Operations Management & Logistics
HOORCOLLEGE 1
Introduction & Sustainable Strategy
Operations refer to the conversion of inputs (resources) into outputs (products).
Operations involve the workflow ordering of activities —> how to design it that it is efficient —>
functional-based workflow.
Supply chain refers to the processes that move information and material to and from the firm, one
level up and down: logistics.
Operations are considered primary production process activities within an organization —> you
can see this in the value chain:
Operations and Supply Chain Management is defined as the design, operation, and
improvement of the systems that create and deliver the firm’s primary products and services
• A functional field of business
• Clear lines of management responsibilities
• Concerned with the management of the entire production and delivery system
Success of producing at low costs while meeting (mass) customer demand depends on:
• Clever integration of a great operations related strategy
• Processes to produce and deliver products and services
• Analytics to support the decisions needed to manage the firm
,Each of these issues is dealt with in a section of the book OSCM
Basic principles guide the design of transformation processes. The basic principles are:
• How different types of processes are organized
• How to determine the capacity of a process
• How long it should take to make an unit
• How the quality of a process is monitored
• How information is used to make decisions
Designing and improving operations often requires change in workflow ordering and
organizational structure:
Operations and Supply Chain Processes are interlinked
,Producing and delivering goods is different compared with services (services are intangible and
products are tangible).
Various OSC processes reflect different job positions and career perspectives
- Plant manager
- Hospital administrator
- Branch manager
- Department store manager
- Call center manager
- Supply chain manager
- Purchasing manager
- Quality control manager
- Business process improvement analyst
- Lean improvement manager
- Project manager
- Production control analyst
- Facilities manager
- Chief Operating Officer (COO)
Various OSCM concepts have become popular through time
Current issues in operations and supply chain management
• Coordinating the relationships between mutually supportive but separate organizations
• Optimizing global supplier, production, and distribution networks
• Managing customer touch points
• Raising senior management awareness of OSCM as a significant competitive weapon
, • Sustainability and the triple bottom line (Life Cycle Analysis)
• Digitalization and BIG data (Industry 4.0)
Evaluating operations and supply chain process on efficiency, effectiveness and value
• Efficiency = doing something at the lowest possible cost
• Effectiveness = doing the right things to create the most value for the company
• Value = quality divided by the price
• Quality = the attractiveness of the product, considering its features and durability
From a marketing point of view, value is the benefits perceived by the customer minus the costs
of acquisition and use of a product.
Benchmarking based on management efficiency ratios (the higher, the better)
• Receivable turnover = annual credit sales / average account receivable
- Firms prefer cash over credits
• Inventory turnover = cost of goods sold / average inventory value
- Firms prefer low inventory costs
• Asset turnover = revenue (or sales) / total assets
- Firms prefer low asset value compared with revenues
Not every ratio is usable with every type of firm.
Summary chapter 1
• Various processes are associated with OSCM and used to implement the strategy of the firm
• Analytics are used to support the ongoing decisions needed to manage the firm
• OSCM hands on people specialize in managing the production and delivery of goods and
services
• Firms face increasing pressure on mass customization and quality in combination with efficiency
and speed that is reflected in OSCM
• Currently, supply chain control, servitization, sustainability and Industry 4.0 are of paramount
importance
• Efficiency ratio’s help benchmarking firm practices to meet goals
Chapter 2: Sustainable Operations and Supply Strategy
Sustainable strategy is aimed at pleasing not only shareholders but also other stakeholders
• The firm’s strategy describes how it will create and sustain value for its current shareholders
- Shareholders = individuals or companies that legally own one or more shares of stock in
the company
- Stakeholders = individuals or organizations who are directly or indirectly influenced by
the actions of the firm
• Adding a sustainability requirement means meeting value goals without compromising the ability
of future generations to meet their own needs
• It might even be the case that pleasing other stakeholders might in the end also please
shareholders
• Triple bottom line = evaluating the firm against social, economic and environmental criteria
Different ways to produce and innovate in a sustainable way:
- Cleaner products (with less energy)
- More efficient production process
- Alternative technologies
- New business models, new services, system innovation
HOORCOLLEGE 1
Introduction & Sustainable Strategy
Operations refer to the conversion of inputs (resources) into outputs (products).
Operations involve the workflow ordering of activities —> how to design it that it is efficient —>
functional-based workflow.
Supply chain refers to the processes that move information and material to and from the firm, one
level up and down: logistics.
Operations are considered primary production process activities within an organization —> you
can see this in the value chain:
Operations and Supply Chain Management is defined as the design, operation, and
improvement of the systems that create and deliver the firm’s primary products and services
• A functional field of business
• Clear lines of management responsibilities
• Concerned with the management of the entire production and delivery system
Success of producing at low costs while meeting (mass) customer demand depends on:
• Clever integration of a great operations related strategy
• Processes to produce and deliver products and services
• Analytics to support the decisions needed to manage the firm
,Each of these issues is dealt with in a section of the book OSCM
Basic principles guide the design of transformation processes. The basic principles are:
• How different types of processes are organized
• How to determine the capacity of a process
• How long it should take to make an unit
• How the quality of a process is monitored
• How information is used to make decisions
Designing and improving operations often requires change in workflow ordering and
organizational structure:
Operations and Supply Chain Processes are interlinked
,Producing and delivering goods is different compared with services (services are intangible and
products are tangible).
Various OSC processes reflect different job positions and career perspectives
- Plant manager
- Hospital administrator
- Branch manager
- Department store manager
- Call center manager
- Supply chain manager
- Purchasing manager
- Quality control manager
- Business process improvement analyst
- Lean improvement manager
- Project manager
- Production control analyst
- Facilities manager
- Chief Operating Officer (COO)
Various OSCM concepts have become popular through time
Current issues in operations and supply chain management
• Coordinating the relationships between mutually supportive but separate organizations
• Optimizing global supplier, production, and distribution networks
• Managing customer touch points
• Raising senior management awareness of OSCM as a significant competitive weapon
, • Sustainability and the triple bottom line (Life Cycle Analysis)
• Digitalization and BIG data (Industry 4.0)
Evaluating operations and supply chain process on efficiency, effectiveness and value
• Efficiency = doing something at the lowest possible cost
• Effectiveness = doing the right things to create the most value for the company
• Value = quality divided by the price
• Quality = the attractiveness of the product, considering its features and durability
From a marketing point of view, value is the benefits perceived by the customer minus the costs
of acquisition and use of a product.
Benchmarking based on management efficiency ratios (the higher, the better)
• Receivable turnover = annual credit sales / average account receivable
- Firms prefer cash over credits
• Inventory turnover = cost of goods sold / average inventory value
- Firms prefer low inventory costs
• Asset turnover = revenue (or sales) / total assets
- Firms prefer low asset value compared with revenues
Not every ratio is usable with every type of firm.
Summary chapter 1
• Various processes are associated with OSCM and used to implement the strategy of the firm
• Analytics are used to support the ongoing decisions needed to manage the firm
• OSCM hands on people specialize in managing the production and delivery of goods and
services
• Firms face increasing pressure on mass customization and quality in combination with efficiency
and speed that is reflected in OSCM
• Currently, supply chain control, servitization, sustainability and Industry 4.0 are of paramount
importance
• Efficiency ratio’s help benchmarking firm practices to meet goals
Chapter 2: Sustainable Operations and Supply Strategy
Sustainable strategy is aimed at pleasing not only shareholders but also other stakeholders
• The firm’s strategy describes how it will create and sustain value for its current shareholders
- Shareholders = individuals or companies that legally own one or more shares of stock in
the company
- Stakeholders = individuals or organizations who are directly or indirectly influenced by
the actions of the firm
• Adding a sustainability requirement means meeting value goals without compromising the ability
of future generations to meet their own needs
• It might even be the case that pleasing other stakeholders might in the end also please
shareholders
• Triple bottom line = evaluating the firm against social, economic and environmental criteria
Different ways to produce and innovate in a sustainable way:
- Cleaner products (with less energy)
- More efficient production process
- Alternative technologies
- New business models, new services, system innovation
