1.2 Introduction
Operations is either a competitive weapon or a corporate millstone. It is seldom neutral.
–Whickham Skinner
Believe it or not, you have a lot of experience with operations and supply chain management (OSCM). Where did you get this experience? You made something. In fact, you've made a lot of things in your life. Consider three popular hobbies: art, cooking, and do-it-yourself (DIY) projects. They have a lot in common—at least when it comes to illustrating operations and supply chain management concepts.
Let's do a simple thought exercise. Think about a picture you've painted, a meal you've cooked, or a DIY project you've completed. Describe the processes you used by filling in the table below. As you look at your completed table, you'll note that art, cooking, and DIY projects are all transformation processes. That is, they take a set of purchased inputs and use them to make something that possesses greater value. OSCM is all about creating value. Figure 1.1 depicts OSCM as a simple input-output model or transformation process.
Purchasing acquires inputs.
Operations manages the black box (i.e., the transformation process).
Logistics moves materials into and out of the company.
| Hobby | What did you make it with? | How did you make it? | What were your results? | Were you pleased with the outcome? |
|---|---|---|---|---|
| Art | ||||
| Cooking | ||||
| DIY Project |
Looking inside a company, whose job is it to turn inputs into more highly valued outputs? That is, whose job is it to make things? By now, you know the answer: Operations management (aka, production, manufacturing, or service operations depending on the company). As an operations manager, your job description is simple: You create customer value!
As Elon Musk and Tesla learned with the launch of the Model 3, creating value isn't easy. To succeed, you need to work closely with suppliers and customers. That's where supply chain management comes in. Supply chain management (SCM) involves managing transformation processes up and down the value chain. As an operations manager, when you do your job well your company works well with key supply chain partners to make things more efficiently and effectively than rival supply chains. The result: Customers choose to buy your products instead of those produced by rivals. You grow your market share and earn a profit. You can then invest this profit in new products, expanded production capacity, or more productive supply chain relationships. Efficient and effective OSCM kickstarts a virtuous cycle. To take advantage of this virtuous cycle, you need to understand how to design and manage world-class processes.