Chapter 2: Operations and Supply Chain Strategies

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1

Mission Statement

A statement that explains why an organization exists. It describes what is important to the organization, called its core values, and identifies the organization’s domain.

2

Business Strategy

A mechanism by which a businesses coordinates its decisions regarding structural and infrastructural elements to support its mission.

Identifies a firm’s targeted customers, how the firm will compete, and sets time frames and performance objectives for the business

3

Functional Strategy

A plan of action that translates a business strategy into functional (e.g., supply chain, marketing, human resources, finance, etc.) responses supporting the business strategy.

4

Core Competency

An organizational strength or ability developed over a long period of time, that customers value and competitors find difficult or impossible to copy. Objective of strategy is to develop core competencies.

5

Operations and supply chain strategy

A functional strategy that indicates how structural and infrastructural elements with the operations and supply chain areas will be acquired and developed to support the overall business strategy.

6

Structural Decision Categories

Capacity

Facilities

Technology

7

Capacity

Amount, Type, Timing of capacity changes

8

Facilities

Services/Manufacturing, Warehouses, Distribution hubs

Size, location, degree of specialization

9

Technology

Services/Manufacturing processes, Material handling equipment, Transportation equipment, Information systems

10

Infrastructural Decision Categories

Organization

Sourcing/Purchasing

Planning and Control

Business Processes and Quality Management

Product and service development

11

Organization

Structure, Control/reward systems, Workforce decisions

12

Sourcing/Purchasing

Sourcing strategies, Supplier selection, Supplier performance measurement

13

Planning and Control

Forecasting, Tactical planning, Inventory management, Production planning and control

14

Business Processes and Quality Management

Six Sigma, Continuous improvement, Statistical quality control

15

Product and service development

The developmental process, Organizational and supplier roles

16

Four Major Performance Dimensions

  • Quality
  • Time
  • Flexibility
  • Cost
17

Performance Quality

Addresses the basic operating characteristics of a product or service.

18

Conformance Quality

Addresses whether a product was made or a service performed to specifications.

19

Reliability Quality

Addresses whether a product will work for a long time without failing or requiring maintenance.

20

Delivery Speed

Delivery Speed - How quickly the operations or supply chain function can fulfill a need once it has been identified.

21

Delivery Reliability

The ability to deliver products or services when promised.

22

Mix Flexibility

The ability to produce a wide range of products or services.

23

Changeover Flexibility

The ability to produce a new product with minimal delay.

24

Volume Flexibility

The ability to efficiently produce whatever volume the customer needs.

25

Cost

  • Labor costs
  • Material costs
  • Engineering costs
  • Quality-related costs
  • Overhead allocation
26

Customer Value Index

  • A measure that uses a customer’s evaluation and importance scores for the various performance dimensions to calculate a score that indicates the overall value of an item or service to a customer.
27

Operations and Supply Chain Strategies

Identify product dimensions highly valued by customer, select competitive dimensions, and design supply chain to excel on these dimensions.

28

Order Winners

A performance dimension highly valued by customers that differentiates a company’s products and services from its competitors. It tends to drive market share within a targeted market segment.

29

Order Qualifiers

A performance dimension on which customers expect a minimum level of performance.