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Chapter 1. Operations and Supply Chain Management. Learning Objectives. Understand why it is important to study operations and supply chain management. Define efficient and effective operations. Categorize operations and supply chain processes.

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chapter 1

Chapter 1

Operations and Supply Chain Management

learning objectives
Learning Objectives
  • Understand why it is important to study operations and supply chain management.
  • Define efficient and effective operations.
  • Categorize operations and supply chain processes.
  • Contrast differences between services and goods producing processes.
  • Identify operations and supply chain management career opportunities.
  • Describe how the field has developed over time.
what is operations and supply chain management
What is Operations and Supply Chain Management?
  • Operations and supply management (OSM): the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services
    • Functional field of business
    • Clear line management responsibilities
  • Concerned with the management of the entire system that produces a good or delivers a service
  • Involves transformation of inputs to outputs and is the core of any business

OSCM Transformation Process



(Value Adding)



  • People
  • Plants
  • Parts
  • Processes
  • Planning and Control

Transformation is enabled

By the 5 P’s of OM


Examples of OSCM Transformation Processes

  • Physical—manufacturing
  • Locational—transportation
  • Exchange—retailing
  • Storage—warehousing
  • Physiological—health care
  • Informational—telecommunications

Operations and Supply Chain Management

  • OSCM is related to all areas of business
  • There is no business without OSCM
  • Education on how to produce goods or services
  • Most costs are incurred in creating goods or providing services
  • Global nature of operations and competition
  • Impetus of new technologies
understanding the global supply chain
Understanding the Global Supply Chain
  • Success in today’s 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
work involved in each type of process
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 firm’s 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

differences between services and goods
Differences Between Services and Goods
  • Services are intangible
  • Services require some interaction with the customer
  • Services are inherently heterogeneous
  • Services are perishable and time dependent
  • Services are defined and evaluated as a package of features
  • Is McDonald’s service or manufacturing company?

LO 4

servitization strategies
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

efficiency effectiveness and value
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: quality divided by price

LO 2

careers in operations and supply management
Plant manager

Hospital administrator

Branch manager

Call center manager

Supply chain manager

Purchasing manager

Business process improvement analyst

Quality control manager

Lean improvement manager

Project manager

Production control analyst

Facilities manager

Careers in Operations and Supply Management

LO 5

historical development of operations and supply mgt
Historical Development of Operations and Supply Mgt.
  • Lean manufacturing, JIT, and TQC
  • Manufacturing strategy paradigm
  • Service quality and productivity
  • Total quality management (TQM) and quality certifications
  • Business process reengineering
  • Six-sigma quality
  • Supply chain management
  • Electronic commerce
  • Service science
current issues in operations and supply management
Current Issues in Operations and Supply Management
  • Coordinating the relationship between mutually supportive but separate organizations
  • Optimizing global suppliers, production, and distribution networks
  • Managing customer touch points
  • Raising senior management awareness of operations as a significant competitive weapon
  • Sustainability and the triple bottom line

LO 6