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 and services.
➢ Operations refers to manufacturing and service processes used to transform the resources
employed by a firm into products desired by customers.
➢ Supply chain refers to processes that move information and material to and from the
manufacturing and service process of the firm.
Operations and supply chain processes can be conveniently categorized, particularly from the view of
a producer of consumer products and services, as planning, sourcing, making, delivering, and
returning. OSCM is a functional field of business, concerned with the management of the entire
production/delivery system.
Differences between services and goods:
1. A service is an intangible process that cannot be weighed or measured.
2. A service requires some degree of interaction with the customer for it to be a service.
3. A service is heterogeneous.
4. Services as a process are perishable and time dependent, and unlike goods, they can’t be
stored.
5. The specifications of a service are defined and evaluated as a package of features that affect
the five sense.
Product–service bundling refers to a company building service activities into its product offerings
for its customers. Almost any product offering is a combination of goods and services.
Jobs in OSCM: specialized in managing the planning, production and distribution of goods and
services. Focus on delivering the goods on-time and at low cost (plant manager, project manager, chief
operating officer).
• OSCM people specialize in managing the production of goods and services.
• OSCM jobs are hands-on and require working with others and figuring out the best way to do
things.
• The chief operating officer (COO) works with the CEO and company president to determine
the company’s competitive strategy.
• COOs determine an organization’s location, its facilities, which vendors to use, and how the
hiring policy will be implemented.
Major concepts of the OSCM field:
,Business analytics involves the analysis of data to better solve business problems.
Efficiency means doing something at the lowest possible cost.
Effectiveness means doing the right things to create the most value for the company.
Value: the attractiveness of a product relative to its price.
Benchmarking is a process in which one company studies the processes of another company (or
industry) to identify best practices (net income per employee/revenues per employee).
Receivables turnover: the number of times receivables are collected
during the fiscal year. The higher the ratio the better.
Inventory turnover: the average number of times inventory is sold
and replaced during the fiscal year.
Asset turnover: the amount of sales generated for every dollar’s
worth of assets. The higher the better.
C2 Strategy
Strategy should describe how a firm intends to create and sustain value for its current shareholders
and stakeholders. By adding sustainability to the concept, we add the requirement to meet these
current needs without compromising the ability of future generations to meet their own needs.
➢ Triple bottom line: a business strategy that takes into account economic, social and
environmental values (people, planet, profit).
Operations and supply chain strategy is concerned with setting broad policies and plans for using
the resources of a firm and must be integrated with corporate strategy. A major focus to the operations
and supply chain strategy is operations effectiveness. Operations effectiveness: performing activities
in a manner that best implements strategic priorities at minimum costs.
Competitive dimensions:
➢ Low-cost. Competing based on cost can be difficult unless the firm has some unique
advantage over the competition.
➢ Quality. There are two characteristics of a product or service that define quality: design quality
and process quality.
➢ Delivery speed
➢ Delivery reliability
➢ Coping with changes in demand
➢ Flexibility and new product introduction speed
,Central to the concept of operations and supply chain strategy is the notion of operations focus and
trade-offs. The underlying logic is that an operation cannot excel simultaneously on all competitive
dimensions. Consequently, management has to decide which parameters of performance are critical to
the firm’s success and then concentrate the resources of the firm on these particular characteristics.
Straddling occurs when a company seeks to match the benefits of a successful position while
maintaining its existing position. It adds new features, services, or technologies onto the activities it
already performs.
The terms order winner and order qualifier describe marketing-oriented dimensions that are key to
competitive success. An order winner is a criterion, or possibly a set of criteria, that differentiates the
products or services of one firm from those of another. An order qualifier is a screening criterion that
permits a firm’s products to even be considered as possible candidates for purchase
Activity-system maps show how a company’s strategy is delivered through a set of supporting
activities. Can be useful in understanding how good the fit is between the system of activities and the
company’s strategy.
Supply chain risk is defined as the likelihood of a disruption that would impact the ability of the
company to continuously supply products or services. Supply chain disruptions are unplanned and
unanticipated events that disrupt the normal flow of goods and materials within a supply chain, and
which expose firms within the supply chain to operational and financial risks.
➢ Supply chain coordination risks: risk in day to day management (safety stock, safety lead
time, etc.)
➢ Disruption risks: highly random and impossible to predict.
The nature of these types of risks lends them to a three-step risk management process that can be
applied to situations where disruptions are possible.
1. Identify the sources of potential disruptions
2. Assess the potential impact of the risk
3. Develop plans to mitigate the risk
Productivity is a common measure of how well a country, industry, or business unit is using its
resources (or factors of production). General: output / input.
C4 Projects
The four major types of change are product change, process change, research and development, and
alliance and partnership. A project may be defined as a series of related jobs usually directed toward
some major output and requiring a significant period of time to perform. Project management can be
defined as planning, directing, and controlling resources (people, equipment, material) to meet the
technical, cost, and time constraints of the project.
, Before the project starts, senior management must decide which of three organizational structures will
be used to tie the project to the parent firm: pure project, functional project, or matrix project.
1. Pure project: a project where a self organizing team works full time on the project.
Advantages
• The project manager has full authority over the project.
• Team members report to one boss. They do not have to worry about dividing loyalty
with a functional-area manager.
• Lines of communication are shortened. Decisions are made quickly.
• Team pride, motivation, and commitment are high.
Disadvantages
• Duplication of resources. Equipment and people are not shared across projects.
• Organizational goals and policies are ignored, as team members are often both
physically and psychologically removed from headquarters.
• The organization falls behind in its knowledge of new technology due to weakened
functional divisions.
• Because team members have no functional area home, they worry about life-after-
project, and project termination is delayed.
2. Functional project: the projects are housed within a functional division.
Advantages
• A team member can work on several projects.
• Technical expertise is maintained within the functional area even if individuals leave
the project or organization.
• The functional area is a home after the project is completed. Functional specialists can
advance vertically.
• A critical mass of specialized functional-area experts creates synergistic solutions to a
project’s technical problems.
Disadvantages
• Aspects of the project that are not directly related to the functional area get
shortchanged.
• Motivation of team members is often weak.
• Needs of the client are secondary and are responded to slowly.
3. Matrix project: mix of the functional and pure structure. Each project uses people of different
functional areas when needed.
Advantages
• Communication between functional divisions is enhanced.
• A project manager is held responsible for successful completion of the project.
• Duplication of resources is minimized.
• Team members have a functional “home” after project completion, so they are less
worried about life-after-project than if they were a pure project organization.
• Policies of the parent organization are followed. This increases support for the project.
Disadvantages
• There are two bosses. Often the functional manager will be listened to before the
project manager. After all, who can promote you or give you a raise?
• It is doomed to failure unless the PM has strong negotiating skills.
• Suboptimization is a danger, because PMs hoard resources for their own project, thus
harming other projects.
A project starts out as a statement of work (SOW). The SOW may be a written description of the
objectives to be achieved, with a brief statement of the work to be done and a proposed schedule
specifying the start and completion dates. These specific events are called project milestones. The
work breakdown structure (WBS) defines the hierarchy of project tasks, subtasks, and work packages.
Activities are defined within the context of the work breakdown structure and are pieces of work that
consume time.
Critical Path Method:
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