Operations Management

1. Operations Management • Day Three Plan • Administrative matters • Collect Player Commitment Form • Discuss assignment schedule • Current Events of Note • Article presentation • A brief history quiz on Chapter One • An Overview of Chapter Two

2. Supply Chain / Operations Management Defined • Value creation from resources is the heart of all business, those that • make consumer products • make goods and services for other businesses • Operations / Supply Chain Management is the management of PROCESSES used to design, supply, produce and deliver VALUEABLE goods & services to customers—specific customers • Customers buy a product when it fills a need and when if offers more value than competitor products

3. Implications of the Business Process Perspective • Operations Managers Must Maintain a Cross-functional perspective • Concern about pleasing the customer is paramount • A resource balancing act: things, humans and information • The Operations Manager must wear many hats • The One Sixth Perspective • Profit = MS1 x MS2x MS3 • = market size x market share x margin on sales • where margin on sales = price – cost

4. Chapter Two: Operations & Supply Chain Strategy • Operations strategy : A set of competing priorities couple with supply chain structure and infrastructure design choices intended to create capabilities that support value a set of value propositions targeted to address the needs of critical customers. (Whew!) • Note the terms included

5. Term One • The Value Proposition • Product related competitive priorities • Quality • Timeliness • Cost • Process related competitive priorities • Innovation • Flexibilities • Sustainability & Risk

6. Term 2: Capabilities of the Supply Chain • Capabilities are the 2rd Element of Operations Strategy (See Figure 2-2) • What was the other ? • Capabilities are ssuperior operational abilities that stem from routines, skills and processes that the firm develops and uses • Please do not confuse capabilities and capacity.

7. Strategy Operations Management • Evolution of Strategy • Know thy enemy/Know thy customer • Forces impacting strategy • Information technology/e-commerce • Increase customer participation/demands • Market growth opportunities may be limited • Your markets might be maturing • Geographic expansion opportunities may be limited • Two Basic Approaches • Focus on your core competencies (stick to your knitting) • Demand innovation—investigate your customers’ total needs and expand your product offering scope

8. The Two Elements of Strategy • Strategy Formulation is a process in which the firm or one of its strategic business units defines what it intends to be. • Strategic Implementation is the process in which the 3

9. Strategy Implementation • Sequential or Simultaneous Process • Pace will determine the feasibility • Bureaucratic approaches • Kawasaki’s card system • The OPJ uses goals/process • Three levels Organization/ Process/ Job • Within each level it uses Goals/Design/ Management • The Balanced Scorecard Approach • How do we want to be seen by financial markets? • How do we want to be seen by our customers? • What capabilities must we have to appeal to the above constituencies? • What must my organization learn how to do better in order to develop these capabilities?

10. Some Important Terms • Quiz—Define the following • Value proposition & its elements • Order winners, qualifiers, and losers • Lead time and market orientation • Strategic profit model • Which story impressed you the most & why?