McGraw-Hill/Irwin

Copyright © 2011 The McGraw-Hill Companies, All Rights Copyright © 2011 The McGraw-Hill Companies, All Rights ReservedReserved

Chapter 1

Operations and Supply Chain Management

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Learning Objectives

1. Understand why it is important to study operations and supply chain management.

2. Define efficient and effective operations.3. Categorize operations and supply chain

processes.4. Contrast differences between services and

goods producing processes.5. Identify operations and supply chain

management career opportunities.6. Describe how the field has developed over

time.

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What is Operations and Supply Chain Management?

• Operations and supply management (OSM): the design, operation, and improvement of the systems that purchase, create and deliver the firm’s primary products and services– A functional field (dept.) of businesses

• Concerned with the management of the entire system that buys materials, produces a good and/or delivers a service

• Make things customers want, efficiently.• What is a supply chain?

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Process Steps for Men’s Nylon Supplex Parka

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Understanding the Global Supply Chain

• Success in today’s global markets requires a business strategy that matches the preferences of customers with the realities of supply networks

• A sustainable strategy is critical– Meets the needs of shareholders and employees– Preserves the environment

• Supply refers to processes that move information and material to and from the manufacturing and service processes of the firm– Objective of SCM: buy, make and deliver what customers want,

for a price they are willing to pay, while creating profits for the firm.

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Work Involved in Each Type of Process

• Planning: the processes needed to operate an existing supply chain strategically

• Sourcing: the selection of suppliers that will deliver the goods and services needed to create the firm’s product

• Making: Where the major product is produced or the service provided

• Delivering: carriers are picked to move products to warehouses and customers

• Returning: the processes for receiving worn-out, defective, and excess products back from customers

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Differences Between Services and Goods

1. Services are intangible2. Services require interactions with the

customer3. Services are inherently heterogeneous

(vary continuously due to customer/server)4. Services are perishable and time dependent5. Services are defined and evaluated as a

package of features

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Servitization Strategies

• Servitization refers to a company building service activities into its product offerings for its current users– Maintenance, spare parts, training, and so on

• Success starts by drawing together the service aspects of the business under one roof

• Servitization may not be the best approach for all companies

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Efficiency, Effectiveness, and Value

• Efficiency: Doing something at the lowest possible cost

• Effectiveness: Doing the right things to create the most value for the company

• Value: delivered quality for price paid

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Careers in Operations and Supply Chain Management

• Plant manager• Hospital manager• Branch manager• Call center manager• Supply chain

manager• Purchasing

manager• Manufacturing mgr.• Inventory mgr.

• Business process improvement analyst

• Quality control manager

• Lean improvement manager

• Project manager• Production control

analyst• Facilities manager

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Historical Development of Operations and Supply Chain Management

• JIT, TQC • Manufacturing strategy paradigm• Service quality and productivity• Total quality management (TQM) and quality

certifications (ISO 9000/14000)• Business process reengineering (BPR)• Lean thinking and Six-sigma quality• Supply chain management• Electronic commerce• Service science

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Current Issues in Operations and Supply Management

1. Coordinating the relationships between mutually supportive but separate organizations

2. Optimizing global suppliers, production, and distribution networks

3. Managing customer & supplier interactions4. Raising senior management awareness of

operations as a significant competitive weapon5. Sustainability and the triple bottom line6. Social networks and the company

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