SCM Chapter 2 Operations and supply chain strategy

structural elements:

Includes tangible resources such as buildings, equipment, and computer systems.

Infrastructural elements:

Includes the policies, people, decision rules, and organizational structure choices made by a firm

Strategy:

A mechanism by which a businesses coordinates its decisions regarding structural and infrastructural elements.

mission statement:

A statement that explains why an organization exists. It describes what is important to the organization, called its core values, and identifies the organization's domain.

Business Strategy:

The strategy that identifies a firm's targeted customers and sets time frames and performance objectives for the business.

Core Competency:

An organizational strength or ability, developed over a long period, that customers find valuable and competitors find difficult or even impossible to copy.

Functional Strategy:

A strategy that translates a business strategy into specific actions for functional areas such as marketing, human resources, and finance.

Operations and supply chain strategy:

A functional strategy that indicates how structural and infrastructural elements with the operations and supply chain areas will be acquired and developed to support the overall business strategy.

three primary objectives of operations and supply chain strategies:

1)Help management choose the right mix of structural and infrastructural elements based on a clear understanding of the performance dimensions valued by customers and the trade-offs involved.

2)Ensure that the firm's structural and infrastructural choices are strategically aligned with the firm's business strategy.

3)Support the development of core competencies in the firm's operations and supply chains.

structural decision categories:

1)capacities

2)facilities

3)technologies

Infrastructural decision categories:

1)Organization: Structure, Control/reward systems, Workforce decisions

2)Sourcing/Purchasing: Sourcing strategies, Supplier selection, Supplier performance measurement

3)Planning and Control: Forecasting, Tactical planning, Inventory management, Production planning and control

4)Business Processes and Quality Management

Six Sigma, Continuous improvement, Statistical quality control

5)Product and service development

The developmental process, Organizational and supplier role3)

Value index (customer value)

A measure that uses the performance and importance scores for various dimensions of performance for an item or a service to calculate a score that indicates the overall value of an item or a service to a customer.

four performance dimensions:

Quality

Time

Flexibility

Cost

Quality:

Performance Quality - Addresses the basic operating characteristics of a product or service.

Conformance Quality - Addresses whether a product was made or a service performed to specifications.

Reliability Quality - Addresses whether a product will work for a long time without failing or requiring maintenance.

Time:

Delivery Speed - How quickly the operations or supply chain function can fulfill a need once it has been identified.

Delivery Reliability - The ability to deliver products or services when promised.

Flexibility:

Mix Flexibility - The ability to produce a wide range of products or services.

Changeover Flexibility - The ability to produce a new product with minimal delay.

Volume Flexibility - The ability to produce whatever volume the customer needs.

Cost:

Labor costs

Material costs

Engineering costs

Quality-related costs

Trade off of Performance Dimensions (common conflicts):

Low cost versus high quality

Low cost versus flexibility

Delivery reliability versus flexibility

Conformance quality versus product flexibility

Order winners:

A performance dimension that differentiates a company's products and services from its competitors.

Order Qualifiers:

A performance dimension on which customers expect a minimum level of performance.

Stages of alignment between supply chain and operational strategies:

Stage 1 - Internally neutral

Stage 2 - Externally neutral

Stage 3 - Internally supportive

Stage 4 - Externally supportive