© March 2014

What is operations? A company’s system of value-creation activities used to transform inputs into finished goods and services

What is materials management? The set of activities that control the flow of recources into and out of a firm’s operating system.

Raw materials Components Labor Cutomer Skills Knowledge Machines Experts Goods Services

InputsProcessOutput MATERIALS MANAGEMENT MATERIALS MANAGEMENT OPERATIONS

A superior Operation & Materials Management Could Give Company COMPETITIVE ADVANTAGE PRODUCTIVITY HIGHER VALUE LOWER COST

Operations & Materials Management Method INCREASE PRODUCTIVITY: Better ways to use resources Lower inventory holding cost Reduce time to process customer orders INCREASE RESPONSIVENESS TO CUSTOMER High-quality customer service Satisfying shopping experience Good after sales services INCREASE INNOVATION: Find ways to inprove product quality Find ways to reduce production cost Find ways to sell products at a lower cost INCREASE QUALITY: Number of customer orders corectly processed Consistent, reliable product Ensure supply of high- quality inputs

OMM COST Raw Materials & Components Cost Plant Cost Labor Cost Inventory Cost Distribution Cost

Flexible Production Small-Batch Production Mass Production

An operating system designed to make one-of-a- kind or small quantities of cuztomized products Small-Batch Production

An operating system based on the use of automated machines and standard operating procedures to make work routine and create a large number of standardized products Mass Production

An advanced operating system that combines the benefits of mass production with benefits of small- batch production Flexible Production

Computer-Integrated Manufacturing A manufacturing technique that controls the changeover of machines from one operation to another via computer software. Flexible Employees & Work Groups A team of self-managed employees who assume responsibility for performing the operating task necessary to make part, or all, of a peoduct.

A technique that relies on computers to manage the flow of raw materials and component parts into and out of a company’s operating system

The coordination of the flow of raw materials, semifinished goods, and finished products around the world

An inventory management system whereby inputs are delivered to the firm just when they are needed rather than being purchased and warehoused prior to their use