Introduction to Managing Operations Across the Supply Chain

CHAPTER ONE

22

What is Operations?What is Operations?

• What is Operations?

a function or system that transforms inputs into outputs of greater value. i.e. a transformation process.

OM is a process oriented disciplineOM is a process oriented discipline

1–1–33

Inputs Transformation Outputs

44

Transformation processTransformation process

• Tuna can process–Inputs and outputs?

• Hospital process –Inputs and outputs?

55

Why do the Operations management and Supply Chain

Management matter?

Why do the Operations management and Supply Chain

Management matter?

• In early 2005, HP– New CEO search committee when Carly Fiorina

stepped down as CEO

– New CEO of HP Mark Hurd improved operations through supply chain

66

• 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

Transformation ProcessTransformation Process

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What is Operations Management?What is Operations Management?

• What is Operations Management (OM)?–Operations Management is the management of process used to design, supply, produce, and deliver valuable goods and services to customers.

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Sport Teams

Manufacturers

RestaurantsSchools

Gov’tServices

HealthCare

Transportation

Banks

Military

Agriculture

Hospitality

Retail

Municipalities

Not-for-ProfitOrganizations

Construction

Entertainment

Operations Management (OM) is everywhereOperations Management (OM) is everywhere

99

• Operations• Marketing• Finance and

Accounting• Human

Resources• Outside

Suppliers

Operations Management (OM) is everywhereOperations Management (OM) is everywhere

1010

Supply Chain ManagementSupply Chain Management

• Supply chain: the global network of organizations and activities involved in –(1) designing a set of goods and services and their

related processes– (2) transforming inputs into goods and services– (3) consuming goods and services– (4) disposing of these goods and services

• Supply chain management: the design and execution of relationship and flows that connect the parties and processes across supply chain

Supply Chain Network ExampleSupply Chain Network Example

Financial Underwriters

Screen Writers

Talent Agencies

Film Maker /Producer

Costume Supplier

Resources and Technology Supply Chain

Props Supplier

Equipment Supplier

Casting Company

Director

Raw Materials Suppliers

Chemical Dye Manufacturer

Wood Pulp Supplier

Cellulose Acetate Manufacturer

Film Manufacturer

Stock Film Wholesaler

DVDSales/Rentals

Theaters

DistributorsProduction Company

Product Supply Chain

Tier 4 Tier 3 Tier 2 Tier 1 Echelon 1 Echelon 2

Upstream Product Supply Chain Downstream Product Supply Chain11––1111

Characteristics of Goods and ServicesCharacteristics of Goods and Services

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• Tangible• Can be inventoried• Little customer contact• Long lead time• Often capital-intensive• Quality easily assured• Material is transformed

• Intangible• Cannot be inventoried• Extensive customer contact• Short lead time• Often labor intensive• Quality harder to assess• Information or customer is

transformed

Goods Services

1313

Value-Added & Product PackagesValue-Added & Product Packages

• Value-added is the difference between the cost of inputs and the value or price of outputs.

• Product packages are a combination of goods and services.

• Product packages can make a company more competitive.

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Year Mfg. Service45 79 2150 72 2855 72 2860 68 3265 64 3670 64 3675 58 4280 44 4685 43 5790 35 6595 25 7500 30 70

02 25 75

U.S. Manufacturing vs. Service Employment

0102030405060708090

45 50 55 60 65 70 75 80 85 90 95 00 02 05

Year

Per

cent

Mfg.

Service

1515

Decline in Manufacturing JobsDecline in Manufacturing Jobs

• Productivity–Increasing productivity allows companies to maintain

or increase their output using fewer workers

• Outsourcing–Some manufacturing work has been outsourced to

more productive companies

Functional activities that connect Operations managers

Functional activities that connect Operations managers

• Customer Management: interfaces with customers and order processing and fulfillment

• Supply Management: processes to identify, acquire and administer inputs

• Logistics Management: movement of materials and information within, into and out of the firm

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Historical events in OMHistorical events in OM

Historical events in OMHistorical events in OM

• Industrial revolution (Before 1800):

–Steam engine: James Watt

–Division of labor: Adam Smith

–Interchangeable parts: Eli Whitney

• Technical capitalist (1800-1850):

–Improved manufacturing technology

–Emerging transportation network

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Historical events in OMHistorical events in OM

• mass production (1850-1890):

–Emergence of local factory

–Introduction of steam and electrical power

• Scientific management(1890-1920):

–More scientific management

–Moving assembly (Henry Ford)

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Historical events in OMHistorical events in OM

• Human relations and Demand growth (1920-1960):– Hawthorne studies (Elton Mayo)– Motivation theories (Abraham Maslow and Douglas

Mcgregor)– Introduction of computer usage and quantitative

methods– Increased automation

11––2020

Historical events in OMHistorical events in OM

• Global competition (1960-1980):

– Just in time system

– Early outsourcing

• World class manufacturing (1980-2000):

– Increased computerization and information system

– Global sourcing and need for supply chain coordination

• E-commerce (2000-present):

– Internet revolution

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CWU College of BusinessSupply Chain Management specialization

CWU College of BusinessSupply Chain Management specialization

• SCM 310 Supply chain management

• SCM 425 Procurement and supply management

• SCM 435 Advanced topics in operations and supply chain management

• SCM 475 Global supply chain management

• SCM 480 Supply chain strategy

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CWU College of BusinessSupply Chain Management certificate

CWU College of BusinessSupply Chain Management certificate

• SCM 310 Supply chain management

• SCM 425 Procurement and supply management

• SCM 435 Advanced topics in operations and supply chain management

• SCM 475 Global supply chain management

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CWU College of BusinessSupply Chain Management certificate

(Choose one from )

CWU College of BusinessSupply Chain Management certificate

(Choose one from )

• ACCT 305 Cost accounting

• Bus 490 Cooperative education

• MGT 384 Intro. to international business

• MGT 484 international management

• SCM 324 Quality and continuous improvement

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Chapter 1 homework problemsChapter 1 homework problems

• Do problems 2, 3(a), 4(c), 7 on page 21 and 22.

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