Introduction to Managing Operations Across the Supply Chain CHAPTER 1 Introduction to Managing Operations Across the Supply Chain McGraw-Hill/Irwin Copyright © 2014 McGraw-Hill Higher Education. All rights reserved.

Learning Objectives LO1-1 Explain what operations management is and why it is important LO1-2 Describe the major decisions that operations managers typically make LO1-3 Explain the role of processes and “process thinking” in operations management LO1-4 Explain what the supply chain is and what it means to view operations management using a “supply chain perspective” LO1-5 Identify the partners and functional groups that work together in operations management LO1-6 Define the planning activities associated with managing operations across the supply chain

Operations Management (OM) Is Everywhere – Part I PRODUCTS: Everything you wear, eat, sit on or in, use, read, or knock about on a sports field comes to you courtesy of operations. SERVICES: Every book you borrow from the library, every medical treatment you receive, every lecture you attend at a university, every service you receive comes to you courtesy of operations. LO1-1

Operations Management (OM): A Basic Definition Operations Management (OM): is the management of processes used to design, supply, produce, and deliver valuable goods and services to customers LO1-1

Operations Management (OM): Common Challenges Lowering costs Improving quality Enhancing product desirability Aligning OM with the company’s competitive strategy Evolving with the needs of customers, competition, and technology LO1-1

OM From a Supply Chain Perspective: Supply Chain (SC) Defined Supply Chain (SC): the global network of organizations and activities involved in designing, transforming, consuming and disposing of goods and services. LO1-1

Goods vs. Services Goods Services Tangible Can be inventoried Little customer contact Long lead time Often capital-intensive Quality easily assured Material is transformed Intangible Cannot be inventoried Extensive customer contact Short lead time Often labor intensive Quality harder to assess Information or customer is transformed LO1-2

OM Processes and Process Thinking Inputs Transformation Outputs A process is a system of activities that transforms inputs into valuable outputs. LO1-3

OM Processes and Process Thinking: Process Types Design processes develop new goods and services Strategic planning processes determine how the firm should compete. Production processes plan and execute the supply, manufacture, and delivery of goods and services to customers. Evaluation processes measure and report how well they are meeting their goals or using their resources. LO1-3

Foundational Concepts in Supply Chain Operations Management LO1-4

OM From Supply Chain Perspective: Supply Chain Management (SCM) Defined Supply Chain Management (SCM): is the design and execution of relationships and flows that connect the parties and processes across a supply chain. LO1-4

OM Partners Across the Supply Chain Operations managers interact with three important groups that are external to the firm: Customers, who use or consume output Suppliers, who provide inputs Stakeholders, who have an interest in organizational well being and performance LO1-5

Resource and Technology Suppliers SC Partners and Functional Activities The Business Enterprise Resource and Technology Suppliers Product and Service Suppliers Customers and Partners Internal Operations Mgmt. Customer (Chapter 9) Logistics Mgmt. (Chapter 11) Supply (Chapter 10) Upstream Supply Management Finance Logistics Management Warehousing/RM planning Downstream Marketing Sales & Distribution Customer Service Warehousing/FGI Planning Figure 1-2 LO1-5

Levels of Planning Strategic Planning: long term decisions defining the objectives and capabilities Tactical Planning: intermediate term decisions defining how capacity is used to meet demand Operational Planning: short term priorities and schedules for resource allocation LO1-6

Introduction to Managing Operations Across the Supply Chain: Summary - I Operations helps deliver superior products to a firm's targeted customers. Operations manages the effective and efficient transformation of inputs into outputs. Operations management partners include customers, suppliers, stakeholders and other business functions within the firm. Operations management decisions determine firm capabilities and success Operations management focuses on managing processes, SCM is managing flow and relationships Operations management is dynamic, it is constantly evolving