Summary Operations, Management & Logistics
Lecture 1: Ch 1 & 2.
Operations = the conversion of inputs (resources) into outputs (products).
→ Involves the workflow ordering of activities to produce the product.
Supply chain = The processes that move information and material to and from firms,
ranging from raw materials to consumers. Raw material → Manufacturer → Dealernetwork.
Operations & Logistics are considered primary (production process) activities within an
organization.
Success of producing at low cost while meeting customer demand depends on:
- Clever integration of great operations-related strategy.
- Processes to produce and deliver products and services.
- Analytics to support the decisions needed to manage the firm.
Basic principles guide the design of transformation processes:
- How different types of processes are organized.
- How to determine the capacity of a process.
- How long it should take to make a unit.
- How the quality of a process is monitored.
- How information is used to make decisions.
Operations and Supply Chain Management (OSCM) is also about improvement of the
systems that create and deliver the firm’s primary products and services.
- Change of Operations and Supply Chain strategies.
- New production technologies and modes of transport.
- Optimizing the processes of production and logistics activities.
- Improvements in data analytics and how to use them in decision making.
,Functional-based workflow (for example):
- 1 product at a time.
- Batch based → Product B after product A.
Product-based workflow (for example):
- Simultaneously produce 2 products.
- A and B both have their own production process.
Operations and Supply Chain processes are interlinked and require metrics to steer,
some examples are speed, quality, work productivity but also ordering, payments, shipping.
Producing and delivering goods (food) is different compared with services (medical).
Current issues in operations and supply chain management
- Coordinating the relationships between mutually supportive but separate operations.
- Optimizing global supplier, production and distribution networks.
- Managing customer touch points.
- Raising senior management awareness of OSCM as a significant competitive
weapon.
- Uncertainty in global tariffs and regulations.
- Difficulty in hiring and keeping employees.
- Adapting to change in business technology and infrastructure.
- Sustainability and the triple bottom line (life cycle analysis)
- Digitization and BIG data (industry 4.0)
Evaluating operations and supply chain process on 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 / price.
- Quality = the attractiveness of the product, considering its features and
durability.
Benchmarking based on management efficiency ratios (higher = better)
- Receivable turnover = Annual credit sales / average account receivable.
- Inventory turnover = Cost of goods sold / average inventory value.
- Asset turnover = Revenue (or sales) / total assets.
,Summary of Chapter 1:
- Various processes are associated with OSCM and used to implement the strategy of
the firm.
- Analytics support ongoing decisions needed to manage the firm.
- Firms face increasing pressure on mass customization and quality in combination
with efficiency and speed that is reflected in OSCM.
- Supply chain control, Servitization (services after the sale, e.g. maintenance),
sustainability and industry 4.0 are very important.
- Efficiency ratio’s help benchmarking firm practices to meet goals.
,Chapter 2
→ Life cycle.
Sustainable strategy is aimed at pleasing not only shareholders but also other
stakeholders.
- The firm's strategy describes how it will create and sustain value for shareholders.
- Shareholders = individuals or companies who own shares of stock.
- Stakeholders = individuals or companies who are directly or indirectly
influenced by actions of the firm.
- Adding sustainability requirements means meeting value goals without
compromising the ability of future generations to meet their own needs.
- It might even be the case that pleasing other stakeholders might in the end also
please shareholders.
- Triple bottom line: evaluating the firm against social, economic, and
environmental criteria.
Different ways to produce and innovate in a sustainable way
- Cleaner products
- More efficient production process
- Alternative technologies
- New business models (services / innovation)
Score on dimensions:
- Energy saving / renewable energy
- Resource saving / recycling / renewable material
- Pollution reduction
- measure: CO2 reduction.
Some dilemmas for OSC managers:
- Using less energy vs using renewable energy
- Using less materials vs biodegradable vs recycling processes.
-
, The Operations and Supply Chain Strategy is focused on operations effectiveness
- Operations and supply chain strategy: setting broad policies and plans for using the
resources of a firm.
- OSC strategy must be integrated with corporate strategy
- Corporate strategy provides overall direction and coordinates operational
goals with those of the larger organization.
- Operations effectiveness: performing activities in a manner that best implements
strategic priorities at a low cost. → Strongly related to Business strategy.
- Business strategy aimed at creating value for customers =
1. Cost excellence.
2. Product differentiation.
3. Focus.
Competitive dimensions: Price, quality, delivery speed, reliability, coping with changes in
demand, flexibility and new-product introduction speed.
Supportive dimensions: technical support, meeting a launch date, supplier after-sale
support, environmental impact, other dimensions like customization.
Managers have to face trade-offs and have to decide which parameters of performance are
critical and concentrate their resources on those characteristics. For example a firm that is
focussed on low-cost production might not be able to quickly improve the product quality.
Straddling: Seeking to match a successful competitor while maintaining its existing position.
- Adds features, services, or technology to existing activities.
- Often a risky strategy.
Order qualifiers: Those dimensions that are necessary for a firm’s products to be
considered for purchase by customers. Features that the customer will not forego.
Order winners: Criteria used by customers to differentiate the products and services of one
firm from those of other firms. Features that customers use to compare which product to
purchase.
To be efficient a firm must minimize total cost without compromising customers’
needs.
Partial measures of productivity
- Restaurant: customers per labor hour.
- Retail store: sales per square foot.
- Chicken farm: pounds of meat per pound of feed.
Lecture 1: Ch 1 & 2.
Operations = the conversion of inputs (resources) into outputs (products).
→ Involves the workflow ordering of activities to produce the product.
Supply chain = The processes that move information and material to and from firms,
ranging from raw materials to consumers. Raw material → Manufacturer → Dealernetwork.
Operations & Logistics are considered primary (production process) activities within an
organization.
Success of producing at low cost while meeting customer demand depends on:
- Clever integration of great operations-related strategy.
- Processes to produce and deliver products and services.
- Analytics to support the decisions needed to manage the firm.
Basic principles guide the design of transformation processes:
- How different types of processes are organized.
- How to determine the capacity of a process.
- How long it should take to make a unit.
- How the quality of a process is monitored.
- How information is used to make decisions.
Operations and Supply Chain Management (OSCM) is also about improvement of the
systems that create and deliver the firm’s primary products and services.
- Change of Operations and Supply Chain strategies.
- New production technologies and modes of transport.
- Optimizing the processes of production and logistics activities.
- Improvements in data analytics and how to use them in decision making.
,Functional-based workflow (for example):
- 1 product at a time.
- Batch based → Product B after product A.
Product-based workflow (for example):
- Simultaneously produce 2 products.
- A and B both have their own production process.
Operations and Supply Chain processes are interlinked and require metrics to steer,
some examples are speed, quality, work productivity but also ordering, payments, shipping.
Producing and delivering goods (food) is different compared with services (medical).
Current issues in operations and supply chain management
- Coordinating the relationships between mutually supportive but separate operations.
- Optimizing global supplier, production and distribution networks.
- Managing customer touch points.
- Raising senior management awareness of OSCM as a significant competitive
weapon.
- Uncertainty in global tariffs and regulations.
- Difficulty in hiring and keeping employees.
- Adapting to change in business technology and infrastructure.
- Sustainability and the triple bottom line (life cycle analysis)
- Digitization and BIG data (industry 4.0)
Evaluating operations and supply chain process on 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 / price.
- Quality = the attractiveness of the product, considering its features and
durability.
Benchmarking based on management efficiency ratios (higher = better)
- Receivable turnover = Annual credit sales / average account receivable.
- Inventory turnover = Cost of goods sold / average inventory value.
- Asset turnover = Revenue (or sales) / total assets.
,Summary of Chapter 1:
- Various processes are associated with OSCM and used to implement the strategy of
the firm.
- Analytics support ongoing decisions needed to manage the firm.
- Firms face increasing pressure on mass customization and quality in combination
with efficiency and speed that is reflected in OSCM.
- Supply chain control, Servitization (services after the sale, e.g. maintenance),
sustainability and industry 4.0 are very important.
- Efficiency ratio’s help benchmarking firm practices to meet goals.
,Chapter 2
→ Life cycle.
Sustainable strategy is aimed at pleasing not only shareholders but also other
stakeholders.
- The firm's strategy describes how it will create and sustain value for shareholders.
- Shareholders = individuals or companies who own shares of stock.
- Stakeholders = individuals or companies who are directly or indirectly
influenced by actions of the firm.
- Adding sustainability requirements means meeting value goals without
compromising the ability of future generations to meet their own needs.
- It might even be the case that pleasing other stakeholders might in the end also
please shareholders.
- Triple bottom line: evaluating the firm against social, economic, and
environmental criteria.
Different ways to produce and innovate in a sustainable way
- Cleaner products
- More efficient production process
- Alternative technologies
- New business models (services / innovation)
Score on dimensions:
- Energy saving / renewable energy
- Resource saving / recycling / renewable material
- Pollution reduction
- measure: CO2 reduction.
Some dilemmas for OSC managers:
- Using less energy vs using renewable energy
- Using less materials vs biodegradable vs recycling processes.
-
, The Operations and Supply Chain Strategy is focused on operations effectiveness
- Operations and supply chain strategy: setting broad policies and plans for using the
resources of a firm.
- OSC strategy must be integrated with corporate strategy
- Corporate strategy provides overall direction and coordinates operational
goals with those of the larger organization.
- Operations effectiveness: performing activities in a manner that best implements
strategic priorities at a low cost. → Strongly related to Business strategy.
- Business strategy aimed at creating value for customers =
1. Cost excellence.
2. Product differentiation.
3. Focus.
Competitive dimensions: Price, quality, delivery speed, reliability, coping with changes in
demand, flexibility and new-product introduction speed.
Supportive dimensions: technical support, meeting a launch date, supplier after-sale
support, environmental impact, other dimensions like customization.
Managers have to face trade-offs and have to decide which parameters of performance are
critical and concentrate their resources on those characteristics. For example a firm that is
focussed on low-cost production might not be able to quickly improve the product quality.
Straddling: Seeking to match a successful competitor while maintaining its existing position.
- Adds features, services, or technology to existing activities.
- Often a risky strategy.
Order qualifiers: Those dimensions that are necessary for a firm’s products to be
considered for purchase by customers. Features that the customer will not forego.
Order winners: Criteria used by customers to differentiate the products and services of one
firm from those of other firms. Features that customers use to compare which product to
purchase.
To be efficient a firm must minimize total cost without compromising customers’
needs.
Partial measures of productivity
- Restaurant: customers per labor hour.
- Retail store: sales per square foot.
- Chicken farm: pounds of meat per pound of feed.
