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