Managing Operations Across the Supply Chain

Comprehensive vocabulary flashcards covering basic operations management, supply chain strategy, process capacity, sourcing, and integrated logistics.

Operations Management

The management of processes used to design, supply, produce, and deliver valuable goods and services to customers.

Supply Chain

The global network of organizations and activities involved in designing, transforming inputs, consuming, and disposing of goods and services.

Dematerialization

The process of turning a tangible good into an intangible service, such as a digital textbook.

Lean Operation

An operation that produces maximum efficiency and effectiveness using a minimal amount of resources.

Core Capabilities

Unique sets of skills, processes, and systems that create a competitive advantage for firms and are hard to imitate.

Upstream Product Suppliers

Suppliers that provide raw materials, services, and components directly related to the manufacturing or service production process.

Downstream Product Suppliers

Suppliers that provide enhancements to finished goods such as assembly, packaging, transportation, and storage.

Aftermarket Suppliers

Suppliers that provide services and support such as maintenance, repair, and disposal.

Stakeholders

People who have an interest in the financial well-being of an operation.

Customer Management

The management of the customer interface, including distribution, sales, order processing, and fulfillment.

Supply Management

The identification, acquisition, positioning, and management of resources and capabilities a firm needs to attain strategic objectives.

Logistics Management

The management of the movement and storage of materials and information within, into, and out of the firm.

Tier

A step in the upstream supply chain.

Echelon

A step in the downstream supply chain.

Corporate Strategy

Strategy that determines the overall mission of the firm, the type of businesses it pursues, and the values and directions for the whole firm.

Business Model

The combination of choices determining targeted customers, value propositions offered, and the supply chain/operations capabilities employed.

Order Winners

Product traits such as better performance or lower price that cause customers to choose a product over competitors.

Order Qualifiers

Product traits that must meet a certain level, such as availability or conformance quality, for a customer to consider the product.

Order Losers

Traits where poor performance, such as late delivery or poor quality, can cause the loss of business.

Fit

The extent of alignment between a firm's operational capabilities, its value proposition, and the desires of its critical customers.

Juran’s Law

The principle that $15\%$ of operational problems are from human error and $85\%$ are from systematic errors.

Operation (Process Activity)

Any activity that transforms an input; the major source of value creation.

Transportation (Process Activity)

An activity that moves an input from one place to another without transforming its other characteristics.

Inspection (Process Activity)

An activity that checks or verifies another activity.

Delay (Process Activity)

An occurrence where the flow of an input is unintentionally stopped due to interference.

Storage (Process Activity)

An activity where items are inventoried under formal control.

Economies of Scale

A phenomenon where unit cost decreases as production volume increases due to lower fixed costs per unit and the learning curve.

Maximum Capacity

The highest level of output a process can achieve under ideal conditions in the short term, also known as design capacity.

Effective Capacity

The level of output a process can be expected to produce under normal conditions; what management plans for.

Utilization

The percentage of process capacity that is actually used.

Yield Rate

The percentage of units successfully produced, calculated as $\frac{\text{successful units}}{\text{total units}} \times 100$.

Theory of Constraints

A management system that improves performance by identifying, focusing on, and managing constraints or bottlenecks.

Little’s Law

The formula $F = \frac{I}{TH}$ where $F$ is flow time, $I$ is inventory, and $TH$ is throughput rate.

Flow Time

The total time it takes for one unit to get through a process.

Cycle Time

The time it takes to complete a single step in a process.

Wait Time Formula

$\text{wait time} = (\frac{C_a^2 + C_p^2}{2})(\frac{u}{1 - u})t_p$ where $u$ represents utilization.

Supply Chain Risk

The probability of an unplanned event, such as a delivery disruption or cyber attack, that negatively impacts a firm's ability to serve customers.

Supply Chain Resilience

The capability to minimize the impact of a disruption and recover afterwards.

Total Cost of Ownership (TCO)

All costs incurred before, during, and after a purchase.

Sustainability

The ability to sustain performance by managing pollution (planet), people, and business model changes (profit).

Insourcing

Acquiring inputs from operational processes provided within the firm.

Outsourcing

Acquiring inputs from operational processes provided by external suppliers.

Spend Analysis

A process for identifying purchases throughout an organization.

Enterprise Resource Planning (ERP) System

Software that consolidates purchases and data throughout an organization.

Strategic Purchases

Purchase categories characterized by high spend and high risk that are unique and critical to core performance.

Leverage Purchases

Purchase categories characterized by low risk and high spend, often standardized across the firm.

Supply Base Optimization

Determining the ideal number of suppliers to minimize complexity and administrative costs while avoiding disruptions.

Weighted-Point Model

A supplier evaluation method using performance categories that are weighted according to importance.

Electronic Data Interchange (EDI)

The structured, secure electronic transmission of data between companies for placing orders.

Economic Regulation

Government controls on entry, rates, and services of transportation carriers to ensure reasonable cost and availability.

Economies of Distance

A reduction in the cost per unit of distance as the distance moved increases, spreading fixed costs over more miles.

Market Area Consolidation

Condensing multiple shipments going to the same market area into a single shipment.

Intermodal Transportation

A method that combines two or more modes of transportation to take advantage of their respective strengths.

Value Density

The ratio of a product's value to its weight.

Omnichannel

A distribution strategy where customers can place and receive orders in a variety of ways.

Break-bulk

The process of splitting a large shipment into individual orders for local delivery.

Cross-docking

A logistics activity that combines break-bulk and warehouse consolidation to move goods directly from receiving to shipping.

Total Network Cost

The sum of inventory cost and total transportation cost: $\text{total cost} = \text{inventory cost} + \text{total transportation cost}$.