UGBA 10 Operations and Sustainability
responsive CSR
1. acting as a good corporate citizen 2. mitigating existing or anticipated adverse effects from biz activities
mass customization affects the design of supply chain in 3 ways
1. assemble-to-order strategy 2. modular design (final service/product can be assembled from a set of standardized modules economically and fast in response to a customer order) 3. postponement
customer-contact matrix
1. degree of customer contact 2. customization 3. process characteristics. x-axis: customer contact and competitive priorities. y-axis: process divergence and flow (movement of customers, materials, info). 1. front office 2. hybrid office 3. back office
5 strategic and tactical decisions
1. developing new capabilities 2. maintaining existing capabilities 3. designing new processes 4. developing supply chains 5. achieving cost/quality targets
3 process steps to sustainable brand innovation
1. embed sustainability (deliver solutions w/practical, social/envmtal, tribal benefits wired to ideas) 2. inspire co-creativity (integrate ideas, exp, aspirations of consumers and expert practitioners to drive idea generation) 3. unleash shared value (create ideas designed to deliver value, from scalable brand strategies to breakthrough campaigns and movements)
3 ways to achieve strategic fit
1. focus by process segments (PWPs) 2. focused service operations (specialty retailers have opened stores with smaller, more accessible spaces to implement the concept of focus) 3. focused factories (splitting large plants into several specialized smaller plants)
3 steps to layout design
1. gather info (space req, available space, closeness factors) 2. develop a block plan (allocate space and indicate placement of each operation) 3. design a detailed layout (detailed rep with actual sizes and shapes of each center)
3 categories of social issues that can help with prioritization
1. generic social issues 2. value chain social impacts 3. social dimensions of competitive context
5 factors pushing markets and competitors towards improving operations
1. global competition 2. shorter product life cycle 3. new, low-cost distr channels 4. more powerful well-informed customers 5. internet and e-business strategies
5 developments that triggered the need for sound global strategies
1. improved transportation and communication tech 2. loosened regulations on financial institutions 3. increased demand for imported services and goods 4. reduced import quotas and other international trade barriers 5. comparative cost advantages
2 factors driving increased productivity
1. increased cross-border investment 2. increased info tech investment
2 adv of globalization
1. increased market penetration 2. comparative cost adv
4 process choices
1. job process 2. batch process 3. line process 4. continuous-flow process
2 tools to analyze interdep of a company and society
1. looking inside out (value chain = all activities a company engages in while doing biz and can be used as framework to identify pos and neg social impact of activities) 2. looking outside in (diamond framework shows how conditions at company's locations affect its ability to compete)
3 competitive adv of mass customization
1. managing customer relationships 2. eliminating finished goods inventory 3. increasing perceived value of services/products
4 prevailing justifications for CSR
1. moral obligation 2. sustainability 3. license to operate 4. reputation
4 key motivators drive interest in sustainability
1. personal protection 2. cost 3. status 4. altruism
4 process decisions that apply to both service and manufacturing processes
1. process structure (including layout) 2. customer involvement 3. resource flexibility 4. capital intensity
3 outsourcing potential pitfalls
1. pulling the plug too quickly (try hard to improve your internal process first) 2. tech transfer (company transferring tech may be doing it at cost of losing its intellectual property) 3. process integration (time, distance, and communication may make it hard to integrate internal/external processes)
6 disadv of globalization
1. risks of giving up proprietary tech 2. nationalization 3. political instability 4. training employees in foreign countries w/potentially lower skills involves time/expense 5. customer response time can be longer 6. vulnerability to supply chain disruptions
5 principles of sustainable brand innovation
1. start with what's sacred (start with values) 2. design holistically (reinforces health, sustainability, success over time. everything considered) 3. create collaboratively (platforms, makers and users of products/services generate idea/solutions) 4. be playful (fosters creativity, flexibility, learning, big ideas) 5. disrupt and delight (consumers aren't motivated by sustainability; they want better products and a better world. link b/w disruptive innovation and consumer delight)
product-process matrix
1. volume 2. customization 3. process characteristics. x-axis: volume and product customization. y-axis: process divergence and flow
multifactor productivity 400 units for $10 each, $400 for labor, $1k for materials, $300 for overhead
400 units x $10 each all over 400 + 1k + 300 = 2.35 dollars
labor productivity 3 employees, 600 output, 8 hours/day, 5 days/week worked
600 output over 3 employees x 40 hours/employee = 5 output/hour
supply chain decisions can affect these multiple financial measures
TR, costs of goods sold, operating expenses, cash flow, working capital, returns on assets (ROA)
forward vertical integration
acquiring more channels of distr, such as distr centers and retail stores, or even further by acquiring its biz customers
service/product proliferation
adding more services or products often adds complexity to the supply chain. a thoughtful balance is needed b/w cost of operating the supply chain and the need to market new services and products
supply chain management
alignment of a firm's processes with those of its suppliers and customers to match the flow of materials, services, and info w/customer demand
process
any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers. tend to be clustered into operations.
sustainable biz
any org that participates in envmtally and socially friendly activities to ensure that all processes, products, and manufacturing activities adequately address current envmtal, social concerns while maintaining profit
5 principles for conveying your message
authenticity, fit, consistency, simplicity, fun & positive
strategic CSR
beyond responsive CSR to mount a smaller # of initiatives whose social and biz benefits are large and distinctive
corporate social responsibility (CSR)
can be a source of opportunity, innovation, and competitive adv rather than cost, constraint, or charitable deed. often counterproductive b/c 1. pit biz against society when 2 are interdep 2. pressure firms to think of CSR in generic ways rather than customize initiatives to align w/firm's strategy
supply chain manufacturing
control inventory by managing the flow of materials
key takeaway
corporate strategy, operations strategy and sustainability should always be seen as part of the same ONE overarching mission
competitive capabilities
cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver
dynamic sales volumes
costly aspect of supply chains is meeting the needs of volatile sales volumes. involves excessive inventories, underutilized personnel, more expensive delivery options. can be triggered internally by end-of-month sales promotion
order winner
criterion that customers use to differentiate the services or products of one firm from those of another. ex. price, quality, time, flexibility, after-sale support, tech support, reputation
competitive priorities
critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future. cost, quality, time, flexibility
process structure
determines the process type relative to the kinds of resources needed
plants within plants (PWPs)
different operations within a facility w/individualized competitive priorities, processes, and workforces under the same roof. boundaries may be established by physically separating subunits or by revising organizational relationships
supply chain services
driven by the need to provide support for the essential elements of the various services it delivers
economies of scope
economies that reflect the ability to produce multiple products more cheaply in combo than separately
internal customers
employees in the firm
internal suppliers
employees or processes that supply important info and materials
external customers
end users or intermediaries
process divergence
extent to which the process is customized
5 major supply chain drivers
facilities (more facilities generally means more responsive, while fewer creates higher efficiency), inventory (high - resp, low - eff), transportation (faster - resp, slower - eff), info (key to success), sourcing (in-house unless can increase profits and better results than you)
competitive adv
favorable position an org seeks in order to be more profitable than its competitors. involves communicating a greater perceived value to a target market than its competitors can provide
backward vertical integration
firm's movement upstream toward the sources of raw materials, parts, and services thru acquisitions. reduces risk of supply. ex. grocery chain having its own plants to produce house brands of ice cream
process reengineering
fundamental rethinking and radical redesign of processes to improve performance dramatically w/respect to cost, quality, service, and speed. consider for your core processes. reinvention, not improvement. ex. critical processes, strong leadership, cross-functional teams, info tech, clean-slate philosophy, process analysis
operations
groups of resources performing all or part of one or more processes
front office
high interaction with customers, highly customized service, flexible flows with individualized processes
multifactor productivity
index of output provided by more than one of the input resources
what managers should consider when designing and operating processes?
integrity, respect for individ, customer satisfaction along with more conventional performance measures such as productivity, quality, cost, and profit.
centralized placement
keep all inventory of a product at a single location. inventory pooling adv: reduction in inventory and safety stock b/c of merging of uncertain and variable demands. disadv: added cost of shipping smaller, uneconomical quantities to customers over long distances
classifications at the process level are less/more ambiguous than those at the firm level?
less b/c firm can provide a service and manufacture a product at firm level
forward placement
locating stock closer to customers at a warehouse, distr center, wholesaler, retailer. adv: faster delivery times and reduced transportation costs. disadv: pooling effect of inventories is reduced b/c safety stocks must increase to address uncertain demands at mult. locations
back office
low interaction with customers, standardized services, line flows, routine work performed the same with all customers
make-to-order
make products to customer specifications in low volumes. ex. specialized medical equip
supply chain sustainability
management of envmtal, social, and economic impacts, and the encouragement of good governance practices throughout the life cycles of goods and services.
flexible/programmable automation
manufacturing process that can be changed easily to handle various products. useful for both low-customization and high-customization processes
fixed automation and 2 drawbacks
manufacturing process that produces one type of part/product in a fixed sequence of simple operations, esp. for line/continuous-flow processes, when demand volumes are high, product designs are stable, product life cycles are long. 1. large initial investment cost 2. relative inflexibility
made-to-stock
mass production. holding items in stock for immediate delivery, thereby minimizing customer delivery times. ex. garden tools, soft drinks
operations strategy
means by which operations implement corporate strategy and helps to build a customer-driven firm
order qualifier
min level required from a set of criteria for a firm to do biz in a particular market segment; fulfilling the order qualifier will not ensure competitive success
capital intensity
mix of equip and human skills in a process
need for new generation of smarter, safer, greener solutions
new biz models, re-invent whole systems, create more happiness and a better quality of life
inventory turnover
obtained by dividing annual sales at cost by the avg aggregate inventory value maintained during the year. measures how quickly the merchandise of a retailer is sold and replaced over a given time: higher turnover generally implies a lower holding cost for the retailer
external suppliers
other businesses or individs who provide the resources, services, products, and materials for the firm's short and long term needs
supply chain processes
outsourcing, warehousing, sourcing, customer service, logistics, cross-docking
process strategy
pattern of decisions made in managing processes so that they will achieve their competitive priorities. need strategic fit. invid processes are building blocks that create firm's entire supply chain. management must pay attention to the interfaces b/w processes
outsourcing
paying suppliers and distributors to perform processes and provide services and materials
inventory measures
physical count of units, volume, weight that are reported by avg aggregate inventory value, weeks of supply, inventory turnover
assemble-to-order
postponement. mass customization. for producing a wide variety of products from relatively few subassemblies and components after the customer orders are received. ex. computer systems
customer relationship process
process that identifies, attracts, and builds relationships with external customers and facilitates the placement of orders
new service/product development process
process to design and develop new services/products from customer/market inputs
order fulfillment process
process to produce and deliver services/products to external customer
supplier relationship process
process to select the suppliers of services, materials, and info and facilitate the flow of these into the firm
nested process
process w/in a process
supply chain
processes can be linked together to form this
corporate strategy (4)
provides an overall direction that serves as the framework for carrying out all the org's functions. 1. envmt scanning 2. developing core competencies 3. developing core processes 4. developing global strategies
customer involvement
reflects the ways in which customers participate in the process
customer service levels
sales and marketing groups may trigger organizational pressures to deliver superior service levels to customers that affect decisions around points of supply and supplier selection
core process (4)
set of activities that delivers value to external customers. 1. supplier relation 2. new service/product development 3. order fulfillment process 4. customer relationship
hybrid office
some interaction with customers, standard services with some options, flexible flows with some dominant paths, with some exceptions as to how work performed
offshoring
supply chain strategy that involves moving processes to another country. more encompassing than outsourcing b/c it also includes vertical integration. things to consider: comparative labor costs, rework and product returns, logistic costs, tariffs/taxes, market effects, labor laws and unions, internet
operations management
systematic design, direction, and control of processes that transform inputs into services and products for internal and external customers. wealth for business and the improvement in the living standards
process improvement
systematic study of activities and flows of each process to improve it. ongoing review of all aspects of a firm's operations to understand the process and dig out the details. ex. streamlining tasks, eliminating processes, cutting expensive materials, improving the envmt, making jobs safer
weeks of supply
takes demand into account, and is obtained by dividing the avg aggregate inventory value by sales/week at cost. denominator reps only finished goods sold at cost
resource flexibility
the ease with which employees and equip handle a variety of products, output levels, duties, and functions
avg aggregate inventory value
total avg value of all items held in inventory by a firm, where the avg value for any given item X is = to the # of units of item X typically on hand multiplied by the value of each unit of item X
productivity
value of outputs (services and products) produced divided by the values of input resources (wages, costs of equip, etc.). output over input
support processes (4)
vital resources and inputs to the core processes. ex. budgeting, recruiting, scheduling from diff functional areas. 1. accounting 2. human resources 3. info systems 4. engineering
make-or-buy decisions
when deciding whether to outsource a process or do it in-house
efficient supply chains
work best in envmts where demand is highly predictable. new intros are infrequent, variety is low, contribution margins are low, suppliers selected with emphasis on low prices, consistent quality, on-time delivery. build-to-stock
responsive supply chains
work when demand is highly uncertain. new intros are frequent, variety is high, contribution margins are high, suppliers selected on basis of ability to provide quick deliveries, customize services/components, adjust volumes quickly to match demand cycles, offer variety, provide top quality. assemble-to-order, make-to-order, design-to-order