Introduction to Operations and Supply Chain Management Chapter 1
A New Business Environment Businesses try to break down the “silos” that used to define business functions.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 3 Technological progress is moving at a tremendous rate There are many new products and services in addition to old ones Rapid change is the norm A New Business Environment
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 4 Operations Management What is operations management? “The management of resources used to create saleable products and services.” The management of an organization’s productive resources or its production system, which converts inputs into the organization’s products and services.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 5 Operations Management Operations Management – The planning, scheduling, and control of the activities that transform inputs into finished goods and services. Figure 1.1 © 2010 APICS Dictionary
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 6 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.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 7 Services Intangible Product or Service Location, Exchange, Storage, Physiological, Information Key decisions: How much customer involvement? How much customization?
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 8 Effectiveness vs. Efficiency Effectiveness – the ability to choose appropriate goals and achieve them. Efficiency – the ability to make the best use of available resources in the process of achieving goals.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall1 - 9 Supply Chain Supply Chain – A network of manufacturers and service providers that work together to create products or services needed by end users.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chains Basic Producer ConvertersFabricatorsAssemblers Support Services Transport Storage Finance, etc. Basic Producer – Mines, extracts or harvests natural resources Converter – Refines natural resources Fabricator – Converts refined materials into usable components Assembler – Assembles components into finished products
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Management Supply Chain Management – The active management of supply chain activities and relationships in order to maximize customer value and achieve a sustainable competitive advantage.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall A Supply Chain Example Figure 1.2
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Terminology Upstream – Activities positioned earlier in the supply chain. Downstream – Activities positioned later in the supply chain. First-tier supplier – A supplier that provides products or services directly to a firm. Second-tier supplier – A supplier that provides products or services to a first-tier supplier.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Operations Reference (SCOR) Model © Supply-Chain Council, 2011 Figure 1.3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Why study Operations and Supply Chain Management? Every organization must make a product or a service that someone values. Most organizations function as part of larger supply chains. Organizations must carefully manage their operations and supply chains in order to prosper, and indeed, survive.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Adopting SCM Increased competition The impact of customers on suppliers The impact of suppliers on customers Technological advances
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Management (SCM) Consists of: Planning activities Sourcing activities “Make,” or production, activities Delivery activities Return activities © Supply-Chain Council, 2011
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Operations Reference (SCOR) Model © Supply-Chain Council, 2011 Figure 1.3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Historical Development of OM The Industrial Revolution Post-civil war period Scientific Management Human Relations and Behavioralism Operations Research Service Revolution Computer Revolution
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Contributions to Society Higher standard of living Better quality goods and services Concern for the environment Improved working conditions
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 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
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Tangible Resources Inventory Workforce Capacity Facilities
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Intangible Resources Customer relationships Resource planning Lean systems Total Quality management (TQM) Constraint management Supply chain management
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Professional Organizations APICS – Association for Operations Management ISM – Institute for Supply Management CSCMP – The Council of Supply Chain Management Professionals ASQ – The American Society for Quality