McGraw-Hill/Irwin © 2011 The McGraw-Hill Companies, All Rights Reserved Chapter 1 Operations and Supply Chain Management

1-2 Learning Objectives  Understand why it is important to study operations and supply chain management.  Define efficient and effective operations.  Categorize operations and supply chain processes.  Contrast differences between services and goods producing processes.  Identify operations and supply chain management career opportunities.  Describe how the field has developed over time.

1-3 What is Operations and Supply Chain Management?  Operations and supply management (OSM): the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services  Functional field of business  Clear line management responsibilities  Concerned with the management of the entire system that produces a good or delivers a service  Involves transformation of inputs to outputs and is the core of any business

1-4 OSCM Transformation Process People Plants Parts Processes Planning and Control Transformation Process (Value Adding) Transformation Process (Value Adding) InputOutput Transformation is enabled By the 5 P’s of OM

1-5 Examples of OSCM Transformation Processes   Physical—manufacturing   Locational—transportation   Exchange—retailing   Storage—warehousing   Physiological—health care   Informational—telecommunications

1-6 Operations and Supply Chain Management   OSCM is related to all areas of business   There is no business without OSCM   Education on how to produce goods or services   Most costs are incurred in creating goods or providing services   Global nature of operations and competition   Impetus of new technologies

1-7 Process Steps for Men’s Nylon Supplex Parka

1-8 Understanding the Global Supply Chain  Success in today’s global markets requires a business strategy that matches the preferences of customers with the realities of supply networks  A sustainable strategy is critical  Meets the needs of shareholders and employees  Preserves the environment  Supply refers to processes that move information and material to and from the manufacturing and service processes of the firm

1-9 Organization of OSCM: The Integration of Strategy, Processes and Planning

1-10 Supply Chain Processes LO 3

1-11 Work Involved in Each Type of Process  Planning: the processes needed to operate an existing supply chain strategically  Sourcing: the selection of suppliers that will deliver the goods and services needed to create the firm’s product  Making: Where the major product is produced or the service provided  Delivering: carriers are picked to move products to warehouses and customers  Returning: the processes for receiving worn- out, defective, and excess products back from customers LO 3

1-12 Differences Between Services and Goods  Services are intangible  Services require some interaction with the customer  Services are inherently heterogeneous  Services are perishable and time dependent  Services are defined and evaluated as a package of features  Is McDonald’s service or manufacturing company? LO 4

1-13 The Goods-Services Continuum LO 4

1-14 Servitization Strategies  Servitization refers to a company building service activities into its product offerings for its current users  Maintenance, spare parts, training, and so on  Success starts by drawing together the service aspects of the business under one roof  Servitization may not be the best approach for all companies LO 4

1-15 International Growth in Services LO 4

1-16 Efficiency, Effectiveness, and Value  Efficiency: Doing something at the lowest possible cost  Effectiveness: Doing the right things to create the most value for the company  Value: quality divided by price LO 2

1-17 Careers in Operations and Supply Management  Plant manager  Hospital administrator  Branch manager  Call center manager  Supply chain manager  Purchasing manager  Business process improvement analyst  Quality control manager  Lean improvement manager  Project manager  Production control analyst  Facilities manager LO 5

1-18 Historical Development of Operations and Supply Mgt.  Lean manufacturing, JIT, and TQC  Manufacturing strategy paradigm  Service quality and productivity  Total quality management (TQM) and quality certifications  Business process reengineering  Six-sigma quality  Supply chain management  Electronic commerce  Service science

1-19 Current Issues in Operations and Supply Management  Coordinating the relationship between mutually supportive but separate organizations  Optimizing global suppliers, production, and distribution networks  Managing customer touch points  Raising senior management awareness of operations as a significant competitive weapon  Sustainability and the triple bottom line LO 6