UGBA 10 Sustainability and Ops

Factors of supply chain decision

Inventory Placement, Mass Customization, and Outsourcing

average aggregate inventory value

(cost of product A)(#of product A)+(cost of product B)(#of product B)

Job Process

-Low-volume products, made to customer order -Customized process, with flexible and unique sequence of tasks ex. one house, one consulting project

Supplier relationship Process

A process to select the suppliers of services, materials, and information and facilitate the flow of these into the firm

Strategic Fit

A state in which an organization's strategy is consistent with its external opportunities and circumstances and its internal structure, resources, and capabilities.

Symbiotic relationships between businesses and environment

1- better forecast of demand (produce only what you need and avoid waste and unnecessary resource consumption) 2- better transportation systems (consume less gasoline, which saves money and lowers emission of pollutants to air.)

potential conflicts around environmental and social issues

1- lack of metrics 2- lack of information and transparency 3- opposing conflict metrics

5 stages of CSR

1. Defensive (to deny responsibility) 2. Compliance (to do the minimum required) 3. Managerial (to begin integrating CSR into management practices) 4. Strategic (to embed CSR within the strategy planning process) 5. Civil (to promote CSR practices industry-wide)

four components that are essential to defining strategic CSR

1. Firms incorporate a CSR perspective within their strategic planning process; 2. Any actions they take are directly related to core operations; 3. They incorporate a stakeholder perspective 4. They shift from a short term perspective to managing the firm's resources and relations with key stakeholders over the medium- to long term.

Principles for conveying a message

1.Authenticity 2.Fit 3.Consistency 4.Simplicity 5.Fun & Positive

Volkswagen in Operations

2015- largest car manufacturer, but very environmentally bad, so in 2015 they had a green movement for UNETHICAL reasons which led to a significant loss in market value

Outsourcing

A decision by a corporation to turn over much of the responsibility for production to independent suppliers.

Customer relationship process

A process that identifies attracts and builds relationships with external customers and facilitates the placement of orders (ex. Ebay customers buy and sell, starbucks command line)

New service/Product Development

A process to design and develop new services or products from customer or market inputs

Order fulfillment Process

A process to produce and deliver services or products to the external customer

Process

Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers. → Transforms Inputs into Outputs

Centralized placement pros and cons

Advantage: Inventory pooling (reduced total inventory cost) Disadvantage: shipping many small and economical packages increases costs

Inventory Turnover

Annual sales at cost/Average aggregate inventory value--measures how quickly the merchandise of a retailer is sold and replaced over a given time: a higher turnover generally implies a lower holding cost for the retailer.

Sourcing

Assign supply chain functions to the right party only if it increases profits and you realize that your supplier can achieve better results than you. Otherwise, keep functions in house.

assemble to order

Combine a number of preassembled modules to meet a customer's specifications (ex. nike) postponement and mass customization

continuous flow process

Continuous flow, high Volume (ex. oil)

Amazon's 4 competitive priorities

Delivery Speed, Variety, Customization, and Low Cost Operations

Process Structure

Determines the process type relative to the kinds of resources needed, and their characteristics. It includes Layout decisions.

Apple in Operations

Doubles production each year, but also has a large carbon footprint, mostly from manufacturing and product use

Economies of Scope

Economies that reflect the ability to produce multiple products more cheaply in combination than separately.

transportation

Faster modes of transportation increases a chain's responsiveness, while using slower modes generally increases efficiency.

What drives supply chains?

Global competition

Facilities

Having more facilities generally makes a chain more responsive, while having fewer, central facilities creates higher efficiency.

Inventory

Holding higher levels of inventory increases the responsiveness of a supply chain, while keeping inventory low increases the chain efficiency.

Corporate Sustainability

It is a business approach that creates long-term consumer and employee value by creating a "green" strategy aimed towards the natural environment and taking into consideration every dimension of how a business operates in the social, cultural, and economic environment.

Layout

Layout can affect how shoppers behave (ex. Starbucks line)

Forward Placement pros and cons

Locate inventory closer to customer Advantage: faster delivery time, less costly shipments Disadvantage: larger inventory needed

Manufacturing vs. Service

Manufacturing: goods-oriented Service: act-oriented

3 functional areas of organization

Marketing: creates demand Operations: supplies good and services Finance: manages resources and capital

Offshoring

Moving operations from the country where a company is headquartered to a country where pay rates are lower but the necessary skills are available.

Vertical Integration

Practice where a single entity controls the entire process of a product, from the raw materials to distribution

4 Decisions in Process Strategy

Process structure, resource flexibility, customer involvement, and capital intensity

supply chain efficiency curve

Shows the trade-off between costs and performance for a given supply chain

Inventory turnover rate examples (high to low)

Supermarkets, convenience stores, home electronics and supplies, electronics, department store, clothing store

Information

The key to successful supply chains. It can improve the supply chain performance on both dimensions. This investment, however, must be made based on the strategic posit ion supported by the other drivers.

Operations Management

The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers.

Inside-Out Perspective

Understand the effect of business operations to society and the environment.

Outside-In perpective

Understand the effect of external social and environmental issues to the business.

bullwhip effect

a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as you move further up the supply chain. Customers demands are stable, and supply manufacturer/retailer makes more than the simple demand

Core processes

a set of activities that delivers value to external customers.

Make-to-order

a system that produces low volumes of customized product

make to stock

a system that produces mass production of standardized product

Best way to fulfill customer orders and expectations

align corporate strategy and execution

Small Batch/Large Batch Process

anything you produce in batches (i.e., a fixed lot size). Don't worry about distinguishing between Small or Large batches...more volume, and more repetitive than job process

Mass customization is based on an underlying strategy called

assemble-to-order (combines postponement and modular customization)

Weeks of supply

average aggregate inventory value/sales per week at cost

2 types of inventory placements

centralized placement, and forward placement

Customer Contact Matrix

degree of customer contact, customization, process characteristics

Corporate Strategy

determines the markets the firm will serve and the response the firm will make to changes in market conditions or the competitive environment.

5 major supply chain drivers

facilities, inventory, transportation, information, sourcing

Product cycles

getting shorter- ex. game consoles make new ones sooner so life cycle of one becomes shorter since there are new products

Netle shared value

good for enviro = good for company

Driving forces of CSR

growing affluence, geological sustainability, globalization, media, brands

Line Process

highly repetitive, few products...ex. cars (except Tesla)

Most supply chains are

hybrid of responsive and efficient

sustainable business

is any organization that participates in environmentally and socially friendly activities to ensure that all processes, products, and manufacturing activities adequately address current environmental, social, concerns while maintaining a profit.

Supply Chain management

is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements.

centralized placement

keeping all the inventory of a product at a single location such as a firm's manufacturing plant or a warehouse and shipping directly to each of its customers (Zappos)

forward placement

locating stock closer to customers at a warehouse, Distribution center, wholesaler, or retailer. This implies more store facilities than centralized placement (GameStop)

Return on Assets

measures how profitable by assets: earnings/assets

forward integration

occurs when a firm owns or controls the customers or distribution channels for its main products

backward integration

occurs when a firm owns or controls the inputs it uses

WalMart

provides quality product at competitive prices, short flow times and low inventory, Cross docking (warehouse where nothing can stay more than 24 hrs), Electric Data Interchange, Logistics (fast transportation)

Support Processes

provides vital resources and inputs to the Core Processes and is essential to the management of the business ex. Accounting, HR, Engineering, and Information Systems that provides vital resources and inputs to the core processes

Autonomation

replacing human workers with machines and technology

Types of Stakeholders

shareholders but also employees, customers, society and interested institutions

Greenwash

the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service

responsive supply chains

utilize strategies aimed at being responsive and flexible because demand is unpredictable- assemble-to-order

efficient supply chains

when demand is highly predictable: deliver products in the most efficient way make-to stock