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Operations and supply chain management (OSCM)
A functional field of business concerned with the management of the entire production and delivery system.
Process Activities
Main activities include planning, sourcing, making, delivering, and returning products or services.
Planning
Processes needed to operate an existing supply chain.
Sourcing
Selection of suppliers to provide the necessary goods and services for production.
Making
The process of producing the major product or service.
Delivering
Logistics processes including selecting carriers and coordinating the movement of goods.
Returning
Receiving worn-out, excess, or defective products back from customers.
Supply chain
Processes that move information and material to, through, and from the firm.
Intangible vs Tangible
A service is intangible and cannot be measured, while a good is a tangible output.
Service heterogeneity
Services are inherently heterogeneous, meaning they can vary in delivery and experience.
Perishable services
Services are perishable and time-dependent; they cannot be stored.
Customer interaction in services
A service requires some degree of interaction with the customer.
Competitive advantage
Creating value for shareholders without compromising future generations' needs.
Efficiency vs Effectiveness
Efficiency is doing things at the lowest cost; effectiveness is doing the right things for maximum value.
Order qualifiers
Dimensions necessary for product consideration by customers.
Order winners
Criteria used by customers to differentiate products and services.
Productivity
Measure of effective resource use, expressed as the ratio of output to input.
Product/service definition
Need-satisfying offering from an organization.
House of quality
Quality function deployment translating customer needs into specifications.
Product life cycle
Stages a product goes through from introduction to decline.
Concurrent engineering
Simultaneous development of project design functions with interactive communication.
Strategic sourcing
Development and management of supplier relationships to meet business needs.
Insourcing vs Outsourcing
Insourcing produces goods/services internally; outsourcing acquires from external providers.
Supplier evaluation and certification
Process to ensure reliable suppliers and effective quality systems.
Logistics
Art and science of obtaining, producing, and distributing materials and products.
Transportation modes
Includes truck, ship, plane, rail, pipeline, and hand delivery for goods.
Warehouse vs Distribution center
Warehouse stores goods; distribution center processes orders for shipment.
Capacity management
Ability to hold, receive, store, and accommodate in operations.
Capacity planning
Process to determine the appropriate level of capacity to meet demand.
Lead strategy
Increasing capacity ahead of anticipated demand.
Lag strategy
Increasing capacity after demand exceeds current levels.
Economies of scale
Cost advantages achieved by increasing production volume.
Decision tree
Schematic model that outlines the steps and consequences in solving a problem.
Lean supply chain
Supply chain focusing on eliminating waste and minimizing costs.
Vertical integration
Owning multiple assets in a supply chain, either backward or forward.
Raw materials
Parts and materials obtained from suppliers for production use.
Work-in-process inventory
Partly finished components or modules in the production process.
Finished goods inventory
Items ready to ship to customers, requiring no further work.
Vendor-managed inventory
Supplier manages an item/group of items for the customer.
Green sourcing
Environmentally responsible sourcing to reduce waste and impact.
Inventory turnover
Measure of how often inventory is replaced during the year.
Third-party logistics (3PL)
Outside company managing part/all logistic functions for another company.
Distribution facility processes
Include inventory tracking, receiving, stowing, picking, packing, and shipping.
Fixed costs
Costs that remain constant regardless of production volume.
Variable costs
Costs that fluctuate based on production volume.
Capacity utilization
Measure of how fully a system is being utilized, expressed as a percentage.
Cushion
Level of capacity in excess of average utilization rate, addressing demand uncertainty.
Service industries
Industries characterized by high uncertainty in demand.
Effective capacity
Maximum service capacity/person per time considering situational factors.
Planning horizon
Time period over which production or operational plans are made.
Capacity cushion formula
Cushion = (1/Average Utilization Rate) - 1.
Trade-offs in operations
Management decides which performance parameters to prioritize in resource allocation.
Order qualifiers and winners
Qualifiers are necessary for consideration; winners determine purchase decisions.
Product life cycle phases
Introduction, growth, maturity, and decline stages of a product.
Supplier development
Improvement of supplier capabilities to meet business needs.
Fulfillment center
Distribution center designed to handle small, individual customer orders.
Tariffs
Taxes on imports/exports, used by governments to generate revenue.
Clustering effects in location
Location of facilities impacts the choice of distribution or service centers.
Backwards vertical integration
Owning suppliers within the supply chain.
Forward vertical integration
Owning distribution channels in the supply chain.
Supplier feedback importance
Frequent feedback ensures positive supplier-customer relationships.
Cost efficiency in procurement
Balancing quality and cost for successful procurement practices.
Economic changes affecting products
Changes in the economy that influence product/service opportunities.
Human behavior’s role in innovation
Customer behavior identifies needs and indicates areas for product improvement.
Service business categorization
Businesses impacting human bodies, physical products, minds, or financial risks.
Good vs service feature
Goods are tangible; services are intangible and cannot be stored.
Decision nodes in decision trees
Represented by squares, indicating decision points in a process.
Chance nodes in decision trees
Represented by circles, indicating uncertainty in outcomes.
Paths in decision trees
Links between decision and chance nodes outlining the sequence of events.
Quality and cost balance
Essential for procurement to ensuring overall supply chain performance.
Cross-functional teams
Teams from various departments working together on projects.
Capabilities of a supply chain
Capacity to adapt to changing market demands while maintaining efficiency.
Market research importance
Critical to understanding customer expectations for product development.
Maintenance of supplier relationships
Frequent communication and feedback essential in sustaining supplier partnerships.
Organizing for product development
Shift from distinct departments to a team-based approach with concurrent engineering.
Capacity measurement in business
Output measured through throughput or inputs based on industry needs.
Service process evaluation
Services often evaluated on customer satisfaction and delivery quality.
Pure Goods
Food products, chemicals, mining
Core Goods
Appliances, automobiles
Core Services
Hotels, airlines, internet service providers
Pure services
University, medical, investment
Triple bottom line
Economic prosperity, social responsibility, environmental stewardship
Strategy Process
Customer needs, corporate strategy, operations strategy, decisions on process and infrastructure
Straddling
Seeking to match a successful competitor by adding features, services, or technology to existing activities
Value Analysis
Objective is to achieve better performance at a lower cost while maintaining all functional requirements designed by the customer
Agile Supply chain
a supple chain designed to operate efficiently while optimizing speed and adaptability
Request for proposal
used for purchasing items that are more complex or expensive and where there may be a number of potential vendors
Request for Quotation
Buyer identifies suppliers and issues a request for routine items
Purchase Order
Is the buyers offer and becomes a binding contract when accepted by the supplier
Weeks of supply
How many weeks worth of inventory is in the system at a particular point in time
warehouse
a facility where goods are stored for future use
proximity to customers
makes rapid delivery easier
Business climate
can include Prescence of similar sized businesses
infrastructure
adequate road, rail, air and sea transportation
political risk
risks in both the country of location and the host country influence the decision
Centroid method
Used for locating single facilities
Long range capacity planning
5-10 years
Intermediate capacity planning
6-18 months
Short range capacity planning
less than one month
Match strategy
Aims to incrementally Match capacity with demand
