Ch.9 Value Chains Flashcards
What is an organization?
1.Organizations are social entities—they are made up of people, and they involve human interaction.
2.Organizations are created to achieve goals (whether profit or non-profit); they are goal-directed.
3.Organizations interact with the environment—organization obtains inputs (e.g. sources, labour, materials) from the environment and transforms then into outputs (e.g. goods, services).
Open Systems
Viewing organization as an open system focuses our attention on its relation to and interaction with its environment.
Open systems interact with and rely on the environment around them (.e.g. almost everything)
Business as an open system…
Can be represented as a “value chain” (a.k.a. The supply chain)…
Value chain: The process by which a valuable product or service is created
Organizations Closed Systems
Closed systems are fully self-contained and self-sufficient (e.g. the earth (?))
Organization used to be viewed as closed systems. This approach focuses on the internal aspect of the organization and sees it as independent and self-sufficient entity.
CLOSED SYSTEM
Closed systems are entities that are viewed as being fully self-sufficient and thus requiring no interaction with the environment.
OPEN SYSTEM
Open systems are entities that are embedded in and dependent on exchanges with the environment within which they operate. Such systems are more than the sum of its parts.
Organization +
Organizations are social entities created to achieve goals. Thus they requires efficient management of human resources (among other factors)
But organizations are also open systems that interact and adopt to the environment. Thus they require an appropriate organization.
Supply Chain Management
Input (land, labour, capital) -> Transformation Process (Production) -> Output (Goods and & Services)
How is this relevant to supply chain management?
Business as an open system can be represented as a “value chain” (also known as the supply chain)
Supply chain management involves managing the flow of goods both within and outside the firm from point of origin to point of consumption (raw materials to finished goods). It integrates procurement (purchasing); logistics (shipping); operations, and information technology
Pioneers of Productivity
Frederick Taylor
(1) compartmentalizing and standardizing work practices
(2) supervising the workers
(3) motivating the workers.
Major goal – Efficiency.
Efficiency is based on the ratio of inputs to outputs (maximum output with minimum input)
Compartmentalizing
compartmentalization involved breaking down the job into its most basic components (also known as specializing), and making the worker perform the basic tasks. This creates clear rules for performance (no room for individual discretion), ensures consistency and efficiency.
Supervising the workers:
For Taylor, managers should be specialized in supervising the workers who perform a common function. He separated the mental task of management from physical task of the laborer.
Motivating the workers:
Taylors believed that money is the main (or only) motivator for the worker. A piece-rate system, whereby compensation is tightly connected to performance, is the desirable approach to motivation.
scientific management
the analysis of work often involves the use of time and motion studies (often with movie camera and stopwatch) to study the elements of the performance of a task with a view to making it more efficient
The industrial process developed by Henry Ford to produce the Model T automobile (facilitated by technological revolution)
Three major principles:
Standardization: Machine made vs. handmade; automation
Assembly lines: Each worker performs a single task
Higher wages: So employees can afford the product
Henry Fayol
Fayol believed in (1) the division of work into smaller units, (2) unity of command (rigid subordination of workers to a single boss); (3) esprit de corps (team spirit for organizational cohesiveness) and (4) subordination of individual interest to the organization.
