Chapter 1

Operations and Supply

Chain Management

McGraw-

Copyright 2011 The McGraw-Hill Companies, All Rights

Learning Objectives
1. Understand why it is important to study
operations and supply chain management.
2. Categorize operations and supply chain
processes.
3. Contrast differences between services and
goods producing processes.
4. Understand the definitions of efficiency and
effectiveness
5. Identify operations and supply chain
management career opportunities.
6. Describe how the field has developed over
time.
1-2

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 firms 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
LO 1

1-3

Organization of OSCM: The Integration

of Strategy, Processes and Planning

LO 1

1-4

Supply Chain Processes

LO 3

1-5

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 firms 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 wornout, defective, and excess products back
from customers
LO 3

1-6

Differences Between Services and

Goods

1. Services requires some interaction with

the customer
2. Services are inherently heterogeneous
3. Services are perishable and time
dependent
4. Services are defined and evaluated as a
package of features

LO 4

1-7

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

1-8

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

1-9

Careers in Operations and Supply

Management
Plant manager
Hospital
administrator
Branch manager
Call center manager
Supply chain
manager
Purchasing
manager
LO 5

Business process
improvement
analyst
Quality control
manager
Lean improvement
manager
Project manager
Production control
analyst
Facilities manager
1-10

Historical Development of
Operations and Supply Management

LO 6

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
1-11

Current Issues in Operations and

Supply Management
1. Coordinating the relationship between
mutually supportive but separate
organizations
2. Optimizing global suppliers, production, and
distribution networks
3. Managing customer touch points
4. Raising senior management awareness of
operations as a significant competitive
weapon
5. Sustainability and the triple bottom line
LO 6

1-12