This document provides an overview of operations and supply chain management. It defines operations and supply chain management as designing, operating, and improving systems that create and deliver products and services. It categorizes operations and supply chain processes into planning, sourcing, making, delivering, and returning. It also contrasts services and goods producing processes and identifies careers in operations and supply chain management.

1. McGraw-Hill/Irwin Copyright © 2011 The McGraw-Hill Companies, All Rights Reserved
Chapter 1
Operations and Supply Chain Management

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

3. 1-3
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
LO 1

4. 1-4
Process Steps for Men’s Nylon
Supplex Parka
LO 2

5. 1-5
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
LO 3

6. 1-6
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

7. 1-7
Differences Between Services and
Goods
1. Services are intangible
2. Services requires some interaction
with the customer
3. Services are inherently
heterogeneous
4. Services are perishable and time
dependent
5. Services are defined and evaluated as
a package of features
LO 4

8. 1-8
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

9. 1-9
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

10. 1-10
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
LO 5

11. 1-11
Historical Development of
Operations and Supply Management
• 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
LO 6

12. 1-12
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