Operations and Supply chain

• Operations performance


  The power to compete by providing the ability to respond to customers and by developing the capabilities that will keep it ahead of its competitors in the future
• Operations management


  • Concerned with doing things better – better quality, better service, better responsiveness, better reliability, better flexibility, better cost and better use of capital invested in facilities
  • Concerned with 'process', with how things are done
  • There is a relationship between process and outcome

  
• Triple bottom line


  • People
  • Planet
  • Profit
• Sustainable business


  Creates an acceptable profit for its owners, but minimizes the damage to the environment and enhances the existence of the people with whom it has contact
• Ways operations can impact the social bottom-line performance


  • Customer safety from products and services
  • Employment impact of an operation's location
  • Employment implications of outsourcing
  • Repetitive or alienating work
  • Staff safety and workplace stress
  • Non-exploitation of developing country suppliers
• Ways operations can impact the environmental bottom-line performance

  • Recyclability of materials, energy consumption, waste material generation
  • Reducing transport-related energy
  • Noise pollution, fume and emission pollution
  • Obsolescence and wastage
  • Environmental impact of process failures
  • Recovery to minimize the impact of failure
• Ways operations can impact the financial bottom-line performance

  • Cost of producing products and services
  • Revenue from the effects of quality, speed, dependability and flexibility
  • Effectiveness of investment in operations resources
  • Risk and resilience of supply
  • Building capabilities for the future
• Strategic aspects of operations performance

  • Cost
  • Revenue
  • Net promoter score
  • Required level of investment
  • Risk of operational failure
  • Ability to build the capabilities on which future innovation is based

  
• Operations performance objectives


  • Quality
  • Speed
  • Dependability
  • Flexibility
  • Cost
• Quality


  The most visible part of what an operation does, customer perception of high-quality products and services means customer satisfaction and therefore the likelihood that the customer will return
• Speed


  The elapsed time between customers requesting products or services and their receiving them, the faster they can have the product or service, the more likely they are to buy it, or the more they will pay for it, or the greater the benefit they receive
• Dependability


  Doing things in time for customers to receive products or services exactly when they are needed, or at least when they were promised, saves time and money, and gives stability
• Types of flexibility


  • Product/service flexibility
  • Mix flexibility
  • Volume flexibility
  • Delivery flexibility
• Mass customization


  Producing customized products and services in a high-volume, mass-production manner which keeps costs down, achieved by flexibility in design and flexible technology
• Agility


  A combination of all the five performance objectives, particularly flexibility and speed, the ability to respond to the uncertainty in the market
• Productivity


  The ratio of what is produced by an operation (its output) to what is required to produce it (its input)
• Types of productivity measures

  • Single-factor productivity
  • Total factor productivity
• Improving other operations objectives

  Improves cost performance
• Polar representation


  A way of representing the relative importance of performance objectives for a product or service, with a line describing the relative importance of each performance objective
• Generic issues in performance measurement

  • What factors should be included as performance measures?
  • Which are the most important performance measures?
  • What detailed measures should be used?
• Composite performance measures


  Help to present a picture of the overall performance of a business, although they may include some influences outside those that operations performance improvement would normally address

  
• Balanced scorecard


  A commonly used approach to performance measurement that incorporates measures related to financial, internal process, customer, and improvement perspectives
• Key performance indicators (KPIs)

  Measures that reflect strategic objectives

  
• Performance objectives


  • Quality
  • Speed
  • Dependability
  • Flexibility
  • Cost
• Balanced scorecard (BSC)


  Approach to performance measurement that incorporates measures related to: financial perspective, internal process perspective, customer perspective, learning and growth perspective
• Trade-offs


  The extent to which improvements in one performance objective can be achieved by sacrificing performance in others
• Efficient frontier


  Concept that distinguishes between repositioning performance on the efficient frontier and improving performance by overcoming trade-offs
• Strategy


  Setting broad objectives that direct an enterprise towards its overall goal, planning the path to achieve these goals, stressing long-term rather than short-term objectives, dealing with the total picture rather than stressing individual activities, being detached from and above the confusion and distractions of day-to-day activities

  
• Operations strategy


  The pattern of decisions and actions that shape the long-term vision, objectives and capabilities of the operation and its contribution to the overall strategy of the business

  
• Content of operations strategy

  The specific decisions and actions that set the operations role, objectives and activities

  
• Process of operations strategy

  The method that is used to make the specific 'content' decisions
• Hayes and Wheelwright four-stage model

  • Stage 1: Internal Neutrality
  • Stage 2: External neutrality
  • Stage 3: Internally supportive
  • Stage 4: Externally supportive
• Corporate strategy


  Positions the corporation in its global, economic, political, and social environment, including decisions about what types of business the group wants to be in and where to operate
• Business strategy


  Sets out an individual mission and objective, guiding the business in relation to its customers, markets, and competitors, and the strategy of the corporate group it is part of
• Functional strategy


  Considers what part each function should play in contributing to the strategic objectives of the business
• Business model


  The plan that is implemented by a company to generate revenue and make a profit (or fulfil its social objectives if a not-for-profit enterprise), including the various parts and organizational functions of the business, as well as the revenues it generates and the expenses it incurs
• Operating model


  A high-level design of the organization that defines the structure and style which enables it to meet its business objectives

  
• Order winners


  Things that directly and significantly contribute to winning business, that customers regard as key reasons for buying the product or service
• Order qualifiers

  Factors where the operation's performance has to be above a particular level just to be considered by the customer
• Less important factors


  Factors that neither order winning nor qualifying, that do not influence customers in any significant way