CHAPTER 1and 2
Operations and
Supply Chain Management
Learning Objectives
After completing the chapter you will:
 Know why it is important to study operations and supply
management
 Understand the meaning of efficient and effective operations
 See how operations and supply strategy relates to marketing and
finance
 Understand the competitive dimensions of operations and supply
strategy
 Know what order winners and order qualifiers are
 Know what measures Wall Street analysts use to evaluate
operations
What is Operations and Supply
Chain Management?

Operations and supply management (OSM):
the design, operation, and improvement of
the systems that create and deliver the firm’s
primary products and services


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Functional field of business
Clear line management responsibilities
Concerned with the management of the
entire system that produces a good or
delivers a service
LO 1
Supply Chain Processes
LO 3
Process Steps for Men’s Nylon
Supplex Parka
LO 2
Work Involved in Each Type of
Process





Planning: the processes needed to operate an
existing supply chain strategically
Sourcing: the selection of suppliers that will deliver
the goods and services needed to create the firm’s
product
Making: Where the major product is produced or the
service provided
Delivering: carriers are picked to move products to
warehouses and customers
Returning: the processes for receiving worn-out,
defective, and excess products back from customers
LO 3
Differences Between Services
and Goods
1.
2.
3.
4.
5.
LO 4
Services are intangible
Services requires some interaction with the
customer
Services are inherently heterogeneous
Services are perishable and time dependent
Services are defined and evaluated as a
package of features
A Sustainable Strategy


Shareholders: Those individuals or
companies that legally own one or more
shares of stock in the company
Stakeholders: Those individuals or
organizations who are influenced, either
directly or indirectly, by the actions of the firm
LO 1
Triple Bottom Line
LO 1
Triple Bottom Line



Continued
Social: pertains to fair and beneficial
business practices toward labor, the
community, and the region in which a firm
conducts is business
Economic: the firm’s obligation to
compensate shareholders who provide
capital via competitive returns on investment
Environmental: the firm’s impact on the
environment
LO 1
Servitization Strategies

Servitization refers to a company building
service activities into its product offerings for
its current users



Maintenance, spare parts, training, and so on
Success starts by drawing together the
service aspects of the business under one
roof
Servitization may not be the best approach
for all companies
LO 4
Efficiency, Effectiveness, and
Value



Efficiency: Doing something at the lowest
possible cost
Effectiveness: Doing the right things to
create the most value for the company
Value: quality divided by price
LO 2
Competitive Dimensions






Price: make the product or deliver the service cheap
Quality: make a great product or deliver a great
service
Delivery speed: make the product or deliver the
service quickly
Delivery reliability: deliver it when promised
Coping with changes in demand: change its volume
Flexibility and new product introduction speed:
change it
LO 2
Order Qualifiers and Winners
Defined


Order qualifiers: the basic criteria that
permit the firms products to be considered as
candidates for purchase by customers
Order winners: the criteria that differentiates
the products and services of one firm from
another
LO 3
Historical Development of Operations and
Supply Management

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Lean manufacturing, JIT, and TQC
Manufacturing strategy paradigm
Service quality and productivity
Total quality management (TQM) and quality
certifications
Business process reengineering
Six-sigma quality
Supply chain management
Electronic commerce
Service science
LO 6
Current Issues in Operations
and Supply Management
1.
2.
3.
4.
5.
LO 6
Coordinating the relationship between mutually
supportive but separate organizations
Optimizing global suppliers, production, and
distribution networks
Managing customer touch points
Raising senior management awareness of
operations as a significant competitive weapon
Sustainability and the triple bottom line
This Semester what will we
cover.
Strategy
• Sustainability
• Decision Theory
• Location/Logistics
Processes
•
•
•
•
Analysis
Layout
Quality/LEAN
Project Mgmt
Demand
Planning
•
•
•
•
Forecasting
Inventory Management
MRP
Scheduling
Any Questions?