Operations and Supply Chain Management CHAPTER 1and 2

Learning Objectives After completing the chapter you will: Know why it is important to study operations and supply management Understand the meaning of efficient and effective operations See how operations and supply strategy relates to marketing and finance Understand the competitive dimensions of operations and supply strategy Know what order winners and order qualifiers are Know what measures Wall Street analysts use to evaluate operations

What is Operations and Supply Chain Management? Operations and supply management (OSM): the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services Functional field of business Clear line management responsibilities Concerned with the management of the entire system that produces a good or delivers a service LO 1

Supply Chain Processes LO 3

Process Steps for Men’s Nylon Supplex Parka LO 2

Work Involved in Each Type of Process Planning: the processes needed to operate an existing supply chain strategically Sourcing: the selection of suppliers that will deliver the goods and services needed to create the firm’s product Making: Where the major product is produced or the service provided Delivering: carriers are picked to move products to warehouses and customers Returning: the processes for receiving worn-out, defective, and excess products back from customers LO 3

Differences Between Services and Goods 1. Services are intangible 2. Services requires some interaction with the customer 3. Services are inherently heterogeneous 4. Services are perishable and time dependent 5. Services are defined and evaluated as a package of features LO 4

A Sustainable Strategy Shareholders: Those individuals or companies that legally own one or more shares of stock in the company Stakeholders: Those individuals or organizations who are influenced, either directly or indirectly, by the actions of the firm LO 1

Triple Bottom Line LO 1

Triple Bottom Line Continued Social: pertains to fair and beneficial business practices toward labor, the community, and the region in which a firm conducts is business Economic: the firm’s obligation to compensate shareholders who provide capital via competitive returns on investment Environmental: the firm’s impact on the environment LO 1

Servitization Strategies Servitization refers to a company building service activities into its product offerings for its current users Maintenance, spare parts, training, and so on Success starts by drawing together the service aspects of the business under one roof Servitization may not be the best approach for all companies LO 4

Efficiency, Effectiveness, and Value Efficiency: Doing something at the lowest possible cost Effectiveness: Doing the right things to create the most value for the company Value: quality divided by price LO 2

Competitive Dimensions Price: make the product or deliver the service cheap Quality: make a great product or deliver a great service Delivery speed: make the product or deliver the service quickly Delivery reliability: deliver it when promised Coping with changes in demand: change its volume Flexibility and new product introduction speed: change it LO 2

Order Qualifiers and Winners Defined Order qualifiers: the basic criteria that permit the firms products to be considered as candidates for purchase by customers Order winners: the criteria that differentiates the products and services of one firm from another LO 3

Historical Development of Operations and Supply Management Lean manufacturing, JIT, and TQC Manufacturing strategy paradigm Service quality and productivity Total quality management (TQM) and quality certifications Business process reengineering Six-sigma quality Supply chain management Electronic commerce Service science LO 6

Current Issues in Operations and Supply Management 1. Coordinating the relationship between mutually supportive but separate organizations 2. Optimizing global suppliers, production, and distribution networks 3. Managing customer touch points 4. Raising senior management awareness of operations as a significant competitive weapon 5. Sustainability and the triple bottom line LO 6

This Semester what will we cover. Strategy Processes Demand Planning Sustainability Decision Theory Location/Logistics Analysis Layout Quality/LEAN Project Mgmt Forecasting Inventory Management MRP Scheduling

Any Questions?