McGraw-Hill/I rwin Copyright 2013 by The McGraw-Hill Companies, I nc. All rights reserved.

Operations and Supply

Chain Management
Chapter 01
1-2
Learning Objectives
1. Understand operations and supply chain
processes and why it is important to study
them.
2. Contrast the differences between services
and goods producing processes.
3. Define efficient and effective operations.
4. Identify operations and supply chain
management career opportunities.
5. Learn how the field has developed over time.
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Strategy, Processes, and
Analytics
Operations and supply chain management
involves
Product design
Purchasing
Manufacturing
Service operations
Logistics
Distribution
Success depends upon
Strategy
Processes to deliver products and services
Analytics to support the decisions needed to manage
the firm
1-4
What is Operations and Supply
Chain Management?
The design, operation, and improvement of the
systems that create and delivery the firms
primary products and services
Operations and Supply Chain Management
(OSCM) is
A functional field of business
Concerned with the management of the entire
production/delivery system
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Operations and Supply Chain
Processes
Operations
Manufacturing and
service processes
used to transform
resources into
products
Supply
Chain
Processes that
move information
and material to and
from the firm
1-6
OSCM: The Core -
Organization
What should our operations and supply chain strategy be?
What do we expect demand to be?
How much capacity will we need in the future?
How do we implement change with projects?
Section 1: Strategy and Analytics
How are manufacturing processes organized?
How are service processes organized?
What is the relationship between waiting time and the capacity of a process?
How do we make a plan for meeting future demand?
How do we calculate the material needed to meet our plan?
How do we make improvements to our process and ensure quality?
Section II: Manufacturing and Service Process and Analytics
How is inventory managed?
What is a lean supply chain?
How are materials and services bought?
Where do we locate our facilities?
Seciton III: Supply Chain Processes and Analytics
1-7
Process Activities
Planning processes needed to operate an
existing supply chain
Sourcing selection of suppliers that will deliver
the goods and services needed to create the
firms product
Making producing the major product or service
Delivering logistics processes such as selecting
carriers, coordinating the movement of goods and
information, and collecting payments from
customers
Returning receiving worn-out, excess, and/or
defective products back from customers
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Goods versus Services
Tangible
Less interaction with customers
Often homogeneous
Not perishable can be inventoried
Pure Goods Core Goods
Intangible
Interaction with customer required
Inherently heterogeneous
Perishable/time dependent
Defined and evaluated as a package of
features
Core Services Pure Services
Goods Services
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Efficiency, Effectiveness, and
Value
Doing something at the lowest possible cost
Efficiency
Doing the right things to create the most value for
your customer
Effectiveness
The attractiveness of a product relative to its cost
Value
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Evaluating Efficiency
Comparison of firms is important to investors
From an operations and supply chain perspective, the
relative cost of providing a good or service is closely
related to earnings growth
Management efficiency ratios
Labor productivity
Net income per employee
Revenue (or sales) per employee
Asset productivity
Receivables turnover ratio
Inventory turnover
Asset turnover


1-11
Careers in Operations and Supply
Chain Management
Plant manager
Hospital
administrator
Branch manager
Department
store manager
Call center
manager
Supply chain
manager
Purchasing
manager
Quality control
manager
Business
process
improvement
analyst
Lean
improvement
manager
Project manager
Production
control analyst
Facilities
manager
Chief operating
officer
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Historical Development of Operations and
Supply Chain Management
Late 1970s
Early
1980s
Mid 1980s
Early
1990s
Mid 1990s
Late 1990s
Early
2000s
Mid 2010s
Manufacturing strategy
developed
Just-in-time (JIT) production
pioneered by the Japanese
Service quality and productivity
Total Quality Management
(TQM) and Quality
Certification programs
Business Process
Reengineering (BPR)
Electronic commerce
Business
Analytics
Service Science
Supply Chain
Management
(SCM)
Six-Sigma
Quality