The market finds users and defines products for the enterprise, the design and production polishes the products to create value, the market spreads the value, and then the sales delivers the value, etc. The work of these departments belongs to the operation of the enterprise. These departments are all part of the operation of the enterprise. Whether the enterprise operation is good or not, whether the implementation is in place or not, whether it earns money or not, and whether it earns more or less, the results will be reflected in the financial statements.

So the essence of operation is to match supply and demand to make the business profitable for a long time. So, all the parts of the company that involve matching supply and demand are in the realm of operations.

Think about it, marketing, design, product, purchasing, marketing, sales, and so on, frankly, which department's goal is not to supply services or products to ultimately meet the needs of consumers?

In the past, operations relied more on personal experience to make decisions, such as how much to produce, how much to sell, how much to sell, how much to sell, how much to sell, how much to sell, how much to sell, how much to sell, how much to sell, how much to sell? How much do you want to sell? But under the influence of scientific, rigorous quantitative thinking in the West, we have transformed operations from an operation based on personal experience into a discipline that utilizes quantitative tools for quantitative analysis to assist in decision-making. So, in this course, I will teach you some quantitative methods, you will be able to calculate how much to produce? How much to sell? You can earn the most.

In addition to matching supply and demand in your organization, you can also use operations thinking and methods in your own work and life.

For example, when your superiors set a big KPI for you, operational thinking and methods can help you efficiently implement and achieve this KPI.

You can use operational thinking and methods to help you decide how often to reply to messages, which will not delay things, and will not affect the work efficiency. You can also use operational thinking and methods to help you find the ****-win scenario and win the read judgment.

Having said that, how will I take you through operations management in this course?

Over the years, with the constant changes in the way the economy is organized, as well as people's higher pursuit of realizing self-worth, more and more people are trying to become slash-and-burn youth or freelancers, wanting to own a coffee shop, tea house or B&B, etc., and even a lot of celebrities have opened up restaurants.

For celebrities, running a restaurant doesn't seem to be a difficult task, as they come with their own IP and traffic, and can easily solve the problem of branding and customer acquisition.

But you will find, in fact, the star restaurant operation and management, encountered problems are endless: unreasonable pricing, long queues, high costs, and even food hygiene issues, etc....... These problems have been exacerbated by the star's higher exposure, which in turn has exacerbated the loss of consumers and their dissatisfaction.

For example, the "Huang Liang Yi Meng" hot pot restaurant, which was opened by Huang Lei and Meng Fei, announced that it was closed at the end of 2018; Han Han's "Glad to meet you", the Wuhan branch was closed due to hygiene problems, and the rest of the stores are now also sparse in customers; Zhang Jiaxian's "Happy to meet you", the Wuhan branch was closed due to hygiene problems, and the remaining stores are now also sparse in customers. The rest of the stores are now sparse; Zhang Jiajia's Rolling Lobster, also closed due to poor management.

These stars on resources and influence, there is no doubt that they have more advantages than ordinary people, they spend enough effort on marketing, restaurant positioning may also be very clear, and financial management to a professional team, so why, in the end, most of them are still operating poorly?

The stars use their own IP and influence, can solve the problem of customer acquisition in the early stage, but the next is not just rely on sentiment and story to win the market, more need to do a good job of operation and management of food and beverage entities.

The data in the 2018 China Catering Report shows that the rate of store closures in China's catering industry is as high as 91%, which is a very low threshold and at the same time an exceptionally competitive industry, which extremely tests the team's operational ability and operational efficiency, which includes the supply chain management of ingredients, cost structure, process management, dish R&D, product pricing, service, etc., and it's a complex systematic project.

This is a complex systematic project.

So you see, whether it is to open a store, start a business, or work in the enterprise, relying on sentiment and passion is not enough, the operation management is very important, which determines the efficiency of the utilization of people, money, and materials, which ultimately affects our earnings.

Operations management was developed during the industrial revolution, so many classic operations management textbooks discuss the manufacturing industry, which may give you a stereotypical impression that operations management is a rigid, old-fashioned discipline, and that in the age of the Internet, we don't need to learn about operations management anymore.

But in fact, with the development of the times, operations management is not limited to manufacturing, it is also evolving, iterative, and the connotation has become richer and richer.

In 1913, Ford developed an assembly line to manufacture the Model T, which greatly improved the efficiency of production and opened the historical prologue of modern large-scale industrial production. During World War II, in order to rationally deploy war materials, scientists introduced mathematical models to quantitatively analyze and optimize management, which led to the rapid development of operations research and laid the foundation for the development of operations management. After the war, these findings were widely used in manufacturing, allowing the United States to reach the peak of manufacturing in the 1960s.

By the 1980s, the global recession, companies need more streamlined, efficient management ideas and technologies to reduce costs and gain competitiveness, by the Japanese company Toyota proposed lean management, just-in-time (JIT) production can be the least inventory of parts and components to produce a maximum number of products, and to ensure that timely, on-demand delivery of parts and components to achieve mass production, and has been generally recognized and applied in developed countries. Recognition and application of the developed countries in general.

In the past three decades, with the rapid development of the service industry, computer technology, the Internet and other emerging industries, the scope of modern operations management is also more and more extensive, is no longer limited to the manufacturing industry in the production process of planning and control, but the expansion of service science (Service Science Management and Engine eing, SSME), through, for example, computer technology, computerized production processes. SSME), through information technology such as computer-aided design (CAD), computer-aided manufacturing (CAM), material requirements planning (MRP), enterprise resource planning (ERP) and other information technology, for various industries to improve efficiency, reduce costs, expand revenues, such as e-commerce (e.g., Amazon, eBay, Alibaba), communications (e.g., T-Mobile. Skype), transportation (e.g., T-Mobile), and other industries, Skype), transportation (e.g., airlines, FedEx, Jingdong, Shunfeng), finance (e.g., e-discount brokers, Schwab), Internet (e.g., CNN, Googlo), and services (e.g., restaurants, hotels, and department stores).

Nowadays, with the continuous development of technologies such as big data, cloud computing, Industry 4.0, and mobile Internet, all industries have access to massive amounts of data, and data analytics can help business decision makers better predict the future and seek optimal solutions.

For example, managers in the airline industry can comprehensively and systematically adjust prices for different classes of tickets in real time based on real-time demand data, historical demand data, weather conditions, fuel prices, crew duty arrangements, and other information, which can greatly improve the utilization of shipping, thereby reducing costs and increasing profits.

Therefore, business managers can no longer make decisions based only on intuition, patting the head, in today's increasingly competitive market, we need to operate the enterprise through scientific, quantitative way of fine generation, operation management has become more and more important.

In this course, I will also introduce you to many practical mathematical models, but these do not require you to spend time to understand the complexity of these mathematical formulas, I have been in the various chapters of the extended learning board system, for you to design a simple and easy to use axcel tool file you can see these data models as a black box, as long as you enter your data in the management or operation, you can get the results to help you make more scientific and reliable decisions. This will help you make more scientific and reliable decisions.

Just now we said, operations management is no longer limited to manufacturing, its scope has been derived to the service industry, the Internet and other industries, then you may still have questions: operations management is not only responsible for the production of products in these industries related to the department? My position does not have the word "operations", so I don't need to learn operations management?

To answer this question, we need to go back to the essence of operations management and explore what exactly is operations management?

Modern operations management covers a very rich content, including from the understanding of user needs, operations strategy, product development, product design, product pricing, raw material procurement, manufacturing, distribution and after-sales service, a complete value chain, to explain in one sentence what is operations management is not easy.

Professors at Wharton, one of the world's most prestigious business schools and the birthplace of the modern MBA, summarize the essence of operations management as follows:

Simply put, it's about how a company allocates its limited resources to provide a product or service that meets a user's needs. Good or bad operations management will ultimately be reflected in the financial statements of business activities, directly related to the management and development of the enterprise.

So, even if you don't have the word "operations" in your job, as long as your work involves how to supply products or services to meet user needs, it belongs to the category of operations management. For example, the purchasing, production, marketing, sales, and after-sales departments of an organization need the thinking and methods of operations management to make decisions.

For example, for the production department, how do you decide how much of a product to produce? Assuming that you run a coffee shop, if you make less coffee every day, you can't meet the needs of your customers, and the revenue you should be earning will be lost. If you make too much coffee and can't sell it, it will go to waste or be sold cheaply. This is a mismatch between supply and demand.

And to realize the match between supply and demand, one of the very important factors affecting demand is price. That for the marketing department, how do you price the product to maximize profits? The price of the product directly affects the customer's demand, such as a cup of coffee you sell 15 yuan, you can sell 50 cups a morning; sell 30 yuan a cup, only 20 cups a morning; if the same coffee you sell 50 yuan a cup, the consumer may go next door to buy soybean milk to drink.

Then is not priced at 15 yuan, sell the most, the biggest profit? In fact, not necessarily. So you can use quantitative models in operations management to predict consumer demand at different prices and set prices to maximize profits.

And for the purchasing department, you want to provide reasonable quantities of raw materials for the production department. For example, you don't stock enough coffee beans to save warehouse space and overhead, and as a result, one day you realize that there are no more coffee beans and you need to make a temporary purchase, and the consumer who buys breakfast can't wait and goes to buy the soy milk next door.

Then how to purchase raw materials to both ensure a constant supply, but not to buy too much to take up the warehouse, spend management costs, and even face the risk of raw material breakage, impairment? This is also a problem you can solve by using quantitative modeling in operations management.

Consumers generally want to receive services as soon as possible, no one wants to waste a lot of time queuing up, if your production or service processes are more chaotic, inefficient, it will cause customers to wait, and the confusion of the process will generally also induce a decline in product quality, which will affect the brand reputation. So, through process management, make the service supply can efficiently match the user's demand, which is also a problem you can solve through operations management.

And very often, even if you have made a comprehensive supply decision to match demand, without the support of the supplier, you can't rely on the enterprise itself to complete the transaction. This requires you to stand in the supply chain from a global perspective to think about the problem, and strive to achieve **** win with the supplier, so as to better realize the goals of the enterprise. Therefore, supply chain management is also an area of research in operations management, and through the cooperation of upstream and downstream of the supply chain, you can increase the profitability of the enterprise.

Well, I believe you now understand the wide range of application scenarios of operations management, and also know that the essence of operations management is to do a good job of matching supply and demand, so that the enterprise can be sustainable and profitable. But if you do not do a good job of matching supply and demand in the end what will be the consequences? Why do we all know that matching supply and demand is so important but still not good enough?

Next, we'll walk you through the examples of McDonald's and KFC in our pre-class reflection.

McDonald's and KFC had problems with their raw materials, which caused their stock prices to plummet.

Share prices are affected by many factors, but in general they depend on investors' expectations of the company's future profits. The two McDonald's and KFC share prices plummeted mainly because the raw materials incident seriously affected the quantity and quality of the two giants' product supply, exposing their inability to meet consumer demand for their supply to the extent that investor confidence in their ability to make a profit in the long term, was also greatly reduced.

In terms of chicken procurement, both KFC and McDonald's chose Shanghai Fuxi as their chicken supplier. Therefore, after the Fuxi incident, the two fast food giants decided to stop purchasing from Shanghai Fuxi, and both of them are therefore facing a temporary lack of chicken raw material supply.

The outbreak of the Foxi incident has increased the market's anxiety about the safety of foreign fast food ingredients. This will directly lead to a decline in user demand, which will affect investors' expectations of future profits in the fast food industry.

At the same time, McDonald's and KFC faced the same problem, but why was KFC able to quickly adjust its supply to match consumer demand again?

This was the case with McDonald's, which gets most of its raw chicken from Foxy in Shanghai. So when McDonald's decided to stop buying from Foxy, it had no way of getting a large, reliable supply of raw materials from other suppliers in the short term. The process of choosing a new supplier is a strategic decision that involves a complex and lengthy process, so McDonald's was unable to supply chicken products for several months after it stopped purchasing from Shanghai Fuxi.

This is the model used by KFC, which sources only a portion of its chicken raw materials from Foxy Shanghai. So when KFC decided to stop sourcing from Shanghai Fuxi, it still had a stable and reliable source, and by redeploying supplies from different suppliers, KFC was able to resume supplying chicken products relatively quickly. But the incident still caused irreparable damage to KFC's performance and a crisis of confidence for some time.

In the real world of business, similar mismatches between supply and demand happen all the time, and invariably bring serious negative impacts to the business, and Prof. Hendricks and Prof. Singhal have conducted a study of the WallStreet Journal and the DowJones News Service on their reports on chicken supply and demand in the period of 1989 to 2000. Professors Hendricks and Singhal have analyzed the supply-demand mismatches reported by the WallStreet Journal and the DowJones News Service between 1989 and 2000, and found a total of 519 cases.

Next, the two scholars analyzed the changes in the stock prices of the companies two days before and after the reports, and found that the mismatch between supply and demand had a huge impact on the stock prices of these companies, with an average drop of up to 10.28%, which means that the valuation of the companies evaporated by 1/10th overnight.

You see, although these large international companies have mature management systems and operational experience, they still face mismatches between supply and demand, but they still have to face mismatches between supply and demand.

You see, these big international companies have mature management systems and operational management experience, but they still face problems caused by the mismatch between supply and demand, which affects their own performance and reputation.

Why is it so hard to match supply with demand? Generally speaking, this is because demand can change at any time, while supply capacity is relatively fixed and inflexible.

When demand is constantly changing, most companies are unable to flexibly adjust where, when, or how much supply resources are allocated, resulting in an impact on the efficiency, quality, and cost of the product or service.

And even when demand is relatively fixed, sometimes supply can be problematic, as happened in the Foxy case, where firms struggled to instantly adjust inflexible supply resources, resulting in a mismatch between supply and demand.

What's more, the reality is that in most cases, changes in demand and unstable supply can occur simultaneously, which makes operations management even more challenging.

As you can see in these 519 cases, there are many reasons for the mismatch between supply and demand.

So analyzing and solving supply-demand mismatches is a complex problem, and in subsequent sessions, I'll dive deeper into the reasons why operations management creates problems and explain strategies to deal with them.

Now you understand that the essence of operations management is to make a good match between supply and demand so that the business can be profitable in a sustainable way. Therefore, in business operations, we

And you know that the ability of business operations management will ultimately be reflected in the financial, and the company's shareholders care about the financial or stock market performance. So do you know how to do a good job of operations management in order to make the company's financial reports better, more profitable and better stock market performance?

There's no way we can directly change the financial metrics, so we need it to be broken down step by step into a series of operational metrics that can be manipulated.

So in the next lesson, I'm going to introduce you to a tool that establishes the relationship between operational and financial metrics to help you qualitatively and quantitatively analyze the impact of each operational decision on business performance.

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