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C01 Presentation Transcript

  • 1. Chapter 1Introduction to Operations andSupply Chain Management1-1
  • 2. Lecture Outline• What Operations and Supply Chain Managers Do• Operations Function• Evolution of Operations and Supply ChainManagement• Globalization and Competitiveness• Operations• Strategy and Organization of the Text• Learning Objectives for This CourseCopyright 2011 John Wiley & Sons, Inc. 1-2
  • 3. What Operations and Supply ChainManagers Do• What is Operations Management?• design, operation, and improvement of productive systems• What is Operations?• a function or system that transforms inputs into outputs of greatervalue• What is a Transformation Process?• a series of activities along a value chain extending from supplierto customer• activities that do not add value are superfluous and should beeliminatedCopyright 2011 John Wiley & Sons, Inc. 1-3
  • 4. Transformation Process• Physical: as in manufacturing operations• Locational: as in transportation or warehouseoperations• Exchange: as in retail operations• Physiological: as in health care• Psychological: as in entertainment• Informational: as in communicationCopyright 2011 John Wiley & Sons, Inc. 1-4
  • 5. Operations as aTransformation ProcessCopyright 2011 John Wiley & Sons, Inc. 1-5INPUT•Material•Machines•Labor•Management•CapitalTRANSFORMATIONPROCESSOUTPUT•Goods•ServicesFeedback & Requirements
  • 6. Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.Operations Function• Operations• Marketing• Finance andAccounting• HumanResources• OutsideSuppliers1-6
  • 7. How is Operations Relevantto my Major?• Accounting• InformationTechnology• Management• ―As an auditor you must understand thefundamentals of operationsmanagement.‖• ―IT is a tool, and there’s no better place toapply it than in operations.‖• ―We use so many things you learn in anoperations class—scheduling, leanproduction, theory of constraints, andtons of quality tools.‖Copyright 2011 John Wiley & Sons, Inc. 1-7
  • 8. How is Operations Relevantto my Major?• Economics• Marketing• Finance• ―It’s all about processes. I live byflowcharts and Pareto analysis.‖• ―How can you do a good job marketing aproduct if you’re unsure of its quality ordelivery status?‖• ―Most of our capital budgeting requestsare from operations, and most of ourcost savings, too.‖Copyright 2011 John Wiley & Sons, Inc. 1-8
  • 9. Evolution of Operations andSupply Chain Management• Craft production• process of handcrafting products or services forindividual customers• Division of labor• dividing a job into a series of small tasks eachperformed by a different worker• Interchangeable parts• standardization of parts initially as replacement parts;enabled mass productionCopyright 2011 John Wiley & Sons, Inc. 1-9
  • 10. Evolution of Operations andSupply Chain Management• Scientific management• systematic analysis of work methods• Mass production• high-volume production of a standardized product fora mass market• Lean production• adaptation of mass production that prizes quality andflexibilityCopyright 2011 John Wiley & Sons, Inc. 1-10
  • 11. Historical Events inOperations ManagementEra Events/Concepts Dates OriginatorIndustrialRevolutionSteam engine 1769 James WattDivision of labor 1776 Adam SmithInterchangeable parts 1790 Eli WhitneyScientificManagementPrinciples of scientificmanagement1911 Frederick W. TaylorTime and motion studies 1911Frank and LillianGilbrethActivity scheduling chart 1912 Henry GanttMoving assembly line 1913 Henry FordCopyright 2011 John Wiley & Sons, Inc. 1-11
  • 12. Historical Events inOperations ManagementEra Events/Concepts Dates OriginatorHumanRelationsHawthorne studies 1930 Elton MayoMotivation theories1940s Abraham Maslow1950s Frederick Herzberg1960s Douglas McGregorOperationsResearchLinear programming 1947 George DantzigDigital computer 1951 Remington RandSimulation, waitingline theory, decisiontheory, PERT/CPM1950sOperations researchgroupsMRP, EDI, EFT, CIM1960s,1970sJoseph Orlicky, IBMand othersCopyright 2011 John Wiley & Sons, Inc. 1-12
  • 13. Historical Events inOperations ManagementEra Events/Concepts Dates OriginatorQualityRevolutionJIT (just-in-time) 1970s Taiichi Ohno (Toyota)TQM (total qualitymanagement)1980sW. Edwards Deming,Joseph JuranStrategy andoperations1980sWickham Skinner,Robert HayesReengineering 1990sMichael Hammer,James ChampySix Sigma 1990s GE, MotorolaCopyright 2011 John Wiley & Sons, Inc. 1-13
  • 14. Historical Events inOperations ManagementEra Events/Concepts Dates OriginatorInternetRevolutionInternet, WWW, ERP,supply chain management1990s ARPANET, TimBerners-Lee SAP,i2 Technologies,ORACLE, DellE-commerce 2000s Amazon, Yahoo,eBay, Google, andothersGlobalization WTO, European Union,Global supply chains,Outsourcing, ServiceScience1990s2000sChina, India,emergingeconomiesCopyright 2011 John Wiley & Sons, Inc. 1-14
  • 15. Historical Events inOperations ManagementEra Events/Concepts Dates OriginatorGreenRevolutionGlobal warming, AnInconvenient Truth, KyotoToday Numerousscientists,statesmen andgovernmentsCopyright 2011 John Wiley & Sons, Inc. 1-15
  • 16. Evolution of Operations and SupplyChain Management• Supply chain management– management of the flow of information, products, and services across anetwork of customers, enterprises, and supply chain partners1-16Copyright 2011 John Wiley & Sons, Inc.
  • 17. Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.Globalization• Why ―go global‖?– favorable cost– access to international markets– response to changes in demand– reliable sources of supply– latest trends and technologies• Increased globalization– results from the Internet and falling trade barriers1-17
  • 18. Hourly Compensation1-18
  • 19. GDP per Capita1-19
  • 20. Trade in Goods, % of GDPCopyright 2011 John Wiley & Sons, Inc. 1-20
  • 21. Productivity and Competitiveness• Competitiveness• degree to which a nation can produce goods andservices that meet the test of international markets• Productivity• ratio of output to input• Output• sales made, products produced, customersserved, meals delivered, or calls answered• Input• labor hours, investment in equipment, materialusage, or square footageCopyright 2011 John Wiley & Sons, Inc. 1-21
  • 22. Measures of ProductivityCopyright 2011 John Wiley & Sons, Inc. 1-22
  • 23. Osborne IndustriesCopyright 2011 John Wiley & Sons, Inc. 1-23C6*C8C7*C9C5/C6C5/C7C5/C13
  • 24. Productivity GrowthCopyright 2011 John Wiley & Sons, Inc. 1-24
  • 25. Percent Change in Input and OutputCopyright 2011 John Wiley & Sons, Inc. 1-25
  • 26. Strategy and Operations• How the mission of a company is accomplished• Provides direction for achieving a mission• Unites the organization• Provides consistency in decisions• Keeps organization moving in the right directionCopyright 2011 John Wiley & Sons, Inc. 1-26
  • 27. Strategy Formulation1. Defining a primary task• What is the firm in the business of doing?2. Assessing core competencies• What does the firm do better than anyone else?3. Determining order winners and order qualifiers• What qualifies an item to be considered forpurchase?• What wins the order?4. Positioning the firm• How will the firm compete?5. Deploying the strategyCopyright 2011 John Wiley & Sons, Inc. 1-27
  • 28. Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.Strategic Planning1-28Missionand VisionCorporateStrategyOperationsStrategyMarketingStrategyFinancialStrategy
  • 29. Order Winnersand Order QualifiersCopyright 2011 John Wiley & Sons, Inc. 1-29Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and AlanBetts, Operations and Process Management, Prentice Hall, 2006, p. 47
  • 30. Positioning the Firm• Cost• Speed• Quality• Flexibility1-30
  • 31. Positioning the Firm: Cost• Waste elimination• relentlessly pursuing the removal of all waste• Examination of cost structure• looking at the entire cost structure for reduction potential• Lean production• providing low costs through disciplined operationsCopyright 2011 John Wiley & Sons, Inc. 1-31
  • 32. Positioning the Firm: Speed• Fast moves, Fast adaptations, Tight linkages• Internet• Customers expect immediate responses• Service organizations• always competed on speed(McDonald’s, LensCrafters, and Federal Express)• Manufacturers• time-based competition: build-to-order production andefficient supply chains• Fashion industry• two-week design-to-rack lead time of Spanish retailer, ZaraCopyright 2011 John Wiley & Sons, Inc. 1-32
  • 33. Positioning the Firm: Quality• Minimizing defect rates or conforming to designspecifications• Ritz-Carlton - one customer at a time• Service system designed to ―move heaven and earth‖to satisfy customer• Employees empowered to satisfy a guest’s wish• Teams set objectives and devise quality action plans• Each hotel has a quality leaderCopyright 2011 John Wiley & Sons, Inc. 1-33
  • 34. Positioning the Firm: Flexibility• Ability to adjust to changes in productmix, production volume, or design• Mass customization: the mass production ofcustomized parts• National Bicycle Industrial Company• offers 11,231,862 variations• delivers within two weeks at costs only 10% abovestandard modelsCopyright 2011 John Wiley & Sons, Inc. 1-34
  • 35. Policy Deployment• Policy deployment• translates corporate strategy into measurableobjectives• Hoshins• action plans generated from the policydeployment processCopyright 2011 John Wiley & Sons, Inc. 1-35
  • 36. Policy DeploymentDerivation of an Action Plan Using Policy Deployment1-36Copyright 2011 John Wiley & Sons, Inc.
  • 37. Balanced Scorecard• Balanced scorecard• measuring more than financial performance1. finances2. customers3. processes4. learning and growing• Key performance indicators• set of measures to help managers evaluateperformance in critical areasCopyright 2011 John Wiley & Sons, Inc. 1-37
  • 38. Balanced Scorecard WorksheetCopyright 2011 John Wiley & Sons, Inc. 1-38
  • 39. Balanced Scorecard1-39Copyright 2011 John Wiley & Sons, Inc.Radar Chart Dashboard
  • 40. Copyright 2011 John Wiley & Sons, Inc.Copyright 2011 John Wiley & Sons, Inc.Operations StrategyProducts1-40Services ProcessandTechnologyCapacityHumanResources QualityFacilities Sourcing OperatingSystems
  • 41. Organization of This Text:Part I – Operations Management1. Intro. to Operations and Supply ChainManagement2. Quality Management3. Statistical Quality Control4. Product Design5. Service Design6. Processes and Technology7. Capacity and Facilities Design8. Human Resources9. Project ManagementCopyright 2011 John Wiley & Sons, Inc. 1-41
  • 42. Organization of This Text:Part II – Supply Chain Management10.Supply Chain Strategy and Design11.Global Supply Chain Procurement and Distribution12.Forecasting13.Inventory Management14.Sales and Operations Planning15.Resource Planning16.Lean Systems17.SchedulingCopyright 2011 John Wiley & Sons, Inc. 1-42
  • 43. Learning Objectives of this Course• Gain an appreciation of strategic importance ofoperations and supply chain management in a globalbusiness environment• Understand how operations relates to other businessfunctions• Develop a working knowledge of concepts andmethods related to designing and managingoperations and supply chains• Develop a skill set for continuous improvementCopyright 2011 John Wiley & Sons, Inc. 1-43
  • 44. Copyright 2011 John Wiley & Sons, Inc. 1-44Copyright 2011 John Wiley & Sons, Inc.All rights reserved. Reproduction or translation of thiswork beyond that permitted in section 117 of the 1976United States Copyright Act without express permissionof the copyright owner is unlawful. Request for furtherinformation should be addressed to the PermissionDepartment, John Wiley & Sons, Inc. The purchasermay make back-up copies for his/her own use only andnot for distribution or resale. The Publisher assumes noresponsibility for errors, omissions, or damages causedby the use of these programs or from the use of theinformation herein.