interacting with people outside of your organization in order to obtain valuable information that is not available within your organization.
   2. Ethical implications – the impact of increased efficiency can result in overloading workers with more responsibilities or, worse, in the elimination of the jobs of some workers.