Presentation on theme: "Introduction to Operations and Supply Chain Management"— Presentation transcript:
1 Introduction to Operations and Supply Chain Management Chapter 1Introduction to Operations and Supply Chain Management
2 Copyright 2011 John Wiley & Sons, Inc. Lecture OutlineWhat Operations and Supply Chain Managers DoOperations FunctionEvolution of Operations and Supply Chain ManagementGlobalization and CompetitivenessOperationsStrategy and Organization of the TextLearning Objectives for This CourseCopyright 2011 John Wiley & Sons, Inc.
3 What Operations and Supply Chain Managers Do What is Operations Management?design, operation, and improvement of productive systemsWhat is Operations?a function or system that transforms inputs into outputs of greater valueWhat is a Transformation Process?a series of activities along a value chain extending from supplier to customeractivities that do not add value are superfluous and should be eliminatedCopyright 2011 John Wiley & Sons, Inc.
4 Transformation Process Physical: as in manufacturing operationsLocational: as in transportation or warehouse operationsExchange: as in retail operationsPhysiological: as in health carePsychological: as in entertainmentInformational: as in communicationCopyright 2011 John Wiley & Sons, Inc.
5 Operations as a Transformation Process INPUTMaterialMachinesLaborManagementCapitalOUTPUTGoodsServicesTRANSFORMATIONPROCESSFeedback & RequirementsCopyright 2011 John Wiley & Sons, Inc.
6 Operations Function Operations Marketing Finance and Accounting Human ResourcesOutside Suppliers
7 How is Operations Relevant to my Major? AccountingInformation TechnologyManagement“As an auditor you must understand the fundamentals of operations management.”“IT is a tool, and there’s no better place to apply it than in operations.”“We use so many things you learn in an operations class—scheduling, lean production, theory of constraints, and tons of quality tools.”Copyright 2011 John Wiley & Sons, Inc.
8 How is Operations Relevant to my Major? EconomicsMarketingFinance“It’s all about processes. I live by flowcharts and Pareto analysis.”“How can you do a good job marketing a product if you’re unsure of its quality or delivery status?”“Most of our capital budgeting requests are from operations, and most of our cost savings, too.”Copyright 2011 John Wiley & Sons, Inc.
9 Evolution of Operations and Supply Chain Management Craft productionprocess of handcrafting products or services for individual customersDivision of labordividing a job into a series of small tasks each performed by a different workerInterchangeable partsstandardization of parts initially as replacement parts; enabled mass productionCopyright 2011 John Wiley & Sons, Inc.
10 Evolution of Operations and Supply Chain Management Scientific managementsystematic analysis of work methodsMass productionhigh-volume production of a standardized product for a mass marketLean productionadaptation of mass production that prizes quality and flexibilityCopyright 2011 John Wiley & Sons, Inc.
11 Historical Events in Operations Management Events/ConceptsDatesOriginatorIndustrialRevolutionSteam engine1769James WattDivision of labor1776Adam SmithInterchangeable parts1790Eli WhitneyScientific ManagementPrinciples of scientificmanagement1911Frederick W. TaylorTime and motion studiesFrank and Lillian GilbrethActivity scheduling chart1912Henry GanttMoving assembly line1913Henry FordCopyright 2011 John Wiley & Sons, Inc.
12 Historical Events in Operations Management Events/ConceptsDatesOriginatorHuman RelationsHawthorne studies1930Elton MayoMotivation theories1940sAbraham Maslow1950sFrederick Herzberg1960sDouglas McGregorOperations ResearchLinear programming1947George DantzigDigital computer1951Remington RandSimulation, waitingline theory, decisiontheory, PERT/CPMOperations research groupsMRP, EDI, EFT, CIM1960s, 1970sJoseph Orlicky, IBMand othersCopyright 2011 John Wiley & Sons, Inc.
13 Historical Events in Operations Management Events/ConceptsDatesOriginatorQualityRevolutionJIT (just-in-time)1970sTaiichi Ohno (Toyota)TQM (total qualitymanagement)1980sW. Edwards Deming,Joseph JuranStrategy andoperationsWickham Skinner,Robert HayesReengineering1990sMichael Hammer,James ChampySix SigmaGE, MotorolaCopyright 2011 John Wiley & Sons, Inc.
14 Historical Events in Operations Management Events/ConceptsDatesOriginatorInternet RevolutionInternet, WWW, ERP, supply chain management1990sARPANET, TimBerners-Lee SAP,i2 Technologies,ORACLE, DellE-commerce2000sAmazon, Yahoo,eBay, Google, and othersGlobalizationWTO, European Union, Global supply chains, Outsourcing, Service ScienceChina, India, emerging economiesCopyright 2011 John Wiley & Sons, Inc.
15 Historical Events in Operations Management Events/ConceptsDatesOriginatorGreen RevolutionGlobal warming, An Inconvenient Truth, KyotoTodayNumerous scientists, statesmen and governmentsCopyright 2011 John Wiley & Sons, Inc.
16 Evolution of Operations and Supply Chain Management management of the flow of information, products, and services across a network of customers, enterprises, and supply chain partnersCopyright 2011 John Wiley & Sons, Inc.
17 Globalization Why “go global”? Increased globalization favorable cost access to international marketsresponse to changes in demandreliable sources of supplylatest trends and technologiesIncreased globalizationresults from the Internet and falling trade barriers
20 Copyright 2011 John Wiley & Sons, Inc. Trade in Goods, % of GDPCopyright 2011 John Wiley & Sons, Inc.
21 Productivity and Competitiveness degree to which a nation can produce goods and services that meet the test of international marketsProductivityratio of output to inputOutputsales made, products produced, customers served, meals delivered, or calls answeredInputlabor hours, investment in equipment, material usage, or square footageCopyright 2011 John Wiley & Sons, Inc.
22 Measures of Productivity Copyright 2011 John Wiley & Sons, Inc.
23 Copyright 2011 John Wiley & Sons, Inc. Osborne IndustriesC6*C8C7*C9C5/C6C5/C7C5/C13Copyright 2011 John Wiley & Sons, Inc.
24 Copyright 2011 John Wiley & Sons, Inc. Productivity GrowthCopyright 2011 John Wiley & Sons, Inc.
25 Percent Change in Input and Output Copyright 2011 John Wiley & Sons, Inc.
26 Strategy and Operations How the mission of a company is accomplishedProvides direction for achieving a missionUnites the organizationProvides consistency in decisionsKeeps organization moving in the right directionCopyright 2011 John Wiley & Sons, Inc.
27 Copyright 2011 John Wiley & Sons, Inc. Strategy FormulationDefining a primary taskWhat is the firm in the business of doing?Assessing core competenciesWhat does the firm do better than anyone else?Determining order winners and order qualifiersWhat qualifies an item to be considered for purchase?What wins the order?Positioning the firmHow will the firm compete?Deploying the strategyCopyright 2011 John Wiley & Sons, Inc.
28 Strategic Planning Mission and Vision Voice of the Business Voice of the CustomerCorporateStrategyMarketingStrategyOperationsStrategyFinancialStrategy
29 Order Winners and Order Qualifiers Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan Betts, Operations and Process Management, Prentice Hall, 2006, p. 47Copyright 2011 John Wiley & Sons, Inc.
30 Positioning the FirmCostSpeedQualityFlexibility
31 Positioning the Firm: Cost Waste eliminationrelentlessly pursuing the removal of all wasteExamination of cost structurelooking at the entire cost structure for reduction potentialLean productionproviding low costs through disciplined operationsCopyright 2011 John Wiley & Sons, Inc.
32 Positioning the Firm: Speed Fast moves, Fast adaptations, Tight linkagesInternetCustomers expect immediate responsesService organizationsalways competed on speed (McDonald’s, LensCrafters, and Federal Express)Manufacturerstime-based competition: build-to-order production and efficient supply chainsFashion industrytwo-week design-to-rack lead time of Spanish retailer, ZaraCopyright 2011 John Wiley & Sons, Inc.
33 Positioning the Firm: Quality Minimizing defect rates or conforming to design specificationsRitz-Carlton - one customer at a timeService system designed to “move heaven and earth” to satisfy customerEmployees empowered to satisfy a guest’s wishTeams set objectives and devise quality action plansEach hotel has a quality leaderCopyright 2011 John Wiley & Sons, Inc.
34 Positioning the Firm: Flexibility Ability to adjust to changes in product mix, production volume, or designMass customization: the mass production of customized partsNational Bicycle Industrial Companyoffers 11,231,862 variationsdelivers within two weeks at costs only 10% above standard modelsCopyright 2011 John Wiley & Sons, Inc.
35 Copyright 2011 John Wiley & Sons, Inc. Policy DeploymentPolicy deploymenttranslates corporate strategy into measurable objectivesHoshinsaction plans generated from the policy deployment processCopyright 2011 John Wiley & Sons, Inc.
36 Policy Deployment Derivation of an Action Plan Using Policy Deployment Copyright 2011 John Wiley & Sons, Inc.
37 Copyright 2011 John Wiley & Sons, Inc. Balanced ScorecardBalanced scorecardmeasuring more than financial performancefinancescustomersprocesseslearning and growingKey performance indicatorsset of measures to help managers evaluate performance in critical areasCopyright 2011 John Wiley & Sons, Inc.
38 Balanced Scorecard Worksheet Copyright 2011 John Wiley & Sons, Inc.
39 Copyright 2011 John Wiley & Sons, Inc. Balanced ScorecardRadar ChartDashboardCopyright 2011 John Wiley & Sons, Inc.
40 Operations Strategy Services Process and Technology Products Human ResourcesQualityCapacitySourcingOperatingSystemsFacilities
41 Organization of This Text: Part I – Operations Management Intro. to Operations and Supply Chain ManagementQuality ManagementStatistical Quality ControlProduct DesignService DesignProcesses and TechnologyCapacity and Facilities DesignHuman ResourcesProject ManagementCopyright 2011 John Wiley & Sons, Inc.
42 Organization of This Text: Part II – Supply Chain Management Supply Chain Strategy and DesignGlobal Supply Chain Procurement and DistributionForecastingInventory ManagementSales and Operations PlanningResource PlanningLean SystemsSchedulingCopyright 2011 John Wiley & Sons, Inc.
43 Learning Objectives of this Course Gain an appreciation of strategic importance of operations and supply chain management in a global business environmentUnderstand how operations relates to other business functionsDevelop a working knowledge of concepts and methods related to designing and managing operations and supply chainsDevelop a skill set for continuous improvementCopyright 2011 John Wiley & Sons, Inc.
44 Copyright 2011 John Wiley & Sons, Inc. Copyright 2011 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.Copyright 2011 John Wiley & Sons, Inc.