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Chapter 1
OPERATIONS & SUPPLYCHAIN MANAGEMENT
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Learning Objectives
1. Operations and supply chain management(OSCM) Definition.
2. Transformation process.
3. Type of operations.
4. Services vs. goods.
5. Career opportunities in supply chainmanagement.
6. Historical development of OSCM over time.
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Operations and Supply Chain
Management (OSCM) Definition
Operations Management is
the management of systems or processes
that create goods and/or provide services(STC, 2010)
OSCM is defined as the design, operation,
and improvement of the systems that createand deliver the firms
primary products and
services (JCL, 2011)
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Transformation Process
The operations function involves the conversion of
inputs into outputs
Inputs:
Land
Labor
Capital
Transformation/conversion
process
Outputs:
Goods
Services
Control
Feedback
FeedbackFeedback
Value added
5Ps:
1. People (labor)
2. Plants
3. Parts (materials)
4. Processes
5. Planning and
Control
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Types of Operations
Operations ExamplesGoods Producing
Farming, mining, construction,
manufacturing, power generation
Storage/Transportation
Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
ExchangeRetailing, wholesaling, financial
advising, renting or leasing
EntertainmentFilms, radio and television,
music concerts, recording
CommunicationNewspapers, radio and TV
newscasts, telephone, satellites
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Process Steps for Mens Nylon
Supplex Parka
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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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Supply Chain Processes
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Work Involved in Each Type of Process
Planning: the processes needed to operate anexisting supply
chain strategically
Sourcing: the selection of suppliers that will deliver
the goods and services needed to create the firms
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 fromcustomers
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Services vs. Goods
1. Services are intangible
2. Services requires more 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
6. Services cant be stored
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Goods vs. Service Continued
Characteristic Goods ServiceCustomer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High LowInventory Much
Little
Evaluation Easier Difficult
Patentable Usually Not usually
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The Goods-Services Continuum
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Automobile assembly, steel making
Home remodeling, retail sales
Automobile repair, fast food
The GoodsService Continuum Continued
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
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Servitization Strategies
Servitization refers to a company buildingservice activities
into its product offerings for itscurrent users
Maintenance, spare parts, training, and so on
Success starts by drawing together the serviceaspects of the
business under one roof
Servitization may not be the best approach forall companies
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International Growth in Services
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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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Year Mfg. Service
45 79 21
50 72 28
55 72 28
60 68 32
65 64 3670 64 36
75 58 42
80 44 46
85 43 57
90 35 65
95 25 75
00 30 70
02 25 75
U.S. Manufacturing vs. Service Employment
010
20
30
40
50
60
70
80
90
45 50 55 60 65 70 75 80 85 90 95 00 02 05
Year
Percen
t
Mfg.
Service
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0
10
20
30
40
50
60
70
80
90
97 98 99 00 01 02 03 04 05 06 07
Services
Manufacturing
Singapore Manufacturing vs. Service
Employment
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Careers in Operations and Supply
Management
Plant manager
Hospital administrator
Branch manager
Call center manager
Supply chain manager
Purchasing manager
Director of Operations/ Manufacturing /
Production
Chief Operations
Officer (COO)
Business processimprovement analyst
Quality control
manager Lean improvement
manager
Project manager
Production controlanalyst
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 qualitycertifications
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
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Plan of this Course: The Integration of
Strategy, Processes and Planning
