Operations, Quality, & Supply Chain Management

5.1 Production—Discussion Guide

Performance Indicator: Explain the concept of production

Slide 1 THINK ABOUT IT

You may think of cars rolling down an assembly line when you think of the term “production.” But every time you take something and use it to create something else, that’s production!

• Let’s say you have a term paper due for your English class. You may use the following resources to contribute to the production of your final term paper:

  • Books to conduct your research

  • Brain to organize your findings

  • Paper and pen to create your outline

  • Computer to write the paper

• A working knowledge of production will serve you well, no matter what career you decide to pursue.

KEY CONCEPTS

Slide #2 Production is the creation of goods and services from economic resources.

• It combines human, natural, and capital resources to produce such varied products as clothing, meals, agricultural products, appliances, college graduates, farm equipment, and haircuts.

• All the resources used are called the factors of production.

• For production to occur, a business needs inputs, a conversion process, and outputs.

Slide #3 Inputs are the specific economic resources used in producing goods and services.

• The basic categories of inputs are human resources, natural resources, and capital or capital goods.

• The business must have workers, materials to create products, production equipment, and the money to pay for it all.

• The money a business uses to purchase resources can come from various sources, such as investors, bank loans, profits from previous sales, crowdfunding, etc.

  • This money is often referred to as financial capital.

• Inputs turn into products during the conversion process.

  • Conversion processes could include manufacturing, cooking, teaching, constructing, printing, or any activity that takes resources and turns them into something usable.

Discussion #1: Ask students to think about a local restaurant. What are some examples of inputs that the restaurant needs to operate?

Slide #4 Outputs are the goods and services produced as the result of combining inputs.

• Outputs may be tangible products such as computers or jewelry, or they may be intangible products such as education or health care.

• Outputs that are sold to producers who will use them to make other products are called industrial goods.

• Outputs are categorized as consumer goods if they are ultimately sold to consumers.

Slide #5 Production is vital to ensuring businesses stay in business.

• A key benefit of production is that it gives resources form utility—usefulness created by altering or changing the form, shape, or look of a good to make it more useful or attractive to the end user.

• Without production, businesses would not have anything to sell.

• When production is most efficient, businesses turn out the maximum number of products at the lowest cost, which enables the businesses to be competitive.

Discussion #2: Ask students to discuss examples of natural resources such as crude oil that develop form utility through the production process.

Slide #6 Most products used today are created by combining several different production activities.

• The specific activities used depend on the product.

• The production activities involved in making cereal, for instance, are much different from the production activities involved in educating and training attorneys.

• Production activities include the following:

  • Planning: determining how the products will be produced and in what amounts

  • Purchasing: buying the resources needed for production

  • Production process: choosing the way in which production will be carried out, which includes:

    • Intermittent production: periodically stops and restarts

    • Continuous production: turns out products without stopping

  • Routing: determining the sequence for the steps in the production process

  • Scheduling: establishing the timetable to be followed in production

  • Dispatching: issuing orders for production to start

  • Follow-up: making sure production was carried out according to plan and that products meet company standards

• The goals of production activities are to create the highest quality products using the most effective, efficient means of production possible.

Discussion #3: Ask students to discuss which of the production activities they think is the most important. Why?

5.2 Productivity—Discussion Guide

Performance Indicator: Explain the concept of productivity

Slide 1 THINK ABOUT IT

Have you ever heard that you should become a “productive member of society”? What do you think that saying really means?

• Being productive means keeping busy, working hard, and being successful at your job.

• Productive employees are often the first to get raises, earn bonuses, or be promoted.

• They make the business more productive (and profitable!), and productivity is essential for business success.

KEY CONCEPTS

Slide #2 Productivity is the amount and value of goods and services produced from set amounts of resources.

• Productivity is a measure of how efficiently inputs are changed into outputs in a set time period.

• We can use this formula: Productivity equals outputs divided by inputs.

• Productivity is essential for national prosperity.

  • Our productivity as a nation benefits society by meeting people’s needs and wants more effectively.

  • It provides us with more products at more competitive prices.

  • An increased national income and a higher standard of living are the direct result of high productivity.

Slide #3 Businesses can measure both the productivity of individual workers and of themselves.

• While productivity, in theory, simply equals outputs divided by inputs, no one method of measuring productivity can be used in all situations.

• It is possible to measure a worker’s productivity, a business’s productivity, an industry’s productivity, or even a country’s productivity, and you might use a different approach to measuring each one.

• For now, let’s focus on measuring the productivity of workers and businesses.

  • Worker productivity: The productivity of an individual worker can be measured by the amount of work the individual can produce, the amount of time needed to do the work, or the monetary value of the work.

  • Business productivity: The productivity of a business can be measured by dividing the number of products produced by the number of steps involved in producing them, dividing the dollar value of total sales by the number of salespeople who make the sales, or dividing the dollar value of total sales by the costs of making those sales.

• Businesses measure the productivity of their workers and of themselves for the following reasons:

  • To see if business objectives are being met

  • To determine the efficiency of actual production methods

  • To determine if productivity is going up or down

  • To show trends in business conditions

  • To plan for productivity improvement

  • To manage resources

Discussion #1: Ask students to discuss how they would measure the productivity of a doctor. What factors would they consider?

Slide #4 Any number of things can hinder a business’s productivity level.

• These might include:

  • Lack of standardization

  • Lack of tools/equipment

  • Too many different products

  • Poor product/service design

  • Lack of communication

  • Poor planning

  • Lack of worker knowledge and education

  • Personality conflicts

  • Poor or unsafe working conditions

  • Unclear goals

• If a business doesn’t consider productivity to be important, then that business is likely to lose time, customers, sales, and ultimately, money.

• A drop in productivity can have a negative effect on the economy.

  • When productivity decreases, inflation occurs.

  • Costs of labor go up, and prices rise.

  • If prices rise, then people buy less, sales fall, unemployment increases, and productivity drops further still.

  • This creates a vicious cycle; inflation is brought on by higher wages that cause higher prices that create a new demand for higher wages.

  • It is important to keep productivity stable or growing to prevent this cycle from happening.

Discussion #2: Ask students to think of other conditions that can diminish productivity.

Slide #5 There are a number of ways to improve productivity.

• Here are a few ways to raise productivity levels:

  • Specialization/Division of labor

  • Increased capital investment

  • Mass production

  • Research and development

  • Working within government regulations

  • Training and education

  • Communication

  • Participative decision-making

  • Motivation

  • Quality of work life

• Productivity is very important, and it affects everyone in slightly different ways.

• Businesses depend upon productivity for profits and survival of their organizations.

• Productivity enables workers to earn higher wages.

• Consumers enjoy a greater selection of goods and services at lower prices because of productivity.

• Society benefits from a higher standard of living as a result of productivity and, if productivity grows, then the general economy grows as well.

Discussion #3: Ask students to think of their own habits. When are they most productive? What changes can they make to improve productivity?

5.3 Quality-Control Measures—Discussion Guide

Performance Indicator: Identify quality-control measures

Slide 1 THINK ABOUT IT

Quality control might not seem to be a glamorous part of the business world. Perhaps you’d much rather focus on creating exciting new products or developing flashy marketing campaigns.

• Without appropriate quality-control measures in place, other business efforts are pointless.

• Quality control keeps a business running smoothly and ensures that its products are excellent and its processes are efficient.

KEY CONCEPTS

Slide #2 One major influence on modern quality management is “Big Q.”

• Decades ago, quality was a concept mainly applied to factory settings, where the focus was on making sure that manufacturing processes and end products conformed to specifications.

• Over time, popular thinking began to shift to the realization that quality should be a top concern for every type of business and should encompass every business process and activity.

• Today, we call the old way of thinking “Little Q” and the new way of thinking “Big Q.”

  • “Big Q” focuses on ingraining quality into every aspect of the organization to deliver what customers want and to exceed their expectations.

  • It is sometimes referred to as total quality management (TQM).

  • “Big Q” contributes to organizational success and has become an accepted way of thinking for most businesses and managers.

Slide #3 Another major influence on modern quality management is ISO 9000.

• ISO 9000 is a widely used set of quality-management standards that has been developed and published by the International Organization for Standardization.

  • It establishes criteria for quality management, focusing on basic principles such as:

    • Strong customer focus

    • Solid leadership from top management

    • Involvement at every level of the organization

    • Continual improvement

    • Process orientation

  • The ISO 9000 quality-management standards are flexible enough to be used in virtually any type of business or organization.

Discussion #1: Ask students to discuss the benefits of implementing standardized criteria for assessing quality management. Why are predetermined standards important?

Slide #4 There are several different quality-control methods that can help an organization build quality into all of its processes and activities.

• These quality-control methods include:

  • Process performance management

    • This is the supervision of business and/or manufacturing processes to ensure their quality and efficiency.

    • PPM enables an organization to catch issues before they become problems and to take suitable corrective actions to ensure that quality won’t suffer.

    • By constantly supervising its activities and processes, a business can make major progress toward instilling quality from top to bottom.

  • Taguchi method

    • This is also known as robust design and is an approach to quality management that focuses on product research, design, and development, rather than manufacturing.

    • Though following the Taguchi method may require more time, effort, and money upfront, it’s often much less expensive in the long run than it is to “clean up” issues relating to poor quality.

  • Concurrent (simultaneous) engineering

    • This refers to performing the various stages of product design and development at the same time, instead of one after another.

    • This method enhances product quality by allowing potential problems to be caught and adjusted earlier in the development process.

    • Concurrent engineering cuts down on time and reduces costs for companies, savings that can be passed on to customers.

  • Lean production

    • This method is often referred to simply as “lean” and originated with the car manufacturer Toyota.

    • The foundation of “lean” is maximizing customer value while minimizing waste.

      • Waste is anything that doesn’t create value for the customer. The “seven wastes” identified by this method are:

        • Overproduction

        • Defective products

        • Transportation

        • Waiting

        • Inventory

        • Motion

        • Over-processing

    • Any business or organization, no matter what type or size, can utilize the “lean” method if it strives to reduce the amount of effort, space, money, and time it uses to meet its customers’ needs.

Discussion #2: Ask students to think of a quality-control method that is in place at their school. How might it be improved?

Slide #5 Quality-control tools enable management to track, review, and compare quality.

• These quality-control tools include:

  • Cause-and-effect diagram

    • Also called a fishbone diagram or an Ishikawa diagram, this is a way to identify many potential causes of a problem and to sort them into useful categories.

    • It is especially useful in group settings or when there is little “hard” information.

  • Scatter diagram

    • Also called a scatter plot, this is a graphical representation of two variables that is used to determine cause and effect.

  • Check sheet

    • This is simply a form for collecting data on the spot.

    • Also called a tally sheet, it can be adapted for any number of uses, but it is often used to measure product defects by type, cause, location, etc.

  • Flow chart

    • This is used to analyze a sequence of events and uncover the relationships within it.

    • It can improve quality by helping root out problems within a business or manufacturing process.

  • Histogram

    • Also called a bar graph, this shows the distribution of data and is a very simple but useful tool in quality management

    • It is a visual representation for analyzing and comparing information.

  • Pareto chart

    • This is a type of bar graph that aids in quality management by helping determine which problems need the most immediate attention.

  • House of quality matrix

    • This is a tool used during the production-planning process that enhances quality by helping managers determine if a product meets customer needs.

    • It can also foster a helpful collaboration between departments.

    • It is most useful when planning product improvements or analyzing the product in comparison to the competition.

  • Statistical quality control (SQC)

    • This is a group of tools used to evaluate quality and identify problems. SQC has three main components:

      • Descriptive statistics

      • Acceptance sampling

      • Statistical process control

• Every business should strive to put appropriate quality-control measures in place to ensure customer satisfaction as well as continuing organizational success.

Discussion #3: Ask students to think of examples of situations when quality-control methods have failed. How could these issues be prevented in the future?

5.4 Quality Management—Discussion Guide

Performance Indicator: Explain the nature of quality management

Slide 1 THINK ABOUT IT

The products a business creates reflect how well that business manages quality.

• In the business world, quality often refers to excellence, value, conformance, and satisfaction.

• High-quality products don’t just appear out of nowhere—they’re the result of careful planning and execution.

• Quality management relates to the entire organization, not just the products it creates.

KEY CONCEPTS

Slide #2 Quality management is the ongoing process of planning, implementing, and integrating quality into every aspect of an organization.

• It results not only in the production of quality goods and services but also in an overall organization of quality.

• Let’s take a closer look at three main aspects of quality management:

  • Quality control is a process that measures products against predetermined standards after the products have already been created.

  • Quality assurance seeks to prevent defective products from being created in the first place. It focuses on planning ahead for quality and getting things right the first time around.

  • Quality improvement involves an organization’s willingness to change and adapt for the purpose of maintaining quality. A successful business is committed to constantly seeking new ways to improve quality throughout the entire company.

• Quality management is a mindset that should be integrated into the entire organization.

• Companies that implement quality-management plans enjoy many benefits, including:

  • A clear organizational vision

  • Motivated managers and employees

  • Increased consistency

  • Increased efficiency

  • Reduced costs

  • Increased sales/profitability

  • Most important of all—higher levels of customer satisfaction!

Discussion #1: Ask students to discuss the importance of quality improvement. Is there a specific industry in which quality improvement is particularly vital?

Slide #3 Customers seek specific characteristics in quality products.

• A quality product is one that satisfies customer needs and wants.

  • In goods, customers are looking for the following characteristics: reliability, serviceability, and durability.

  • In services, customers are looking for the following characteristics: reliability, tangibles, responsiveness, assurance, and empathy.

• Businesses enjoy many benefits from effective quality management, including increased efficiency and higher customer satisfaction.

• For maximum effectiveness, quality management must be present at every level of the company—the top level, the department level, and the individual level.

Discussion #2: Ask students to think of examples of quality goods and services they personally use. Which characteristics matter most to them?

Slide #4 Certain factors keep quality at the front of the modern business world.

• Over the past few decades, quality has become more and more important to both customers and businesses.

• A business simply cannot afford to let quality slip if it wants to succeed.

• Here are some of the factors keeping quality at the forefront of the modern business world:

  • Consumer pressure—Competition is fierce in today’s market. Customers demand quality, and if a company doesn’t provide it, they’ll take their business elsewhere.

  • Changing technology—We live in a world where technology changes in what seems like the blink of an eye. Today’s customers want the “latest and greatest” quality products.

  • Globalization—In the modern business world, companies have competition all over the globe, not just in their home countries.

  • Environmental issues—Customers and businesses alike are aware of the need to preserve and protect the environment. Many organizations consider this one of their social responsibilities, and customers expect them to do their part.

Slide #5 Challenges and costs are obstacles businesses can face along the way to effective quality management.

• Ideally, an organization can implement effective quality management at every level.

• However, there are many different challenges and obstacles a business can face on the way to this goal, including:

  • Lack of commitment from top managers

  • Vague quality goals and plans

  • Resistance to change

  • Improperly trained employees

  • Lack of integration throughout the entire organization

  • Lack of quality suppliers

  • Lack of sufficient time or resources

• When faced with one or more of these challenges, managers must quickly determine how to overcome them.

• Quality must be a priority, not an option.

• Before a company can set about reducing costs through quality management, its managers should understand more about quality-related costs in general.

• Let’s take a closer look at the four main costs associated with quality.

  • Prevention costs are the costs associated with making sure defective products don’t get made in the first place (quality assurance).

  • Appraisal costs are the costs associated with catching defective products as quickly as possible (quality control).

  • Internal failure costs are the costs associated with defective products before they make it to the customer.

  • External failure costs are the costs associated with defective products that have reached the customer.

• Quality management is not free: it costs money to plan and implement quality.

• However, successful businesses have learned that it costs far less in the long run to strive for high quality the first time around than it does to fix and live with the results of poor quality.

Discussion #3: Ask students to brainstorm additional challenges and obstacles a business can face on the road to effective quality management.

Slide #6 Companies use various methodologies when applying quality management.

• Quality management is a philosophy rather than a process, and there are many different methodologies (sets of principles and guidelines) that companies can use as blueprints when implementing quality management.

• A popular one is Six Sigma, named for the statistical term that indicates only 3.4 defects per million.

• Six Sigma follows a five-step approach called DMAIC:

1. Define the problem.

2. Measure current performance.

3. Analyze the root causes of deviation (defectiveness).

4. Improve the process through brainstorming, selecting, and implementing changes.

5. Control the process over the long term.

• Other quality management methodologies include:

  • PDCA (plan-do-check-adjust)

  • Quality Circle (a people-oriented approach)

  • Taguchi methods (statistical approaches)

  • TQM (Total Quality Management)

  • BPR (business process reengineering)

  • ITIL (an IT-oriented approach)

  • CMMI (a process-oriented approach)

• No matter what methodology a business chooses, quality management is a key ingredient to success.

5.5 Supply Chain—Discussion Guide

Performance Indicator: Explain the concept of supply chain

THINK ABOUT IT

Have you ever stopped to think about the piece of paper in front of you?

• From the mighty oak to the loggers, the processing plant, the warehouse, a wholesaler, a retailer, and then eventually to your computer lab, all components of the supply chain need to work together seamlessly to ensure you receive the quality paper you expect at the right time.

• Supply chain is the process of transforming materials into the finished products you use every day.

KEY CONCEPTS

Slide #1 Supply chain is the transformation of raw materials into finished products for consumers.

• Supply chain is the process of transforming materials from raw goods into finished products—and putting those products in the hands of consumers.

• This system includes a network of connected organizations, resources, and activities that are designed to create and move goods from start to end user.

• Supply chain streamlines the flow of products, information, time, and capital.

• Contemporary supply chains are global networks with complex, multi-step processes that rely on strong relationships between all the links in the chain.

Slide #2 Efficient supply chains are important for businesses.

• Businesses utilize supply chain to increase productivity and profitability.

• An effective supply chain reduces operating costs, minimizes expenses from logistics and transportation, maintains optimum inventory levels, and increases both customer and supplier satisfaction by ensuring all the right parts are in the right place at the right time.

• Supply chain incorporates quality-management systems to improve operations and mitigate risk factors.

• This produces faster turn-around times and higher product quality, and increases business revenue.

• It is important to consider supply chain simultaneously as:

  • Concept: cycle of creating a product from start to finish

  • Function: management of inventory by coordinating with suppliers to guarantee delivery

  • Industry: transference of products in an operational infrastructure

Discussion #1: Ask students to choose an everyday object and trace its path along the supply chain.

Slide #3 Supply chains contain four main members.

• Supply chains typically include four main members/participants:

  • Producers: collect the raw materials used to manufacture the product (e.g., cutting timber, farming animals, drilling for oil)

  • Distributors: also known as wholesalers; organizations that gather inventory from the producers to sell to other businesses in bulk

  • Retailers: stock smaller amounts, known as inventory, and sell to the general public using convenience, price, and product selection to create value and entice customers

  • Customers: purchase the product for consumption; sometimes, organizations may purchase a product to combine with their own product to sell to other customers

• Other supply chain members can include vendors, warehouses, transportation companies, and distribution centers.

• These participants collaborate to create and distribute a specific product to the customer efficiently and effectively.

Slide #4 Supply chain activities transform raw materials into consumable goods for end users.

• Supply chain activities consist of the various actions that transform raw materials into consumable goods and get those products to the end users.

• Key supply chain activities include:

  • Product development: researching, designing, and generating a product

  • Marketing: promoting and advertising a product to potential customers

  • Operations: planning and executing the flow of a product from start to finish

  • Distribution: packaging, storing, and transporting a product from one location to another

  • Finance: assessing and optimizing cash flow among suppliers

  • Customer service: satisfying needs, fulfilling orders correctly, and monitoring feedback

• Other supply chain activities include documentation, storage of products, tracking inventory, and managing supply and demand.

• The success of the supply chain relies on everyone in the network working together to manage and optimize its functioning by performing each activity as efficiently as possible; this includes identifying issues and enacting solutions to streamline the process.

Discussion #2: Ask students to discuss the impact of transparency along the supply chain. How does knowing the origin and conditions in which it was created (quality, ethics, safety, environmental impact) effect their likelihood to support certain products? What factors do they consider when purchasing products?

Slide #5 Supply chains manage the flow of various elements.

• Supply chains require managing the flow of products, capital, information, demand, and time.

  • Unsurprisingly, products need to flow effectively from the supplier to the consumer; goods flow forward, or downstream.

  • However, other flows are just as important:

    • The capital, or financial, flow involves revenue from the consumer, as well as ensuring suppliers are paid for goods and services provided.

    • Information, including inventory levels, delivery scheduling, and product data, is crucial to effectively communicate and coordinate.

    • Customers are at the center of the demand flow, providing valuable insights on rapid turnaround times and excellent customer service.

    • Time, like the flow of information, should be carefully monitored and adjusted to optimize performance.

• Supply chain managers communicate with each link in the chain to ensure these flows are uninterrupted, issues are addressed promptly, and all members are satisfied.

Discussion #3: Ask students to discuss the potential issues and long-term consequences associated with an inefficient supply chain.

5.6 The Impact of Supply Chain on Business Performance—Discussion Guide

Performance Indicator: Explain the impact of supply chain on business performance

Slide 1 THINK ABOUT IT

Successful supply chains improve and expedite the journey a product takes in the transformation from raw material to a finished product in the customer’s hands.

• When communication is open and free flowing among all links in the chain, businesses enjoy lower costs, higher profits, improved efficiency, and greater quality control.

• At the same time, customers experience minimized delays and lower prices, resulting in increased customer satisfaction.

• Integrated, effective supply chains lend businesses an edge over the competition by enhancing the customer experience, boosting profitability, and streamlining operations.

KEY CONCEPTS

Slide #2 Efficient supply chains have a positive impact on customers.

• They guarantee a better-quality customer experience thanks to minimized delays, faster delivery times, and lower prices, resulting in increased customer satisfaction and greater customer loyalty.

• Getting things done right the first time results in fewer product returns.

  • This means less hassle, time, effort, and money spent returning a product on the customer’s end.

  • However, if a customer does need to return an incorrect product, an efficient supply chain can decrease complaint resolution time by utilizing exceptional customer service.

  • An efficient supply chain ensures the customer receives the correct products in his/her order within the promised time frame.

• Effective supply chains create increased customer satisfaction and greater customer loyalty.

  • When a customer receives the entirety of their order with speed and accuracy, s/he is more likely to recommend a business.

  • With the spread of word of mouth, a business can expand its reach as a result of happy customers sharing positive experiences with their networks of friends and family.

Discussion #1: Ask students to discuss their interactions with companies that have notably positive customer experiences. Compare these examples to transactions with companies with poor-quality customer service.

Slide #3 Effective supply chains have a profound effect on a business’s profitability.

• The most valuable supply chains result in higher profits, lower costs, less waste, and increased cash flow.

• When a business can create and deliver products to customers quickly, that business can invoice the customer sooner.

  • An efficient supply chain speeds up the product flow and ensures businesses get paid promptly for products and services, thereby increasing cash flow.

• Businesses can reduce overhead costs by adjusting inventory levels to stock the optimum matrix of high-moving, profitable inventory.

  • By analyzing supply chain findings, businesses can optimize warehouse layouts, implement effective automation techniques, and employ better inventory management systems.

• Businesses can also lower costs by decreasing fixed assets.

  • Supply chain managers can redesign and optimize the use of expensive warehouses and transportation vehicles.

• Another way businesses can lower costs is by identifying unnecessary spending and eliminating waste by switching to other providers that offer similar quality and service for less money.

• An efficient supply chain doesn’t just impact one’s own business.

  • It spreads out to reduce costs for partners and other suppliers in the network, incentivizing them to continue working with that business in the future as a result of these savings.

Discussion #2: Ask students to brainstorm additional ways businesses can increase revenue and profitability. What decisions could lower costs?

Slide #4 An integrated supply chain has a positive influence on operations in a business.

• A connected, efficient supply chain results in heightened transparency, improved efficiency, greater flexibility, and increased quality control.

• Real-time, data-driven approaches are vital in today’s complex, global supply chains.

  • Transparent, real-time data ensures better communication among the links in the supply chain as the result of efficient information flow.

  • Supply chain managers have the information necessary to make educated decisions.

  • Real-time data, especially on the availability of materials or news of manufacturing delays, enables businesses to implement backup plans and prevent further holdups.

  • Without accurate data, businesses face production delays, late shipments, or out-of-stock inventory that can result in extra expenses and disappointed customers.

• Transportation optimization is another benefit of efficient supply chains.

  • Businesses can reduce costs by adjusting shipping methods and transportation routes and timing to maximize savings—which can in turn be passed along to the consumer, therefore increasing customer satisfaction.

• An integrated supply chain empowers a business to be flexible and adapt to various situations, from shifting competition to last-minute customer adjustments, fluidly and efficiently.

  • In terms of inventory, just-in-time capability lends the flexibility to adjust product amounts to optimize both warehouse space and cost savings—and a cohesive, cooperative supply chain makes this possible.

• Successful supply chains improve a business’s quality-control capabilities.

  • Standard minimum-quality criteria enable suppliers to collaborate with satisfactory manufacturers who meet these guidelines, resulting in higher quality products, processes, and partnerships.

Discussion #3: Ask students to discuss the societal role of supply chains. During a crisis, how do supply chains impact disaster response?

5.7 Supply Chain Management—Discussion Guide

Performance Indicator: Discuss the nature of supply chain management

Slide 1 THINK ABOUT IT

Supply chain management is responsible for linking the production, shipment, and distribution of products in a way that cuts excess costs, improves efficiency, and increases business revenue.

• Well-organized supply chain management is responsible for transforming a business’s numerous supply chains into an integrated, cooperative, well-oiled machine.

• Effective supply chain management results in decreased spending, improved productivity, increased flexibility, and increased profitability, and ultimately leads to the creation of harmonious relationships among suppliers, employees, and consumers.

KEY CONCEPTS

Slide #2 Supply chain management is the supervision and administration of the flow of goods from raw materials into final products in the hands of consumers.

• It involves the coordination and close monitoring of the efforts of all links in the supply chain to guide materials through the various stages of a business’s operations, from initial sourcing and manufacturing to final sale and shipping.

• Supply chain managers actively oversee and streamline each touchpoint of a business’s product.

• Effective managers understand the importance of all links collaborating as team players to ensure maximum efficiency, optimum customer experience, and increased company profitability, consequently lending businesses a competitive edge in the marketplace

Discussion #1: Ask students to discuss how supply chain management creates and adds value for customers.

Slide #3 There are six elements that contribute to efficient supply chain management.

• Planning: forecasting, scheduling, preparing, and managing all the resources required to meet demand for a company’s product

  • Planning involves designing the supply chain and assigning metrics to monitor regulatory compliance, oversee safety, measure efficiency, and produce greater profits.

  • These metrics can include perfect orders, cash to cash cycle times, and fill rate.

• Sourcing/Purchasing: choosing suppliers to provide materials, supplies, and services companies need to create their products

  • This includes forming processes to supervise supplier relationships when ordering, receiving, and tracking inventory, as well as operating within the company’s budget.

• Making: coordinating the activities necessary to receive raw materials, create the product, assess for quality, package for shipping, and schedule for delivery

  • Businesses evaluate quality, employee efficiency, and production output to confirm products meet quality standards.

• Delivering/Logistics: managing the logistics of communications among vendors, clients, and wholesalers to efficiently transport products from warehouses to customers

  • This involves coordinating orders, scheduling delivery, and dispatching loads.

  • Many businesses use software to administer shipments or outsource parts of the delivery process to specialized companies.

• Returning: establishing an adaptable network to accept extra, faulty, or unwanted products

• Enabling: creating support processes to foster communications, ensure regulation compliance, and monitor information flow among all departments the supply chain

  • This entails coordinating communication among departments including human resources, sales, finance, information technology, and quality assurance to create an integrated, unified team.

Discussion #2: Ask your students to discuss the specific qualities supply chain managers should look for when initiating supplier relationships. What characteristics are important?

Slide #4 Supply chain management plays a vital role in developing an integrated supply chain.

• Effective supply chain management creates an efficient flow of materials, work, and finished products, which results in cost savings and increased customer satisfaction.

  • The management of a supply chain affects the quality of the products, speed and accuracy of delivery, cost savings and profit margins, overall customer experience, and the business’s essential profitability.

• Supply chain management is especially vital in developing an integrated supply chain.

  • Supply chain managers facilitate frequent, transparent communication among all links in the chain to ensure potential problems are identified quickly and operations have enough flexibility to shift gears as needed to seamlessly implement various backup plans.

  • Supply chain managers are constantly monitoring systems, gathering feedback, adjusting processes, and researching new methods to optimize supply chain quality, productivity, and efficiency.

• Effective supply chain management has a wide-reaching impact on a business’s success.

  • This ranges from recommending numerous improvements along the supply chain to increase efficiency, decrease expenses, and improve customer satisfaction, all the way to helping boost a company’s bottom line.

    • Well-organized supply chain management keeps companies away from costly lawsuits and expensive recalls and out of the headlines.

Discussion #3: Ask your students to discuss challenges supply chain managers face in the process of integrating a business’s supply chains. How can these obstacles be overcome or solved?