1. McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Operations and Supply Strategy CHAPTER 1

2. 1-2 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

3. 1-3 Why Study Operations and Supply Management? Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications Operations And Supply Management

4. 1-4 What is Operations and Supply Management? Operations and supply management (OSM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

5. 1-5 Supply Chain of a Typical Original Equipment Manufacturer

6. 1-6 Operations and Supply Strategy Setting broad policies and plans for using the recourses of a firm to best support its long-term competitive strategy

7. 1-7 Operations and Supply Strategy Example Strategy Process Customer Needs Corporate Strategy Operations and Supply Strategy Decisions on Processes and Infrastructure and Infrastructure More Product Increase Org. Size Increase Production Capacity Build New Factory

8. 1-8 Competitive Dimensions Cost or 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 Other Product-Specific Criteria Support It

9. 1-9 Dealing with Trade-offs Cost Quality DeliveryFlexibility For example, if we improve customer service problem solving by cross-training personnel to deal with a wider-range of problems, they may become less efficient at dealing with commonly occurring problems. For example, if we reduce costs by reducing product quality inspections, we might reduce product quality.

10. 1-10 Order Qualifiers and Winners Defined Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers Order winners are the criteria that differentiates the products and services of one firm from another

11. 1-11 Operations Strategy Framework

12. 1-12 The Importance of Operations Management Synergies must exist with other functional areas of the organization Operations account for 60-80% of the direct expenses that burden a firms profit.

13. 1-13 End of Chapter 1