Summary Introduction to Operations and Supply Chain Management

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ISBN-10 1292291583
317 Flashcards & Notes
4 Students
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This is the summary of the book "Introduction to Operations and Supply Chain Management". The author(s) of the book is/are Cecil C Bozarth, Robert B Handfield. The ISBN of the book is 1292291583. This summary is written by students who study efficient with the Study Tool of Study Smart With Chris.

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.
  • Inputs ----------------> Transformation Process -------> 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 inputs into 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.
  • Three trends that will continue to attract the attention of operations and supply chain management professionals for the foreseeable future:
    • 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; 
    • Quality
    • Time
    • Flexibility
    • Cost
  • The four generic performance dimensions are:

    • Quality (e.g. Performance quality)
    • Time (e.g. Delivery speed)
    • Flexibility (e.g. After-sales support)
    • Cost (e.g. Cost)
  • How to calculate the value index?
    Answer from 1 (completely unimportant) to 5 (critical), to the four generic performance dimensions, for a product.

    Then follow the steps, as given in the picture.
  • What are trade-offs (among performance dimensions), and give an example?
    A decision to emphasize some dimensions at the expense of others. For e.g. When doing more flights, it means greater flexibility for consumers, but a trade-off is 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;
    1. Internally neutral; seeking any negative potential in O&SCM areas
    2. Externally neutral; what works for competitors will work for the company as well.
    3. Internally supportive; strategic debate aligning business strategy.
    4. Externally supportive: business strategy actively seeks to exploit the core competencies found within these areas.
  • Intra-organisational Interactions;
    1. Finance; budgeting, analysis, funds
    2. (M)IS*; what IT solutions to make it all work together?
    3. Human Resources; skills? Training? # of employees?
    4. Marketing; what products? What volumes? Costs? Quality? Delivery?
    5. Accounting; performance measurement systems, planning, and control
    6. Design; sustainability, quality, manufacturability
  • Closing the Loop Between Business Strategy and Functional Area Strategies
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What is a Circular Economy?
A Circular Economy is an economy that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.
What is a Reverse Logistics System?
A Reverse Logistics System is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

  • 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.
What is Vendor Manage Inventory (VMI)?
Vendor-managed inventory is an inventory management practice in which a supplier of goods, usually the manufacturer, is responsible for optimising the inventory held by a distributor.
What do ERP (Enterprise Resource Planning) systems provide?
ERP systems provide a single information system for organization-wide coordination and integration of key business processes.

  • 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.
Give some reasons for outsourcing.
  • Reducing both fixed and recurrent costs
  • Allowing the client organization to focus on its core business
  • Accessing skills and technologies
  • Providing flexibility
  • Increasing accountability
What is the make-or-buy decision?
A high-level, often strategic, decision regarding which products or services will be provided internally and which will be provided by external supply chain partners.
What is outsourcing?
The use of supply chain partners to provide products or services.
What is insourcing?
The use of resources within the firm to provide products or services.
What is the profit leverage effect?
The profit leverage effect is a term used to describe the effect of $1 in cost savings increasing pretax profits by $1 and a $1 increase in sales increasing pretax profits
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.
What does procurement means?
Procurement means acquiring goods and/or services from an outside source.