McGraw-Hill/Irwin Copyright 2011 The McGraw-Hill Companies, All Rights Reserved

Chapter 1
Operations and Supply Chain Management
1-2
Learning Objectives
1. Understand why it is important to study
operations and supply chain management.
2. Define efficient and effective operations.
3. Categorize operations and supply chain
processes.
4. Contrast differences between services and
goods producing processes.
5. Identify operations and supply chain
management career opportunities.
6. 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 purchase, create and deliver the
firms primary products and services
A functional field (dept.) of businesses
Concerned with the management of the entire
system that buys materials, produces a good
and/or delivers a service
Make things customers want, efficiently.
What is a supply chain?
1-4
Process Steps for Mens Nylon
Supplex Parka
LO 2
1-5
Understanding the Global Supply
Chain
Success in todays 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
Objective of SCM: buy, make and deliver what customers
want, for a price they are willing to pay, while creating profits
for the firm.
LO 3
1-6
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 firms
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
1-7
Differences Between Services and
Goods
1. Services are intangible
2. Services require interactions with the
customer
3. Services are inherently heterogeneous
(vary continuously due to customer/server)
4. Services are perishable and time dependent
5. Services are defined and evaluated as a
package of features
LO 4
1-8
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
1-9
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: delivered quality for price paid
LO 2
1-10
Careers in Operations and Supply
Chain Management
Plant manager
Hospital manager
Branch manager
Call center manager
Supply chain
manager
Purchasing
manager
Manufacturing mgr.
Inventory mgr.
Business process
improvement
analyst
Quality control
manager
Lean improvement
manager
Project manager
Production control
analyst
Facilities manager
LO 5
1-11
Historical Development of Operations
and Supply Chain Management
JIT, TQC
Manufacturing strategy paradigm
Service quality and productivity
Total quality management (TQM) and quality
certifications (ISO 9000/14000)
Business process reengineering (BPR)
Lean thinking and Six-sigma quality
Supply chain management
Electronic commerce
Service science
LO 6
1-12
Current Issues in Operations and
Supply Management
1. Coordinating the relationships between mutually
supportive but separate organizations
2. Optimizing global suppliers, production, and
distribution networks
3. Managing customer & supplier interactions
4. Raising senior management awareness of
operations as a significant competitive weapon
5. Sustainability and the triple bottom line
6. Social networks and the company
LO 6