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Summary - Introduction to Operations and Supply Chain Management
1 Introduction to Operations and Supply Chain Management
What is the operations function?The operations function is the collection of people, technology, and systems within an organization that has primary responsibility for providing the organization's products or services.
What is a supply chain?A supply chain encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction), through to the end-user, as well as the associated information flows.
How do supply chains link to the operations function of a company?Supply chains link together the operations functions of many different organizations to provide real value to customers.
An example of a supply chain is a sporting goods store. The store is only one link in a much larger supply chain that includes for example: manufacturers of the shoes, financial firms, software firms, etc. The store provides valuable services for its customers - although the store doesn't actually make the shoes.
The operations function are the collection of people, technology, and systems within an organization that has primary responsibility for providing the organisation's products or services.
The right choices within the operations function and supply chain can lead to higher profitability and increased market share, while the wrong choices can cost the company dearly---or even put it out of business.
TransformationProcess -------> Outputs
Materials Manufacturing operations Tangible goods
Intangible needs Service operations Fulfilled needs
Information Satisfied customers
What is the operations management about?Operations management is all the planning,
scheduling, and control of the activities that transform inputsinto finished goods and services.
Upstream: the firms whose inputs feed into the transformation process of the company (Anheuser-Busch)
Downstream: the firms who take the products from the transformation process and move them along to the final consumer.
First-tier supplier: supplies materials directly to the brewer (transformation process)
Second-tier supplier: provides goods to the first-tier supplier
What is the supply chain management about?Supply chain management is the active management of supply chain activities and relationships in order to maximize customer value and achieve a sustainable competitive advantage.
trendsthat will continue to attract the attention of operations and supply chain management professionals for the foreseeablefuture: Agility: recalculate plans in the face of market, demand, and supply volatility and deliver the same or comparable cost, quality, and customer service as before. Recalculate plans because of the changing demand and needs.
- Information Technologies: e-commerce; the use of computer telecommunications technologies to conduct business via electronic transfer of data and documents.
- People: the shortage of talented operations and supply chain professionals. It becomes more important to choose a few, select suppliers, thereby paving the way for informal interaction and information sharing.
2 Operations and Supply Strategies
What are structural elements in business?Structural elements are tangible resources, such as buildings, equipment, and information technology.
What are infrastructural elements in business?Infrastructural elements are the people, policies, decision rules, and organizational structure choices made by the firm.
What is the business strategy?It identifies a firm's targeted customers and sets time frames and performance objectives for the business.
What are core competencies?Organizational strengths and/or abilities developed over a long period of time, that customers find valuable and competitors hard to copy.
What are functional strategies?Functional strategies translate a business strategy into specific actions for functional areas, such as marketing, hr, and finance.
Functional strategies translate a business strategy into specific actions for functional areas.
The two operations and supply chain decision categories:
- Structural Decision Categories: capacity, facilities, technology.
- Infrastructural Decision Categories: organization, sourcing decisions and purchasing process, planning and control, business processes and quality management, product and service development.
Most customers evaluate products and services based on multiple performance dimensions;
genericperformance dimensions are:
- Quality (e.g. Performance quality)
- Time (e.g. Delivery speed)
- Cost (e.g. Cost)
How to calculate the value
Answer from 1 (completely
unimportant) to 5 (critical), to the four genericperformance dimensions, for a product.
Then follow the steps, as given in the picture.
trade-offs (among performance dimensions), and give an example?A decision to emphasizesome dimensionsat the expense of others. For e.g. When doing more flights, it means greater flexibilityfor consumers, but a trade-offis then that it will bring higher costs.
What are order winners?A performance dimension that differentiates a company's products and services from its competitors.
What are order qualifiers?Order qualifiers are performance dimensions on which customers expect a minimum level of performance.
When supplying industrial chemicals, for the supplier's perspective, product quality is the order qualifier; cost, delivery, speed, and flexibility are order winners.
Order qualifiers and winners helps operations and SCM formulate strategy in three ways.
- Identifying problem areas, as well as strengths.
- Clarifies the issues surrounding decisions on trade-offs.
- It helps managers prioritise their efforts.
The four stages of alignment with the business strategy;
- Internally neutral; seeking any negative potential in O&SCM areas
- Externally neutral; what works for competitors will work for the company as well.
- Internally supportive; strategic debate aligning business strategy.
- Externally supportive: business strategy actively seeks to exploit the core competencies found within these areas.
- Finance; budgeting, analysis, funds
- (M)IS*; what IT solutions to make it all work together?
- Human Resources; skills? Training? # of employees?
- Marketing; what products? What volumes? Costs? Quality? Delivery?
- Accounting; performance measurement systems, planning, and control
- Design; sustainability, quality, manufacturability
Closing the Loop Between Business Strategy and Functional Area Strategies
Latest added flashcards
- The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.
- Information that was previously fragmented in different systems can seamlessly flow throughout the firm so that it can be shared by business processes in manufacturing, accounting, Human Resources, and other areas.
- Better data leads to better Business decisions
- With a modern ERP system, all necessary applications are integrated, your data is
- standardized and the tools to see year-over-year comparisons and forecasts are built in. These are often presented in an easy-to-read dashboard format (as pictured below).
- ERP systems can automate and streamline daily processes, giving your employees more time to do things that generate revenue.
- Reducing both fixed and
- Allowing the client organization to focus on its core business
Accessingskills and technologies
- Providing flexibility
only by $1 multiplied by the pretax profit margin.
Profit leverage The profit-leverage effect means that if purchasing costs constitute a major portion of the total cost of a business, a saving in purchasing costs has greater profitpotential than a similar increase in sales.