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Introduction to Operations and Supply
Chain Management
Text: Introduction to Operations and Supply Chain ManagementCustom edition for Farmingdale State College
Authors: Cecil Bozarth & Robert Handfield
Where appropriate reference text page numbers will be on bottom of slides
OSC may be used as an abbreviation of Operations and Supply Chain
Chapter Objectives
Be able to: Describe what the operations function is and why it is
critical to an organization’s survival. Describe what a supply chain is and how it relates to a
particular organization’s operations function. Discuss what is meant by operations management and
supply chain management. Identify some of the major operations and supply chain
activities, as well as career opportunities in these areas. Make a case for studying both operations management
and supply chain management.
Introduction
• Why study Operations and Supply Chain Management?
• Operations Management
• Supply Chain Management
• Important trends
• LeapFrog case study
Focus
• Key issues surrounding the design and ongoing management of these areas
• Common tools and techniques– Introduction to the SCOR model
• Analytical skills (both qualitative and quantitative)
Why Study Operations andSupply Chain Management?
Three Basic Truths
I. Pervasiveness
II. Interdependence
III. Profitability and Survival
PervasivenessEvery organization must make a product or
provide a service that someone values………….
Manufacturer.Retailer.Design firm.University.Health services.
Interdependence
Most organizations function as part of a larger supply chain
Supply Chains
• Networks of manufacturers and service providers that work together to move goods from the raw material stage through to the end user
• Linked through physical, information, and monetary flows
Profitability and Survival
Organizations must carefully manage their operations and supply chains to prosper, and indeed, survive!
Shoe manufacturer:How many shoes should we make? What mix?What resources do we need? What will we outsource?Location?Key performance criteria -- Cost? Quality? Speed?
Operations Management
The planning, scheduling, and control of the activities that transform inputs
into finished goods and services
Operations Function
The collection of people, technology, and systems within a company ...
… that has primary responsibility ...
… for providing the organization’s products and/or services.
Viewing Operations as a Transformation Process
TransformationProcess
Manufacturing operations
Service operations
Inputs Outputs
MaterialsPeopleEquipmentIntangible needsInformation
Tangible goodsFulfilled requestsInformationSatisfied Customers
Manufacturing• Tangible product
• Key decisions driven by physical characteristics of the product:– How is the product made? – How do we store it?– How do we move it? – Etc.
Services
• Intangible “Product” or Service
– Location, Exchange, Storage, Physiological, Information
• Key decisions:
– How much customer involvement?
– How much customization?
Cross-Functional Linkages
Operations and Supply Chain
FinanceBudgeting.Analysis.Funds.
MarketingWhat products?What volumes?Costs? Quality?Delivery?
HumanResourcesSkills? Training?# of Employees?
AccountingPerformance measurement systems.Planning and control.
MISWhat IT solutionsto make it all worktogether?
DesignSustainability.Quality.Manufacturability.
Supply Chain Management
Active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage
Alcoa Ball Corp Anheuser-Busch M&M Meijer
First TierSupplier Distributo
rRetailer
Transportation companies
Finalcustomers
Upstream Downstream
Alcoa
Second TierSupplier
Material Flows
Supply Chain Issues
• Length of the chain
• Complexity
• Stability
• Physical, informational, and monetary flows
Supply-Chain Operations Reference (SCOR)* ModelConsists of:• Planning activities• Sourcing activities• “Make” or production activities• Delivery activities• Return activities
* Supply-Chain Council, 2007. www.supply-chain.org
SCOR Model
© Supply-Chain Council, 2007
Wal-Mart — Early 1990s
• Individual stores sent sales data daily to Wal-Mart’s suppliers via satellite
• Suppliers plan production and ship based on this sales data
• Wal-Mart used its own dedicated fleet to ship from its warehouses to stores
Panera Bread — 2006
• 4th quarter revenues and profits up 25% and 8%, respectively, over 2005 4th quarter*
• >200 million pounds of dough delivered by 110 trucks traveling 9.7 million miles annually
*Panera Bread, 4th Quarter 2006 Earnings Report, www.panera.com/about/investor/reports.php.
Important Trends
• Electronic commerce– Reduces the costs and time associated with
supply chain relationships
• Increasing competition and globalization– Fewer industries protected by geography
• Relationship management– Competition between chains, not individual firms– Trust and coordination
Operations and Supply Chain Management and You
• Analyst• Commodity Manager• Customer Service
Manager• International Logistics
Manager• Logistics Services
Salesperson• Production Manager
• Sourcing Analyst• Logistics and Material
Planner• Systems Support
Manager (MIS)• Transportation Manager• Process Analyst• Scheduler• Purchasing Agent
Some of the many career positions
Operations and Supply Chain Activities
• Process selection, design, and improvement• Forecasting for decision making• Capacity planning for capital investment and
resource levels• Inventory management for amount and location• Planning and control for work scheduling and
meeting demand• Purchasing, managing supplier relationships• Logistics or acquisition and distribution
Case Study Introducing Operations and Supply Chain
Management
LeapFrog