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Fundamentals of Operations Management BUS 3 – 140 Process Layout, Work System Design, and Supply Chain Management Nov 2, 2011

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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

inputs and outputs when selecting a process

Facilities andEquipment

CapacityPlanning

Forecasting

Layout

Product andService Design

ProcessSelection

WorkDesign

TechnologicalChange

Inputs and Outputs when Selecting a Process

OUTPUTS

INPUTS

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

key elements of process strategy
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
uses of technology and automation
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)
process types
Process Types

Table 6.1

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

key characteristics of different process types
Key Characteristics of different Process Types

Table 6.2

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

considerations in work system design
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
operations is a key element of a supply chain
Operations is a Key Element of a Supply Chain

Revenue

Utilization of Assets

(People, Plant, Equip)

Cash

Inventory

BALANCING keeping Customers completely satisfied and Resources

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

and carrying the least amount of Inventory

supply chain scope this course shaded
Supply Chain Scope (this course shaded)

Customer

Service

Customer

Demand

Production

Scheduling

Production

Materials

Mgmt

Shipping

  • 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
supply chain challenges
Supply Chain Challenges
  • Barriers to integration of organizations
  • Top management support
  • Dealing with trade-offs
  • Small businesses
  • Variability and uncertainty
  • Long lead times
example of supply chain strategy
Example of Supply Chain Strategy

MAXIMIZE CUSTOMER SATISFACTION

  • Assured Supply and best value
  • Accurate and timely exchange of demand and supply data
  • Shared savings from continuous improvement
  • Other
  • Other

MAXIMIZE PROFITABLE REVENUE

MINIMIZE TOTAL COST

  • 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
the increasing emphasis on supply chain management
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

benefits of supply chain management
Benefits of Supply Chain Management

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

benefits of supply chain management17
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

selected supply chain metrics
Selected Supply Chain Metrics

Table 11.4

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

logistics
Logistics

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

Transportation

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

services provided by third party logistics providers 3pl
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

reverse logistics
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

example of reverse logistics
Example of Reverse Logistics

Damaged Units

Refurbished

Product sent to

Distribution

Center(s)

Refurbished

Product shipped

From FGI at DC

Customer

Returns

Damaged

Product

Product

Received

at Local

Service Center

Product

Collected

and Forwarded

to Repair Center

Product

Repaired to

Refurbished

Status

Repaired Units

distribution requirements planning drp
Expansion of MRP principles to plan and coordinate:

Transportation

Warehousing

Regional allocations

Equipment

Financial flows

Distribution Requirements Planning (DRP)

The right amount of inventory,

at the right place, at the right time

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