Operations2

473.31Fall 2015

Bruce DugganProvidence University College

Quiz 1

Operations and SCM in Practice

$28.5B Kearl Oil Sands Project • Imperial chose to outsource “modules” of the facility • 2100 km trip for 200+ modules required:

o ocean freight from South Korea to Vancouvero barges up river to Lewiston, Idahoo road transportation through Idaho, Montana, and Alberta.

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Learning Objectives

• Define operations and supply chain management.• Evaluate why understanding operations and supply chain management is

important to any manager. • Discuss the meaning of efficient and effective operations.• Describe transformation processes.• Contrast the differences between services and goods-producing

processes.• Evaluate how operations and supply chain management developed over

time.• Discuss important current challenges facing operations and supply chain

management.

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Definition

Operations and supply chain management (OSCM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products (goods and services)

LO1

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Operations and Supply Chain Processes

LO1

Operations and Supply Chain Management: Important To Any ManagerOperations and supply chain management is about getting work done quickly, efficiently, without error, and at a low cost.

LO2

Operations and Supply Chain Management: Important To Any ManagerOperations refers to the processes that are used to transform the resources into goods and services. Supply refers to how materials and services are moved to and from those transformation processes.

LO2

Efficiency, Effectiveness, and Value

Efficiency means to produce a good or service by using the smallest input of resources. Effectiveness means doing the right things to create the most value for the company.Value refers to the ratio of quality to price paid.

LO3

Supply Chain Transformation ProcessA transformation process uses resources to convert inputs into some desired output.Transformation processes:

o Physicalo Locationo Exchangeo Storageo Physiologicalo Informational

LO4

Input – Transformation – Output Relationships for Typical Systems

LO4

Differences Between Goods and Services

LO5

Evolution of Operations and Supply Management

LO6

Current Issues in OSCM

1. Coordinating the relationship between mutually supportive but separate organizations.

2. Optimizing global supplier, production, and distribution networks.3. Increased co-production of goods and services.4. Managing customer service points.

LO7

Current Issues in OSCM

5. Raising senior management’s awareness of operations management as a significant weapon.

6. Taking more environmental responsibility.7. Corporate responsibility in supply chains.

Summary

• Operations and supply chain management is important to Canada’s competitiveness.

• Operations and supply activities of the firm are part of the transformation process.

• When managing operations, firms need to focus on efficiency, effectiveness, and value.

End of Chapter 1

Chapter 2

Operations and SCM in Practice

Zara• excels on

• Price• Speed• Flexibility

• retail chain of high-fashion boutique clothing stores• reacts quickly to changes in

customer buying behaviour• use of information technology• clothes produced in small batches• production to retail store cycle as

fast as two weeks

Learning Objectives

List the parameters of a sustainable operations and supply chain strategy.Classify the competitive dimensions of operations and supply chain strategy. Identify order winners and order qualifiers.Discuss how strategy is implemented through operations and supply chain activities. List the concepts of risk assessment and mitigation.

Operations and Supply Strategy

Setting broad policies and plans for using the resources of a firm to best support its long-term competitive strategy• Involves decisions that relate to the design of a process and the infrastructure

needed to support the process.• ‘Triple Bottom Line’

o social objectiveso economic objectiveso environmental objectives

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ExampleStrategy Process

Customer Needs

Corporate Strategy

Operations and Supply Strategy

Decisions on Processes and Infrastructure

More Product

Increase Org. Size

Increase Production Capacity

Build New Factory

Operations and Supply Strategy

Competitive Dimensions

1.quality2.delivery speed3.deliver reliability4.coping with changes in demand5.flexibility and new-product introduction speed6.other product-specific criteria

• technical liaison and support• coordinating between firms• after-sale support

7.environmentalism and corporate social responsibility8.access to information

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Trade-Offs

An operation cannot excel simultaneously on all competitive dimensions.• management has to

o decide which dimensions are critical to the firm’s success • management has to

o concentrate firm resources on these characteristics• employees have to

o execute on those dimensions better than their competitors

Trade-Offs

For example, if a company wants to focus on speed of delivery, it cannot be very flexible in its ability to offer a wide range of products

Cost

Quality

DeliveryFlexibility

Order Qualifiers and Winners

• Order qualifiers are the criteria that are used to screen a product or service as a candidate for purchase.

• Order winners are criteria that differentiate the products or services of one firm from another.

LO3

Fitting Operational Activities to Strategy• All the activities that make up the firm’s operation relate to one

another• The firm must minimize its total cost without compromising

customers’ needs

LO4

TheOperationsStrategyProcess

LO4

Core Capabilities

Core capabilities (or competencies) are the distinctive skills or capabilities that the organization possesses.

LO4

LO5

Risk Mitigation Strategies

1. Identify the sources of potential disruptions. 2. Assessment of the potential impact of the risk. 3. Develop plans to mitigate the risk.4. Develop contingency plans.

RiskMitigation Strategies

Summary

• Overall strategy of a firm can be tied to operations and supply strategy.

• Operations and supply strategy is critical to the firm’s ability to sustain a competitive advantage.

• Operations and supply chain strategies must consider risks in their supply chains and develop risk mitigation strategies to avoid disruptions.

End of Chapter 2

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