1. The Big Picture & Supply Chain Basics

Operations management

The design and operation of systems that create and deliver goods or services.

Strategic decision

A long-term, high-level choice that shapes an organization's overall direction (e.g., expanding into a new international market).

Tactical decision

A medium-term operational choice focused on resource allocation and execution (e.g., selecting supplier orders for the next quarter).

Operational decision

A routine, day-to-day choice required to keep regular activities running (e.g., scheduling weekend shifts for staff).

Competitive priorities

The core operational capabilities a firm emphasizes to succeed—cost, quality, delivery, and flexibility—typically committing to two.

Cost (competitive priority)

Competing by offering low prices achieved through high efficiency, waste reduction, and economies of scale (e.g., Walmart).

Quality (competitive priority)

Competing through superior product performance, durability, craftsmanship, and consistency (e.g., Lexus).

Delivery (competitive priority)

Competing on fast fulfillment speed and reliable, predictable transit times (e.g., Amazon Prime).

Flexibility (competitive priority)

Competing on customization, variety, and the ability to adapt quickly to volume changes (e.g., custom fabricators).

Vertical integration

A strategy where a company owns and controls multiple consecutive stages of its supply chain, from raw materials to distribution (e.g., Samsung).

Apple's supply chain strategy

Retaining core high-value competencies—such as product design, software, and marketing—in-house while outsourcing physical manufacturing and assembly.

Chokepoint

A narrow passage or hub that handles a disproportionately large volume of global trade, creating concentrated vulnerability to disruption (e.g., the Suez Canal).

Supply chain resilience

The capacity of a logistics and production network to anticipate, absorb, adapt to, and rapidly recover from unexpected disruptions.

Bottleneck

The stage in a process with the lowest capacity or longest processing time, which dictates and restricts total system output.

Formula for maximum output of a line

$$\frac{\text{Total Time Available}}{\text{Bottleneck Time per Unit}}$$