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Learning ObjectivesAfter 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

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Supply Chain Processes

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Process Steps for Men’s Nylon Supplex Parka

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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

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Differences Between Services and Goods

1. Services are intangible2. Services requires some interaction with the

customer3. Services are inherently heterogeneous4. Services are perishable and time dependent5. Services are defined and evaluated as a

package of features

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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

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Triple Bottom Line

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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

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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

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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

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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

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Order Qualifiers and WinnersDefined 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

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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

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Current Issues in Operations and Supply Management1. Coordinating the relationship between mutually

supportive but separate organizations2. Optimizing global suppliers, production, and

distribution networks3. Managing customer touch points4. Raising senior management awareness of

operations as a significant competitive weapon5. Sustainability and the triple bottom line

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This Semester what will we cover.

Any Questions?