Operations and Supply Management 4.0

Companies face significant challenges. The Covid-19 crisis, advancing globalization, the need for global digitization, and the urge for ever faster and new innovations are forcing companies to radically change their strategy and traditional models. The increasing global and above all digital networking of customers, manufacturing companies, suppliers and other interest groups, the almost unrestricted exchange of data and information and the associated maximum transparency over a large part of the value-adding activities within global supply chains raises the question of future generation of competitive advantages of manufacturing, trading and service companies. In this context, supplier management, i.e., the function that controls the entire value chain is of much more importance across the entire value chain than was the case in previous years. Because only the integrative approach from the customer order through the planning, procurement, production, logistics to the returns process gives companies the necessary basis for decision-making for their future actions. The tasks in supplier management have changed from a purely procurement function to a value-creating, leading, and value-adding function. By concentrating on core competencies and shifting services to supplier networks that are in competition with one another, new models, strategies, and processes emerge which lead supplier management into a central role in every company. For a long time now, the focus in the future has not only been on increasing company-internal cost advantages, but much more on the exchange of information and the exploitation of global cross-company potential. Scope of added value can no longer be dealt with by the manufacturer alone, but have to fall back on innovative, efficient, and flexible supplier structures. Increasing competition, global trends, the COVID-19 pandemic, sustainability elements, technological change, and shortened product life cycles place ever higher demands on companies and their suppliers in numerous industries. The increasing variety of products, shorter innovation cycles and cross-sector business models with digital business processes also increase the complexity of future management of value networks. However, the planning, control and monitoring of the upstream value creation networks, i.e., the supplier networks, becomes more difficult, so that these tasks have to be covered by holistic, standardized and innovative supplier management. But modern supplier structures are becoming increasingly volatile. The control of the external value-added networks must therefore also adapt to the new requirements. Risk prevention in the supply chain is therefore of central importance in every company, but only 17% of companies operate preventive supplier management with early and standardized integration of their suppliers, and more than two thirds only assess a selection of suppliers (Dust 2016). These alarming figures emerge from the study “Total Supplier Management—Strategic Competitive Advantages through Risk Prevention in Supplier Management.” The representative survey of 221 companies from different sectors from industry, trade, and services was created by the Technical University of Berlin in cooperation with the BME region Berlin-Brandenburg (Dust 2016). Figure 1.1 shows the proportion of peripheral skills being transferred to external suppliers to more than 80% (outsourcing). In contrast, own core competencies, i.e., processes and skills from which competitive advantages are developed for your own company are around 20%. As a consequence, it is important that enterprises are looking at their upstream activities (suppliers) and that these enterprises integrate them smoothly and digitally into their own operations (Helmold 2021). Only these companies that will be able to optimally drive their supply and integrate this supply into their operations will be able to gain a long-term competitive advantage. This is where Operations and Supply Management 4.0 come onto the spotlight as a new and integrated concept in the value chain.

Operations management is the process and activity of planning, designing, and controlling the process of production and redesigning business operations in the production of products or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed and effective in terms of meeting customer requirements. Operations management is primarily concerned with planning, organizing, and supervising in the contexts of production, manufacturing, or the provision of services. It is concerned with managing an entire production or service system which is the process that converts inputs (in the forms of raw materials, labor, consumers, and energy) into outputs (in the form of goods and/or services for consumers). Operations management involves the systematic direction and control of the processes that transform resources (inputs) into finished goods or services for customers or clients (outputs) as shown in Fig. 2.1. Operations produce products, manage quality, and create services. Operations management covers sectors like banking systems, hospitals, companies, working with suppliers, customers, and using technology. Operations is one of the major functions in an organization along with supply chains, marketing, finance, and human resources. The operations function requires management of both the strategic and day-to-day production of goods and services. In managing manufacturing or service operations, several types of decisions are made including operations strategy, product design, process design, quality management, capacity, facilities planning, production planning, and inventory control. Each of these requires an ability to analyze the current situation and find better solutions to improve the effectiveness and efficiency of manufacturing or service operations (Slack et al. 1995).

The supply side is the function, which secures that inputs are available for the transformation process as shown in Fig. 3.1. Transformation is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients. Inputs, for which the supply management is responsible, are mostly products and services coming from suppliers in the upstream side of the value chain. These products or services are directly involved in the transformation into end-products to customers. However, inputs can also be indirect categories or services, which are not directly included in the transformation process (desks, machines, training services, etc.).

5S is the name of a workplace organization method that uses a list of five Japanese words: seiri, seiton, seiso, seiketsu, and shitsuke as shown in Fig. 4.1. Transliterated into Roman Script, they all start with the letter “S”. 5S is used to stabilize, maintain, and improve the safest, best working environment thus supporting sustainable QCDplus alpha. 5S is a systematic and structured workplace optimization, originally be developed and used by Toyota. The objective is the identification and elimination of waste. In simple terms, the 5S methodology helps a workplace remove items that are no longer needed (sort), organize the items to optimize efficiency and flow (straighten), clean the area in order to more easily identify problems (shine), implement color coding and labels to stay consistent with other areas (standardize) and develop behaviors that keep the workplace organized over the long term (sustain). 5S is a workplace organization method that uses a list of five Japanese words as follows:

Industry 4.0 is a name given to the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the internet of things, cloud computing, and cognitive computing. Industry 4.0 is commonly referred to as the fourth industrial revolution. Industry 4.0 fosters what has been called a “smart factory.” Within modular structured smart factories, cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions. Over the internet of things, cyber-physical systems communicate and cooperate with each other and with humans in real time both internally and across organizational services offered and used by participants of the value chain. There are four design principles in Industry 4.0. These principles support companies in identifying and implementing Industry 4.0 scenarios (Helmold and Samara 2019):

Lean management must be the integral part of the corporate strategy (Helmold et al. 2019). Strategic management is a framework that is dealing with recognizing and making the important changes towards its lean mission and vision by using resources and assets in the most efficient way (Helmold and Samara 2019). It is a framework which links strategic planning and decision-making with the everyday business of operational administration. Strategic management is very important for an organization’s long-term success, which is making companies able to compete in a hostile and competitive environment (Johnson and Scholes 1997). Translation of strategic management plans into practice is the most important aspect of the planning itself in any organization. Strategic and lean plans can include actions like entering new markets, global sourcing, make or buy strategies, deployment of new products or services, centralization or decentralization of activities or aligning leadership and resources as outlined by various authors (Johnson and Scholes 1997; Mintzberg et al. 1995; Porter 1980; Helmold et al. 2019).

Lean management and processes have positive effects on the performance of the organization in terms of quality cost, delivery, and other improvements. However, it is necessary to establish organizational infrastructures which required for effective lean implementation and continuation (Fatma 2015). The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization’s culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy. These infrastructures must integrate cultural elements as illustrated in Fig. 7.1. The challenge to implement and sustain lean management processes lies in the need to identify the organizational culture infrastructure that will allow this system that was first used by Japanese firms to operate well in other organizational contexts. The values and norms that underlie lean processes may create conflict with the culture that already exists within the organization; such divergence retards adoption and performance (Helmold and Samara 2019). Johnson and Scholes identified six distinct but interrelated elements which contribute to what they called the “paradigm,” equivalent to the pattern of the work environment, or the values of the organization. They suggested that each may be examined and analyzed individually to gain a clearer picture of the wider cultural issues of an organization. The six contributing elements (with example questions used to examine the organization at hand) are as follows:

Global supply chains and supply chains cause problems due to their complexity and growing challenges. But it should also be emphasized that increasing requirements, response times, and risk protection contribute to the differentiation of companies and value-added networks (Dust 2009). Not only the own company but also its supplier networks are in constant competition in order to gain the favor of the customer. Value networks are competitive, global, and customer-relevant. They enable companies to provide services that are coordinated across the company, in which the individual partners focus on their core competencies, as Fig. 8.1 shows.

Business operations incorporate all the elements and activities that contribute to the company’s functions and profitability. Although the various factors that influence business operations differ from company to company, most organizational leaders consider the following when planning their operations:

Change management can be defined as the sum of tasks, measures, and activities that are intended to bring about a comprehensive, cross-departmental, and far-reaching change in an enterprise or organization. Change management includes the implementation of new a mission, vision, strategies, structures, systems, processes, and behaviors in an organization. The ultimate goal of change is to obtain a long-term favorable position in the market and to gain a sustainable competitive advantage (Helmold 2020). Synonyms for change management found in literature are Business Process Reengineering, Turnaround Management, Transformation Management, Lean Management, Innovation Management, or Total Quality Management (Vahs 2019). Change is increasingly determining the everyday businesses and activities of companies. In order to manage change in the most optimal way, special change management techniques are required, which can be summarized under the term Change Management (Lauer 2019, 2020). The human factor is at the forefront of all considerations because the implementation of change depends on the active support of employees. Since everyone has their own needs, ideas, and experiences, some of which do not conform to the official company organization, there can be no simple recipe for how to successfully manage change. Rather, it is a complex process that has to start at three points: the organization and individuals concerned, the corporate structures, and the corporate culture (Lauer 2019). Another important element in the context is the technological factor including systems, routines, methods, and instruments (Helmold and Samara 2019). Figure 10.1 summarizes the elements of change management.

Design for lean manufacturing is the process in the product development phase, in which lean principles will be applied in the design and product development phase. The term describes methods of design in lean manufacturing companies as part of the

Lean management must be an integral part of any enterprise and organization. Performance improvements and permanent adjustments are important factors for the successful implementation of lean structures. Performance management therefore integrates a cycle from performance measurement and analysis (Plan), the performance action and implementation (Do), the performance management controlling (Check) and the performance improvements and adjustments (Act) as illustrated in the lean performance management cycle in Fig. 12.1. The figure shows the lean performance management cycle as an iterative and continuous process for the control and improvement of processes, products, or services. The original P-D-C-A four-step framework is also known as Deming circle (Slack 1995).

Corporate social responsibility (CSR) is also known by a number of other names. These include corporate responsibility, corporate accountability, corporate ethics, corporate citizenship or stewardship, business ethics, responsible entrepreneurship, and triple bottom line, to name just a few. As CSR issues become increasingly integrated into modern business practices, there is a trend towards referring to it as “responsible competitiveness” or “corporate sustainability.” CSR is understood to be the way firms integrate social, environmental, and economic concerns into their values, culture, decision-making, strategy and operations in a transparent and accountable manner, and thereby establish better practices within the firm, create wealth and improve society. A key point to note is that CSR is an evolving concept that currently does not have a universally accepted definition. Generally, CSR is understood to be the way firms integrate social, environmental, and economic concerns into their values, culture, decision-making, strategy, and operations in a transparent and accountable manner and thereby establish better practices within the firm, create wealth, and improve society. As issues of sustainable development become more important, the question of how the business sector addresses them is also becoming an element of CSR. The World Business Council for Sustainable Development has described CSR as the business contribution to sustainable economic development. Building on a base of compliance with legislation and regulations, CSR typically includes “beyond law” commitments and activities pertaining to:

Audits can be described as a systematic and structured performance evaluation and assessment of a system, process, or product or any other area by internal or external auditors. The aim of an audit is to evaluate and approve or disapprove the assessed area by standardized criteria and questions, to define areas for actions, and to ensure the sustainable implementation of the actions and improvement areas. Assessment criteria in audits are based on customer and stakeholder expectations. Audits can be clustered in systems, process, product, control, and special audits as shown in Table 14.1. Lean audits are conducted to determine if the business is properly implementing and lean management methodologies are implemented into the company and value chain (Helmold and Terry 2016). This is achieved by a detailed 360° analysis how lean processes with a goal towards recognizing opportunities to improve processes and to eliminate waste.

Manufacturers want flexible operations that allow them to use one production line to make multiple products. However, the benefits of flexibility are hard to capture because time-consuming changeovers are required to prepare machinery to manufacture different products. By implementing lean tools, such as single-minute exchange of dies, manufacturers can remove non-value-adding activities from the changeover, thus significantly accelerating the process. Companies, that implemented lean methods and Operations Management 4.0 will be able to benefit from these technologies (Küpper et al. 2017). New sensors and software make it possible for machines to automatically identify products and load the appropriate program and tools without manual intervention. Because the changeover is automated, operators can focus on performing value-adding activities.