ch01 opr supply chain

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Chapter 1

Operations and

Supply Chain Management

Introduction

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Lecture Outline

What Operations and Supply Chain Managers Do Operations Function

Evolution of Operations and Supply ChainManagement

Globalization and Competitiveness Operations

Strategy and Organization of the Text

Learning Objectives for This Course

Copyright 2011 John Wiley & Sons, Inc. 1-2


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What Operations and Supply Chain

Managers Do

What is Operations Management? design, operation, and improvement of productive systems

What is Operations? a function or system that transforms inputs into outputs of greater

value What is a Transformation Process?

a series of activities along a value chain extending from supplierto customer

activities that do not add value are superfluous and should be

eliminated



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Transformation Process

Physical: as in manufacturing operations Locational: as in transportation or warehouse

operations

Exchange: as in retail operations

Physiological: as in health care

Psychological: as in entertainment

Informational: as in communication



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Operations as a

Transformation Process


INPUT

Material

Machines

Labor

Management

Capital

TRANSFORMATION

PROCESS

OUTPUT

Goods

Services

Feedback & Requirements


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Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.

Operations Function

Operations Marketing

Finance and

Accounting

Human

Resources

Outside

Suppliers

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How is Operations Relevant

to my Major?

Accounting

InformationTechnology

Management

As an auditor you must understand the

fundamentals of operations

management.

IT is a tool, and theres no better place toapply it than in operations.

We use so many things you learn in an

operations classscheduling, leanproduction, theory of constraints, and

tons of quality tools.



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How is Operations Relevant

to my Major?

Economics

Marketing

Finance

Its all about processes. I live by

flowcharts and Pareto analysis.

How can you do a good job marketing a

product if youre unsure of its quality or

delivery status?

Most of our capital budgeting requests

are from operations, and most of our

cost savings, too.



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Evolution of Operations and


Craft production process of handcrafting products or services for

individual customers

Division of labor

dividing a job into a series of small tasks eachperformed by a different worker

Interchangeable parts standardization of parts initially as replacement parts;

enabled mass production



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Evolution of Operations and


Scientific management

systematic analysis of work methods

Mass production

high-volume production of a standardized product fora mass market

Lean production

adaptation of mass production that prizes quality and

flexibility



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Historical Events in

Operations Management

Era Events/Concepts Dates Originator

Industrial

Revolution

Steam engine 1769 James Watt

Division of labor 1776 Adam Smith

Interchangeable parts 1790 Eli Whitney

ScientificManagement

Principles of scientificmanagement

1911 Frederick W. Taylor

Time and motion studies 1911Frank and LillianGilbreth

Activity scheduling chart 1912 Henry Gantt

Moving assembly line 1913Henry Ford



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HumanRelations

Hawthorne studies 1930 Elton Mayo

Motivation theories

1940s Abraham Maslow

1950s Frederick Herzberg

1960s Douglas McGregor

Operations

Research

Linear programming 1947 George Dantzig

Digital computer 1951 Remington Rand

Simulation, waiting

line theory, decision

theory, PERT/CPM

1950sOperations research

groups

MRP, EDI, EFT, CIM1960s,1970s

Joseph Orlicky, IBM

and others



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QualityRevolution

JIT (just-in-time) 1970s Taiichi Ohno (Toyota)

TQM (total quality

management)1980s

W. Edwards Deming,

Joseph Juran

Strategy andoperations

1980s Wickham Skinner,Robert Hayes

Reengineering 1990sMichael Hammer,

James Champy

Six Sigma 1990s GE, Motorola



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Era Events/Concepts Dates OriginatorInternetRevolution

Internet, WWW, ERP,supply chain management

1990s ARPANET, Tim

Berners-Lee SAP,

i2 Technologies,

ORACLE, DellE-commerce 2000s Amazon, Yahoo,

eBay, Google, andothers

Globalization WTO, European Union,Global supply chains,Outsourcing, ServiceScience

1990s

2000s

China, India,emergingeconomies



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Era Events/Concepts Dates OriginatorGreenRevolution

Global warming, AnInconvenient Truth, Kyoto

Today Numerousscientists,statesmen and

governments



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Evolution of Operations and Supply

Chain Management

Supply chain management

management of the flow of information, products, and services across a

network of customers, enterprises, and supply chain partners

1-16Copyright 2011 John Wiley & Sons, Inc.


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Hourly Compensation

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GDP per Capita

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Trade in Goods, % of GDP



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Productivity and Competitiveness

Competitiveness degree to which a nation can produce goods andservices that meet the test of international markets

Productivity ratio of output to input

Output sales made, products produced, customers served,

meals delivered, or calls answered

Input

labor hours, investment in equipment, material usage,or square footage



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Measures of Productivity



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Osborne Industries


C6*C8

C7*C9

C5/C6

C5/C7

C5/C13


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Percent Change in Input and Output



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Strategy and Operations

How the mission of a company is accomplished Provides direction for achieving a mission

Unites the organization

Provides consistency in decisions

Keeps organization moving in the right direction



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Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.

Strategic Planning

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Missionand Vision

CorporateStrategy

OperationsStrategy

MarketingStrategy

FinancialStrategy


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Order Winners

and Order Qualifiers


Source:Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and AlanBetts, Operations and Process Management, Prentice Hall, 2006, p. 47


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Positioning the Firm: Quality

Minimizing defect rates or conforming to designspecifications

Ritz-Carlton - one customer at a time

Service system designed to move heaven and earth

to satisfy customer

Employees empowered to satisfy a guests wish

Teams set objectives and devise quality action plans

Each hotel has a quality leader



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Positioning the Firm: Flexibility

Ability to adjust to changes in product mix,production volume, or design

Mass customization: the mass production ofcustomized parts

National Bicycle Industrial Company offers 11,231,862 variations delivers within two weeks at costs only 10% above

standard models



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Policy Deployment

Policy deployment translates corporate strategy into measurableobjectives

Hoshins

action plans generated from the policydeployment process



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Policy Deployment

Derivation of an Action Plan Using Policy Deployment

1-36Copyright 2011 John Wiley & Sons, Inc.


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Balanced Scorecard

Balanced scorecard measuring more than financial performance

1.finances

2.customers

3.processes

4.learning and growing

Key performance indicators

set of measures to help managers evaluateperformance in critical areas



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O i i f Thi T


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Organization of This Text:

Part IISupply Chain Management

10.Strategic Supply Chain Management and Design

11.Supply Chain Procurement and Distribution

Globalization

12.Forecasting

13.Role of Inventory Management

14.Aggregate Sales and Operations Planning

15.Resource Planning Systems

16.Lean System Methods17.Scheduling



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Copyright 2011 John Wiley & Sons, Inc.

All rights reserved. Reproduction or translation of this

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