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Summary Operations and supply chain Q3
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extensive summary of OSCM Q3 of the book and all the materials from class
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Summary Introduction to operations and supplychain management q3
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Supply chain IIRecap OSM I (chapter 1 and 2)
Supply chain management
Upstream are the activities or firms that are positioned earlier in the supply chain
relative to some other activity or firm of interest. Downstream are the activities or
firms that are positioned later in the supply chain relative to some other activity or
firm of interest. First-tier supplier is a supplier that provides products or services
directly to a firm. A second-tier supplier provides products or services to a firm’s
first-tier supplier. 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. It represents a conscious effort by a firm or
group of firms to develop and run supply chains in the most effective and efficient
ways possible. According to the supply chain operations reference (SCOR)
model supply chain management covers five broad areas:
- Planning activities: balance demand requirements against resources
- Sourcing activities: identifying, developing and contracting with suppliers and
scheduling the delivery of incoming goods.
- Make or production activities: the actual production
- Delivery activities: everything from entering customer orders and determining
delivery dates to storing and moving goods to their final destination
- Return activities: activities necessary to return and process defective products
or materials.
According to AIRMIC the following seven factors underlie supply chain failures:
1. Offshoring making it increasingly difficult for firms to monitor supply chains
adequately
1
, 2. Increasing complexity of supply chains meaning companies were often
unaware of who their suppliers were subcontracting to
3. Cost pressures could lead to compromise on quality and ethics
4. Geographic clustering making manufactures vulnerable to a localized
disaster
5. Modern communications can damage reputations
6. Just-in-time production methods have reduced the time to recover from
supply chain failure
7. Dependence on multiple suppliers increasing vulnerability
SCM is difficult because of uncertainty and complexity.
1.2 Important trends
Electronic commerce
Electric commerce refers to the use of computer and telecommunications
technologies to conduct business via electronic transfer of data and documents.
Breakthroughs in information technology have made instantaneous communications
across supply chain partners a reality. They also provide visibility into incoming
shipments and delays and inventory.
Increasing competition and globalization
The rate of change in markets, products and technology continues to escalate,
leading to situations where managers must make decisions on shorter notice, with
less information, and with higher penalty costs if they make mistakes.
Relationship management
Any efforts to improve operations and supply chain performance are likely to be
inconsequential without the cooperation of other firms. Therefore, more companies
are putting an emphasis on relationship management. Relationship management
can be difficult due to geographic distance or cultural differences.
Chapter 2
2.1 Elements of the business
A business is defined by structural and infrastructural elements. Structural
elements are tangible resources such as buildings, equipment and computer
systems. These elements require large capital investments that are difficult to
reverse. Infrastructural elements are the people, policies, decision rules and
organizational structure.
2.2 Strategy
Strategies are the mechanisms by which businesses coordinate their decisions
regarding their structural and infrastructural elements. The business strategy in this
vein must be:
- Clearly identify the targeted customers and indicate what the operations and
supply chain functions need to do to provide value to these customers
- Set time frames and performance objectives that managers can use to track
the firm’s progress towards fulfilling its strategy
- Identify and support the development of core competencies
Core competencies are an organizational strength of ability, developed over a long
period, that customers find difficult or even impossible to copy. Functional
2
, strategies translate business strategies into specific actions for functional areas
such as marketing, resources and finance.
2.3 Operations and supply chain
strategies
The operations and supply chain
strategy is a functional strategy that
indicates how much structural and
infrastructural elements within the
operations and supply chain areas will be
acquired and developed to support the
overall business strategy. An operations
and supply chain strategy must help
management choose to the right mix of
structural and infrastructural elements,
ensure that the structural and infrastructural
choices are aligned with the business
strategy and support the core
competencies in the supply chain.
Customer value
Four performance dimensions are relevant:
- Quality: characteristics of a product or service that bear on its ability to satisfy
stated or implied needs.
o Performance quality: the basic operating characteristics of a product
or service
o Conformance quality: indicated whether a product was made to
specifications
o Reliability quality: addressing whether a product will work for a long
time without failing or requiring maintenance
- Time: divided into two characteristics
o Delivery speed: refers to how quickly the operations or supply chain
function can fulfill a need once it has been identified.
o Delivery reliability: refers to the ability to deliver products or services
when promised. supply chain partners must coordinate within a
specific delivery window, the acceptable time range in which
deliveries can be made. Another measure is accuracy of quantity
shipped.
- Flexibility: considers how quickly operations and supply chain can respond
the unique needs of customers.
o Mix flexibility: the ability to produce a wide range of products or
services
o Changeover flexibility: the ability to provide a new product with
minimal delay
o Volume flexibility: the ability to produce whatever volume the
customer needs
- Cost: some typical costs categories include: labor costs, material costs,
engineering costs and quality related costs
3
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