SUMMARY BOOK SUPPLY CHAIN MANAGEMENT
CHAPTER 1: OPERATIONS AND SUPPLY CHAIN MANAGEMENT
1. Identify the elements of operations and supply chain management (OSCM)
Processes are used to implement the strategy of the firm
Analytics are used to support the ongoing decisions needed to manage the firm
Operations and supply chain management (OSCM) The design, operation and improvement of the
systems that create and deliver the firm’s primary products and services
Process: One or more activities that transform inputs into outputs
Product-Service building: When a firm builds service activities into its product offerings to create
additional value for the customer
Supply (Chain) Network: The piplinelike movement of the materials and information needed to
produce a good or service
Planning: The processes needed to determine the set of future actions required to operate an
existing supply chain.
2. Evaluate the efficiency of the firm
Criteria that relate to how well the firm is doing include:
Efficiency: Doing something at the lowest possible cost
Effectiveness: Doing the right things to create the most value for the customer
Value created in its products and services. Value: The attractiveness of a product relative to
its price (Metaphorically defined as quality divided by price)
Benchmarking: When one company studies the processes of another company to identify best
practices
Efficiency measures:
Cash conversion cycle: Days sales outstanding + Days inventory – Payable Period
Annual credit sales
Receivables turnover:
Average accounts receivable
Cost of goods sold
Inventory turnover:
Average inventory value
Revenue ( Sales)
Asset turnover:
Total assets
3. Know the potential career opportunities in operations and supply chain management
OSCM people specialize in managing the production of goods and services
OSCM jobs are hands-on and require working with others in figuring out the best way to do
things
The chief operating officer (COO) works with the chief executive officer (CEO) and company
president to determine the company’s competitive strategy
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, COOs determine an organization’s location, its facilities, which vendors to use, and how the
hiring policy will be implemented
4. Recognize the major concepts that define the operations and supply management fields
Book focuses on concepts developed since the 1980s.
Manufacturing strategy: Emphasized how a factory’s capabilities could be used strategically to gain
advantage over a competing company
Just-in-Time (JIT): An integrated set of activities designed to achieve high-volume production using
minimal inventories of parts that arrive exactly when they are needed
Total quality control (TQC): Aggressively seeks to eliminate causes of production defects
Lean manufacturing: Term used to refer to the set of concepts relating to JIT and TQC
Total quality management (TQM): Managing the entire organization so that it excels on all
dimensions of products and services that are important to the customer
Business process reengineering (BPR): An approach to improving business processes that seeks to
make revolutionary changes as opposed to evolutionary (small) changes
Six Sigma: A statistical term to describe the quality goal of no more than 3.4 defects out of every
million units. Also refers to a quality improvement philosophy and program. Tools that are taught to
managers in “Green and Black Belt Programs”
Mass customization: The ability to produce a unique product exactly to a particular customer’s
requirement
Electronic commerce: The use of the Internet as an essential element of business activity
Sustainability: The ability to meet current resource needs without compromising the ability of future
generations to meet their needs
Triple bottom line: A business strategy that includes social, economic, and environmental criteria
(Strategy that meets the needs of shareholders, and employees, and that preserves the
environment)
Business analytics: The use of current business data to solve business problems using mathematical
analysis
Practice exam:
Sourcing: the selection of suppliers
Making: A type of process where a major product is produced or a service is provided
Returning: Processes that involve the receiving of worn-out, defective, and excess products returned
by customers and support for customers who have product problems
Product-service building: when a company builds service activities into its product offerings
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, CHAPTER 2: STRATEGY AND SUSTAINABILITY
1. Know what sustainable business is and how it relates to operations and supply chain
management
A strategy that is sustainable needs to create value for the firm’s shareholders and
stakeholders
The shareholders are equity owners in the company
The stakeholders are those individuals and organizations that are influenced by the actions of
the firm
This view means that a firm’s strategy must focus not only on economic viability, but also on
the environmental and social impact of its actions
Sustainability: the ability to meet current resource needs without compromising the ability of future
generations to meet their needs
Triple bottom line: Evaluating the firm against social, economic and environmental criteria
2. Define operations and supply chain strategy
This involves setting the broad policies of a firm and creating a plan for using that firm’s
resources
The operations and supply chain strategy coordinates operational goals with those of the
larger organization
A firm’s operational capabilities should match the changing product or service needs of the
firm’s customer
Major competitive dimensions that form the competitive positions of a firm include:
Cost, quality, delivery speed and reliability, changes in volume, flexibility and new-product
introduction speed, other product-specific criteria
It is probably the most difficult to compete on this major competitive dimension = cost
Usually there are trade-offs that occur relative to these competitive dimensions
Operations and supply chain strategy: The setting of broad policies and plans that will guide the use
of the resources needed by the firm to implement its corporate strategy
Operations effectiveness: Performing activities in a manner that best implements strategic priorities
at minimum cost
Straddling: When a firm seeks to match what a competitor is doing by adding new features, services,
or technologies to existing activities. This often creates problems if certain trade-offs need to be
made
Order winners: One or more specific marketing-oriented dimensions that clearly differentiate a
product from competing products
Order qualifiers: Dimensions used to screen a product or service as a candidate for purchase
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