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CHAPTER EIGHT OVERVIEW

SECTION 8.1 – OPERATIONS MANAGEMENT • Operations Management Fundamentals• OM in Business• IT’s Role in OM• Competitive OM Strategy• OM and the Supply Chain•  SECTION 8.2- SUPPLY CHAIN MANAGEMENT• Supply Chain Fundamentals• IT’s Role in the Supply Chain• Supply Chain Management Success Factors• Supply Chain Management Success Stories• Future Supply Chain Trends

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OM FUNDAMENTALS

• Transformation process - the actual conversion of inputs to outputs

• Value-added - the term used to describe the difference between the cost of inputs and the value of price of outputs

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OM IN BUSINESS

• How does an airline service organization’s OM team adds value? Forecasting Capacity planning Scheduling Managing inventory Assuring quality Motivating and training employees Locating facilities

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OM STRATEGIC BUSINESS SYSTEMS

• Operations strategy addresses broad questions about using major resources to achieve corporate objectives

• Major long-term issues addressed in operations strategy include: How big to make the facilities? Where to locate the facilities? When to build additional facilities? What type of process(es) to install to make

the products?

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OM STRATEGIC BUSINESS SYSTEMS

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COMPETITIVE OM STRATEGY

• Five key competitive priorities which a company can add value to its OM decisions including:

1. Cost2. Quality3. Delivery4. Flexibility5. Service

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OM AND THE SUPPLY CHAIN

• Four basic components of supply chain management include:

1. Supply chain strategy – strategy for managing all resources to meet customer demand

2. Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.

3. Supply chain operation – schedule for production activities

4. Supply chain logistics – product delivery process

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OM AND THE SUPPLY CHAIN

• Effective and efficient SCM systems can enable an organization to: Decrease the power of its buyers Increase its own supplier power Increase switching costs to reduce the threat of

substitute products or services Create entry barriers thereby reducing the

threat of new entrants Increase efficiencies while seeking a

competitive advantage through cost leadership

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OM AND THE SUPPLY CHAIN

• Effective and efficient SCM systems effect on Porter’s Five Forces

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SUPPLY CHAIN FUNDAMENTALS

• Organizations must embrace technologies that can effectively manage supply chains

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IT’S ROLE IN THE SUPPLY CHAIN

• IT’s primary role is to create integrations or tight process and information linkages between functions within a firm

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IT’S ROLE IN THE SUPPLY CHAIN

Factors Driving SCM

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SCM SUCCESS FACTORS

• Segment customers• Customize the logistics network• Listen to signals of market demand and plan accordingly• Differentiate products closer to the customer• Strategically manage sources of supply• Develop a supply chain IT strategy• Adopt performance evaluation measures

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FUTURE SUPPLY CHAIN TRENDS

• Fastest growing SCM components Supply chain event management (SCEM) Selling chain management Collaborative engineering Collaborative demand planning