Supply chain is a massive topic; it describes the entire lifecycle of the product - from the raw ingredients, to the planning, manufacturing, and eventual distribution to the end customer. Remember that a cup of coffee started out as coffee beans. So, operations turns strategy into reality. Operations is difficult because it requires significant effort, coordination, risk, and trade-offs. The good news is that global trade increased 10x over the last 50 years. The bad news is that protectionism (e.g., tariffs) are on the rise and geopolitics can negatively influence free trade.

The SCOR (Supply Chain Operations Reference guide) is a simple way to think about supply chain and organize it into buckets. Matching supply and demand “as accurately as possible” for all the different supplies, products, customers, locations. Buying all the necessary materials, equipment, labor to build bikes at the “right” quality and “right” costs. Manufacturing products “to specification” while running the factory flexibly, efficiently, and safely. Getting products to customers accurately, on-time, at lowest acceptable cost.

Build-to-stock products are made in advance with the goal of creating economies of scale (and lower costs). Make-to-order products are built after the order is placed, to allow for more customization and less inventory. Services are “made” and “delivered” at the same time. It requires having enough of the right people to meet the demand. Digital assets are unique because it’s easy/cheap to copy and distribute widely to the second, third. . . thousandth customer.

There are 3 parts to this module: 1) Economies of scale matter a lot in business. “The bigger you get, the cheaper you can make your products”. This is why many businesses try to keep growing. 2) In addition to this scale, there has also been drive to improve productivity through standardization. The Toyota Production System (TPS) revolutionized how cars were made by emphasizing quality as the most important production criteria. The idea was that quality was the “first domino” that led to better flow, lower costs. 3) Lean focuses on speed and efficiency. Six Sigma focused on accuracy and reliable. Both are useful and complementary.

This is the last module in the specialization and it's focused on prioritization. We all know that it's easy to be distracted and waste time. It's important to focus on the “stuff that matters”. One way to do this is to focus on CTQ (what is truly critical) and also the 80/20 principle. Namely, what are the 20% of inputs that drive the 80% of outputs?