Exam 1: Creating Customer Value through Operations

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Internal customers are one or more employees who use outputs from earlier,upstream processes in the organization to perform related,downstream processes in the next office,work station,shop,or department.External customers are end users or intermediaries,such as manufacturers,wholesalers,or retailers,who buy a firm's products and services.Examples used to support the explanation will vary.

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A process is an activity or group of activities that takes one of more inputs,transforms and adds value,and generates one or more outputs for its customers.The types of processes that exist within organizations can vary significantly.For example,the primary process for an airline is the movement of passengers and their luggage from one location to another.In addition,an airline requires processes for making reservations,checking in passengers,serving meals,and scheduling crews.Processes involve various inputs and outputs in the form of goods and services for its customers.Inputs include human resources (workers and managers),capital (equipment and facilities),energy,and purchased materials and services including information.The operational processes of an organization transform these inputs by adding value through the various activities it performs to produce the outputs for its customers in the form of goods and services.Customers can include external customers,who may be either end users or intermediaries (such as manufacturers,wholesalers,or retailers),buying the firm's finished products or services.Others are internal customers who may be one or more other employees who rely on inputs from other (earlier)processes within the organization in order to perform related (later)processes.Processes can involve a whole firm,a department or small group,or even a single individual.Each one has inputs and uses processes at various operations to produce outputs.Some processes are said to be nested in the sense that they can be broken down into sub processes,which in turn can be broken down into still narrower sub processes.Examples used to support the explanation will vary.