Operational Supply Chain Management Chpt 1

Operational Supply Chain Management
Is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services.
Operations refers to
manufacturing and service processes that are used to transform the resource employed by a firm into products desired by customers.
Supply Chain refers to
processes that moves information and material to and from the manufacturing and service processes of the firm
Made up of one or more activities that transform inputs into outputs
The 5 stages of the Operations and Supply Chain Processes
1. Planning 2. Sourcing 3. Making 4.Delivering 5. Returning
PLANNING stage 1 of the Operations and Supply Chain Processes
Planning: consists of the processes needed to operate an existing supply chain strategically. Firms must anticipate demand and that it will be met with available resources. The supply chain must be efficient and deliver high quality and value to customers.
SOURCING stage 2 of the Operations and Supply Chain Processes
Sourcing: involves the selection of suppliers that will deliver the goods and services needed to create the firm’s product. This includes receiving and verifying shipments, transferring them to manufacturing facilities, and authorizing supplier payments
MAKING stage 3 of the Operations and Supply Chain Processes
Making: is where the major product is produced or service is provided. labor material equipment are scheduled here the info is used to measure speed, quality, and worker productivity
DELIVERING stage 4 of the Operations and Supply Chain Processes
Delivering: is also referred to as “logistics processes”. carriers are pick to move products to warehouses and customers, coordinate and schedule the movement of goods and information through the supply network
RETURNING stage 5 of the Operations and Supply Chain Processes
Returning: involves processes for receiving worn-out, defective, and excess products back from customers and support or customers who have problems with delivered products.
Differences between goods and services
services are not tangible
services require a degree of interaction
services are inherently heterogeneous (they vary)
services are perishable and time dependent
services are defined evaluated as a package of features that affect the five senses
1 of 4 package features (Supporting Facility)
location, decorations, layout, supporting equipment
2 of 4 package features (Facilitating Goods)
variety, consistency, quantity of the physical goods that go with the service; like food items that accompany a meal service
3 of 4 package features (Explicit Services)
training of service personnel, consistency of service performance, avaliablility and access to the service, and comprehensiveness of the service
4 of 4 package features (Implicit Services)
attitude of the servers, atmosphere, waitng time, status, privacy and security, and convenience
The Goods-Services Continuum
the continuum captures the main focus of the business and spans from firms that just produce products to those that only provide services
pure good
is where industries have become low-margin commodity businesses, and inorder to differentiate, they are often adding some services. examples logistical, stocking items, maintaining extensive information databases and provideding consulting advice
Core good
providers already provide a significant service component as part of their business. examples car makers provide spare parts and distribution services to support repair centers at dealers.
core service
providers must integrate tangible goods. example cable providers provide cable hook ups and repair services along with high-def cable
Pure service
providers may offer financial consulting may need little in the way of facilitating goods, but they do use textbooks references and spreadsheets.
product-service bundling
is when a firm builds service activities into its product offerings to create additional value for the customer. example for IBM the computers are a small part of their business the majority comes from services.
doing something at the lowest possible cost
doing the things that will create the most value for the customer
he attractiveness of a product relative to its cost
2 ratios that measures efficiency of the labor employed by the firm
Net income per employee
Revenue (sales) per employee
receivable turnover ratio (annual credit sales / average account receivable)
this ratio measures the number of times receivables that are collected, on average, during the fiscal year. i.e the efficiency in collecting its sales on credit
Receivable Turnover Ratio… continued
a high ratio implies either that the company operates on a cash basis or that its extension of credit and collection methods are efficient. it also shows a short lapse of time between sales and collection. i,e, the lower the number the longer receivables are being held and the higher the risk of them not being collected
Inventory turnover ratio (COGS / Average Inventory)
this ratio measures the company’s efficiency in turning its inventory into sales. its purpose is to measure the liquidity of the inventory. its compared to industry averages. low equals inefficient
asset turnover ratio (revenue (sales) / total assets)
this ratio measures a firm’s efficiency at using its assets in generating sales revenue, the higher the number the better. it also indicates pricing strategy; companies with low profit margins tend to have high asset turnover and vice versa.
the ability to meet current resource needs without compromising the ability of future generations to meet their needs
triple bottom line
a business strategy that includes social economic and environmental criteria
mass customization
producing products exactly to a particular customer’s requirements
business analytics
the use of current business data to solve business problems using mathematical analysis
bench marking
when one company studies the processes of another company to identify best practices

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