Operations and Supply Chain Management

Operation

The process through which people, capital, and material are combined to produce the services and goods consumed by the public

Goods

Articles of trade, merchandise, or wares.

Manufacturing

A specific term referring to the production of goods

The service sector

An important and growing segment of the global economy

The operations function includes

Accounting, finance, marketing, information systems, engineering, and human resource management.

Strategy

Consists of the organizational goals and the methods for implementing the goals, called key policies

Strategy defines

How the organization chooses to compete within the framework dictated by the external environment

A plan

The method for allocating the organization’s resources in relation to opportunities and problems present in the environment

Organizations that are successful in the twenty-first century will develop

An external understanding of global marketing, distribution, systems, financial and capital markets, accounting, and operations rather than national strategiesE

Elements of external competition affected by operations

Product performance, product quality, efficiency, and delivery lead time

Ethics

A sense of what is right and wrong that guides behavior

Ethical behavior

A corporate issue that affects the company’s bottom line

Attempting to maximize short-term earnings to the stockholder per share by cutting corners on plat safety or environmental compliance

Actions that separate management from labor, the consumer, and the general public

Sustainablility

The ethical issues an organization faces to balance financial performance while maintaining social responsibility standards and a responsible environmental profile

Sustainability considers the ____-term benefits of actions over any ____-term cost savings

long; short

The sustainability of operations involves

Improving efficiency to reduce costs, utilize available capacity, and achieve business objectives.

What does efficient use of resources mean?

Getting as much positive return from them as possible

How does teamwork in operations benefit or add value to customers?

Teamwork in operations benefits the customer when coordinated decisions within an organization produce high-quality products that customers value.

The management of inventory is important to producers of goods and producers of services, but ______________.

Usually service businesses do not have physical inventories

Why are team-oriented operations essential today?

Because cooperation is necessary for solving quality and productivity problems to remain competitive in an increasingly global marketplace

Which unique characteristic makes a business process key in any organization?

It is cross-functional.

Which type of decision-making can result in more cross-functional teams?

Decentralized

Job markets have shifted between countries for manufacturing, technology, engineering, and management jobs over the past decades.

What has been a driving force in the global job market?

Labor costs

Many automotive manufacturers have factories in multiple countries. Vehicle designs and safety specifications are different from country to country.

In which country would you expect to see stronger safety regulations for automobiles?

United States

A pharmaceutical sales company needs to replace its company cars. One car company quoted a price 15% lower than its competitor. The pharmaceutical company considered total expected costs of ownership, including purchase price, fuel efficiency, ergonomic comfort, end-of-life resale value, and warranty costs, and went with the higher-priced competitor to achieve _____.

Long-term benefits

Product design

The determination of the characteristics, features, and performance of the product

Product technology

The application of knowledge to improve the product

Process design

Describes how a product is made

Process technology

The application of knowledge to improve a process. It affects how a product is produced, but it may have little, if any, impact on the product's features and function

What is concurrent engineering?

An approach where product design and process design are completed simultaneously by the same collaborative group to develop high-quality designs quickly

Why does modern labor generally support productivity improvements?

Because greater efficiency provides job security against global competition and allows for non-inflationary wage increases.

What is the primary benefit of decentralizing decision-making in an organizational structure?

It creates a leaner structure with fewer hierarchical levels, allowing cross-functional teams to resolve problems faster and make decisions based on broader corporate interests rather than isolated functional silos.

How is an organization's strategy typically communicated and decided upon for implementation?

Through the annual budgeting and planning process.

Which of the following best describes a 'business process'?

A cross-functional set of work activities with preferred order, inputs, and outputs that add value to the customer

A fast-food restaurant decides to change how it cooks its burgers from frying to grilling, but uses the exact same meat and bun. What kind of change is this?

Process design change

What is a primary advantage of organizing by business process rather than traditional business functions?

It speeds up decision-making and focuses attention on activities that customers value

In the context of operations, when is 'value' successfully added?

When consumers are willing to pay more finished good than the total cost of inputs required to make it

What was a primary initial motivation for organizations to outsource jobs to countries like China, and what is a subsequent trend as labor costs in those countries increase?

Easing cost constraints; some jobs are returning to the United States or moving to other low-cost countries

When determining whether to outsource operations, which of the following sets of factors, traditionally used to define project success, does an organization most likely consider?

Time, cost, scope, and quality

What is the definition of a competitive advantage?

A capability that customers value which gives an organization an edge against its competition

Key business processes are cross-functional. This means an operations manager designing processes to improve competitive capabilities would need to work closely with:

Counterparts in other internal disciplines, such as accounting, marketing, or information systems

In a SWOT analysis, what does an organization evaluate to understand its internal environment?

Strengths and Weaknesses

Which concept enables firms to design, produce, and quickly deliver products that meet specific customer needs at a price rivaling mass production?

Mas customization

When measuring the competitive priority of 'Product quality', how does the customer generally define it?

Fitness for use

How does an automotive industry manage to bring down the initially high cost of airbags (estimated at $600–700 each)?

Through better design, economies of scale, and productivity improvements

Lesson 2.2: Key Business Processes