Chapter 1

Operations and Supply Chain Management

McGraw-Hill/Irwin

Copyright 2011 The McGraw-Hill Companies, All Rights Reserved

Learning Objectives
1. Understand why it is important to study operations and supply chain management. 2. Categorize operations and supply chain processes. 3. Contrast differences between services and goods producing processes. 4. Define efficient and effective operations 5. Identify operations and supply chain management career opportunities. 6. Describe how the field has developed over time.
1-2

What is Operations and Supply Chain Management?

Operations and supply management (OSM): the design, operation, and improvement of the systems that create and deliver the firms primary products and services
Functional field of business Clear line management responsibilities

Concerned with the management of the entire system that produces a good or delivers a service
LO 1
1-3

Process Steps for Mens Nylon Supplex Parka

LO 2
1-4

Understanding the Global Supply Chain

Success in todays 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
LO 3
1-5

Organization of OSCM: The Integration of Strategy, Processes and Planning

LO 1
1-6

Supply Chain Processes

LO 3
1-7

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 firms 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 wornout, defective, and excess products back from customers
LO 3
1-8

Differences Between Services and Goods

1. Services requires some interaction with the customer 2. Services are inherently heterogeneous 3. Services are perishable and time dependent 4. Services are defined and evaluated as a package of features
LO 4
1-9

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
LO 4
1-10

International Growth in Services

LO 4
1-11

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: quality divided by price

LO 2
1-12

Careers in Operations and Supply Management

Plant manager Hospital administrator Branch manager Call center manager Supply chain manager Purchasing manager
LO 5
1-13

Business process improvement analyst Quality control manager Lean improvement manager Project manager Production control analyst Facilities manager

Historical Development of Operations and Supply Management

LO 6
1-14

Lean manufacturing, JIT, and TQC Manufacturing strategy paradigm Service quality and productivity Total quality management (TQM) and quality certifications Business process reengineering Six-sigma quality Supply chain management Electronic commerce Service science

Current Issues in Operations and Supply Management

1. Coordinating the relationship between mutually supportive but separate organizations 2. Optimizing global suppliers, production, and distribution networks 3. Managing customer touch points 4. Raising senior management awareness of operations as a significant competitive weapon 5. Sustainability and the triple bottom line
LO 6
1-15