Chapter 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

Chapter 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

Chapter 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

Chapter 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?

Chapter OM STRATEGIC BUSINESS SYSTEMS

Chapter 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

Chapter 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

Chapter 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

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

Chapter SUPPLY CHAIN FUNDAMENTALS Organizations must embrace technologies that can effectively manage supply chains

Chapter 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

Chapter IT’S ROLE IN THE SUPPLY CHAIN Factors Driving SCM

Chapter 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

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