BUS 370 Operations and Supply Chain Strategies - Vocabulary Flashcards

Business Strategy and Functional Strategy

  • Strategy coordinates decisions to decide on core competency and the required structural and infrastructural elements to execute the strategy.

Core Competencies

  • Organizational strengths and abilities developed over long time periods.
  • Valued by customers and difficult for competitors to copy.

Structural vs Infrastructural Elements

  • Structural: buildings, equipment, computer systems, other capital assets.
  • Infrastructural: people, policies, decision rules, organizational structure.

Operations and Supply Chain Decision Categories

  • Structural Decisions (guided by SC strategy):
    • Capacity: Size, Timing, Type
    • Facilities: Size, Location
    • Technology: Equipment, Processes, Information systems
  • Infrastructural Decisions (guided by SC strategy):
    • Organization: Control/reward systems, Centralization/decentralization
    • Workforce: Skilled/semi-skilled
    • Sourcing and Purchasing: Supplier selection/performance metrics, Procurement systems, Sourcing strategy
    • Planning and Control: Forecasting, Inventory management, Production planning/control
    • Process and Quality: Continuous improvement, BPM, SPC/Six Sigma
    • Product and Service Design: Development process, Organization/supplier roles

Top-Down Model of Strategy

  • Elements:
    • Mission Statement, Core values, Domain
    • Business Strategy, Targeted Customers/Markets
    • Competitive Advantage/Core Competency
    • Role of Supply Chain Partners, Time Frames and Performance Objectives
  • Operations and SC Strategy translates business strategy into SC actions, provides value to targeted customers/markets, develops supporting core competencies in SC, and aligns with other functional strategies.

Functional Strategy

  • Translates the business strategy into functional terms.
  • Identifies specific actions required.
  • Facilitates coordination with other areas.
  • Provides direction and guidance for functional decisions.

Objectives of Operations and SC Strategy

  • Help managers choose the right mix of structural and infrastructural elements.
  • Ensure choices are aligned with the firm’s business strategy.
  • Support the development of core competencies.

Structural and Infrastructural Decisions (Guided by the SC Strategy)

  • Structural: Capacity, Facilities, Technology
  • Infrastructural: Organization, Workforce, Sourcing and Purchasing, Planning and Control, Process and Quality, Product and Service Design

Subway vs McDonald’s: Structural vs Infrastructural Decisions

  • Structural vs infrastructural differences influence restaurant design, staffing, processes, and policies (illustrative comparison).

Southwest Airlines: Example

  • Core Competencies: Lowest cost; Highest customer satisfaction.
  • SC/Operational Strategy: One kind of plane; Point-to-point routes; Online reservations; Flexible, humorous, outgoing employees; Low-cost airports.

Customer Value and Value Assessment

  • In a world with limited time/resources, understand what customers value now and in the future.
  • Questions to assess value: Why do customers choose us? Would they recommend us? What must we excel in to exceed expectations?

The Four Performance Dimensions: Where Must We Excel?

  • Quality, Time, Flexibility, Cost
  • Each dimension can be a source of distinct competence.

Quality

  • Characteristics that affect satisfaction: Performance quality, Conformance quality, Reliability quality.

Time

  • Delivery speed and delivery reliability: delivery window, quantity accuracy.

Flexibility

  • Ability to respond to unique customer needs: mix, changeover, volume.

Cost

  • Expenses: labor, materials, engineering, quality.

Tradeoffs in Performance Dimensions

  • Firms trade off one dimension against another.
  • Match the company to its most important performance dimension (Quality, Time, Flexibility, Cost).

Value Index

  • Value index combines performance and importance to determine customer value.
  • Formula:
    V=∑<em>jI</em>jPjV = \sum<em>j I</em>j P_j
  • Ij: Importance of dimension j; Pj: Performance on dimension j.

Netflix: Virtual Storefront and Distribution

  • Virtual storefront via Netflix website; distribution centers up to ~60; same-day processing and typical one-day delivery; tracks DVDs; subscription-based model; streaming option.

Netflix Advantages

  • Virtual supply chain: streaming reduces physical distribution needs; quick expansion; no costly distribution centers or make/order decisions.

Netflix Disadvantages and Risks

  • Forecasting inventory needs for titles; distribution/streaming dependencies; multiple handling steps.

Netflix Risks/Questions

  • Supplier/content risk: content providers may limit delivery in electronic format.
  • Downstream distributor risks: ISPs may charge higher fees due to traffic.
  • Competitive risks: Amazon, Disney, Hulu, Google entering space.