 Unit 1: Supply Chain Performance & Metrics 

This unit introduces measures taken to evaluate supply chain performance and also
discusses its metrics towards designing a balanced scorecard for the supply chain.

Learning Outcomes

Upon successful completion of this unit, students will be able to

o determine the different elements of supply chain performance,

o describe the Supply Chain Operations Reference (SCOR) model,
o calculate some key performance indicators (KPIs) of supply chain performance,
and
o design a balanced scorecard for measuring a company’s supply chain performance

Welcome to Unit 1

The topics of this course are laid out here in relation to what you have already learned in
BUSI 2113, and what you will learn as the course progresses.

Read

Course Text

Operations Management: Sustainability and Supply Chain Management

 Chapter 11 - LO6
 Website

Microsoft Photos: https://www.microsoft.com/en-ca/p/microsoft-photos/9wzdncrfjbh4

Apple. (n.d.). iMovie. http://www.apple.com/mac/imovie/ 

Note: These two websites have valuable information for preparing your video presentation for
the Final Group Project.

Unit Notes

Supply Chain Performance and Metrics

Watch

GTSCL. (2014, September 29). Measuring and managing supply chain performance [Video].
YouTube. https://www.youtube.com/watch?v=gZNRlXCKt90

Optional Content

Web Article

APICS (n.d.). Quick reference guide: SCOR: Supply chain operations reference model (Version
12.0).
http://www.apics.org/docs/default-source/scc-non-research/apicsscc_scor_quick_reference_guid
e.pdf

Assignments

Due Unit 1 Exercises

 Due no later than 11:00 p.m. on Sunday of Unit 1 

 Worth 6% of final grade
 Unit Notes
Unit 1 Notes: Supply Chain Performance and Metrics

It is almost impossible to manage without measurement and control. The supply chain is no
exception. We start the course with this unit on measurements that guide our supply chain
management path, to know what we are looking for as we manage the chain. There are numerous
aspects of supply chain performance that need to be managed with the proper metrics, to the
extent that it is very difficult to name them all.

Accordingly, we will name four groups of key performance indicators in the supply chain that
need to be measured constantly and in a balanced way: cost, productivity, velocity, and quality.
Learning about supply chain performance measurement serves as a meaningful opening to our
course as you are expected to link upcoming analysis on supply chain costs and risks, managing
product reliability and delivery, and lean and sustainable operations to metrics of this unit.

Key performance indicators (KPIs) strategic, tactical, and operational in the supply chain come
at different levels, serve multiple functions, and have several uses. Accordingly, companies need
to carefully craft a dashboard for KPI measurement that properly guides the supply chain
performance progress. In this unit, you are walked through the steps of designing an effective
dashboard that has the right qualities, e.g., balancing different supply chain aspects, measured in
the right frequency, and enjoying the right attributes (SMART). For more information on the
SCOR model please see

APICS. (n.d.). Quick reference guide: SCOR: Supply chain operations reference model
(Version 12.0). APICS. http://www.apics.org/docs/default-source/scc-non-
research/apicsscc_scor_quick_reference_guide.pdf  
 Unit Notes
Unit 2 Notes: Operations Strategy

In Unit 2, we proceed to take an overview of how a company’s operations are designed to

directly serve its competitive advantage, and indeed drive the competitive advantage. You will
get to learn how businesses manage their operations in the broader context of organizational
strategy. Through careful formulation and implementation of operational strategy, a company
can sustain its competitive edge in the market.

The importance of operations strategy cannot be overestimated. Some companies resort to a

focused production, or alternatively a broad line production, a cost leadership strategy or unique
design offerings, etc. Companies have succeeded with different, and in fact opposing, operational
strategies when they have the right rationale, support, and implementation. Implementing the
correct operations strategy comes with conflicts and trade-offs. How to deal with those
challenges is one question we will attempt to answer in this unit. Success with the strategy is also
related to identifying the right measures, as discussed in Unit 1.

Unit 2: Activities

Read

Handouts

MIT_Sloan_Management.pdf

Hayes_Upton_Operations_Based_Strategy.pdf

Unit Notes

Operations Strategy

Assignments

Due Final Group Project Part 1: Report the Framework for Your Project

 Due no later than 11:00 p.m. on Sunday of Unit 2 

 Ungraded, but with feedback
 

New Case Study 1: Johnson Beverage

 Due no later than 11:00 p.m. on Sunday of Unit 3 

 Worth 7% of final grade
 Unit 2 Notes: Operations Strategy

In Unit 2, we proceed to take an overview of how a company’s operations are designed to

directly serve its competitive advantage, and indeed drive the competitive advantage. You will
get to learn how businesses manage their operations in the broader context of organizational
strategy. Through careful formulation and implementation of operational strategy, a company
can sustain its competitive edge in the market.

The importance of operations strategy cannot be overestimated. Some companies resort to a

focused production, or alternatively a broad line production, a cost leadership strategy or unique
design offerings, etc. Companies have succeeded with different, and in fact opposing, operational
strategies when they have the right rationale, support, and implementation. Implementing the
correct operations strategy comes with conflicts and trade-offs. How to deal with those
challenges is one question we will attempt to answer in this unit. Success with the strategy is also
related to identifying the right measures, as discussed in Unit 1.
 Unit 3 Notes: Supply Chain Total Cost Analysis

Cost is the first aspect of supply chain measurement that we discussed in the first unit.
Traditionally, it had been the one and main aspect that needs monitoring and control, until the
supply chain was viewed much more strategically as discussed in Unit 2. The supply chain can
burden the company with 60% or more of its costs. Accordingly, costs must be carefully
understood and managed in a way that adds value.

Other than having direct (labor, material, etc.) and indirect (overhead, rent, etc.) costs, the supply
chain also witnesses intangible costs, related to reputation, customer satisfaction, costs of quality,
and so on. In this unit, you will realize the importance of those costs, identifying and managing
them.

Furthermore, we challenge the traditional methods of assigning costs to products, product lines,
suppliers, or customers and come to learn Activity-Based-Costing (ABC) systems. ABC goes beyond
assigning supply chain expenses according to the physical volume of units produced, to linking such
expenses to the variety and complexity of the products. Here you will learn about the hierarchy of
activities, reason for performing such activities, cost drivers for each activity, and allocation based on
product, supplier, or customer. You will also come to experience through the Learning Activity and mini-
case how ABC can lead to important decisions that are more accurate compared to ones made using
traditional system.
 Unit 4 Notes: Supply Chain Risk

Two opposing forces are pulling the two ends of the supply chain. On the one hand, the fierce
marketplace has become more and more demanding with the existence of competition, rising
customer expectations, and more stringent regulations of quality and sustainability. On the other
hand, and rather unfortunately, the world has become a riskier place resulting in disruptions to
production processes. In this unit, we learn more about this dilemma, starting with sources,
causes and drivers of risk, going through consequences of those risks to understand exactly what
to anticipate, and, finally, mitigation plans that can help account for possible risks.

The topic of this unit becomes more interesting as we ask questions such as: can we anticipate
all sources of risk? Can consequences be so daunting to the extent of a supply chain breakdown? And,
how can we make a brave decision to invest in risk mitigation, which is paying for the unknown?
Accordingly, risk analysis becomes a critical aspect of managing the supply chain.
 Unit 5 Notes: JIT and Lean Operations

On to another vital strategic aspect of supply chain management, that is, lean operations and
Just-In-Time. In this unit, we learn about one of the supply chain buzz words: lean operations.
Companies have come to realize how much waste may exist in their systems, and have,
accordingly, strived to eliminate this waste. Supply chain managers fine-tune decisions regarding
layout, inventory, supplier management, and quality aspects to reach lean production. Just-In-
Time, which provided the foundation for lean operations, was created in the Toyota Motor
Corporation.

The main aim is to focus on what the customer wants and eliminate everything else that
qualifies as waste. Accordingly, the focus on customer satisfaction and waste elimination leads us to a
discussion on seven wastes and 5-Ss of housekeeping, that is, activities for an efficient and neat
production. You will get the chance to understand these concepts and apply them in a context of a mini-
case study.
 Unit 6 Notes: Acceptance Sampling

In Unit 6, we start going down the hierarchy of decisions to learn about tactical and operational
supply chain issues that extend those learned in BUSI 2113. In this unit, we extend the
discussion on production quality improvement through lean operations to the usage of statistical
techniques (statistical process control), namely, acceptance sampling. “Acceptance sampling is a
form of inspection that is applied to lots or batches of items either before or after a process”
(Stevenson & Hojati, 2012). Because production lots come in large sizes (thousands of items),
only a few items are inspected to reach a decision for the whole lot of whether to accept or reject
it. In this unit, you will learn how to devise a sampling plan for doing this and deciding on lots.

Because no 100% inspection is done, sampling plans can be “good” or “bad”. In this unit, you
will learn the difference between discriminating and non-discriminating plans through the
characteristic curve of the plan. You will further learn to make calculations about the quality of
the lot, i.e., average outgoing quality, acceptance quality level, producer risk, and consumer risk.

Source

Stevenson, W. (2012). Operations management (Canadian) (4th ed.). McGraw-Hill

Ryerson. 
 Unit 7 Notes: Reliability and Maintenance

Equipment failure can lead to daunting consequences. Be it a power generation plant, nuclear
generating station, or any other plant, companies strive to avoid breakdowns and failures.
Systems are to be kept in proper functioning condition throughout their expected lifetime and
operating conditions; this is the definition of reliability. Reliability is considered as early as the
design stage (which has been discussed in BUSI 2113), as products are designed for reliability.
Through controlling the number of components and their individual performance, reliability of
the whole system is determined.

Maintenance activities are performed to keep systems reliable. In this unit, you will learn about
how to maintain products and systems, how to improve reliability, and how to make some important
measurements to judge failure rates, mean time between failures, mean time to failure, and system
reliability. This is the “performance metrics” lens which was introduced in Unit 1. We further look from
another lens, that of cost analysis (Unit 3), to define and compare maintenance costs and the cost of
failure. Such costs take various forms and values from simple monetary expenses, to safety issues that
may harm customers.
 Unit 8 Notes: Production Planning - Sales and Operations Planning (Aggregate Plans)

As the authors of the course textbook comments “idle capacity is expensive and inadequate
capacity loses customers” (Heizer, Render, & Griffin, 2016). Companies obviously attempt to
avoid both over and under-producing. In this unit, we start a series of lessons on production
planning to meet demand. In other words, we learn about some techniques going from high-level
of aggregate planning, to the operational level of scheduling, to make sure we have production
that matches demand. At the higher aggregate level, sales and operations planning is used to
balance resources of production, with forecasted demand. In doing so, attempts are done to alter
either demand (i.e., marketing techniques such as discounts) and/or supply (change production
rate).

Aggregate plans are constructed on the intermediate level, timewise in months, and in product
families. The process through which we devise those aggregate plans is called “Sales and
Operations Planning”. It is a vital process to capture the most revenues, while minimizing cost of
production. Sales and operations planning is tightly linked to, or indeed dependent on, demand
forecasting accuracy (studied in BUSI 2113). The aggregate plan output is done in the form of a
Master Production Schedule (MPS) that specifies what is to be made and when. MPS is further
broken down to specific requirements of each product and component, i.e., Material Requirement
Planning (MRP), studied in BUSI 2113.

MRP acts as a guideline to proceed with shorter term weekly, daily, and hourly schedules of
production, studied in the upcoming two units. In other words, this unit shows students where the MRP
resulted from, and the following units will show how it is used in subsequent production scheduling.
 Unit 9 Notes: Production Planning - Short-Term Scheduling (1)

Knowing the details of jobs to be completed each week/day, the company can now proceed with
requirements to specified schedules. Scheduling is, by no means, a simple task. Airline
companies, such as Air Canada, find it very challenging to schedule thousands of flights given
the vast uncertainty in weather conditions, last minutes changes in demand, changes related to
airports and other factors. Other industries, such as hotels, hospitals, and restaurants, are just as
challenging in their scheduling requirements and processes. Scheduling is, therefore, a very
important operations function that deals with assigning jobs to personnel, machinery, and
materials.

In this unit, we discuss scheduling needs, decisions, types, and criteria. You will learn how to
draw a scheduling GANTT chart, use the assignment method to allocate tasks to resources, apply
sequencing priority rules, the Critical Ratio, and Johnson’s Rule in scheduling.

By the end of the unit, you will be fully aware of the importance and challenges of scheduling in
controlling the timing of activities, movement of materials and people in systems, serving higher level
requirements of worker safety, efficiency, and just-in-time delivery. You will also get your hands on
quantitative techniques that help in the process of scheduling.
 Unit 10 Notes: Production Planning - Short-Term Scheduling (2)
The purpose of this unit is to recap and reinforce concepts learned about the production
planning process from sales and operations planning, to material requirements planning and short-term
scheduling. Here we will get to learn about further details such as scheduling for manufacturing versus
service industries. Furthermore, students will get the chance to pick a scheduling software tool of their
choice (Textbook’s Lekin is recommended for availability and simplicity), and use it throughout this unit
to get hands on experience on the use of technology to deal with some scheduling complexities.
 Unit 11 Notes: Sustainability in Supply Chains

Throughout the previous units, we have been talking about sustainability as a critical element of
almost every aspect of operations. We have discussed sustainability in the context of operations
strategy, risk management, lean operations, scheduling, and others, be it in discussions or as
parts of the assigned readings.

The purpose of this unit is to recap our previous discussions, with a more formalized lens
through short readings in the textbook, where sustainability was discussed. It is very important to
conclude with sustainability in mind as a driver for operational effectiveness, efficiency, and
innovation, as portrayed in the Learning Activity.

In this unit, we conceptualize sustainability as an integrative topic that needs consideration for
every decision we make in operations management. You are strongly encouraged to use external
academic sources, news, and stories about existing trends and research findings that call for
sustainability and that discuss its dimensions.