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Chapter 1

Chapter 1. Operations and Supply Chain Management. 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.

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Chapter 1

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  1. Chapter 1 Operations and Supply Chain Management

  2. 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.

  3. 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 firm’s 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 • Involves transformation of inputs to outputs and is the core of any business

  4. OSCM Transformation Process Transformation Process (Value Adding) Input Output • People • Plants • Parts • Processes • Planning and Control Transformation is enabled By the 5 P’s of OM

  5. Examples of OSCM Transformation Processes • Physical—manufacturing • Locational—transportation • Exchange—retailing • Storage—warehousing • Physiological—health care • Informational—telecommunications

  6. Operations and Supply Chain Management • OSCM is related to all areas of business • There is no business without OSCM • Education on how to produce goods or services • Most costs are incurred in creating goods or providing services • Global nature of operations and competition • Impetus of new technologies

  7. Process Steps for Men’s Nylon Supplex Parka

  8. 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

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

  10. Supply Chain Processes LO 3

  11. 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 LO 3

  12. Differences Between Services and Goods • Services are intangible • Services require some interaction with the customer • Services are inherently heterogeneous • Services are perishable and time dependent • Services are defined and evaluated as a package of features • Is McDonald’s service or manufacturing company? LO 4

  13. The Goods-Services Continuum LO 4

  14. 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

  15. International Growth in Services LO 4

  16. 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

  17. 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 Careers in Operations and Supply Management LO 5

  18. Historical Development of Operations and Supply Mgt. • 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

  19. Current Issues in Operations and Supply Management • Coordinating the relationship between mutually supportive but separate organizations • Optimizing global suppliers, production, and distribution networks • Managing customer touch points • Raising senior management awareness of operations as a significant competitive weapon • Sustainability and the triple bottom line LO 6

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