1. Chapter 8 8-1 CHAPTER EIGHT OVERVIEW SECTION 8.1 – OPERATIONS MANAGEMENT Operations Management Fundamentals OM in Business IT’s Role in OM Competitive OM Strategy OM and the Supply Chain SECTION 8.2- SUPPLY CHAIN MANAGEMENT Supply Chain Fundamentals IT’s Role in the Supply Chain Supply Chain Management Success Factors Supply Chain Management Success Stories Future Supply Chain Trends

2. Chapter 8 8-2 OM FUNDAMENTALS Transformation process - the actual conversion of inputs to outputs Value-added - the term used to describe the difference between the cost of inputs and the value of price of outputs

3. Chapter 8 8-3 OM IN BUSINESS How does an airline service organization’s OM team adds value?  Forecasting  Capacity planning  Scheduling  Managing inventory  Assuring quality  Motivating and training employees  Locating facilities

4. Chapter 8 8-4 OM STRATEGIC BUSINESS SYSTEMS Operations strategy addresses broad questions about using major resources to achieve corporate objectives Major long-term issues addressed in operations strategy include:  How big to make the facilities?  Where to locate the facilities?  When to build additional facilities?  What type of process(es) to install to make the products?

5. Chapter 8 8-5 OM STRATEGIC BUSINESS SYSTEMS

6. Chapter 8 8-6 COMPETITIVE OM STRATEGY Five key competitive priorities which a company can add value to its OM decisions including: 1. Cost 2. Quality 3. Delivery 4. Flexibility 5. Service

7. Chapter 8 8-7 OM AND THE SUPPLY CHAIN Four basic components of supply chain management include: 1. Supply chain strategy – strategy for managing all resources to meet customer demand 2. Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services. 3. Supply chain operation – schedule for production activities 4. Supply chain logistics – product delivery process

8. Chapter 8 8-8 OM AND THE SUPPLY CHAIN Effective and efficient SCM systems can enable an organization to:  Decrease the power of its buyers  Increase its own supplier power  Increase switching costs to reduce the threat of substitute products or services  Create entry barriers thereby reducing the threat of new entrants  Increase efficiencies while seeking a competitive advantage through cost leadership

9. Chapter 8 8-9 OM AND THE SUPPLY CHAIN Effective and efficient SCM systems effect on Porter’s Five Forces

10. Chapter 8 8-10 SUPPLY CHAIN FUNDAMENTALS Organizations must embrace technologies that can effectively manage supply chains

11. Chapter 8 8-11 IT’S ROLE IN THE SUPPLY CHAIN IT’s primary role is to create integrations or tight process and information linkages between functions within a firm

12. Chapter 8 8-12 IT’S ROLE IN THE SUPPLY CHAIN Factors Driving SCM

13. Chapter 8 8-13 SCM SUCCESS FACTORS Segment customers Customize the logistics network Listen to signals of market demand and plan accordingly Differentiate products closer to the customer Strategically manage sources of supply Develop a supply chain IT strategy Adopt performance evaluation measures

14. Chapter 8 8-14 FUTURE SUPPLY CHAIN TRENDS Fastest growing SCM components  Supply chain event management (SCEM)  Selling chain management  Collaborative engineering  Collaborative demand planning