Operations and Supply Chain Management (OSCM) is the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services. OCSM is concerned with the management of the entire system that produces a product or delivers a service. For every product/service a supply network as shown in exhibit 1.1 can be made.
Success in today’s global markets requires a business strategy that matches the preferences of customers with customers, networks, shareholders, employees and the environment (see also exhibit 1.2). Operations refers to manufacturing and service processes that are used to transform the resources employed by a firm into products desired by customers. A Supply Chain encompasses all activities associated with the flow and transformation of goods and services from the raw materials stage through to the end-user, as well as the associated information flows.
A process is made up of one or more activities that transform inputs into outputs. Operations and supply chain processes can be categorized as follows:
Planning: processes needed to operate an existing supply chain strategically;
Sourcing: selection of suppliers that will deliver the goods and services needed to create the firm’s product;
Making: where the product is produced or the service is provided;
Delivering: also logistics processes. Delivering products to warehouses and customers, contact with customers and information systems need to be managed;
Returning: involves the processes for receiving worn-out, defective, and excess products back from customers and support for customers who have problems with the delivered product.
The are five essential differences between goods and services:
Intangible process: a service cannot be weighed or measured. This means that services innovations cannot be patented and customers cannot try the service beforehand.
Requires the degree of interaction with the customer to be a service;
Heterogeneous: services vary day to day between the customer and the servers, whereas variation in producing goods can be almost zero;
Perishable and time dependent: services can’t be stored;
Specification of a services can be defined as a package of features that affect the five senses, existing of supporting facility like location and layout, facilitating goods like variety, consistency and quantity, explicit services like training of the personnel and availability to the service, and implicit service like attitude of the personnel, waiting time and privacy.
The Goods-Services Continuum is provided in exhibit 1.4. Learn this! Product-service bundling refers to when a firm builds service activities into its product offerings to create additional value for the customer.
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