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INTRODUCTION
This provides an overview of the operations
and supply chain functions: operations and
supply chain strategy and product design. In
these topics we should have an appreciation
for the importance of the operations function
and the supply chain to the firm, the major
decisions made with the operations function
of a firm and across the operation functions
of a supply chain, the linkages of operations
and supply chain decisions to other
functions, and the need for strategy to guide
all operations decision making.
CHAPTER ONE
THE OPERATIONS FUNCTION
OPERATIONS MANAGEMENT is a
process that involves planning, organizing,
managing, controlling and supervising the
production and manufacturing the processes
of goods and services. Every business has a
goal and that is to become successful in the
business industry. So operations
management plays a vital role to amy
project of a business to become successful.
Operations management is a process that
involves planning, organizing, managing,
controlling and supervising the production
and manufacturing processes of goods and
services. For short, Operations management
is responsible for delivering products and
services to their customers to surpass their
expectations. Production Management is the
first name of Operations Management, just
for manufacturing operations. So they made
it to “Production and Operations
Management” or simply the “Operations
Management” to include the service
operations as well. Next is the Operations
Managers, the people who are responsible
organization is producing and
manufacturing the goods and services well.
Operations Managers have an important role
in every company. Why? Because they
always make sure that the delivery of the
products and the process of turning the raw
materials into finished products (input to
output) is successful. An organization
believes that the ratio of input to output is
termed productivity. It gives a measure of
the efficiency of the manager as well as the
employees. In every operation can be
viewed as Transformation Processes inside
the organizations.
There’s 2 transformation processes:
 Service operations - Service operations
are intangible, meaning that in service
operations, they are fulfilling
customers requests and resolving
service failures and problems
 Manufacturing operations - The
manufacturing operations are tangible,
you can touch and see the products that
the business made.
1.1 Why operations management?
As operations are necessary in order to run a
business, working and understanding the
operations will help you do your job better.
Because the goal of operations is to provide
the most to society by creating waste.
Therefore, for the environmentally-minded,
working in operations presents an
opportunity to contribute to sustainability
initiatives by creating products and services
using wastes in order to run an
environmentally responsible business.
AFFILIATED
WITH OPERATIONS AND SUPPLY
CHAIN MANAGEMENT
These four associations are examples of
having an Operations and Supply Chain
Management. They help people to have
enough knowledge to become a supply
chain professional.
FIRST: ASSOCIATION FOR
OPERTATIONS MANAGEMENT
They are known for their ability to develop
supply chain talent and elevate end-to-end
supply chain performances.
SECOND: AMERICAN SOCIETY FOR
QUALITY
It’s a global community of people
passionate about quality, who use the tools,
their ideas and expertise to make out world
work better.
THIRD: INSTITUTE FOR SUPPLY
MANAGEMENT
It’s the oldest and largest supply
management association in the world. They
offered career help and training since 1915.
FOURTH: COUNCIL OF SUPPLY CHAIN
MANAGEMENT PROFESSIONALS
Since 1963, they are providing networking,
careerdevelopment and educational
opportunities. Their members are receiving
networking opportunities and onsite
professional education opportunities.
Overall, as you study operations
ideas, techniques, and principles can be
applied across the business, not just in
operations.
1.2 DEFINITION OF OPERATIONS
MANAGEMENT AND SUPPLY CHAIN
SUPPLY CHAIN OPERATIONS
It’s about developing a strategy to organize,
control and motivate the resources involved
in the flow of materials and services in an
organization. It also includes the systems
and processes to plan and execute the flow
of goods and services from the supplier to
customers. Because they always want to
make sure that their supply chain is efficient
and cost- effective. For them, the value of
the goods that they are producing is
important in every customer. Every supply
chain management controls costs and
ensures efficiency of the products because
they are thriving to meet the expectations of
their customers, so that they can satisfy
them. So we have here the 3 functions in an
organization to manage the supply chain for
goods and services”
OPERATIONS FUNCTION- Here, they
are responsible for managing and
controlling the goods and services.
PURCHASING FUNCTION- Here, they are
ensuring that suppliers fulfil their
commitment regarding of the quality and
delivery of every products. Meaning, they
always make sure that goods ordered and
invoiced are actually received and
cost-effective.
LOGISTIC FUNCTION- Here, they are
responsible for the actual goods and services.
Meaning, they are organized and properly
managed to bring effectiveness and
efficiency to the supply chain of a company.
So overall, the operations function of an
organization is responsible for producing
and delivering goods or services of value to
customers of the organization. Operations
managers make decisions to manage the
transformation process that converts inputs
into desired finished goods or services. We
have here the 3 points that deserves
emphasis:
Decisions - Above all, making decisions
for the whole company is an important thing
to do. All managers, even the employees
should be a good decision maker. Any
decision made in a company is important, no
matter how small it may be, it may have an
impact on the future of your company.
FUNCTION- It’s from genetic term
‘operations’, refers to the function that
produces well and services. It’s obviously
about making products from raw materials
into a finished product that the customers
would buy.
PROCESS- It’s about the transformation
process in making the goods or services. We
have here a sample company which delivers
product and societal value:
DELL
Dell is known for managing their products
and services well. They always make sure to
control and manage the stocks and
inventories of their company. And when it
comes to their customers, they are all
approachable. They have the direct selling
system that allows the customers to buy
their products online or even in phone calls.
Dell today has offering a free computer
recycling and they have 2 programs about
planting. It’s PLANT A
TREE FOR ME and PLANT A FOREST FOR ME.
1.3 DECISIONS AT PIZZA U.S.A., INC.
PROCESS- For the process, Pizza U.S.A is
allowing their customers to watch on how
they make pizzas before giving it to them.
They cope up with these strategies to
entertain their customers while waiting for
their orders. They believe that they
are great of making decisions because it
helps their business to be successful. They
are also responsible for putting exact
employees that will do the job, the location,
the number of people needed to operate
the store and the quality products and
services that they serve. As for them,
workforce is really important part
of the process, saying that their employees
work together as a team to operate and
manage the business well.
QUALITY- They are aware that they should
maintain the service quality and ensure the
quality of pizzas that they are serving.
Quality products are important not just only
for the business but also for the customers.
Employees are eager to become a service
quality, to be able to meet the expectations
of their customers and to have a quality
product. Because quality product is equals
to service quality.
CAPACITY - Pizza U.S.A always planned the
capacity determined the maximum level of
outputs of pizzas.
INVENTORY- Every business should plan and
construct all the inventories that they will
use. Pizza U.S.A is always careful when it
comes to planning about all the ingredients,
materials or stocks that they will need. They
really know how important it is to maintain
the correct levels of inventory
. TYPICAL JOBS AND CAREER IN
OPERATIONS AND SUPPLY CHAIN
1. PRODUCT PLANNING MANAGER
Employees here are responsible for a
portfolio about vehicles, machinery and
electronics. A person who’ll work as a
product planning manager will be
responsible for planning, recommending
market-based pricing and providing
insightful competitive analysis.
2. MATERIALS MANAGER or
PRODUCTION CONTROL
A person who’ll work as a Materials
Manager will be responsible for handling,
planning and controlling the selection of
suppliers. Every material manager should
know about the procedures on how they
will control the materials for their
respective suppliers and how they will
supervise the supply chain department.
3. CONTINOUS IMPROVEMENT
MANAGER
People who are responsible for always
making sure that their company is
continuous in improving. This kind of
manager is a gem of every company;
because they will make sure to help your
company to grow and they will put a lot of
on-going efforts to improve the products,
results, services and overall company.
4. DIRECTOR OF HEALTH CARE
OPERATIONS
A director’s work is to help the CEO of the
Health Care Company in a long and short
term panning for the special program
needs, facilities, and patients and for their
employees. A director must be responsible
and should know different procedures
about managing medical stuffs.
5. VICE PRESIDENT OF GLOBAL
OPERATIONS AND SUPPLY CHAIN
This individual will be responsible for global
management of Manufacturing, inventories,
storage, shipping, global sourcing and
facilities. A position like this is rare so once
a company is indeed, it will be a great
opportunity, so you should know how to
manage a global operation and supply
chain.
1.4 OPERATIONS DECISIONS — A
FRAMEWORK
It’s a summarized of Operations Decisions
on how Pizza U.S.A. INC., did to run their
business well. PROCESS: It’s about the
process on how they make pizzas to
satisfy their customers. QUALITY: It’s the
characteristics of a product or service. They
always ensure to have a quality product to
meet the expectations of every customer.
CAPACITY: The maximum amount of
materials that they will need in making
quality products. Even if it’s too risky, they
will plan it
wisely.
INVENTORY: They make sure that the stocks
of materials will be enough to make quality
goods and services.
1.5 CROSS-FUNCTIONAL DECISION
MAKING
Cross-Functional decision making is
obviously about the decisions, not just from
their managers, but also from different
departments within the company. Some
organizations preferred to have a
cross-functional team. A team that is made
up of people from different areas in a
company: in marketing, finance,
engineering etc,. They will work together as
a team because they do have similar goals,
and that is to make the business successful.
We have here some examples of Functional
Areas:
 MARKETING FUNCTION- Obviously,
they are from marketing department.
They are responsible for creating
demand and generating sales revenue.
 OPERATIONS FUNCTION- They are
responsible for production of goods
and services.
 FINANCE FUNCTION- It involves the
utilization of funds necessary for
efficient operations, dealing with all
money coming into and going out of
the organization.
1.6 Operations as a process
- known as transformation system or
transformation process converts inputs to
outputs inputs like energy, materials,
labor, capital and Information
interconnected process and a productive
system
Example:
University
Input: Faculty, Staff, Equipment, Facilities,
Energy, and
Knowledge
Output: Educated students, research, and
public
service
Automobile Manufacturers
Input: Materials (steel, plastics, aluminium),
labor, energy and information. Output:
Automobile
 INTERNAL ENVIRONMENT
- Cross-functional decision making
 EXTERNAL ENVIRONMENT
- Economic, physical, social and political
IMPORTANCE to monitor: to make
corresponding changes of needed
1.7 Contemporary Operations Themes
Makes operations an exciting and
interesting place especially for aspiring
managers and those who are challenged in
leadership
CONTEMPORARY THEMES
Operations will be more:
- Efficient
- Competitive
- Effective
7 Contemporary Themes -
1. Services & Manufacturing
 Needs to monitor because of: General
and connected nature
 Services supports
Manufacturing and vice Versa
Example: Wal-Mart - excels for applying
operations concepts
 Applies service design, process
thinking, quality improvement,
capacity management and lean
operations.
2. Customer-Directed Operations
 Marketing concept that focuses
on "voice of the customer"
 Operation-based that focuses on
"efficiency doesn't need to be
sacrificed to achieve customer
satisfaction"
 Uses customers as driver for
improvement
Examples are GE FLEET Services & UCP
3. Lean
 Focuses on eliminating or reducing
waste to improve the flow
 "Just-in-time production" concept
Requires lean thinking- think a new
way to organize activities to deliver
more benefits and value to society
 Importance of VALUE & FLOW
4. Integration of Operations with Other
Function integration (combination or
merging)
 aims to make everyone pulling in the
same directionone approach for the
lack of organizational cooperation and
integration
examples of methods are cross-functional
teams, information systems, management
coordination, rotation of employees and
other methods
5. Environmental Concerns Sustainability
 Aims to achieve sustainability by:
Protecting the environment and
Minimizing the negative impact on the
global ecosystem
 Aims to meet the needs of future
generations CSR and Annual Summit
for Organizations are implemented to
make it extensive
 Results to a better process that also
reduce the cost of the products
through less wasted material
6. Supply Chain Management
 Involves the entire flow of materials,
Information andnMoney Involves
Suppliers, Producers, and Customers
 Focuses on the speed of flow
from: Raw Materials to Production
until Delivery
 Uses lean operations
 Involves E-business - fast
information through internet
and other electronic transfer between
suppliers and customers
7. Globalization of Operations
 Extensive theme in all global business
Strategies of operations should have
global effect not narrow effect. Makes
the business: Globally competitive
"Facility Location" is one of the most
important operation
Examples: Coke, Pepsi McDonald's
CHAPTER TWO
OPERATIONS AND SUPPL CHAIN STRATEGY
2.1 Mc Donald’s Operation Strategy
In Mc Donald’s, the business strategy for
the company is to make food fast available
to its customers at a very low competitive
price but to get profit as well by reducing
the cost of the product and expanding the
business worldwide. Mc Donald’s
restaurants is provided food service and
quickly to customers with consistent quality
and low cost in clean and friendly
environment. Mc Donald’s has rapidly
expanded to become a global service firm.
The operations strategy
for global expansion has been to replicate
the service system design and supply chain
in each country with minimum
modifications to the menu or the process.
2.2 Global Scope of Operations and Supply
Chain
The scope of global supply chain operations
is increasing as firms expand their global
footprint, Global Corporation is organized
into divisions that have global responsibility
for the marketing and operations function
has emerged with the following
characteristics, facilities and plants are
located on a worldwide basis not country
by country. Gupta, Govindarajan, and Wang
suggest we define corporate globalist in
terms of four dimensions:
- Market presence
- Supply base
- Capital base
- Corporate mind
2.3 Supply Chain Strategy
The operations strategy of the firm but also
the strategies of the suppliers and
customers in the firms supply chain. Supply
chain strategy should be aimed at achieving
sustainable competitive advantages for the
entire supply chain.
THERE ARE TWO FUNDAMENTAL SUPPLY
CHAIN STRATEGIES:
IMITATOR – have products similar to
those of their competitors and are oriented
toward efficiency and low cost as a way of
competing.
INNOVATORS – differentiate their
products as their way of competing and
can charge higher price. These are the
consider proper context of the
global operations and supply chain to
improve help set the context not only for
operations strategy but also for decision
making in all part of the organization.
2.4 Operations Strategy Model
We have already described operations
strategy as a consistent pattern of decisions
about the transformation system and
associated supply chain that are linked to
the business strategy and other functional
strategies, leading to a competitive
advantage for the firm. Since operations
strategy is a FUNCTIONAL
STRATEGY
FUNCTIONAL STRATRGY – seek to improve
implementation of business and corporate
strategies. Functional strategies include
marketing strategies and human resources
strategies.
CORPORATE STRATEGY – a corporate
strategy entails a clearly defined, long-term
vision that organizations set, seeking to
create corporate value and motivate the
workforce to implement the proper actions
to achieve customer satisfaction.
BUSINESS STRATEGY – is a core
management function. It must be said that
having good strategy and executing
the strategy well, does not guarantee
success. Organizations can face unforeseen
circumstances and adverse conditions
through no fault of their own.
THREE TYPES OF COMPETITIVE
ADVANTAGES OF BUSINESS & CORPORATE
STRATEGIES:
- COST LEADERSHIP
- PRODUCT DIFFERENTIATION
- FOCUS
2.5EMPHASISONOPERATIONSOBJECTIVE
Tend to be specific and measurable, so that
they can help organizations to achieve its
long term goals. It can also help to improve
budgeting.
FOUR TYPES OF OPERATIONS OBEJECTIVE S
- COMPETING THROUGH QUALITY
- LOW COST OBJECTIVE
- DELIVERY TIME
- FLEXIBILITY
2.6 Linking Strategies
- Importance of connecting strategies
- Different of operations needs to have
different business strategies because
all-purpose operation doesn't exist
BUSINESS STRATEGIES
MARKETING STRATEGIES
FINANCIAL STRATEGIES
all these functions must support each other
Example:
Missions of every operation
ORDER WINNERS
win orders from the customers
ORDER QUALIFIERS
acceptable level to qualify to win orders
2.7 Environment and Sustainable
Operations
Focused on minimizing eliminating the
environmental impact of operations.
Involves Product Redesign and Process
Changes - Uncompleted Approach in
environment footprint is not accepted
Aims for SUSTAINABILITY Applies GREENING
OPERATIONS (operations of being
environment-friendly)
STEP 1: examine opportunities for
reducing
the environmental footprint - eliminate air,
water, and landfill pollution
- reduce energy consumption
- measure and minimize transportation and
total carbon footprint - work with suppliers
to use recyclable and biodegrable packaging
- incorporate product reuse, end-of-life
return , and recycling
Step 2: Cross-functional teams develop
strategies and action plans
- Supply chain partners are also involved in
the cross-functional teams
CHAPTER THREE
PRODUCT DESIGN
New-product development is a crucial part
of business. New products provide growth
opportunities and competitive advantage
for a firm. It must be defined with not only
the market in mind but also the production
process that will be used to make product.
Product decisions affect each of the four
decision-making areas
of operations. Example: The product
development process at Ford
An automobile is the most complex product
that most people are ever likely to own.
Product design follows from a development
of a business strategy. The Ford Company
begins with information inputs of three
major types: Ford strategy and goals for
performance and leadership, market
research, research and development
technical approaches to a variety of
environmental, safety and performance
challenges.
3.1 Strategies for new-product introduction
There are Three Fundamentally different
ways to introduce new products. These
approaches are called:
Market Pull – The market is the primary
basis for determining the products a firm
should make. Refers to the
need/requirement for a new product or a
solution to a problem, which
come from the market place.
Technology Push – The firm should
pursue a technology-based advantage by
developing superior technologies and
products. It is when research and
development in new technology, drives the
development of new products.
Interfunctional View – This view holds that
the product should not only fit the market
needs but have a technical
advantage as well. This is the most
appealing to three views but also the most
difficult to implement.
3.2 New-Product Development Process
The purpose of this process is to gain
control of product development and ensure
that all important issues are addressed
by the New-Product Development (NPD)
team. The typical phases followed by firms
in developing new products are the
following.
Concept development – This phase is
concerned with idea generation and the
evaluation of alternative ideas for
the new product. The physical product is
not designed during concept development;
rather different approaches to defining and
meeting the market need are considered.
The decision to proceed the product design
phase ordinarily requires top management
approval.
Product Design – This phase is concerned
withdesigning the physical new product. It
requires consideration of many different
trade-offs between product cost, quality
(features), and schedule. Process
Design should be taking place
simultaneously with product design. The
product was relatively simple to
design in this case, but the process change
was more complex.
Pilot Production/Testing – Complex
products require testing of production
prototypes before they are put into
production. During this phase, the process
for production is finalized. To facilitate
full-scale production, an information
package should be finalized that contains
not only product specification but also
process design specifications, training
procedure operations, and test
results.
3.3 Cross-Functional Product Design
The new-product development process is
one of frequent misalignment. Technology
misalignment occurs when the product
designed by engineering cannot be made by
operations. This happens when
technologies are new or unproven or are
not well understood. To overcome these
problems in technology
development, a concurrent marketing,
engineering, and production
approach has been suggested. The
traditional approach proceeds in stages or
steps:
Sequential Process – each function
completing its work before the next one
starts.
Concurrent Engineering – all functions are
involved from the beginning, frequently by
forming a new-product development team,
as soon as concept development is
started.
The concurrent product development
team revolutionized the national
certification process for industrial
respirators used to
protect workers in hazardous environment.
3.4 Supply Chain Collaboration
Just as internal collaboration is important,
so is external collaboration with supply
chain customers and suppliers.
Collaboration with customers means
tapping into their knowledge and expertise
to design products they are willing to buy.
The collaboration can take many
different forms, including the following:
Asking customers the right questions.
Aligning incentives for customers to share
their knowledge with the design team.
Creating a collaborative technology
platform to share information. Including
customers as advisors to the design
team. While collaborating with customer
provides benefits, it also requires a change
in attitude from “controlling the
design” to working in partnership with
customers. Supplies can be asked to join
the new-product development team or to
provide input at critical points in
the design process. Their role is to offer
improvements in the design or alternative
approaches that leverage
their expertise.
Criteria for a Potential Collaborator:
Technical Expertise – Does the supplier
have technical expertise that the company
does not have?
Capability – can the supplier hit targets for
cost, quality, and product performance?
Capacity - Can the supplier meet the
product development schedule and the
ramp-up to production?
Low risk – what is the risk that the supplier
will not performed as expected?
When there is collaboration with critical
suppliers and customers in the supply chain,
the design process is greatly improved.
3.5 Quality Function Deployment
The new-product development process is
aided by many different tools and
techniques. Quality
Function Deployment (QFD) is a tool for
linking customer requirements as defined
by the customer to technical specifications.
It is very useful in translating the ordinary
language obtained from the customer to
technical requirements understood by
engineering, and manufacturing. QFD was
first used in 1972 at the Mistsubishi
shipyard in Japan. Now many companies
throughout the world are using QFD in
industries such as automobiles, electronics,
home appliances and services. QFD has
been found to be very useful as a
communication tool, and it helps ensure
that all the customer requirements are
being considered and nothing has been
forgotten. When using QFD, the firm
identifies various customer attributes. Each
of these attributes can be met by
one or more engineering characteristics of
the product. When the matrix is first
popularized by Hauser and Clausing (1988)
it is called the house of quality.
Customer Attributes
The customer attributes (CAs) represent the
voice of the customer. These attributes are
determined through market research in
conjunction with potential customers.
Engineering Characteristics
This is done by thinking about how each of
the customer attributes can be met by the
new bicycle design. Engineering
characteristics must be measurable and
specific and are closely related to the final
design specifications for the product. The
target value is determined by the
importance of various customer attributes,
the linkages to ECs, and the desired
performance. The ultimate result of the
house of quality is a translation of the CAs
into target values for ECs on the bottom of
the matrix. The house of quality has been
found to be very useful in increasing
cross-functional communications because it
neatly connects the market requirements,
which the customer values, with the design
characteristics that engineers must consider.
The house of quality can be extended into
production by linking the product to various
parts and to process design parameters.
In this case, the target values for the
product design become customer attributes
for the part design and process design. The
house of quality can be linked to suppliers y
considering the target value of the design
as customer attributes for the suppliers.
QFD also can be applied to service
industries in much the same way it is
applied to manufacturing.
3.6 Value Analysis
- Method for improving the value of the
product - VALUE
2 BASIC TERMS
- COST
- USEFULNESS
Defined as "RATIO OF USEFULNESS TO
COST"
- Method for improving the usefulness of a
product without increasing or reducing the
cost and without reducing the usefulness of
the product - Way to improve a product in
the customer's eyes. Customer Attributes
will be the Target Values for product
Design
3.7 Modular Design
- Simplifying design for high product variety
and low components variety One aspect of
DFM (Design for Manufacturing)
- Aims to simplify design for multiple
products variety
- Aims to identify the commonality of parts
and substitutable properties
- Results to HIGH PRODUCT VARIETY AND
LOW COMPONENTS VARIETY
- Appropriate approach for Mass
customization
-Example
University of Minnesota had 2000
combinations of mattresses
50% of these are for 3% sales only so they
changed it to 4 sizes, the REGULAR, TWIN,
and QUEEN and KING. Considering other
properties. They have 288 combinations.
4 X 3 X 3 X 8 = 288 COMBINATIONS
FOCUSED ON ABUNDANT CONSUMER
CHOICES since those are most profitable
and valued by the customers

Linked Design will be conducted along

with the suppliers or manufacturers
- Example of Reduced cost, improved
usefulness, and reliability