Lecture 1: Introduction

Question 1

Definition and strategy of OSM

Answer 1

OSM is the design, operation, and improvement of the system that creates and delivers the firm’s primary products and services.

OSM is the study and practice of better matching supply and demand (make thing better, faster cheaper -> reduce waste)

Operations and supply strategy is concerned with setting broad policies and plans for using the resources of a firm to best support its long-term competitive strategy

OSM is the management (design, operation, and improvement) of the transformation processes to create value for society

Question 2

What is a supplier and what are the 2 key strategies?

Answer 2

› Supplies raw materials, semi-finished products and finished products to downstream customers

› Two key strategies:
- Supplying demand at the lowest possible costs
- Responding quickly to changing requirements and
demand to minimise stockouts

Question 3

What does a manufacturer do and what is the three-stage process for supplier selection?

Answer 3

› Make-or-Buy decisions concerning components and semi-finished products
› Three-stage process for supplier selection:
- Vendor evaluation: finding potential vendors and determining a likelihood of their becoming good
suppliers
- Vendor development: assuming that a firm wants to proceed with supplier, how to integrate activities
into its own system?
- Negotiations: several strategies exist to determine price(s)

Question 4

What does a distributor do and what are the activities it does?

Answer 4

› Distribution of products from manufacturers to retailers and customers
› Activities are, for example:
- Temporary storage of products in warehouses to balance fluctuations in production and demand
- Transportation of products by, for example, trucks, trains, airplanes, ships or pipelines
› Distribution represents, on average, 25% of the total costs of product

Question 5

What is necessary to achieve a valuable supply chain and what does an effective supply chain mean?

Answer 5

› To obtain a valuable chain with satisfied customers, cooperation and integration of materials and information and trust throughout the supply chain might be necessary
› Effective supply chain management is the management of flows between and among supply chain stages to maximize total supply chain surplus

Supply Chain Surplus = Customer Value – Supply Chain Cost

Question 6

Explain the trend related to sustainability

Answer 6

Triple bottom line:
› Environment:
- Green supply chain, reduction of carbon emission
› Society:
- Social responsibility
› Economy:
- Maintain competitive advantages and profitability

Question 7

What is global SCM and what are the reasons for globalization?

Answer 7

› Flow of goods and services from suppliers to
customers (and vice versa) located all over the world
› Reasons for globalization:
 Attract and retain global talent
 Attract new markets
 Reduction of costs
 Providing better goods and services
 Learn to improve operations

Question 8

What are the three outsourcing opportunities?

Answer 8

› Third-party logistics (e.g., PostNL)

• Major candidate for outsourcing: (reverse) logistics activities
• Dutch Figures:
• Approximately 70% of the transport is outsourced

› Vendor managed inventories (e.g., Ford)
- The supplier is in the general case of Vendor Managed Inventory responsible for the management of the inventories of his product at each location within
the supply chain.

› Original equipment/design manufacturers (e.g., Foxconn)
- The vast majority of laptops on the market (about 94%) are manufactured by a small handful of Taiwan-based companies

Question 9

Name and explain three “even faster” activities

Answer 9

› Efficient consumer response:
- Extensive collaboration between firms to respond
faster/better/cheaper to the ever-changing demands and wishes of customers

› Cycle time reduction:
- The cycle time of a supply chain equals the total time
required to complete the total process from raw materials to the delivery of the finished product to the customers

› Just-in-time:
- Philosophy of continuous and forced problem solving that drives out waste (storage, inspection, waiting etc.)