Operations: Production and delivery of goods and services. 

Management: Plan, Implement, Control 

Essential business functions: Marketing, Finance, Operations  

Operations generate cash 

Product flows (Downstream)  

Cash flows (Upstream)   

Information flows (Both up and downstream as companies can share)  

Tiers: Focal firm sells to customers, who sell to others until it ends up with a consumer 

Logistics Management: Plans, implements, and controls the efficient effective forward and reverse flow and storage of goods/services 

• Management of product flows 

• The right products, in the right place, at the right time, in the right condition, at the right cost 

Supply Chain Orientation: Why care about your customers' customers? 

• All demand is derived from consumers 

  • If your customers can’t sell you can’t sell 

• Quality of Distribution channel  

  •  Can significantly impact sales performance 

• Market Orientation  

  • Gathering, analyzing, and communicating customer information 

• Reverse Logistics  

  • Returns, repairs, unsold merchandise, etc. 

• Supply Chain evolution  

  • Identify, evaluate, and implement opportunities 

Supply, Demand, and Value Chain Management are the exact same thing 

Supply defines the supply chain, determines members and structure  

Demand drives the supply chain and all of its activities  

Value is added by each member of the supply chain. A firm will only be included in the supply chain if they add value to it. 

Fundamental terms in operations management

Process

• A sequence of activities to accomplish a goal 

• A system of activities that transform inputs into valuable outputs 

• From video: Most businesses operate in an ad-hoc and chaotic manner where work is completed with no real high-level understanding of how. 

• To improve a business, start by mapping processes that underlie each business activity. 

• This helps clarify accountability

Decision making

• Strategic Planning: 

  • Long term decisions defining the objectives and capabilities (Multiple years)

• Tactical Planning 

  • Intermediate-term decisions defining how capacity is used to meet demand 

• Operational Planning 

  • Short-term priorities and schedules for resource allocation (Daily, weekly, monthly)  

Modeling: Simplified representation of the world 

• Excluding irrelevant details  

• Include relevant details 

• Helps with decisions and increases understanding

• May exclude certain info or not represent properly

Trade-off:

• Most managerial decisions involve a trade-off

• Example: Making compromises in cost vs quality 

Systems approach: Big picture approach 

• System: is a set of interrelated parts that work together to achieve a goal 

• Synergy: A whole is greater than the sum of its parts