Lecture Operations and supply chain management: The Core (3/e) – Chapter 2: Strategy and sustainability

After reading the material in this chapter, you should be able to: Understand the parameters of a sustainable operations and supply chain strategy, understand the competitive dimensions of operations and supply chain strategy, identify order winners and order qualifiers,...

Strategy and Sustainability

Chapter 02

Learning Objectives

1 Understand the parameters of a sustainable

operations and supply chain strategy.

2 Understand the competitive dimensions of

operations and supply chain strategy.

3 Identify order winners and order qualifiers.

4 See how strategy is implemented through

operations and supply chain activities.

5 Introduce the concept of risk assessment and

mitigation.

6 Show how productivity is measured and how it

relates to operations and supply chain

processes.

Sustainable Strategy

 The firm’s strategy describes how it will create

and sustain value for its current shareholders

own one or more shares of stock in the company

directly or indirectly influenced by the actions of the firm

 Adding a sustainability requirement means

meeting value goals without compromising the

ability of future generations to meet their own

needs

 Triple bottom line – evaluating the firm against

social, economic, and environmental criteria

Triple Bottom Line

Operations and Supply Chain

Strategy

resources of a firm – must be integrated with corporate strategy

 Corporate strategy provides overall direction and coordinates operational goals with those of the

larger organization

activities in a manner that best implements

strategic priorities at a minimum cost

Formulating an Operations and

Supply Chain Strategy

Activity 1 –

performed at

least yearly

Activity 2 – updated as often

as four times per year

Competitive Dimensions

of performance are critical and concentrate

resources on those characteristics

production may not be capable of quickly

introducing new products

competitor by adding features, services, or

technology to existing activities

 Often a risky strategy

Order Winners and Order

Qualifiers

necessary for a firm’s products to be

considered for purchase by customers

 Features customers will not forego

to differentiate the products and services of

one firm from those of other firms

 Features that customers use to determine which product to ultimately purchase

Productivity Measurement

Productivity Measurement -

Example

Excel: Productivity Measurement

Assessing Risk

 All strategies have an inherent level of risk

planners to evaluate the relative riskiness of their

strategies

 Supply chain risk is the likelihood of a disruption that would impact the ability of a company to

continuously supply products or services

the day-to-day management of the supply chain

disasters

Risk Management Framework and Risk Mitigation Strategies

1. Identify the sources of potential disruptions

2. Assess the potential impact of the risk

Natural disaster Contingency planning (alternate

sites, etc.), insurance Country risks Hedge currency, produce/source

locally Supplier failures Multiple suppliers

Logistics failure Safety stock, detailed tracking, and

alternate suppliers