Operations and supply management is a dynamic field, and challenges presented by global enterprise present exciting new issues for operations managers. Looking forward to the future, we believe the major challenges in the field will be as follows:

1. Coordinating the relationships between mutually supportive but separate organizations.   Recently there has been a dramatic surge in the outsourcing of parts and services that had previously been produced internally. This has been encouraged by the availability of fast, inexpensive communications. A whole new breed of contract manufacturers that specialize in performing focused manufacturing activities now exists. The success of this kind of traditional outsourcing has led companies to consider outsourcing other major corporate functions such as information systems, product development and design, engineering services, packaging, testing, and distribution. The ability to coordinate these activities is a significant challenge for the operations manager of the future.

2. Optimizing global supplier, production, and distribution networks.   The implementation of global enterprise resource planning systems, now common in large companies, has challenged managers to use all of this information. This requires a careful understanding of where control should be centralized and where autonomy is important, among other issues. Companies have only begun to truly take advantage of the information from these systems to optimally control such resources as inventory, transportation, and production equipment.

3. Increased co-production of goods and services.   The Internet has opened new ways for the customer to interact directly with a firm. Simple direct entry and monitoring of orders is only the first step in the progression of value-added services made possible through information sharing. Intelligent use of information technology will allow the shedding of entire layers of inefficient customer-oriented functions within a firm, resulting in dramatic reductions in cost while actually improving service to the customer.

4. Managing customer touch points.   As companies strive to become superefficient, they often scrimp on customer support personnel (and training) required to effectively staff service departments, help lines, and checkout counters. This leads to the frustrations we have all experienced such as being placed in call-center limbo seemingly for hours, getting bad advice when finally interacting with a company rep, and so on. The issue here is to recognize that making resource utilization decisions must capture the implicit costs of lost customers as well as the direct costs of staffing.

5. Raising senior management awareness of operations as a significant competitive weapon.   As we stated earlier, many senior executives entered the organization through finance, strategy, or marketing and built their reputations on work in these areas, and as a result often take operations for granted. As we will demonstrate in this book, this can be a critical mistake when we realize how profitable companies such as Toyota, Dell, Taco Bell, and Southwest Airlines are. These are companies where executives have creatively used operations management for competitive advantage.