Operations Management Quiz 1: Ch. 1 and 2

Operations and Supply Chain Management (OSCM)
Design, operation, and improvement of the systems that create and deliver the firm’s primary products and services
Operations
Production – Manufacturing and service processes used to transform resources into products
Supply Chain
Transportation – Processes that move information and material to and from the firm
Process Activites
Planning, sourcing, making, delivering, returning
Planning
Processes needed to operate an existing supply chain
Sourcing
Selection of suppliers that will deliver the goods and services needed to create the firm’s product
Delivering
Logistics processes such as selecting carriers, coordinating the movement of goods and information, and collecting payments from customers
Pure Goods
Bottle of water or food products
Core Goods
Appliances, requires some customer interaction to sell product; Apple store or Whole Foods – they create an experience
Core Services
Hotels, airlines; a lot of customer service and the product is a service but is tangible; i.e. a bed or airplane
Pure Services
Teaching, medical services; served from the minute you walk in to the minute you leave
Goods
Tangible, less interaction with customers (facility separate from customer), often homogenous, has tight specifications, and not perishable (can be inventoried)
Services
Intangible, interaction with customer required, inherently heterogeneous, perishable and time dependent, and defined and evaluated as a package of features that affect the 5 sense
OSCM Issues
1) Coordinating relationships between members of SC, 2) Optimizing global network of suppliers, producers, and distributors, 3) Managing customer touch points, 4) Raising awareness of OSCM as a competitive weapon, and 5) Sustainability and triple bottom line
Efficiency
Doing something at the lowest possible cost. Measurements include productivity; input to output. Customization not efficient
Effectiveness
Doing right things to create most value for customer; delivering the right product to the right customer at the right time, not worrying about cost
Value
Activeness of product relative to its cost; being able to sell a product at a price below what the customer is willing to pay
Sustainable Development
Kind of development that meets the needs of the present without compromising the ability of future generations to meet their own needs
Sustainable Strategy
A firm’s strategy describes how it will create and sustain value for its current shareholders
Triple Bottom Line Triangle
Economic prosperity, social responsibility, and environmental stewardship. Firm must be evaluated against social, economic, and environmental criteria; conventional strategy focuses on the economic
Main Competitive Dimensions
Customer expectations are formed/based off what you state in marketing efforts about your competitive dimensions. Include: price, quality, delivery speed, delivery reliability, coping with changes in demand, flexibility and new-product introduction speed
Price
Cheap; make or deliver the product or service cheaply; Wal-Mart
Quality
Design and quality/functionality of the features, and adherence to specifications (= defect free). Kroger at higher quality, Wal-Mart offers cheaper quality
Delivery Speed
Fast production or delivery of service
Delivery Reliability
Delivered when promise; Amazon
Coping with Changes in Demand
Ability to cope with changes in volume in as little of time and with a small increase in cost
Flexibility and New-Product Introduction Speed
Ability to offer wide variety of products and develop new ones
Trade-Offs
A decision by a firm to emphasize one performance dimension over another, based on the recognition that excellence on some dimensions may conflict with excellence on others. Firms make trade-offs to emphasize some dimensions at the expense of others. Ex: high quality is viewed as a trade-off to low cost, and speed of delivery is viewed as a trade-off to the ability to offer a wide variety of products
Order Qualifiers
Dimensions/features of a firm’s product that are needed for the product to be considered for purchase by customers. Ex: Features customers will not forego, screening criteria, must differentiate at some competitive dimension to distinguish your product from your competitor’s product
Order Winners
Criteria used by customer to differentiate the products and services of one firm from those of other firms; features that customers use to determine which product to ultimately purchase. Ex: Apple’s order winners – The Apple ecosystem, brand loyalty
Operations and Supply Chain Strategy
Setting broad policies and plans for using the resources of a firm; must be integrated with corporate strategy
Formulating an Operations and Supply Chain Strategy
1) Develop/Refine strategy (annually). Define, vision, mission, and objectives, conduct strategic analysis, understand competitive priorities. 2) Translate the strategy to operations and supply chain initiatives (quarterly). Product design/revision initiative, and sourcing/location of facilities initialization. Then go back to step one. 3) Determine major focus points and projects; operations initiatives, and major logistic/distribution initiatives.
Productivity Measurment
Measure of how well resources are used; is a relative measure and must be compared to something else meaningful; i.e. operations to other operations or firms to firms
Three Ratios of Productivity
Partial, multi-factor, and total productivity
Partial Productivity
Ratio of some (or total) output to a single input. Can only use partial is units are not dollars; ex: tons of paper per cord of wood. Ex: Output/Labor or Output/Capital or Output/Materials or Total Output/Energy
Multifactor Productivity
Ratio of some (or total) output to a group of inputs, but not all inputs. Ex: Output/Labor+Capital+Capital or Output/Labor+Capital+Materials or Finished Units/Labor+Materials
Total Prodcutivity
Ratio of total output to total input. Output/Inputs or Goods and Services Produced/All Resources Used