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

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

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 = MS 1 x MS 2 x MS 3 = market size x market share x margin on sales where margin on sales = price – cost

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

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

Term 2: Capabilities of the Supply Chain Capabilities are the 2 rd 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.

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

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

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?

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?