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
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Operations Management at its best: Apples Success Story

PRODUCT DESIGN/MIX

VOLUME

LOW COST SUPPLY

SUPPLIERS

DEMAND VISIBILITY

Operations expertise is as big an asset for Apple as product innovation or marketing.

LO11
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Operations Management (OM) is everywhere Part I

__________: Everything you wear, eat, sit on or in, use, read, or knock about on a sports field comes to you courtesy of operations. __________: 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.

LO11

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Operations Management (OM) is everywhere Part II

Schools Hospitality

Restaurants Banks

Construction

Military Agriculture Sport Teams Transportation Municipalities

Health Care

Manufacturers

Retail

Government Services

Not-for-Profit Entertainment Organizations

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LO11

Operations Management (OM): A Basic Definition

_________________ _________________: is the management of processes used to design, supply, produce, and deliver valuable goods and services to customers

LO11

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Operations Management (OM): Common Challenges

Lowering ________ Improving __________ Enhancing ____________________ Aligning OM with the companys ____________________ Evolving with the needs of _________, _________, and ____________
LO11
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OM From a Supply Chain Perspective: Supply Chain (SC) Defined

_____________________: the global network of organizations and activities involved in designing, transforming, consuming and disposing of goods and services.

LO11

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Why study OM? Part I

OM involves using ___________ and managing __________________________ When done well, effective OM can:
_____________________________ _____________________________ _____________________________ _____________________________ _____________________________
LO11
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Why study OM? Part II: Examples of business impacts

According to a study by Swink et al (2010), companies that excel in supply chain operations outperformed their nearest competitors in the following ways: 50% higher _____________________________ 20% __________, _______________________(SG&A) expenses 12% lower _____________________________ 30% less _____________________________ 2X the _____________________________
LO11
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Important Decisions in Supply Chain OM: What?

What types of _________ and what types of __________ are to be delivered by the system? What ____________ do our intended customers care about? What ________ and ________ are needed, and how should they be _________, __________, and ________?

LO12

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Important Decisions in Supply Chain OM: How?

How is the good or service to be _________, ______, and ________? How much should our ___________________ be able to deliver (and under what conditions)? How should we __________ and ________ performance?

LO12

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Important Decisions in Supply Chain OM: When? Where? Who?

When should products be ______, activities be _________, services be ________, or capacities/facilities ____________? Where should certain activities be _____, and Who should do them: _______, ________, or the _________? is the good or service to be _______, ________, and ________?

LO12

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Goods vs. Services

Goods

Services

LO12

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Goods vs. Services: Activity

Think of the last time you visited an amusement park
How many different pure goods did you encounter? How many different pure services did you encounter? How many were both a good and a service? How many were prepared in advance or prepared just as you ordered?

LO12

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Goods vs. Services: Total Product Experience

______________________________ refers to all the outputs of an operation, both goods and services, that are combined to define a customers complete consumption experience. The experience includes all aspects of _________, __________, and __________of the product.

LO12

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OM Processes and Process Thinking Inputs Transformation Outputs

LO13

A __________ is a system of activities that transforms inputs into valuable outputs.

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OM Processes and Process Thinking: Process Types

______________develop new goods and services ____________________________ determine how the firm should compete. _____________________ plan and execute the supply, manufacture, and delivery of goods and services to customers. _____________________ measure and report how well they are meeting their goals or using their resources.
LO13
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Foundational Concepts in Supply Chain Operations Management

LO14

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OM From Supply Chain Perspective: Supply Chain Management (SCM) Defined

__________________________________: is the design and execution of relationships and flows that connect the parties and processes across a supply chain.

LO14

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From OM to SCM
The evolution from focusing on OM to focusing on SCM has primarily been driven by:

LO14

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From OM to SCM: Technology and Infrastructure

Advances in ___________, ___________, and _________________: Faster more extensive connectivity Strengthening of partnerships with better communication Faster, more reliable, and more economical shipping Growing transportation infrastructure in developing and emerging
LO14
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From OM to SCM: Barriers to Trade

Shifting __________, ___________________ and ____________________: Economic decentralization in favor of free market systems Growing potential for improved product costs and quality Increased complexity and exposure to risk
LO14
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From OM to SCM: Core Capabilities

Unique sets of _______ that confer __________ ____________ to a firm, because rival firms cannot easily duplicate them: Concentration on few skills and areas of knowledge that make the firm distinct and competitive Ability to focus the firms efforts in what it does best, thus producing greater product value through higher quality and greater efficiencies Increased interdependence along the supply chain
LO14
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From OM to SCM: Collaborative Networks

Greater influence of, and reliance upon, ____________ ____________: Firms becoming more reliant on their suppliers Product value improvements are achieved through better coordination and collaboration

LO15

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OM Partners Across the Supply Chain

Operations managers interact with three important groups that are external to the firm: ____________, who use or consume output ____________, who provide inputs ____________, who have an interest in organizational well being and performance

LO15

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OM Partners Across the Supply Chain: Customers

Individuals or organizations that use or consume products Customers can be:

LO15

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OM Partners Across the Supply Chain: Suppliers

Individuals or organizations that provide inputs to operational processes. Suppliers can be:

LO15

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SC Partners Across the Supply Chain: Stakeholders

People other than customers and suppliers who have an interest in the well-being of a firm. Stakeholders include:

LO15
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SC Partners and Functional Activities

Upstream Supply Management Finance Logistics Management Warehousing/RM planning Downstream Marketing Sales & Distribution Customer Service Logistics Management Warehousing/FGI Planning
The Business Enterprise (Chapter 10) Supply Mgmt.

Resource and Technology Suppliers

Product and Service Suppliers

Supply Mgmt.

Internal Operations Mgmt.

Customer Mgmt. (Chapter 9)

Customers and Partners

Logistics Mgmt. (Chapter 11) Figure 1-2

LO15

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Functional Activities that Connect Operations Managers

__________________________: mediation/interfacing between customers and the order processing and fulfillment side of the operation ____________________: processes to identify, acquire and administer inputs ____________________: movement of materials and information within, into and out of the firm
LO15
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Functional Activities that Connect Operations Managers: Customers Mgmt.

Relevant Functional groups:

LO15

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Functional Activities that Connect Operations Managers: Supply Mgmt.

Relevant Functional groups:

LO15

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Functional Activities that Connect Operations Managers: Logistics Mgmt.

Relevant Functional groups:

LO15

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Supply Chain Network Example

LO15

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Supply Chains and Change: Key Factors

New business models Regulations and laws Advances in technology Evolution of markets and customer expectations Growing environmental concerns

LO15

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Levels of Planning
___________________: long term decisions
defining the objectives and capabilities

___________________: intermediate term

decisions defining how capacity is used to meet demand

___________________: short term priorities

and schedules for resource allocation

LO16

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Supply Chain Planning Activities

Supply Production Order/Service Fulfillment Product/Process Innovation (Chapter 4) Operations and Supply Chain Strategy (Chapter 2) Demand Planning (Chapter 12)

Tactical Planning

Strategic Planning

Aggregate Sales & Operations Planning (SOP) (Chapter 13)

Operational Planning

Materials and Resources Requirements Planning (Chapter 4) Materials Production/Capacity Distribution

LO16

Figure 1-4

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Introduction to Managing Operations Across the Supply Chain: Summary - I

1. Operations helps deliver superior products to a firm's targeted customers. 2. Operations manages the effective and efficient transformation of inputs into outputs. 3. Operations management partners include customers, suppliers, stakeholders and other business functions within the firm. 4. Operations management decisions determine firm capabilities and success 5. Operations management focuses on managing processes, SCM is managing flow and relationships 6. Operations management is dynamic, it is constantly evolving
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