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Chapter 13

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University of Toronto Mississauga
Dave Swanston

Chapter 13 - operations and supply management. • operations management goes beyond the ability to control or improve, and focuses on the design and development of such processes as well. There is an importance of developing a business system within the organization and ensuring that this system is aligned properly to the business strategy, vision and mission • for a business to be successful, it is fundamental to develop and maintain efficient and effective operational processes that deliver the marketplace the products/services that it offers. • 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 an in support of the organization's strategic goals. • interconnectivity of the business system includes: o strategy: what we want to accomplish o business structure provides the controls and the formal communication and responsibility framework that guides the organization to its strategy. o when operations are understood to be the actual processes employed, which, when combined with the utilization of the organization's capital assets, enable strategic outcomes to be actualized. • successful businesses look to establish within their business systems competitive advantages that enable them to deliver their products and/or services to their targeted market segments in a manner superior to that of the competition. • operations management is all about the effective design, development and management of the processes, procedures and practices embedded within an organization's business system. • There is a definitive interconnectivity between decisions made within process management, supply chain management, and product/service management. • process management is the design and development of the work flow and connectivity of the operational requirements (processes) needed to ensure that an organization's products and services are efficiently produced and delivered to the marketplace. The look at the specific tasks that need to accomplished by the organization and orders or sequences them to result in the most effective and efficient work flow. This is similar to the creation of blueprints. • Supply chain management refers to the management of the flow of materials, products, information and costs. Includes interactions lie buying materials from suppliers and coordination of inventory practices (like the Just-In-Time, JIT). They also deal with the distribution/manufacturing of the product to its partners, that sell the product to the customers. • supply chain management is all about relationship management because of the interdependencies among suppliers, manufacturers and distributors. • Product/service management refers to the variety of activities that commence with the design and development of potential new products. It includes supporting product modifications, enhancements, and other changes made. Consumer wants and preferences must be identified. Their decisions also focus on assessing the cost base of a product. • evolution of technology resulted in increasingly sophisticated ways in the way we produce and deliver products • VALUE CHAIN ANALYSIS: business concept proposed by Michael Porter. Has the principle that managers should make decisions that will contribute positively to the overall value of the products/services being produced or offered. Managers need to maximize value. Maximization of values can be in the form of cost efficiencies, high quality standards, customization of products, high performance standards. THE KEY IS TO add value that can't be easily duplicated by the competition. LIKE the iPad. • There are two areas in the value chain analysis: primary and supporting activities. Primary activities relate to the specific activities through which the development and transformation of a product/service occurs as it is produced and delivered to the marketplace. • Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, customer service. o Inbound logistics: the management of supplier relationships relating to those parts/components/finished products, that are brought into the organization in order to manufacture finished products and delivering it to the marketplace. Like the iPad...it would relate to the scheduling, shipping, and temporary warehousing of all of its parts and components. o Operations: manufacturing and/or product change processes set up to ensure that the final product the organization is manufacturing is ready for the marketplace. Like assembling the parts of the iPad together into a finished product. Operations decisions would include process application, labour, and production management activities. o Outbound logistics: distribution activities required to get the right product to the right place at the right time. Getting the finished product to the customers. Their decisions focus on warehouse needs, distribution, and inventory management activities, as well as on transportation and routing activities. o Marketing and sales: the activities that create profile and awareness for the products/services/brands and the benefits. It is the role of marketing to effectively communicate the benefits of the products and services being offered in a manner that creates preference for, and commitment to, the organization's products and services on the part of its customer base. o Customer service: refers to the support provided to customers before, during and following the purchase process. • operation management teams need to look at the types of processes to initiate in order to smoothly manage the inflow of materials and the transformation of such materials into finished goods, followed by the outflow of such products and services from the organization. • strong supplier and distributor relationships are invaluable to the organization with regard to understanding market trends and shifts, maintaining a 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. • SUPPORT ACTIVITIES of the value chain analysis: this is the areas within the organization that are directly associated with the actual processes the organization uses to produce products and/or deliver services. These act ivies are integral parts of the support structure the primary activities rely on to successfully execute strategy. o like the IT department o research and development and engineering departments o human resources management o finance, accounting, legal and environmental safety. • the operations cycle is the alignment of the operational tasks within an organization. • process standardization is the design and utilization of common platforms and common task sequencing to product/develop a variety of products or services. • process simplification is the design and utilization of a minimum number of tasks when developing products and/or services. • operations managers need to understand the strategic intent of the organization and be able to translate the information into action that will drive the execution of the organization's strategy. • project management relates directly to new product development and the l
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