Operations & Supply Chain Management (OSCM) and Changing Competition

1. Operations & Supply Chain Management (OSCM)and Changing Competition Operations Management

2. Discussion and Learning Points • Firm’s Value Chain and Operations & Supply Chain Processes • Value Chain and Operations Management (OM) • Manufacturing Operations and Processes • Service Operations and Processes • (E-)Supply Chain Management (SCM) and Process-Based View • Changing Competition and Evolution of OSCM • History of Competition and Advances in OSCM • Competition Dynamics in the E-Economy • Key Issues and Challenges of OSCM • Key OSCM Issues & Challenges

3. Firm’s Value Chain andOperations & Supply Chain Processes

4. Macro Operations Procurement & Inbound Logistics (Core) Operations Warehousing & Outbound Logistics Marketing & Sales Customer Service Value Chain and Operations Function Technology (Information, Engineering), Finance, Accounting, Human Resources/Organization Management (Adapted from Porter 1980, 1985)

5. Planning, Execution, Control Outputs (Goods or Services) Process (Transformation, Value creation/adding) Inputs (Material, Labor, Overhead, etc.) Feedback Managing Transformation: Systems View Transformation? Service Uniqueness? System Characteristics? - Effectiveness = - Efficiency = - Capacity - Time Operations Management (OM)?

6. Effectiveness Low High High Efficiency Low Deception Excellence Inferiority Struggle Performance Effectiveness-Efficiency Matrix

7. Process Rigidity/Inflexibility Production Volume/Efficiency Continuous Flow Assembly Line Batch Flow Job Shop Out-of-pocket Cost Opportunity Cost (Project) Product Mix/Customization Manufacturing Operations Processes Product-Process Matrix (Modified from Hayes & Wheelwright 1975, Chase et al. 2004)

8. Make-To-Stock (MTS) Assemble/Configure/Build- To-Order (ATO/CTO/BTO) Make/Engineer- To-Order (MTO/ETO) Finished Goods Subassemblies/Modules Raw Materials/Parts Locus Point of Inventory Control Production and Inventory Systems Movement from MTS toward MTO

9. Customer interaction & Customization Low High Service Factory - Transportation - Hotel - Recreation Service Shop - Hospital - Auto shop - Other repair shop Low Labor intensity High Mass Service - Wholesaling - Retailing - School Professional Service - Physician - Law firm - Accounting firm Service Operations Processes Service Product-Process Matrix (Schmenner 1986)

10. Service Operations: Changing Focus • Managing Focus: • Structure → Process • Performance Measures: • Internal measure (scale economy, productivity) • → External measure (customer satisfaction, profit) • Utility & Quality: • Core/technical service → Total perceived service & relations (Schmenner 1986)

11. Suppliers Enterprise Customers Product Realization Process Product Realization Process Product Realization Process Voice of Customer Voice of Customer Delivered Orders Delivered Orders Order Fulfillment Process Order Fulfillment Process Order Fulfillment Process Returns and Repairs Returns and Repairs Order Capture Process Order Capture Process Order Capture Process Selling/Buying Selling/Buying Customer Care Customer Care Support Processes Support Processes Support Processes Settlements Settlements Supplier Relationship Processes Customer Relationship Processes Inbound/Upstream Outbound/Downstream Procurement Chain Demand/Supply Chain Distribution/Selling Chain Supply Chain Management (SCM)? Supply Chain Processes Demand Creation & Fulfillment: Information, Material/Product, Transaction/Capital Flow (Modified from Kaprelian 2000)

12. Procurement, Operations, and Replenishment Cycles Customer Order Cycle PUSH PROCESSES PULL PROCESSES Customer Order Arrives Customer Order and Manufacturing Cycle Procurement Cycle PULL PROCESSES PUSH PROCESSES Customer Order Arrives Supply Chain Push/Pull Boundary Make-to-stock, Assemble-to-order, Make-to-order (Chopra & Meindl 2007)

13. Changing Competition and Evolution of OSCM

14. Competition Net Post-Industrial Industrial Telecommunication Pre-Industrial Transportation Time 1860 1960 1990 Evolution of Economy, History of Competition, & Advances in OSCM (Modified from Fitzsimmons & Fitzsimmons 2001, Chase et al. 2004)

15. Changing Management Focus and Paradigm (Modified from Gopal & Cahill 1992)

16. Business Responses • Mass Customization • Lean, Quick Response • 6 (Six Sigma) • Collaborative Commerce • Supply Chain Synchronization Changing Industry Dynamics & Business Drivers: 3V’s Customer Economy: Power Shift toward Customers • Value: Benefit / Cost • Increasing customer expectation • Dynamically changing customer preference • More Value Added – Better, Cheaper, Faster • Velocity: Speed, Flexibility, Agility • Shorter product lifecycle • Time compression • Technology advances • Volatility: Uncertainty, Variability • Increasing competition • Industry globalization • Uncertain demand, Wide capacity swings Demand-Supply Matching↑ Source: Hammer (2003), Kim (2006)

17. Key Issues and Challenges of OSCM

18. Ten Key Issues and Challenges in OSCM • Understand operations and supply chain as a process • Align strategies, processes, systems, practices, and measures • Build operations and supply chain capabilities • Improve demand and supply(/capacity) matching • Manage relationships • Develop performance measurement and evaluation system • Manage change and risks • Prepare for challenges and timely issues • Think globally and break through current time, space & knowledge • Invest in people and execute precisely