Module 1: Business Operations and Corporate Sustainability Flashcards
In operations and sustainability, we strive to do right on what three dimensions?
Economic, environmental and social
Define operations management.
The systematic design, direction and control of processes that transform inputs into services and products for internal and external customers
Define process.
Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers
Processes tend to be clustered together into…
Operations, groups of resources performing all or part of one or more processes.
Processes can be linked together to…
Form a supply chain.
Define supply chain management.
The alignment of a firm’s processes with those of its suppliers and customers to match the flow of materials, services and information with customer demand
Operations integrates with what other two business functions?
Finance and Marketing
Processes involve turning inputs into…
Outputs.
Define input.
Can include a combination of human resources, capital, purchased materials and services, land, and energy
Define output.
Can be services that can take the form of information or tangible products
Who are external customers?
End users who receive the product or service (can also include intermediaries)
Who are internal customers?
Employees in the firm
Define a nested process.
The concept of a process within a process
What are the two key differences between manufacturing and service processes?
1) The nature of their output (manufacturing = physical products, service = high degree)
2) The degree of customer contact (manufacturing = low degree, service = high degree)
Define core process.
A set of activities that delivers value to external customers
List the four core processes.
- Supplier relation process
- New service/product development process
- Order fulfillment process
- Customer relationship process
Define support process.
Provides vital resources and inputs to the core processes; for example, this may include budgeting, recruiting and scheduling
Support processes can come from what departments?
Accounting, Engineering, Human Resources, Information Systems
There is a ___ ___ and strategies for specific functional areas of a company: ___, ___, and ___.
Corporate Strategy, Marketing, Operations Finance
What is the relationship between corporate strategy and the three specific functional areas?
Information flows constantly across the functional areas and they all information and get informed by the corporate strategy. At the end of the day, the corporate strategy represents the overall direction for the company.
What is the relationship between corporate strategy and operations?
The Operations Strategy specifies the means by which operations implements corporate strategy and helps to build a customer-driven firm.
Define corporate strategy.
Provides an overall direction that serves as the framework for carrying out all the organization’s functions
What four considerations must be taken into account when developing a corporate strategy?
- Environmental scanning
- Developing core competencies
- Developing core processes
- Developing global strategies
Define market analysis.
Involves segmenting a firm’s customers based on clear characteristics and then identifying the needs of each segment, including price, quality, customization, delivery system, and volume needs
Define competitive priorities.
The critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future
For example, a competitive priority may indicate that the quality of your products should be the highest one among all products in the market, so you will align to processes and design them with quality as a top priority.
Define competitive capabilities.
The cost, quality, time and flexibility dimensions that a process or supply chain actually possesses and is able to deliver.
Name the four competitive priorities.
Quality, Flexibility, Time and Cost
An effective operations strategy does what?
Closes the gap between a competitive priority and a firm’s capability to achieve that competitive priority.
Define order qualifier.
The minimum level required from a set of product/service attributes for a firm to do business in a particular market segment
Fulfilling the order qualifier will not ensure competitive success, but failure to meet an order qualifier spells disaster.
Define order winner.
A criterion that customers use to differentiate the services or products of one firm from those of another
Order winners can include price, quality, time, flexibility, after-sale support, technical support and reputation.
Define productivity.
The value of outputs (such as products and services) produced divided by the value of input resources (such as wages and the cost of equipment)
What is a manager’s challenge in increasing productivity?
To increase the value of the output relative to the cost of the input
Labor productivity refers to…
Output per person or per hour worked.
Machine productivity refers to…
Output per machine or per hour operated.
Name two benefits of globalization.
Favorable tax laws and presenve in new markets
What are five developments that have triggered the need for sound global strategies?
- Improved transportation and communication technologies
- Loosened regulations on financial institutions
- Increased demand for imported services and goods
- Reduced import quotas and other international trade barriers
- Comparative cost advantages
What is the important thing to know about China and India?
These countries have traditionally been the sources for low-cost, skilled labor, but the cost advantage is diminishing as these (and other developing) countries are becoming economically stronger
What are the five disadvantages of globalization?
- Risks of giving up proprietary technology
- Nationalization
- Political instability
- Training involves more time and expense
- Customer response times can be longer
Walmart is a world leader in…
Process efficiency.
Define process strategy.
The pattern of decisions made in operations management so that the processes will achieve their competitive priorities.
Tell me the three principles of process strategy.
- The key to successful process decisions is to make choices that have strategic fit.
- Individual processes are building blocks that create the firm’s entire supply chain.
- Management must pay attention to the interfaces between processes.
What are the four types of basic process decisions that you can make?
- Process Structure (including layout)
- Customer Involvement
- Resource Flexibility
- Capital Intensity
Define process structure.
Determines the process type relative to the kinds of resources needed.
Define customer involvement.
Reflects the ways in which customers participate in the process.
Define resource flexibility.
The ease with which employees and equipment handle a variety of products, output levels, duties and functions
Define capital intensity.
The mix of equipment and human skills in a process.
What three elements does the customer-contact matrix bring together?
- Degree of customer contact
- Customization
- Process Characteristics (divergence vs. line flow)
What are the three process structures in services?
- Front Office
- Hybrid Office
- Back Office
What three elements does the product-process matrix bring together?
- Volume
- Product Customization
- Process Characteristics (divergence vs. line flow)
What are the four process choices in manufacturing?
- Job Process
- Batch Process
- Line Process
- Continuous-flow process
What are the three approaches to inventory that should be coordinated with process choice?
Made-to-order, assemble-to-order, made-to-stock
Who uses the made-to-order strategy?
Used by manufacturers that make products to customer specifications in low volumes (ex. specialized medical equipment)
What is the assemble-to-order strategy used for?
For producing a wide variety of products from relatively few subassemblies and components after the customer orders are received (ex. specific computer, mobile phones or Nike shoes)
Define layout.
The physical arrangement of operations created from the various processes and puts them in tangible form
Tell me the important things to know about Starbucks.
Starbucks has designed its processes in such a way that it is able to offer thousands of different drinks at the same location. Some of these processes are based on a clear command line (from customer, to cashier, to barista) and a universal yet simple code including size, type of milk and type of drink and short form language understood by all.
List some potential advantages to customer involvement.
Better quality, faster delivery, greater flexibility, lower cost (e.g. self-serving stations), supply chain coordination, collaboration
List some potential disadvantages to customer involvement.
Disruption, inefficiencies, quality implications, higher cost of added training and skill level of service providers, revisions to facility layout, decentralized facilities
Automation works best when volume is…
High.
Tell me the important thing to know about McDonalds.
Economies of scope: They prepare multiple products in tandem with one another because it’s cheaper.
Define fixed automation.
A manufacturing process that produces one type of part of product in a fixed sequence of simple operations
Define flexible automation.
A manufacturing process that can be changed easily to handle various products
Define economies of scope.
Economies that reflect the ability to produce multiple products more cheaply in combination than separately
Define plants within plants.
PWPs are different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof. Boundaries for PWPs may be established by physically separating subunits or by revising organization relationships. PWPs can be divided by assembly parts and have independent team leaders.
Process improvement vs. process reengineering
Process improvement is the systematic study of the activities and flows of each process to improve it constantly, even if not radically. Process reengineering is the fundamental rethinking and radical redesign of processes to improve performance dramatically with respect to cost, quality, service, and speed.
What are the internal organizational pressures need to be considered when creating a supply chain?
Dynamic sales volumes, customer service and quality expectations, service/product proliferation, emerging markets
Why are dynamic sales volumes organizational pressures?
This typically involves excessive inventories, underutilized personnel, or more expensive delivery options.
Supply chain design for a service provider is driven by…
The need to provide support for the essential elements of the various services it delivers.
A fundamental purpose of supply chain design for manufacturers is…
To control inventory by managing the flow of materials.
What is the average aggregate inventory value?
The total average value of all items held in inventory by a firm, where the average value for any given item X is equal to the number of units of item X typically on hand multiplied by the value of each unit of item X
How do you obtain the weeks of supply?
Divide the average aggregate inventory value by sales per week at cost; the denominator represents only the finished goods sold.
How do you find inventory turnover?
Divide annual sales at cost by the average aggregate inventory value maintained during the year.
What are the two types of supply chain designs?
Efficient supply chains and responsive supply chains
Efficient supply chains work best in…
Environments were demand is highly predictable.
Name some characteristics of efficient supply chains.
- New product introductions are infrequent
- Variety is low
- Contribution margins are low
- Suppliers are selected with emphasis on low prices, consistent quality, and on-time delivery
Responsive supply chains work best when… (also give an example)
Demand is highly uncertain, such as fashion stores like Zara, who can design, produce ship and places new product at the store in less than 4 weeks.
Name some characteristics of responsive supply chains.
- New intros are frequent
- Variety is high
- Contribution margins are high
- Suppliers are selected on the basis of the ability to provide quick deliveries, customize services or components, adjust volumes quickly to match demand cycles, offer variety, and provide top quality.
Define centralized placement.
Keeping all inventory at a single location
An advantage to centralized placement is…
Inventory pooling.
Define inventory pooling.
A reduction in inventory and safety stock because of the merging of uncertain and variable demands.
What is one disadvantage to inventory pooling?
The added cost of shipping smaller, uneconomical quantities to customers over long distances
Define forward placement.
Locating stock closer to customers at a warehouse, distribution center, wholesaler or retailer
What are two advantages of forward placement?
Faster delivery times and reduced transportation costs
What is one disadvantage of forward placement?
The pooling effect of the inventories is reduced because safety stocks must increase to address uncertain demands at multiple locations
List potential conflicts around environmental and socially responsible sustainable supply chains.
- Lack of information and transparency across the whole supply chain
- Lack of metrics and reliable data on these metrics
- Opposing conflict among metrics (reducing electricity consumption at stores by lowering lighting intensity, but experiencing lower sales because clients don’t want to shop in the dark)
List the five important drivers to adopt CSR/Sustainability.
- Growing Affluence
- Ecological Sustainability
- Globalization
- Media
- Brand Image / Reputation
What is shared value?
The idea that both firms and society must benefit from CSR decisions
What are the two views to analyze the interdependence of a company and society?
- Looking Inside Out
2. Looking Outside In
What does the Looking Inside Out method mean?
The value depicts all activities a company engages in while doing business, and can be used as a framework to identify the positive and negative social impact of the activities
What does the Looking Outside In method mean?
The diamond framework shows how to understand the effect of external social and environmental issues to the business. This includes looking into eternal demand conditions and understanding the context for a firm’s strategy and that of its rivals, among other factors.
Tell me the five principles of sustainable brand innovation.
- Start with what’s sacred.
- Design holistically.
- Create collaboratively.
- Be playful.
- Disrupt and delight.
Tell me process steps to sustainable brand innovation.
- Embed sustainability.
- Inspire co-creativity.
- Unleashed shared value.
