Sebastian Perrier

Efficiency: concern with input/outputs; do things right (e.g. unit cost, frequency of output, etc)

Effectiveness: do the right things! (e.g. operate in attractive markets, provide what customers want, etc)

In order to evaluate the risk of a certain operation we have to analyze it from 4 different perspectives: financial, technological, organizational and market factors (clients, policies, etc). Then, for each perspective list all the possible risk and then rate them according to:

• Probability
• Impact
• Detection Difficulty
• Contingency Plan

Understanding the company’s supply chain involves outlining all of its operations and its suppliers and customers. It is important to understand where you are located in the value chain, then see where is the value (positioning); what drive value to customers?

Note that value migrates with time. The speed of this change depends on each industry; in general value migrates to those areas where changes happen faster (innovation). Other things to consider is the design of the supply chain, vertical integration, outsourcing, make or buy decisions, etc. Positioning within the supply chain include making decisions about: capital requirement, suppliers available in the market, cost factors, future flexibility and risk. Furthermore, it involves determining how much capacity each stage should have.

Managing Supply Chains is about managing relationships, not only choosing the right suppliers, but also ensuring they are given the right information to maintain smooth supply.

There are two approaches:

• Transactional Relationships: arms-length, market-based
• Partnership Relationships: close, longer-term

Operations Strategy is the pattern of decisions that shape the capabilities, objectives and contribution of the organization’s operations to satisfying the market requirements. Operations strategies should reflect  top-down corporate goals while also the bottom-up experience of operational reality.

Operations performance objectives:

1. Quality: error free outputs according to their specification.
2. Speed: time to transform input into the desired outputs.
3. Dependability: its ability to inform what’s going on.
4. Flexibility: its ability to vary or adapt its activity to modify the output.
5. Cost: monetary expenses needed to accomplish its goal.

Operations and process management it the activity of managing the recourses and processes that produce products and services. All organizations produce some mix of products and services.

Operations functions is the part of the organization that produce those products and services. A process is an arrangement of resources that transform inputs into outputs that satisfy internal and external customer needs. The difference between operations and processes is their sale and complexity.

Aggregation Levels:  Supply Chainc ->  Operations  ->  Processes  -> Activities

It is imprtant to have a process perspective within an organization in order to understand the organization’s effectiveness, efficiency and value drivers. Understand what are its inputs (both transforming and transformed inputs), what does the operation actually does, what are its outputs and how those outputs contribute to the final goal.

Processes can be classified according to 4V’s:

1. Volume of output: high volume/repetition/frequency of output (try to systemize)
2. Variety of activities: engages a wide variety of activities (more complex, difficult to systemize)
3. Variation of demand: is demand seasonal, predictable (study capacity cushions)
4. Visibility to customers: how much of the processes are experienced directly by customers