Chapter 1

Operations and Supply Chain Management

McGraw-Hill/Irwin

Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
Understand why it is important to study
operations and supply chain management.
Define efficient and effective operations.
Categorize operations and supply chain
processes.
Contrast differences between services and
goods producing processes.
Identify operations and supply chain
management career opportunities.
Describe how the field has developed over
time.
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What is Operations and Supply

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
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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
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Work Involved in Each Type of Process

1. Planning: the processes needed to operate
an existing supply chain strategically
2. Sourcing: the selection of suppliers that will
deliver the goods and services needed to
create the firms product
3. Making: Where the major product is
produced or the service provided
4. Delivering: carriers are picked to move
products to warehouses and customers
5. 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 intangible

2. Services require some interaction with
the customer
3. Services are inherently
heterogeneous
4. Services are perishable and time
dependent
5. Services are defined and evaluated as
a package of features
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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: quality divided by price

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Careers in Operations and Supply

Management
Plant manager
Hospital
administrator
Branch manager
Call center manager
Supply chain
manager
Purchasing
manager

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 Management

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
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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 (balance
among profitability, employee security and
opportunities, and environmental friendliness)
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