Operations management and protecting suppliers

I taught Operations Management for a number of years. One of the hardest concepts for me to get across to my students was that of protecting one’s supply line. Many students flatly rejected it.  

For example, let’s say you work for Mr. Big.  It is well known that one of your suppliers makes the finest widget in the world in his garage.  It is also a key piece of the main product Mr. Big produces.  One approach might be to negotiate the lowest possible price for the widget. Encourage the maker to expand his operations. Have him go in debt…then demand he lower the price. He will have no choice but to do so. Then, fall behind in payments. The next move is to agree to pay 75% of the amount owed if the rest is waived. Of course this drives your supplier into bankruptcy. But you have the option moving onto the maker of the second best widget. Yes, it does lower the quality of your product, but it lowers production costs.

I, and many others, hold that if a small supplier is making is quality part critical to making my product, it is in the best long term interest of my organization to help him stay open and to continue to produce that product.

As a homesteader, I find myself having to make similar decisions.  While I will not roll over and be taken advantage of, I do often make the decision to purchase at my small town hardware store rather than buy on the net or wait for my next trip to the big city.  It is in my long term best interest to keep that little hardware store open….even if I pay a few Pennie’s more.

I am not sure exactly what operations management is because I never worked where that was a thing???

In 2025, I was scheduled to have surgery that was cancel because the hospital could not get IV bags.  Was that the problem of Operations Management?

You mention purchasing in small town stores so I want to comment that I always believe in buying local though since the pandemic my small town store have such a limited inventory that they have lost my business.

Professionally, I work at a unique intersection of operations management and supplier management. There are days that I just stare off into the distance dreaming of being a hermit in the mountains because a very important 'thingy' will not arrive on time and we have no backup 'thingy' in sight.

I tell you, you haven't lived until you are on an email chain with no less than twenty people from both your company and the supplier trying to figure out how we can all play nice.

I know in my heart of hearts, I would never make a good quality assurance person. They have the toughest job! There are times he goes out to our customers factories to actually teach how to utilize our product effectively. I have to say half of the complaints we got this year turned out to be our customers needing to learn how to use their equipment. It all is very interesting.

Mr. Big is Bud Good (sorry had to say it)

I agree that it's in the best interest of everyone involved to keep a quality supplier open for business.

John F Dean wrote: I, and many others, hold that if a small supplier is making is quality part critical to making my product, it is in the best long term interest of my organization to help him stay open and to continue to produce that product.

As a homesteader, I find myself having to make similar decisions.  While I will not roll over and be taken advantage of, I do often make the decision to purchase at my small town hardware store rather than buy on the net or wait for my next trip to the big city.  It is in my long term best interest to keep that little hardware store open….even if I pay a few Pennie’s more.

100%

While I must allow there is an opportunity cost to the amount of money I 'save' buying online, no one seems to acknowledge the redundant carbon footprint of all those one off Amazon deliveries of items available locally.
No one acknowledges the lost local opportunity costs of incrementally adding to the wealth of the world's richest people, rather than help fund the necessary economy of your local area. Same wealthy folks whose wealth and spending power will never add anything to your local community.
Same wealthy folks who have by direct action suppressed the profits of suppliers, driven sources overseas, narrowed choice.

Hi Anne,

To give a Webster definition, Operations Management is the management of the operations of an organization. What are the operations of an organization?  Timothy’s post drops a hint.  In reality, it is whatever the organization says it is. In the text book I used, it was everything but accounting and marketing. Timothy obviously excludes supply issues as well.   I have seen organizations exclude personnel.  I have seen transportation excluded.
Because I try to be pragmatic, if the definition works for the organization, it works for me. How do I know if it works for the organization?  It works if the business stays open for the long term.