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Summary/ lecture notes of all the lectures from OSCM
In this document are the lecture notes from all the lectures given, including the guest lectures. It is extensive and all models are included.
[Meer zien]Voorbeeld 4 van de 72 pagina's
Voorbeeld 4 van de 72 pagina's
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Voorbeeld van de inhoud
Lecture notes Operations & supply chain managementLecture 1 and 2
1. Introduction
The purpose of supply chain networks is to create value for the customers
- It is about supply chain competition instead of company competition.
- Operating environments of companies change fast and become less forgiving. The speed at which
things are changing is increasing. A compounding factor is that the environment is ever less forgiving
in supply chain disruption B2B side, but also B2C. customers are spoiled, which is transferred
throughout the supply chain. Product life cycles become shorter.
- Value propositions, strategies, capabilities are to be developed, aligned, within the changing
operating environment. What do you want to offer to customer, and transform this into a strategy
and create capabilities.
Operations management
Operations Management= activity of managing the resources and processes that produce products
and services. They key idea is that there are resources that need to be transformed to outputs. This
needs to be organized in the best way possible.
• Process = arrangement of resources (people, equipment, information systems,…) that transform
inputs into outputs to satisfy (internal or external) customer demand
• Operations = operations function = how an organization produces products or services
Why companies bother about operations and process management?
• “A company’s operations function is either a competitive weapon or a corporate millstone. It is
seldom neutral.” (Skinner, 1969)
• Operations management offers the key to superior performance in any industry
– How do companies categorize customer expectations they want to fulfil?
– Which metrics are used to monitor and manage
performance?
– How are organizations structured to deliver superior
(financial) performance?
Expanding scope of OMP
Operations management is not only for production, but
also non-core and service activities.
• Operations Research. and Analytics transform data into
information, and information into insights for making
better decisions and improving results They enable
organizations to turn complex challenges into substantial
opportunities. (INFORMS)
• Supply chain management and logistics are key research domains within OM and OR (OA)
Supply chain management
• SCM = management of supply chain assets and flows (product, information and funds) to maximize
total supply chain surplus. Optimize the different flows to create value to customer. Not only make
profit, but develop products that you can offer to the customer for the right price.
1
,Logistics is about minimizing costs. Supply chain is more about getting the most out of the chain.
Supply chains need to change along with the environment.
– SC surplus: customer value – SC cost
– SC profit: price – SC cost
• Supply chain management is key to contemporary value chains (see cases in Ramirez et al. (2020)
2. Possible disruptive trends
- What are in your view the main initial OSCM impacts of the Covid-19 pandemic?
* policies had to be changed due to lockdown.
* inventory problems -> product shortages
* shift from local and global suppliers-> rethinking supply chain. Instead of offshoring produce more
nearby
* More uncertainty with regards to planning for some products. The stable supply was not
guaranteed.
* Interrupted production and deliveries
* supply and demand impacted
* changing consumer behaviour
What potential causes were listed for the SC issues faced during the first Covid-19 wave?
* Globalisation
* Insufficient stock
* not enough anticipation upfront on time
* single sourcing
* some supply chains are designed for stable demand and supply, but not for unstable situations/
disruptions. -> supply chain structure . Structure is designed for some purpose, when the situation
changes the structure does no longer fit.
Which lasting SCM effects do you expect to originate from the covid-19 pandemic?
* Shifts in more inventory (is only for short-term disruptions), trying to have extra suppliers.
* being able to adjust the supply chain faster-> make decisions better and faster
* digitalisation but also sustainability from the triple bottom line (People, planet, profit)
* Exposed vulnerability
Potential action points?
- uncovering and addressing hidden risks: identifying vulnerabilities, diverse supply base, holding
intermediate or safety stock
- Taking advantage of process innovations (to lower costs or become more flexible): automation, new
processing technologies, continuous flow manufacturing (minimize stock) , additive (3D)
manufacturing
- Revising the trade-off between product variety and capacity flexibility
- companies struggling with large product portfolio unable to changeover production quickly
- See case louis Vuitton on new product introductions and product availability
3. Some problems traditional supply chains are facing
Many problems related to handling a fast-moving operating environment
• Political instability-> often for raw materials
• Increasing administrative burden
2
,• Trade wars -> VS and China, EU and Russia, tensions in the far east
• Brexit
• Fighting long term risks with short term solutions -> decision making by managers is not sufficient.
• Covid-19 related SC disruptions, climate related issues
* Customer expectation
Compounding effect
- Is an effect that makes it hard to solve the problems
- One-size-fits-all approach
– Problems: Over-& underservicing for customer segments (example paper distributor and
producer)
>< tailored supply chains are better-> is dedicated to the customer
• Better use of resources
• Higher customer satisfaction
• Promises for higher margins (up to 2x)
• Less forgiving environment
Main trends challenging supply chains
• Sustainability
• Technology
• Uberization of supply chains: sharing resources, shared capacity, involve flexible agents
• Social media and social license: interaction and support from customers and other stakeholders to
develop and maintain business
• Volatility: increased change in key parameters negatively impacts supply chain performance (see
law of variability, Theory of Swift and Even Flow, Schmenner and Swink, 1998)
- Volatility refers to all the changes you can have in key parameter. The idea is that variability in any
process is bad. It is bad because it affects the capacity of a production process (law of variability).
4. Strategic frameworks to asses and manage SC impact
• Large potential for new technologies, supply chain optimization models etc but they do not make a
supply chain successful. You want to create value, but you need frameworks to help define what you
need to do to create value and where value is coming from.
• Strategic frameworks help to decide on the overall focus of a supply chain, identify under which
conditions technologies can benefit, and – in general- help to assess the impact of disruptive trends
• Briefly introduce approach of Gattorna and Ellis (2020) before examining more established
frameworks
Approach suggested by Gattorna and Ellis (2020)
• Use an ‘inside-out’: look at your market from the perspective of your customers. It is not as simple
as it appears.
• propriety framework of dynamic alignment (based on well-known thoughts) adjust the supply
chain structure
• Distinguish different buying behaviours and patterns
• Realize that buying behaviours change over time
• Formulate matching value propositions and operational strategies for each behavioural segment
• Match volatility in operating environment with faster internal rhythms (clock speed)
3
, Fisher (1997): product types and nature of demand
* Design the supply chain depending on the nature of the product you are offering-> functional or
innovative.
• Objective: offer framework to understand nature of demand and devise SC to satisfy that demand
• Point of departure:
– Two main types of products: Functional & Innovative
– Two main types of supply chain focus: Efficient & Responsive
-> efficient is cost minimization
• Are all combinations beneficial?
• How to move between cells in the 2x2 matrix
Product types
• Functional products
– satisfy basic needs
– stable demand
– low margins
(white tshirt, toilet paper etc)
• Innovative products
– short life cycles
– variable demand
– high margins
• The same product can be both
Supply chain characteristics
• Efficient supply chain
- Focus on efficient operations
and planning
• Responsive supply chain
- Focus on increased speed and flexibility
keeping a lot of stock is a problem for innovative
products because it can be outdated quickly. For example
fruit, mobile phones. Seasonal clothing. But you also do
not want to little stock, you want to be able to fulfil
demand.
Matching supply chains with products
• Companies in lower left hand cell are rare, in the upper right are
common!
• Mismatch: change the product or the supply chain
• For innovative products, improvements in responsiveness tend to
pay off more than efficiency gains
- So efficient for functional products and responsive for innovative
products.
4
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