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Fundamentals of Operations Management BUS 3 140 Process Layout, Work System Design, and Supply Chain Management N - PowerPoint PPT Presentation

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Fundamentals of Operations Management BUS 3 – 140 Process Layout, Work System Design, and Supply Chain Management Nov 2, 2011. Process Alternatives and Selection. Facilities and Equipment. Capacity Planning. Forecasting. Layout. Product and Service Design. Process Selection. Work Design.

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Fundamentals ofOperations ManagementBUS 3 – 140Process Layout, Work System Design, and Supply Chain ManagementNov 2, 2011

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Facilities andEquipment




Product andService Design




Inputs and Outputs when Selecting a Process



Capacity planning is focused on How Many (Quantity) that will be produced.

Process planning is focused on HOW the items will be produced

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Key Elements of Process Strategy

  • Capital Intensity (does the output come more from machines or more from human labor?)

  • Process flexibility required

  • Technology

  • Likelihood of Changes

    • Product Design

    • Volumes

    • Technology

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Uses of Technology and Automation

Three (3) basic kinds of technology

  • Product or service innovation (Cell Phones, Computers, etc..)

  • Process technology (increasing quality and productivity, lowering costs)

  • Information Technology (speed, data storage and retrieval, complex and high-volume processing, process support)

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Process Types

Table 6.1

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Key Characteristics of different Process Types

Table 6.2

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Considerations in Work System Design

  • Observe actual performance and then establish a BASIS for any estimates

    • Sandwiches made per hour

    • Sales closed per quarter

    • Design changes per model

    • Other

  • Be careful to distinguish between “busy” and “valuable”

  • Track your own output and trends and see how you can improve your individual performance

  • Watch your boss

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Operations is a Key Element of a Supply Chain


Utilization of Assets

(People, Plant, Equip)



BALANCING keeping Customers completely satisfied and Resources

optimally utilized ……. against spending the least amount of Cash

and carrying the least amount of Inventory

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Supply Chain Scope (this course shaded)











  • Process Layout

  • Work System Design

  • Lean Operations

  • Quality

  • Inventory Mgmt

  • MRP

  • ERP

  • Forecasting

  • Aggregate Planning

  • Strategic Capacity Planning

  • Demand & Supply Matching

  • Scheduling

  • Just In Time (JIT)

  • Project Mgmt

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Supply Chain Challenges

  • Barriers to integration of organizations

  • Top management support

  • Dealing with trade-offs

  • Small businesses

  • Variability and uncertainty

  • Long lead times

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Example of Supply Chain Strategy


  • Assured Supply and best value

  • Accurate and timely exchange of demand and supply data

  • Shared savings from continuous improvement

  • Other

  • Other



  • Optimal Inventory

    • Company owned

    • Supplier owned

    • Customer owned

  • Optimal headcount

    • Manufacturing

    • Support

    • Worldwide indirect

  • Lean optimization for entire Supply Chain

  • Optimized Supply Chain Network (including integrating Mergers & Acquisitions)

  • Automation whenever possible and supported by business case

  • Responsiveness to Market opportunities

    • Speed to react

    • Credibility of commits

    • Assurance of delivery

  • Optimum utilization of resources

    • Manufacturing

    • Product life cycle

    • Suppliers

    • Transportation and Logistics

  • Scalability for growth and increased complexity

  • Secure collaboration and visibilityamong customers, suppliers, and the enterprise

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The Increasing Emphasis on Supply Chain Management

Several factors are driving this trend:

  • Improve operations

  • Opportunities and Risks of outsourcing

  • Rising transportation costs

  • Competitive pressures

  • Globalization

  • e-commerce

  • Complexity of supply chains

  • Manage inventories

Supply Chain Management is not simply a cost / efficiency

discipline. It is a key differentiator in gaining

customer satisfaction, market share and loyalty

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Benefits of Supply Chain Management

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Benefits of Supply Chain Management

  • Lower inventories

  • Higher productivity

  • Greater agility

  • Shorter lead times

  • Higher profits

  • Greater customer loyalty

  • Integrates separate organizations into a cohesive operating system

Monitoring Inventory is CRITICAL

at virtually every step in the Chain

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Selected Supply Chain Metrics

Table 11.4

* From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin

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Logistics *

The management of inventory at motion and at rest

Logistics – from the Council of Logistics Management (CLM)

That part of the supply chain that plans, implements, and

controls the efficient, effective flow and storage of goods,

services, and related information from the point of origin to the

point of consumption in order to meet customers’ requirements


The movement of goods from the point of origin to the point of

consumption: a subset of the overall Logistics process

* Leenders, Johnson, Flynn, and Fearon, Purchasing and Supply Management, Thirteenth Edition, McGraw Hill Irwin

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Services provided by Third Party Logistics providers (3PL)

  • Economies of Scale

  • Professional focus and expertise

  • Warehousing

  • Outbound and Inbound transportation

  • Freight bill auditing and payment

  • Freight consolidation

  • Distribution

  • Order Fulfillment

  • Cross-docking

  • Packaging

  • Returns

Major Carriers enable their customers to focus on core competencies,

while the carrier drives efficiencies and increased services in

transportation and logistics

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Reverse Logistics

The backward flow of goods

returned to the supply chain

  • Processing returned goods

    • Sorting, examining/testing, restocking, repairing

    • Reconditioning, recycling, disposing

  • Gatekeeping

    • Providing Return Material Authorization (RMA)

    • screening goods to prevent incorrect acceptance of goods

  • Avoidance

    • finding ways to minimize the number of items that are returned

Good career opportunity

for an entry level job

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Example of Reverse Logistics

Damaged Units


Product sent to




Product shipped

From FGI at DC







at Local

Service Center



and Forwarded

to Repair Center


Repaired to



Repaired Units

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Expansion of MRP principles to plan and coordinate:



Regional allocations


Financial flows

Distribution Requirements Planning (DRP)

The right amount of inventory,

at the right place, at the right time