Chapter 1

Operations and Supply Chain Management

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

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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 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

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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

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Organization of OSM—The Core

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Operations and Supply Processes

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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 intangible

2. Services requires 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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The Goods-Services Continuum

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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