McGraw-Hill/Irwin Copyright © 2011 The McGraw-Hill Companies, All Rights Reserved

Chapter 1

Operations and Supply Chain Management

1-2

Learning Objectives

1. Understand why it is important to studyoperations and supply chain management.

2. Define efficient and effective operations.

3. Categorize operations and supply chainprocesses.

4. Contrast differences between services andgoods producing processes.

5. Identify operations and supply chainmanagement career opportunities.

6. Describe how the field has developed overtime.

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What is Operations and SupplyChain Management?

• Operations and supply management(OSM): the design, operation, andimprovement of the systems that createand deliver the firm’s primary productsand services

– Functional field of business

– Clear line management responsibilities

• Concerned with the management of theentire system that produces a good ordelivers a service

LO 1

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Process Steps for Men’s NylonSupplex Parka

LO 2

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Understanding the Global SupplyChain

• Success in today’s global markets requires abusiness strategy that matches thepreferences of customers with the realities ofsupply networks

• A sustainable strategy is critical

– Meets the needs of shareholders and employees

– Preserves the environment

• Supply refers to processes that moveinformation and material to and from themanufacturing and service processes of thefirm

LO 3

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Work Involved in Each Type ofProcess

• Planning: the processes needed to operatean existing supply chain strategically

• Sourcing: the selection of suppliers that willdeliver the goods and services needed tocreate the firm’s product

• Making: Where the major product is producedor the service provided

• Delivering: carriers are picked to moveproducts to warehouses and customers

• Returning: the processes for receiving worn-out, defective, and excess products back fromcustomers

LO 3

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Differences Between Services andGoods

1. Services are intangible

2. Services requires some interactionwith the customer

3. Services are inherentlyheterogeneous

4. Services are perishable and timedependent

5. Services are defined and evaluated asa package of features

LO 4

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Servitization Strategies

• Servitization refers to a companybuilding service activities into itsproduct offerings for its current users– Maintenance, spare parts, training, and so

on

• Success starts by drawing together theservice aspects of the business underone roof

• Servitization may not be the bestapproach for all companies

LO 4

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Efficiency, Effectiveness, andValue

• Efficiency: Doing something at thelowest possible cost

• Effectiveness: Doing the right things tocreate the most value for the company

• Value: quality divided by price

LO 2

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Careers in Operations and SupplyManagement

• Plant manager

• Hospitaladministrator

• Branch manager

• Call center manager

• Supply chainmanager

• Purchasingmanager

• Business processimprovementanalyst

• Quality controlmanager

• Lean improvementmanager

• Project manager

• Production controlanalyst

• Facilities manager

LO 5

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Historical Development ofOperations 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

LO 6

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Current Issues in Operations andSupply Management

1. Coordinating the relationship betweenmutually supportive but separateorganizations

2. Optimizing global suppliers, production, anddistribution networks

3. Managing customer touch points

4. Raising senior management awareness ofoperations as a significant competitiveweapon

5. Sustainability and the triple bottom line

LO 6