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Chapter 13

Chapter 13- Operations and Supply Chain Management.docx

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Dave Swanston

th November 29 , 2013 Chapter 13- Operations and Supply Chain Management OM: Fitting into the Big Picture  Business System Components   Successful organizations understand the interconnectivity of strategy, business structure, and operations, and seek to ensure that all three are integrated into the decision making process and that structure and operations are aligned and in support of the organization’s strategic intent  When visualizing interconnectivity of three business system components:  Strategy is what we want to accomplish  Business structure should provide controls and formal communication and responsibility framework that will guide organization as it seeks to realize its strategy  Operations are understood to be actual processes employed, which, when combined with utilization of organization’s capital assets, enable strategic outcomes to be actualized  Successful businesses establish within their business systems competitive advantages that enable them to deliver their g/s to targeted market segments in manner superior to competitors Responsibilities of Operations Managers  Operations- A function or system that transforms input into outputs of greater value (focus on productivity, competitiveness, and quality)  Operations Management- The effective design, development, and management of the processes, procedures, and practices embedded within an organization’s business system for the purpose of achieving its strategic intent  Major themes include:  Manufacturing vs. service operations  Productivity- efficiency, resources allocation  Quality- effectiveness, measurement  Competitiveness- strategy, flexibility, international  Cost- controls, investment decisions  Relationships- employees, customers, suppliers  Managers are responsible for making decisions under conditions of uncertainty about the allocation of scarce resources towards achieving the organization’s strategic objectives  Operations Management: Areas of Responsibilities (overlap as there is interconnectivity between decisions made within each area):  Process Management November 29 , 2013 o Process Management- The design and development of the work flow and connectivity of the transformation requirements (processes) needed to ensure that organization’s g/s are effectively produced and delivered to marketplace o Key outcome: how transformation process for g/s will be designed o Examples: Assembly line, fully automated technology manufacturing process  Supply Chain Management o Supply Chain Management- The management of the interdependencies among suppliers, manufacturers, and distributors; seeks to develop terms/conditions that will enable all parties to efficiently/effectively meet obligations to one another due to their business relationships o Examples: Purchase of materials from suppliers, coordination of just-in-time (JIT) inventory practices, etc  Product/Service Management o Product/Service Management- Variety of activities that commence with the design and development of potential new products in R&D and extend to the post purchase support of g/s now in the hands of customers o Examples: Supporting product modifications, enhancements, and other changes made throughout product’s life cycle, decisions associated with quality and cost The Organization’s Value Chain  Value chain analysis used to maintain some order to gain fully appreciated of complexity of interconnectivity across organization when dealing with operations  At the centre of the value chain model is the underlying principle that managers should seek to make decision across the activity areas in a manger that contributes positively to the overall value of the g/s being produced/offered (value=benefit>cost)  Value Maximization- Maximizing the benefits (price/quality comparison) that individual or set of customers will realize as a result of using g/s; Asks: “What is it that we must do to deliver maximum value to our customers?”  Two key business system activities: Value Chain Analysis: Primary Activities  Primary Activities- Specific activities through which development/transformation of g/s occurs as it is produced and delivered to marketplace and these areas include:  Inbound Logistics o Inbound Logistics- Management of supplier relationships relating to those parts/components/finished products that are brought into organization in order to produce finished products for delivery to marketplace o ipad example- Scheduling, shipping, and temporary warehousing of glass, metal, and electronic parts/components  Operations o Operations- Manufacturing and/or product change processes set up to ensure that the final product organization is manufacturing/handling is ready for market o ipad example- Manufacturing process used to combine various parts into ipad  Outbound Logistics o Outbound Logistics- Getting the finished product to customer via distribution channel that is accessible, convenient, and able to minimize stockouts and other sales impediment factors November 29 , 2013 o Ipad example- Decisions/activities relating to shipping ipad to Apple’s own stores, determining other retailers that will be authorized to sell the product and delivering product to them  Marketing and Sales o Marking and Sales- Those activities that create profile and awareness for organization’s g/s or brand(s) and the benefits derived from the acquisition and use of such g/s o Example- Apple Inc’s core strength is its brand strength and ability of its marketing/sales departments to leverage this strength and emotional tie that individuals have to the brand  Customer Service o Customer Service- Support provided to customers before, during, and following the purchase process o Key outcome: maintain and enhance the value of g/s purchased by customer o Examples- Technical support, warranty service work, repair support, etc  The development of strong supplier and distributor relationships is invaluable to organization with regard to understand market trends/shifts, maintain watchful eye on competitive innovation, and ensuring that cost control management practices are put into place throughout the supply chain in order to maintain competitive pricing strategies Value Chain Analysis: Support Activities  Support Activities- Activities within organization that are not directly associated with actual processes that the organization uses to produce g/s but that are an integral part of the support structure the primary activities rely on to successfully execute strategy  Successful execution of primary activities of organization is facilitated by support activities  Examples of support activities:  IT department collaborated with operations department on development of new technologies in support of value chain process  R&D + engineering department which focus on new product development, existing produce enhancement, and process design and development  HR department assists in recruitment, employee development and support services for employees  Finance, accounting, legal, and environmental safety The Operations Cycle  Operations Cycle- Alignment of the operational tasks within an organization by its management team in order to meet the strategic outcomes defined in organization’s business strategy: November 29 , 2013  Operations managers need to understand the strategic intent of organization and using this information, translate it into action plans that will drive the execution of organization’s strategy  Process Standardization- Design and utilization of common platforms and task sequencing to produce/develop variety of g/s  Process Simplification- Design and utilization of minimum number of tasks when developing g/s  Outline of alignment between strategy and operational execution:  Operations managers must determine how best to executive operating cycle taking 3 spheres into consideration: Process Management  Four core decision areas in terms of process management 1. Process design, layout, and execution (HOW HANDINLING OF MATERIALS IS PLAYED OUT)  Process Design, Layout, and Execution- Assessment and implementation of tasks necessary to get required work accomplished and how such tasks will be grouped and sequences to ensure that most efficient/effective proce
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