Operations Strategy and Supply Chain Management

Operations Resource Perspective

• Firms should focus on strategically developing their resources to achieve success.
• Resource capabilities are crucial for strategic success, comparable to market positioning.
• The focus should be on understanding and exploiting the potential of intangible assets, like transforming inputs and unlocking capital.
• Firms that accumulate better or more appropriate resources gain a sustainable competitive advantage.

Strategy Formulation

• Operations strategy is formulated in four steps:
  • Formulation
  • Implementation
  • Monitoring
  • Control
• A comprehensive, coherent, and corresponding strategy that identifies critical issues is crucial for success.
• Implementation operationalizes the strategy to achieve vision and objectives.
• Ongoing performance monitoring ensures necessary adjustments.
• Control evaluates the strategy's rollout results.

Supply Chain Management Definition

• Supply chain management (SCM) involves managing the chain of suppliers and customers.
• It emphasizes managing various supply operations across functional units.
• SCM focuses on the flow of raw materials, information, and customers, and distribution of finished goods.
• The supply chain is divided into internal and external components, with external being upstream (towards the organization) and downstream (from the organization to the end customer).
• The internal supply chain comprises the material flow within the organization.
• SCM involves coordinating, managing, and improving collaboration among supply chain partners.
• Standard product or service delivery requires developing processes across the entire supply chain.

Activities of Supply Chain Management

• Supply chain activities include:
  • Purchasing
  • Physical distribution management
  • Logistics
  • Materials management
  • Customer relationship management (CRM)
• SCM managers make crucial decisions, including:
  • Location decisions
  • Forecasting
  • Supplier selection
  • Distribution network choices

Supply Chain Management Benefits

• Benefits of transactional and partnership supply chain relationships are detailed in Table 12.1 on page 415 of the prescribed textbook.
• The aim is to build strong relationships with customers.
• Customer relationship management (CRM) helps understand customer needs and develop solutions while maximizing profitability.

Supply Chain Management Challenges

• Supply chain management faces numerous challenges, including:
  • Trends
  • Fashions
  • Varying demand
  • Material scarcity
• Supply chain managers must understand the macro environment and prepare for contingencies.
• The competitive environment, including direct competitors and substitute products, poses significant disruptions and threats.
• Supply chain managers often face products in various stages of the product lifecycle.

The Bullwhip Effect

• The bullwhip effect describes how a small disturbance at the downstream end of a supply chain creates increasingly larger disruptions and volatility upstream.
• SCM managers must be aware of potential disturbances and mitigate their impact.
• E-business in SCM enhances:
  • Real-time information sharing
  • Channel alignment
  • Operational efficiency
• The focus is on accuracy, delivery speed, and efficiency.

Supply Chain Network Design

• Understanding the entire supply network provides a holistic view of customer satisfaction.
• It helps identify network links and address long-term issues.
• Figure 5.2 on page 146 of the prescribed textbook depicts a network for a plastic hardware company and a shopping mall.
• Network design involves decisions on:
  • Configuration
  • Location of parts
  • Capacity requirements
• Network configuration involves the overall pattern, encompassing decisions on shape, arrangement, and ownership.
• Recent trends include:
  • Minimizing suppliers to reduce complexity.
  • Disintermediation, where organizations bypass supply chain partners to reach end customers directly.
• The co-opetition approach recognizes four types of players:
  • Suppliers
  • Customers
  • Competition
  • Complementors

Outsourcing

• Outsourcing can increase capacity without capital investment.