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Study supplement

Advanced diploma in
purchasing and supply

Operations management in the supply chain


Advanced diploma in purchasing and supply
How to use this study supplement

Introduction Statements of practice Required academic level


This guide covers the syllabus content of These are taken from the subject syllabus (unit Students are reminded that, to pass the
Operations Management in the Supply Chain, an content) and specify the level that students are examination, they must:-
optional subject in the Advanced Diploma in required to achieve in order to pass the • Have appropriate knowledge and
Purchasing and Supply. Its aim is to provide examination. understanding of the syllabus content in its
students with a structure which they can follow entirety.
and which will guide them through the whole Introduction • Be able to apply that knowledge and
syllabus. The guide is broken down into twenty This provides a summary of the session content. understanding specifically in the context of
separate study sessions, each focusing on a the questions set in the examination.
specific area of the unit content. Learning objectives • Be able to analyse and evaluate relevant
Each session will be broken down into parts, tools, models, principles and theories.
The guide will be equally invaluable to all each covering a different area. A learning
students, irrespective of their method of study. objective has been set for each of these parts so Revision
In addition, the guide will also be of use to that students understand clearly what they are Students are reminded that revision is a key part
subject tutors and will help them plan and expected to achieve before moving on to the of preparing for the examination. Therefore,
prepare for course delivery to students. next section. sufficient time for revision must be allowed in
the student’s study programme. This should be
Students will be required to adopt a disciplined Learning activities factored in at regular intervals throughout the
approach to ensure that the directed reading For each learning objective there is an activity study period and, particularly, when all study
(using the recommended study text) is which should be completed by the student. The sessions have been completed and prior to the
undertaken and all learning activities and self- activities have been created to help the student examination.
assessment questions are completed. explore aspects of the syllabus and, in many
cases, to consider how the subject is applied in Students are encouraged to practice using past
The guide includes a brief indication of the areas practice. examination questions. It is recommended that
that students should have considered in this practice is undertaken under mock
response to the self-assessment questions. Self-assessment questions examination conditions so that students are
However, it is emphasised that these are not Similarly, for each learning objective there is a properly prepared for the examination.
‘model’ answers. Students will be expected to self-assessment question. These have been
provide much more comprehensive answers in designed to test students’ knowledge and CIPS has produced a short booklet
the examination. understanding of what they have learned. ‘Examination techniques – a guide for
Outline responses to these questions are students’. Students can obtain a copy of this
contained within the guide. online from the CIPS website.
Recommended reading
The subject Senior Assessor has recommended a Checklist Getting started
study text (‘directed reading’) which will cover as This provides a very brief summary of any key Students should obtain, and familiarise
much of the syllabus content as possible. This is principles, tools, models and techniques which themselves with the subject syllabus which is
Operations Management by Slack, Chambers are relevant to the session and with which the contained in the Unit Content Guide (available
and Johnston – 6th edition 2010 ISBN 978- student should be familiar. online from the CIPS website).
0273731603. However, at this level of
qualification, students are expected to read more Directed reading Students should also obtain a copy of the
widely than from just one source. Additional This states the appropriate references to the recommended study text and, if possible, the
texts have also been suggested by the Senior Senior Assessor’s recommended study text for recommended and additional further reading.
Assessor to ensure full coverage of the syllabus the subject.
content and so that students can study the Students should then create an action plan,
subject more thoroughly through wider reading. Recommended further reading covering all study sessions and allowing
This provides the appropriate references to sufficient time for adequate revision.
Students should note that in order to undertake a additional further reading text which has been
programme of study it will be necessary, as a suggested. Author profile
minimum, to obtain a copy of the recommended Jeremy Johnson
study text for the subject. Additional resources Jeremy Johnson has spent 25 + years in
Here the guide will list any appropriate Purchasing and Supply Chain Management in a
Study session features additional information which will be of use to range of highly competitive industry sectors
For consistency and to aid study, the same students, eg case studies, articles and websites. including nuclear, domestic appliances, fast
approach is adopted for each session. Each moving consumer goods, automotive and
session includes:- CIPS past examination questions furniture. He has experience in the management
Where appropriate, past examination questions and motivation of small teams of up to 15 people
Title which are relevant to the content of the session with a range of abilities from buyers to
This provides a brief indication of the session have been identified. Past papers are available managers.
content. online via the CIPS website.

01
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 1

Title Operations management in context

Statements of Compare the challenges facing operations managers who operate in increasingly complex global markets for goods and
practice covered: services.

Introduction: By the end of this session students should understand and be able to analyse the operations management business
environment and how this relates to supply chain management. This section focuses on influences within the wider business
environment. In addition they should be aware of the following:

• Definition of the term operations management


• Distinguishing operations management as one of the key functions in an organisation
• Improvements in transport and communications technology
• The convergence of consumer preferences
• Increased competition and implications of shorter product lifecycles.

Learning Definition of the term operations management and explaining why operations management function is one of the key
objective 1.1: functions in any business.

Learning activity: Examine a manufacturing business and identify the main areas of influence and control of the operations function.

Self-assessment Describe the deliverables of a service organisation and some of the main challenges in providing the service.
question:

Learning Explain how improvements in transport and communications technology has influenced the role of the operations manager.
objective 1.2:

Learning activity: Examine the environment in your organisation and the influence of communications technology.

Self-assessment Detail three different forms of communications technology that have influenced the competitive environment for operations
question: management.

Learning Describe how the preferences of the consumer have converged over the last two decades.
objective 1.3:

Learning activity: Evaluate how consumer tastes have changed over the last decade and the reasons for consumers now having similar tastes.

Self-assessment Explain the meaning of convergence in the context of the retail environment.
question:

Learning Analyse the external environment to appreciate the drivers of increased competition and as a result shorter product life cycles.
objective 1.4:

Learning activity: Identify a product and consider the number of new product introductions and improvements over the last decade.

Self-assessment Describe the drivers of increased competition and explain, by the use of a graph, the reality of shorter product lifecycles.
question:

02
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Operations management in context

Checklist: (ie the • Globalisation


principles, tools, • PESTLE
techniques, • Product Life cycle (but this is covered in more detail later in the course).
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Pages 4 & 5 of the RST.


(recommended Part 1 Introduction to Operations Management
study text)

Recommended Management – page 14 Short case and answer these questions:


further reading 1. What are the advantages and disadvantages of Prêt A Manger organising itself so that the individual shops make the
(additional further sandwiches they sell?
reading text) 2. How can effective operations management at Prêt A Manger contribute significantly to its success? What would be the
Operations consequences of poor operations management in this kind of organisation?

Additional Read again the activities of operations management in the RST page 21.
resources www.pearsoned.co.uk/slack is the RST website

Operations Management – Ray Wild 6th Edition 2006.

CIPS past L5 – 12 May 2008 Q6.


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 1.1 The main challenges are the fact that delivering a service involves people and you are delivering an intangible item. As we
will see later in session 2 delivering a tangible product can be more difficult because a product needs transporting, storing and
physically delivering where as a service does not. This makes delivering a service easier but, as we will see later, there are
numerous problems when the deliverable is intangible.

NB Operations management is often seen as being primarily manufacturing based. The main reason behind this is that it has
tangible inputs and outputs and makes teaching the subject more straightforward, especially as stock is also a major element
that needs managing.

SAQ 1.2 The different forms of communication are:

• Internet and web


• Transfer of files and money which can make the whole business process faster
• Mobile technology
• E-procurement via ERP systems
• Video conferencing.

There are many others!

03
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Operations management in context

SAQ 1.3 Due to the huge increases in communications technology consumers are much more aware of new technology products and
services. Globalisation sees the world as a single market place and, as countries develop, so their populations demand more
products and services that make life easier, more efficient and effective. Gone are the days when older products could be sold
to less developed countries.

SAQ 1.4 One of the main drivers of competition is the need to continue to update products with new technology so that a company’s
products are the most attractive and up to date in terms of functionality. This means products are continually being updated
and, therefore, their life cycle is becoming shorter. This shorter product life cycle also has implications for sustainability. As we
will see in later sessions, the product life cycle concept is a critical one in operations management and has considerable
implications for operations managers.

04
Advanced diploma in purchasing and supply
Marketing for
Operations management
purchasersin the supply chain

STUDY SESSION 2

Title The input–transformation-output model for goods and services

Statements of • Formulate an operations strategy that will integrate with the product requirements of a marketing function
practice covered: • Compare the challenges facing operations managers who operate in increasingly complex global markets for goods and
services.

Introduction: By the end of this session students should understand and be able to analyse:

• The input–transformation-output model


• The varied resource inputs to the input stage
• The meaning of transformation and how this applies to manufacturing and business processes
• The different types of output from the transformation processes
• And compare the different characteristics of
• Products and service organisations and analyse how they impact on operations management practice.

The different characteristics are:


• Aspects of tangibility
• Quality and specification issues
• Demand management
• Training and development
• Capacity management
• Service quality and managing the customer.

Learning Define the different terms referred to in respect of the input-transformation-output model
objective 2.1:

Learning activity: Consider some different ‘transformation’ activities in manufacturing and service operations.

Self-assessment Apply the input-transformation-output model to a car manufacturing business and an insurance company.
question:

Learning • Explain the varied resource inputs to the input stage


objective 2.2: • Explain the meaning of transformation and how this applies to manufacturing and business processes
• Explain the different types of output from the transformation process.

Learning activity: How do you think the input /output model could be used as a problem solving tool?

Self-assessment Consider the effect of the different quality of resource inputs to the transformation process and the effect they have on the
question: output.

Learning Explain how the input-transformation-output model relates to supply chains.


objective 2.3:

Learning activity: Draw a map of a supply chain you know well and examine the inputs and outputs at each stage.

Self-assessment Is the input–transformation-output model equally applicable to business services and, if so, what are the main inputs/outputs
question: and transformation processes?

05
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The input–transformation-output model for goods and services

Learning Compare the different characteristics of products and service organisations.


objective 2.4:

Learning activity: How might a domiciliary care service operation measure its performance?

Self-assessment How do services store capacity?


question:

Learning Analyse how the different characteristics impact on operations management practice.
objective 2.5:

Learning activity: Identify a service and develop a detailed specification and a means of performance measurement. How easy is this to do?

Self-assessment Why do manufacturing companies find it difficult to move into the service sector?
question:

Checklist: (ie the • Input-transformation-output model


principles, tools, • Goods versus services analysis.
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Page 11 of the RST – Inputs and Outputs.


(recommended Page 18 of the RST – Business processes.
study text)

Recommended Read the short case Oxfam in the RST page 9.


further reading Services and products are merging RST Page 14.
(additional further
reading text)

Additional Current CIPS study guide page 7


resources www.pearsoned.co.uk/slack is the RST website.
Operations Management – Ray Wild 6th Edition 2006 page 15.

CIPS past L5-12 May 2007 Q3.


examination
questions

06
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The input–transformation-output model for goods and services

Notes on self-
assessment
questions (SAQ)

SAQ 2.1 The difference between these two types of organisation is considerable:

The car maker has a wide variety of inputs such as materials, machinery, labour, cash and information. The transformation
activity is assembly and design and the output is a finished car. The insurance company mainly deals with inputs of money and
information and then transforms them by people expertise into other forms of contracts and information. They both have a
tangible product as an output. Often many business offerings are a mixture of goods and services.

SAQ 2.2 The inputs to the I-T-O model are resources and it is the quality of these resources that have such a major influence on the
output. For example, if the steel material needed to make a car door is of poor quality, then the output will also be poor. The
essential feature of this model is that the better the inputs then the better the output but, at the same time, there is a trade off
between quality and cost.

SAQ 2.3 The I-O-T model is equally applicable to services as it is to goods. Instead of manufacturing processes there are mainly
business processes that transform information. For example, as we saw above in the insurance company, instead of people
making and assembling products, they are processing and handling data and information. They are converting it from one form
to another or adding different types of information together to provide complete sets of information. This type of process also
occurs when applying for a mortgage.

SAQ 2.4 Services store capacity in terms of people and the number of hours available to perform certain activities. For example, in a
hairdresser’s there may be two people cutting hair 35 hours per week giving them 70 hours of capacity a week. Of course
there is no guarantee that this capacity will be used since they may not have enough customers!

SAQ 2.5 Manufacturing companies normally find it difficult to move into the service sector because, up until this stage, they have never
had real contact with the customer in terms of delivering the end product. Providing services requires a different approach
from those who interact with the customer when actually delivering the service. This requires operational personnel to talk
and interact directly with the customer.

07
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 3

Title The strategic roles, responsibilities & relationships of operations management

Statements of Compare the challenges facing operations managers who operate in increasingly complex global markets for goods and
practice covered: services.

Formulate an operations strategy that will integrate with the product requirements of a marketing function.
Evaluate the strategic relationship between the operations function and other main functions within the business.

• Marketing
• Finance
• Purchasing and supply chain
• Human resources
• Information Technology (IT).

Introduction: By the end of this session students should understand and be able to analyse:-

An organisation’s business structure and how operations management can contribute to the profitability and success of the
organisation
The main functional roles that are required for any business to function and the reasons why operations management
communicates with these functions on a day to day basis.

Learning Explain the relationship between operations management and supply chain management.
objective 3.1:

Learning activity: For your business draw a diagram of a complete supply chain from raw materials to final customer. Describe a transformation
process within that supply chain and decide who has control over the different activities.

Self-assessment What are the main management activities of an operations manager?


question:

Learning Describe the critical contribution that operations management can make to the business strategy.
objective 3.2:

Learning activity: What are the main day to day tasks for an operations manager in your organisation?

Self-assessment Why has operations management such a wide role of responsibility in an organisation?
question:

Learning Examine the roles and responsibilities of operations management.


objective 3.3:

Learning activity: What are the main objectives of an operations manager?

Self-assessment Identify some of the different tasks that operations managers have to perform in a goods and a service operation.
question:

08
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The strategic roles, responsibilities & relationships of operations management

Learning Examine and appraise the relationships between the key business functions of marketing, finance, purchasing/supply chain,
objective 3.4: HR and IT.

Learning activity: Pick two functions within your organisation and list the reasons for having a close relationship between them.

Self-assessment Why does purchasing activity have such a major influence on the operations management function?
question:

Checklist: (ie the A general understanding of the I-O-T process and how this fits in with a typical organisation as per the diagram on Page 25 of
principles, tools, the RST.
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Page 20 – How operations can affect profits.


(recommended
study text)

Recommended The model of operations management Page 24


further reading Operations Management – Ray Wild 6th Edition 2006
(additional further
reading text)

Additional If you have not read this section then read the activities of operations management in the RST page 21 now. It forms an
resources important section of the whole subject and identifies why it is such an important contributor to business success.

Also read Part 5 of the RST entitled The operations challenge.

www.pearsoned.co.uk/slack is the RST website

CIPS past L5-12 November 2007 Q3 b)


examination
questions

09
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The strategic roles, responsibilities & relationships of operations management

Notes on self-
assessment
questions (SAQ)

SAQ 3.1 The main management activities of an operations manager fall into three categories:

Short term – day to day management of output to make sure the business delivers conforming materials and services to its
customers.
Medium term - weeks to months making sure targets are met and the management of capacity on a week to week basis is
successful. Managers are also given the responsibility for improvement of the whole input output process in terms of
throughput and quality. This would involve training and development of staff.
Long term – he/she has an input into longer term planning of machinery, equipment and resources for achieving the business
strategy over a 2/3 year period.

SAQ 3.2 Operations managers have such a wide role and broad range of responsibilities because they generally manage the delivery of
the products and/or services of the business. They can manage a large number of people, including the purchasing budget (in
many organisations) and also the machinery, equipment and assets. They interface with all the different functions to ensure
that the performance objectives, identified in the next section, are optimised in order to deliver a sustainable profit.

SAQ 3.3 On a day to day basis an operations manager has a huge range of tasks some of which are as follows:-

• Checking that production output is as forecast


• Ensuring maintenance and repairs are completed
• Preparing justification for new equipment purchase
• Ensuring new products are produced and developed
• Dealing with quality problems
• Managing improvement programmes.

The list is endless but it is interesting to note that all these activities relate to improving performance of the input-
transformation-output process.

SAQ 3.4 Purchasing has a significant influence on the operations management function since, if materials and components are not
delivered on time, the plans for manufacturing and assembly will not be achievable. If the operations personnel are short of
materials that they need, then efficiency will decrease and labour resource will be wasted. Materials costs also have a major
influence on profitability and the purchasing function needs to find the right balance between cost and quality.

10
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 4

Title Strategic performance objectives for the operations function

Statements of Compare the challenges facing operations managers who operate in increasingly complex global markets for goods and
practice covered: services.
Formulate an operations strategy that will integrate with the product requirements of a marketing function.

Introduction: By the end of this session students should understand and be able to analyse:-
The main strategic performance objectives of any operations function and relate them to the needs of the business
The key performance objectives, their relationship with the order winning criteria, and how they contribute to the success of a
business. These objectives are as follows
• Cost
• Quality
• Responsiveness and speed
• Flexibility
• Dependability.

Learning Describe Slack’s 5 Performance Objectives.


objective 4.1:

Learning activity: Compare how these objectives relate to goods and services and the emphasis in each case.

Self-assessment Which are the most critical performance objectives for the public sector organisations?
question:

Learning Explain the concept of order winning criteria for products and services and describe the relationship between Slack’s 5
objective 4.2: performance objectives and the order winning criteria (OWC).

Learning activity: As a sales manager, describe your order winning criteria that may be appropriate for purchasing a new car.

Self-assessment How do internal activities and capabilities impact upon the achievement of performance objectives.
question:

Learning Appraise the implications of Slack’s 5 strategic performance objectives for different types of organisations in different sectors.
objective 4.3:

Learning activity: How would you measure two of the above performance objectives?

Self-assessment What performance objectives might be important when running an automobile breakdown service?
question:

Checklist: (ie the Slack’s 5 strategic performance objectives in the context of supporting and delivering business strategy.
principles, tools,
techniques, models
etc that the student
should be familiar
with by the end of
the session)

Directed reading Read: Operations performance is vital for any organisation on Page 34 of RST
(recommended
study text)

11
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Strategic performance objectives for the operations function

Recommended Starting at page 39, the RST covers all the performance objectives and a short case study for each one.
further reading
(additional further
reading text)

Additional It is worthwhile reading the brief overview of strategy in the operations management study guide.
resources
Operations Management – Ray Wild 6th Edition 2006.
Provides supporting material
www.pearsoned.co.uk/slack is the RST website

CIPS past L5-12 November 2008 Q4


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 4.1 This question asks you to consider the 5 performance objectives in the context of the public sector and to identify which are the
most important.

Certainly most public sector organisations deliver a high volume and value of services, so cost and quality are perhaps the main
ones, but also speed of response can be critical in health and social services. Flexibility is important as every variant of a service
is almost impossible to define and specify. Reliability and dependability are also important especially in care and health related
services. In many cases there is a statutory obligation for these services to be delivered!

SAQ 4.2 Internal activities and capabilities are the means to deliver a product or service. Process capability is about how repeatable a
process is every time it is performed whether by a human or a machine. A machine needs maintenance and repair ( so do
humans sometimes) and humans need training and development to make sure they can perform their activities to produce good
quality products – for example, operating a machine correctly in a safe manner.

SAQ 4.3 The performance objectives when operating a car breakdown service are generally speed of response and customer service.
Cost is an issue but not a critical one.
Perhaps the ability of the organisation to either get you home or get the car back on the road is the crucial requirement here.

12
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 5

Title Outsourcing - make versus buy (see session 9)

Statements of Advise on the benefits of make or buy/outsourcing decisions associated with specific components and services.
practice covered:

Introduction: By the end of this session students should understand the following:-

• The rationale for outsourcing goods and services


• The advantages and disadvantages of outsourcing
• Analyse the significance of strategic outsourcing decisions in terms of
• Span of control within an organisation
• Core competencies
• Impact on other functions.

Learning Explain the concept of ‘span of control ‘ and the need to consider this in the context of ‘make or buy’.
objective 5.1:

Learning activity: What parts of the supply chain are outsourced? Can you relate this to your span of control?

Self-assessment What are the consequences of outsourcing your core competencies?


question:

Learning Analyse an organisation’s manufacturing and/or business processes and identify those that are considered to be ‘core’
objective 5.2: process competencies.

Learning activity: What are the main competitive activities of your organisation and what makes them special?

Self-assessment What is the difference between the terms outsourcing and off-shoring?
question:

Learning Evaluate the impact of outsourcing on other functions in the business.


objective 5.3:

Learning activity: Consider some of the other functions in your business and identify some of the disadvantages they experience because of the
decision to outsource.

Self-assessment Is there ever a case to outsource purchasing and, if so, what are the risks?
question:

Learning Explain the process of ‘make or buy’ and the factors that need to be considered in terms of volume and capacity.
objective 5.4:

Learning activity: What activities has your organisation subcontracted on a short term basis in order to increase capacity?

Self-assessment What are the risks of outsourcing?


question:

Checklist: (ie the Vertical integration.


principles, tools, The decision logic of outsourcing (RST page 155).
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

13
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Outsourcing - make versus buy (see session 9)

Directed reading Read the section on outsourcing. Do or buy? On page 143 of the RST.
(recommended
study text)

Recommended Table 6.1 on page 154 for how in-sourcing and outsourcing may affect the operations’ performance objectives.
further reading
(additional further Operations Management – Ray Wild 6th Edition 2006.
reading text)

Additional CIPS website


resources www.pearsoned.co.uk/slack is the RST website

CIPS past examination questions.


L5-12 November 2008 Q2.

Notes on self-
assessment
questions (SAQ)

SAQ 5.1 Your core competencies give you your competitive advantage and so it is not advisable to outsource these activities. Normally
organisations know their strengths in terms of business or manufacturing processes and often these are dependent on
volume. For example, companies often outsource different products depending on where they are in the product life cycle
(volume related) and how much control they want over the particular activity. Hence outsourcing activities can be a result of
lacking the core knowledge and expertise to deliver a good quality, cost effective product or service.

SAQ 5.2 The difference between outsourcing and off shoring is given as follows, but there is often a debate about what exactly each
one means:

Outsourcing – giving the processing of a material, information or related activity to an external organisation that is not part of
your business.

Off shoring is using the cheaper labour resources in another country to perform activities that you could do yourself (say in the
UK). It remains an extension of your own business. However it can also be a subcontracted activity. For example, software
design might be undertaken in India rather than doing this in the UK, but the business is not owned by you. This is similar to
outsourcing.

SAQ 5.3 In the case of outsourcing the purchasing function, there can be a case where the business lacks the necessary expertise to
perform the purchasing processes. For example a property company where the activity is quite bureaucratic. Of course like any
contract, there is the need for management and oversight. Like all other outsourcing you have to decide what control you
require and assess the risks! The main risks are that you will lose contact with the market place and so be less able to assess
whether the performance of your supplier is best practice. You will lose the knowledge and expertise in staff capability. Much
depends on the complexity of purchasing, what impact it has directly on your products or services, and what proportion is
direct and indirect.

14
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Environmental analysis and the marketing audit

SAQ 5.4 The risks of outsourcing are many and varied:

Advantages
• Reduced costs
• Reduced maintenance
• No sourcing effort required
• No CSR responsibility ( seen as being transferred to the supplier but still your risk)
• Reduced overheads.

Disadvantages
• Extended lead times
• Forecasting needed
• Loss of jobs
• Risks with late delivery and quality
• Supplier management and culture
• Communications.

Quality may or may not improve.

There are others but these are some of the main ones.

15
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 6

Title Effective design of products and services

Statements of Assess the relationship between design and procurement and propose potential design tools that will ensure cost effective
practice covered: development of new products and services.

Introduction: By the end of this session students should understand and be able to analyse and describe:

• The benefits of the design and development process


• Appreciate the benefits of cross functional teams
• Analyse the design process for products and services
• Definition of the term design
• Aspects of customer satisfaction
• Approaches to designing better products
• Understanding the full design business process.

Learning Define the term design and explain its relation to competitive advantage.
objective 6.1:

Learning activity: Write your own definition of ‘design’. How important is the design process in terms of ‘built in cost’?

Self-assessment How does the design of a product influence your choice of product?
question:

Learning Explain the aspects of customer satisfaction and how they are related to the order winning criteria.
objective 6.2:

Learning activity: How does changing technology influence the design of products and services in your organisation?

Self-assessment What are the key OWC that relate to the introduction stage of the product life cycle?
question:

Learning Approaches to designing better products.


objective 6.3:

Learning activity: What quality tools and techniques are used in your organisation for designing new products?

Self-assessment What are the main themes behind the Quality Function Deployment (QFD) approach to designing quality products? Research
question: this tool and its application.

Learning Explaining the full design business process and the different stages.
objective 6.4:

Learning activity: Investigate the design process in your organisation.

Self-assessment What are the advantages of adhering to your own internal design process for developing new products?
question:

16
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Effective design of products and services

Checklist: (ie the The design and development process


principles, tools, The product life cycle.
techniques, models
etc that the student
should be familiar
with by the end of
the session)

Directed reading Chapter 5 of the RST which covers this session and Session 7
(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading
(additional further
reading text)

Additional www.cfsd.org.uk is the website for sustainable design


resources www.designcouncil.org.uk is the website for the design council
www.pearsoned.co.uk/slack is the RST website

CIPS past L5-12 May 2008 Q1


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 6.1 Design covers a range of issues that influence which product you decide to buy. These can be elements such as aesthetics,
functionality, brand, image and environmental issues. Certain products are more expensive because of the way they are
designed and function. This is the impact of the cost and quality of the materials utilised in the product and whether it is
recyclable.

SAQ 6.2 OWC refers to order winning criteria. These are the criteria that win you orders in the market place through, for example, price
and quality. However in the early stages of the product life cycle, when a new product is introduced, the choice is influenced by
technology and functionality that also is affected by image and aesthetics. Generally new products into the market place are
more expensive as companies try to recoup their investment.

SAQ 6.3 QFD is the Quality Function Deployment method of designing quality into the product. A full review of this technique can be
found in the CIPS study guide page 161 or in the RST page 135.

SAQ 6.4 The benefit of having an internal design and development process is that it provides a structured process for choosing and
developing new products. This helps all stakeholders to have a say in the process and ensures that the product is more likely to
be delivered on time and to budget. It can also ensure that the right products are chosen and developed. It is well worth
reviewing some of the case studies in Chapter 5.

17
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 7

Title Design and disposal of environmentally friendly products & services

Statements of Assess the relationship between design and procurement and propose potential design tools that will ensure cost effective
practice covered: development of new products and services.

Introduction: By the end of this session students should understand and be able to analyse:

• The contribution that purchasing can make to the design function and also the influence purchasing can have on the
sourcing of materials with respect to sustainability and environmentally preferred materials
• The benefits that arise from thorough design evaluation and environmentally sensitive design with respect to the product
life cycle
• The contribution of purchasing to design
• Areas of conflict between purchasing and design and be able to compare and contrast them
• Trade-offs in designing environmentally acceptable products
• Environmentally preferred materials
• Life cycle analysis
• End of life issues.

Learning Explain the contribution of purchasing to design.


objective 7.1:

Learning activity: How does your purchasing function support the design and development function?

Self-assessment At what stage during the product life cycle is the input from purchasing most valuable, and why?
question:

Learning Identify areas of conflict between purchasing and design.


objective 7.2:

Learning activity: What areas of conflict occur between purchasing and design in your organisation?

Self-assessment How might lead time issues affect the sourcing decisions for components required by the design department?
question:

Learning Explain the trade offs in designing environmentally acceptable products especially with respect to sustainable and
objective 7.3: environmentally preferred materials.

Learning activity: What materials does your organisation use that can be recycled? Are there better materials and more friendly materials
available?

Self-assessment What are the purchasing considerations when buying materials from sustainable sources?
question:

Learning Explain the concept of life cycle management and the cradle to grave approach.
objective 7.4:

Learning activity: Identify a product you have purchased recently and apply the product life cycle concepts.

Self-assessment How does life cycle management affect the approaches to the management of finished goods stock?
question:

18
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design and disposal of environmentally friendly products & services

Learning Describe the background to end of life issues.


objective 7.5:

Learning activity: How do the end of life issues affect the responsibility of organisations like the automotive industry and domestic appliance
industry?

Self-assessment Are you prepared to pay more for environmentally friendly products? What factors stop people from following this
question: perspective?

Checklist: (ie the • The contribution of purchasing to the design process


principles, tools, • The product life cycle concept
techniques, • End of life issues
models etc that • Whole life costing.
the student
should be
familiar with by
the end of the
session)

Directed reading See Operations and CSR in the RST Chapter 21


(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading
(additional further
reading text)

Additional www.cfsd.org.uk is the website for sustainable design


resources www.pearsoned.co.uk/slack is the RST website

CIPS past L5-12 November 2007 Q4


examination L5-12 May 2007 Q4
questions

Notes on self-
assessment
questions (SAQ)

SAQ 7.1 The most important part of the product life cycle where purchasing can advise on materials and sourcing is the design phase.
This is especially relevant to the sourcing of environmentally sound materials that can be easily sourced, are sustainable, and
are capable of being recycled. It should be remembered that approximately 70% of product cost is designed into the product
at the design stage.

SAQ 7.2 Lead times for materials and components in manufacturing are a constant problem and the reasons that many organisations
keep stock. Purchasing can advise on lead times and suggest alternatives. There needs to be an awareness that components
with long lead times can have a price and efficiency influence on organisations that have to supply a product in less time than
even the longest component lead times. Sourcing products from the Far East for example can be beneficial in terms of
price/cost but can be very demanding in terms of forecasts and potential stock-out costs.

19
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design and disposal of environmentally friendly products & services

SAQ 7.3 Purchasing considerations from sustainable sources are cost, quality and availability. Recycling is, of course, a major issue but
this has to be offset against the cost of the virgin material. There is a need to consider whole life cycle costs from cradle to
grave.

There is a need for materials to be recyclable but this also means the products have to be designed in such a way that the
materials can be disassembled and processed for reuse. The management of recycled materials is also difficult because the
quality is generally quite poor.

SAQ 7.4 Life cycle management means that all products that are sold within an organisation need to be reviewed on a periodic basis.
This approach is critical to the purchasing function as it can have a major affect on economic batch quantities.

There is a need to review the volume of products sold and trade this off against the revenue generated. If the usage of
materials falls below the EBQ. there is a danger that considerable quantities of materials will be left in stock and have no real
use other than to be scrapped or sold on. Sales sometimes will insist on providing low volume products to customers even
though they are no longer profitable. Purchasing have to be aware of this scenario and use their influence and persuasive
skills to encourage the sales person to sell them a new product rather than staying with old low volume products that are
entering the latter part of their product life cycle.

SAQ 7.5 There are many reasons for not purchasing environmentally friendly products. Firstly they may be too expensive and some
social groups will consider the price premium not worth the environmental impact or just not affordable.

There is a great focus on cost and price. If there is a need to buy sustainable products then they have to be competitive with
equivalent alternative products. Sometimes the quality is not on a par with traditional products and customers demand quality
as being an order qualifier and not an order winner.

20
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 8

Title Design improvement tools

Statements of Assess the relationship between design and procurement and propose potential design tools that will ensure cost effective
practice covered: development of new products and services.

Introduction: By the end of this session students should understand and be able to analyse:

• The contribution that purchasing and supply can make to the design of products and services by the application of certain •
tools:
• Standardisation
• Modularisation
• Value analysis and engineering
• Computer aided design.

Learning Explain the concept of standardisation.


objective 8.1:

Learning activity: Identify some examples of standardisation.

Self-assessment List the advantages of standardisation.


question:

Learning Explain the concept of modularisation.


objective 8.2:

Learning activity: How might modularisation affect the way you structure your supply base?

Self-assessment Detail the benefits of modularisation with regard to re-cycling of materials.


question:

Learning Explain the concept of value analysis and value engineering ( VA & VE).
objective 8.3:

Learning activity: How does this approach interface with eliminating non-added value activity and lean manufacturing concepts such as the
elimination of waste?

Self-assessment How do the tools of VA & VE relate to Kaizen activities?


question:

Learning Explain the concept of Computer Aided Design/Computer Aided Manufacture (CAD/CAM).
objective 8.4:

Learning activity: What different options are available when purchasing CAD software and what implications are there when obtaining bespoke
products?

Self-assessment What benefits can be obtained by using 3D design and a design library for materials and components?
question:

21
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design improvement tools

Checklist: (ie the The main tools discussed are as follows


principles, tools, • Standardisation
techniques, • Modularisation
models etc that • Value analysis and engineering
the student • Computer aided design.
should be
familiar with by
the end of the
session)

Directed reading Read the RST page 123 Preliminary design.


(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading
(additional further
reading text)

Additional See the short case ‘ Customising for kids’ page 131
resources www.pearsoned.co.uk/slack is the RST website

CIPS past There have been no specific questions relating to this subject at this point in time.
examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 8.1 The advantages of standardisation are as follows:-

• Fewer parts to manage


• Design mobility which gives similar standards in other international regions
• Routine purchasing and inspection
• Lower prices, fewer suppliers to manage, and economies of scale
• Fewer parts to stock.

The benefits of standardisation are great and usually the lack of standardisation is a result of poor historical management and
choice of suppliers. It is easy for designers to pick products randomly out of a catalogue but managing these can be very
difficult once volumes increase and suppliers are on the database.

SAQ 8.2 Modularisation is the use of standardised sub-components in assemblies that can be replaced and substituted very easily.
Standardised modules can be produced in higher volumes which can lead to lower prices as a result of economies of scale.
They can aid servicing and maintenance. They also allow easy disassembly from the main product and this can allow the
items to be dismantled and broken down into their constituents for recycling.

22
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design improvement tools

SAQ 8.3 Kaizen activities fit in well with VA & VE. Kaizen is essentially continuous improvement and value engineering / analysis can
be applied so that cost is taken out of the product. This type of cost down activity uses cross functional teams to review
products and their constituent parts and, as a result, take actions that will remove cost but not impact on quality. Many
organisations drive these improvements by operations managers facilitating such group discussions.

SAQ 8.4 See page 137 for further information on CAD and its benefits and applications.

These days CAD systems are more than a design tool for drafting. They now offer the option to develop libraries of sourced
materials and components that have been approved and purchased previously. This means that component proliferation is
kept to a minimum and the organisation attempts to standardise. As we have seen above, the benefits of standardisation are
great and CAD systems can ensure that restrictions are put in place to ensure the supply base is controlled and managed.

23
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 9

Title Design of the operations management network

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to analyse:-

The critical features of an operations network and explain how they contribute to the management of supply and demand:
• Network design and investment
• Strategic decisions in developing a network
• Feasibility factors
• Benefit factors
• Financial factors
• Organisational structure
• Integration
• Outsourcing: make versus buy.

And explain the complexity surrounding facility location decisions:


• Reasons for complexity
• Demand side decisions
• Supply side decisions.

Learning Describe the strategic investment decisions and associated factors when designing an operations management network.
objective 9.1:

Learning activity: What have been the main investment decisions made by your organisation in the last two years?

Self-assessment What are the three main strategic decisions that need to be considered in designing a network?
question:

Learning Examine organisational structures, integration and outsourcing options.


objective 9.2:

Learning activity: Consider an outsourced process or function in your own organisation and analyse the structure in terms of production,
distribution and the supply base.

Self-assessment What are the main structural considerations based on where your customers are located and the industry in which you
question: operate?

Learning Explain the reasons why facility location decisions are very complex.
objective 9.3:

Learning activity: Analyse information in a table and differentiate between supply side and demand side factors.

Self-assessment Based on the material you have studied in the learning activity above, identify and analyse your location with respect to a
question: major customer.

24
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design of the operations management network

Learning Examine and apply different types of location analysis tools in order to assist the location decision.
objective 9.4:

Learning activity: Consider one of your main suppliers and review their location with respect to you as a customer.

Self-assessment Work through the example of the centre of gravity method which is detailed in RST page 161.
question:

Checklist: (ie the • Network design and investment


principles, tools, • Strategic decisions in developing a network
techniques, • Feasibility factors
models etc that • Benefit factors
the student • Financial factors
should be • Organisational structure
familiar with by • Integration
the end of the • Outsourcing: make versus buy
session) • Reasons for complexity
• Demand side decisions
• Supply side decisions
• Location analysis tools.

Directed reading Read Chapter 6 in the RST


(recommended
study text)

Recommended Case study Disneyland Resort Paris page 162 in RST


further reading
(additional further
reading text)

Additional Operations Management – Ray Wild 6th Edition 2006 Part 3


resources www.pearsoned.co.uk/slack is the RST website
CIPS study guide page 76 to 81

CIPS past L5_12 November 2007 Q5


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 9.1 The three main strategic features that need to be considered when designing and operations network are:-
Integration – how should it be configured?
Operation location – where should each part of the network be located?
Long term capacity – what should the capacity be at any time in the future?

These decisions are strategic and long term and essentially decide what organisations are going to be doing and where. This
means either doing the activities yourself or setting up a network that will ensure suppliers are available to do these tasks.

25
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Design of the operations management network

SAQ 9.2 The main consideration here is the type of industry sector in which you operate as this will dictate how you organise your
network. Your choices of supplier and customer will depend on where you are located in the supply chain. Equally your
choices will be limited by the size of your own organisation and the types of products that you produce. Do you have any real
choice about where you source your goods and services? This will depend, to a certain extent, on the volumes of product that
you purchase. If the volumes are very low you may have to use a stockist or distributor. If volumes are quite high you may be
able to deal directly with the manufacturer.

SAQ 9.3 Describe the location of your particular facility in terms of the supply side and demand side factors which are detailed in the
CIPS study guide on page 77.

It is well worth describing these factors in terms of your own facility as this will reinforce your learning and ensure you have a
good quality practical example that you have applied within the context of your business.

SAQ 9.4 The centre of gravity method is used to find a location that minimises transportation costs. In this sense all locations have a
value. This worked example in the RST is covered in a reasonable amount of detail. It is worth trying to understand the
arithmetic. You may be able to use this technique as an example to apply it to your own organisation to decide just how good
your location is and whether there would be any benefits in moving elsewhere.

26
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 10

Title Process types, technologies and layouts in manufacturing and service industries

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.

Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to distinguish between the different process types in
manufacturing and service industries:

• Process types in terms of variety and volume


• Processing technologies
• Process layouts and workflow.

Learning Describe the different process types in relation to variety and volume.
objective 10.1:

Learning activity: Draw a graph of how volume relates to variety, incorporating process types as detailed in this section.

Self-assessment Identify the different process types and write a brief description of each, including some examples from your own experience
question: or the study materials. Consider the implications of these processes on the labour skill levels and investment in the processes.

Learning Describe different types of processing technology.


objective 10.2:

Learning activity: Consider the different types of processing technology for services where the customer does most of the sales work.

Self-assessment What are some of the advantages and disadvantages of using robots in a manufacturing environment?
question:

Learning Describe different process layouts and workflow.


objective 10.3:

Learning activity: Investigate different software for designing factory layouts.

Self-assessment Review the benefits of layout at an IKEA store located near you.
question:

Checklist: (ie the • Process types in terms of variety and volume


principles, tools, • Processing technologies
techniques, • Process layouts and workflow.
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Chapter 4 & Chapter 7 in the RST


(recommended
study text)

27
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Process types, technologies and layouts in manufacturing and service industries

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading
(additional further
reading text)

Additional www.pearsoned.co.uk/slack is the RST website


resources
www.youtube.com You tube KUKA– car assembly operations

CIPS past L5_12 November 2008 Q3 & May 2007 Q1


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 10.1 This assessment question requires you to define and describe the following terms:-

• Project – bridge construction


• Jobbing – printing
• Batch – pressed parts for automotive
• Mass – car assembly
• Continuous – petrochemicals.

It is important to appreciate the relevance of volume versus variety. It is also necessary to appreciate that the actual
production process and its volume capability will have a big influence on the economics of the product itself. For example,
there are numerous ways of making metal components such as forging, different types of casting, fabrication and pressed
components. Depending on which process is chosen this will affect the production volume levels and hence the cost and the
quality.

The skill levels tend to be higher in project and jobbing and less so in batch and mass. In continuous processing, the skills are
in maintenance as these are usually 24/7 and 365 days per year. This in turn shows that levels of investment for continuous
processing are very high, as it can be for mass processing. They need to recoup investment rapidly for a return on that
investment.

SAQ 10.2 This seems an odd question but robots have some excellent benefits as well as some disadvantages. Robots are generally
very reliable and can work in harsh environments. They are consistent in their application and performance, don’t really need
to comply with H & S legislation, and can lift heavier loads than a human. They can operate 24/7 but of course need some
maintenance. They are useful for high volume repetitive operations but can be uneconomic when product mix changes are
frequent and so would not then justify the investment.

The most common application is welding in automotive car plants. The disadvantages are that they break down, can be
inflexible, and do take some time to set up.

28
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Process types, technologies and layouts in manufacturing and service industries

SAQ 10.3 IKEA is a classic example of how an organisation can position itself strategically in order to get the best output in terms of
sales and attracting customers to its locations.

Location – generally out of town, plenty of space and facilitates family days out. Restaurant and child minding facilities.

Layout - moves you around the store in a predetermined route past all their product offerings eventually to the check out area
where customers collect and pay for their goods. Most of the goods are self assembly.

There is an article on IKEA on page 3 and 4 of the RST.

29
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 11

Title Work study and work measurement

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to analyse:-

• Definition of the word job


• The use and techniques of work study and work measurement
• Advantages and disadvantages of the different approaches to job design
• The works of FW Taylor’s and Gilbreth
• Scientific management approach
• Motivational approaches
• Socio-technical systems approach
• Human factors approach
• Empowerment and self-managed teams.

Learning Define the term ‘job’ and also the tools of method study and work measurement and how to apply them.
objective 11.1:

Learning activity: Apply one of the tools to a job/task with which you are familiar and highlight some of the difficulties of using such a tool.

Self-assessment Think of the applications that the tools of work study and work measurement could be applied to. What are their general uses
question: and benefits?

Learning Describe the advantages and disadvantages of different approaches to job design.
objective 11.2:

Learning activity: Consider a specific type of job within your organisation and identify the five interrelated components.

Self-assessment Consider figure 9.5 in the RST on page 261 entitled work study and rewrite in your own terms the content of this diagram plus
question: examples.

Learning Read Chapter 9 Supp on Work Study and design a flow chart which summarises the steps in the Method Study process (RST
objective 11.3: Chapter 9 Supp Page 259).

Learning activity: Identify an example of how the work of Gilbreth applies to the redesign of people’s jobs in real life.

Self-assessment Write a brief revision note comparing the works of Gilbreth and FW Taylor.
question:

Learning Describe the ‘scientific’ and ‘motivational’ approaches to job design.


objective 11.4:

Learning activity: Apply the job characteristics approach to your own job by rating it on a chart.

Self-assessment Describe Figure 9.5 on page 241 and write a brief summary of the content and what it is trying to explain.
question:

30
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Channel management

Learning Describe the ‘socio-technical systems’ and ‘human factors’ approach to job design.
objective 11.5:

Learning activity: Identify some examples of where flexibility in job design is beneficial to the operations manager and why, in the past, there
has been a reluctance to accept the practice of flexibility. Also answer the question ‘What is demarcation’?

Self-assessment Read the critical commentary on Page 248 of the RST and write a brief defence of this commentary as if you were answering
question: an exam question.

Learning Describe the two approaches to the restructuring of empowerment and self managed teams.
objective 11.6:

Learning activity: Research some of the essential aspects that are needed for empowerment to be successful.

Self-assessment View the critical commentary on page 254 of the RST and respond to the criticisms as if you were answering an exam
question: question.

Checklist: (ie the • The use and techniques of work study and work measurement
principles, tools, • Advantages and disadvantages of the different approaches to job design
techniques, • Scientific management approach
models etc that • Motivational approaches
the student • Socio-technical systems approach
should be • Human factors approach
familiar with by • Empowerment and self-managed teams.
the end of the
session)

Directed reading Chapter 9 in the RST


(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading
(additional further
reading text)

Additional Operations Management by Ray Wild - Work and work systems Part 4
resources Read the case study NUMMI in Chapter 9 of the RST page 263

CIPS past None at this point in time.


examination
questions

31
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Channel management

Notes on self-
assessment
questions (SAQ)

SAQ 11.1 Method study and work measurement are part of the subject of work study.

Method study - this has a typical definition as follows:


Concerned with the systematic recording and critical examination of existing and proposed ways of doing work as a means of
developing easier and more effective methods and reducing cost.

Work measurement – usually defined as the application of techniques such as time study and work sampling to establish the
time for a qualified worker to carry out a specific job at a defined level of performance.

Method study is how a particular job is carried out and work measurement is how long it takes to complete. Of course method
study analysis aims to improve the way people do their jobs thus reducing the time it takes and the cost of production.

A typical example might be the assembly of an electronic product which can be speeded up by using specific types of tools
and jigs/fixtures. This means more units can be assembled within a specified period of time and capacity increased.

SAQ 11.2 This self assessment question requires you to rewrite the diagram in your own terms with your own examples. This should
give you an opportunity to investigate some alternative approaches to these subjects and find some examples of their
application on the internet. They are used extensively in the automotive industry and have been for some considerable time.

SAQ 11.3 • Gilbreth and Taylor – A summary description of their work can be found in the CIPS study guide on page 132 to 137. It is
possible to read these approaches and summarise the main differences.

• The outcome should be that FW Taylor was the pioneer of method study and the Gilbreth of work measurement. This is a
very convenient way of splitting up this subject.

• It would also be a useful exercise to research both these pioneers to understand the background to their work and why it
was so important .

SAQ 11.4 Motion economy is essentially saying that effort should not be wasted and this fits in very well with lean manufacturing
which we will study in Session 19 under the heading of JIT. Lean manufacturing is about the elimination of waste in all its
forms so that wasted effort is ‘effort’ that could be used elsewhere where it can add value. As you view the list in the current
CIPS study guide on page 137 you will see that there is a focus on increasing throughput and output.

Gilbreth also suggested ways of simplifying tasks by joining jobs together that need to share and communicate common
information. This was often the case where purchasing personnel also had the job of scheduling materials from suppliers
because these two jobs had large information overlaps.

SAQ 11.5 This case study is simple one but it reinforces the fact that culture and communication are an essential element in the
managing of change. It supports the philosophy of TQM and that the people who can manage change are the people who do
the jobs on a day to day basis. They are also the ones that can find solutions to problems and drive continuous improvement.

SAQ 11.6 This critical commentary emphasises some of the bad things about work study etc but, as we have seen in the case study we
looked at in the last SAQ, it is about how these techniques and tools are applied. They are tools and, if they are applied with
some flexibility and consideration for the people who are being studied, then they can be of significant benefit. It is also about
how the internal relationships are managed in addition to respected, being realistic and managing stakeholder expectations.

32
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 12

Title The planning and control of quality

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to evaluate the techniques used to plan and control quality,
including:-

• Definition of quality
• Dimensions of quality
• Cost of Quality management tool
• Quality management and quality management principles
• Techniques used to plan and control quality in products and processes.

Learning Understanding the definition and dimensions of quality.


objective 12.1:

Learning activity: Write down your own definition of quality and compare it with some other standard definitions from other sources.

Self-assessment What is SPC and how is it applied to the monitoring of processes.


question:

Learning Explain the cost of quality management tool and the different elements of the cost of quality.
objective 12.2:

Learning activity: Consider the different elements of this tool and how it could be applied in your organisation.

Self-assessment Try and draw the two main graphs for this section and write some notes in order to explain their meaning.
question:

Learning Explain the techniques used to plan and control quality in products and services.
objective 12.3:

Learning activity: Investigate the relationship between standard deviation and the concepts of 6 Sigma.

Self-assessment Describe the different phases of QFD and explain the main benefits.
question:

Checklist: (ie the • Dimensions of quality


principles, tools, • Cost of quality management tool
techniques, models • Quality management and quality management principles
etc that the student • Techniques used to plan and control quality in products and processes.
should be familiar
with by the end of
the session)

Directed reading Read Chapter 17 of the RST


(recommended
study text)

33
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The planning and control of quality

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading Part 8 Chapter 20
(additional further
reading text)

Additional www.thecqi.org The Chartered Quality Institute


resources
CIPS past examination questions
None at this point in time

Notes on self-
assessment
questions (SAQ)

SAQ 12.1 SPC is ’statistical process control’ and involves the measuring of data on a regular basis, then plotting the data on a chart
based around a specific measurement, with an upper and lower control limit that covers the plus and minus tolerances. When
the measurements fall outside the limits, action has to be taken. See definition on page 706 and detail on page 552 to 572 of
the RST.

SAQ 12.2 The two graphs that are related to the cost of quality can be found on page 149 of the CIPS study guide. These graphs need to
be related to the cost of a quality management tool. Note the optimal of defects and optimum costs.

SAQ 12.3 QFD has already been covered and the main process steps are detailed in page 163 of the study guide and pages 133-135 of
the study guide.

34
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 13

Title Asset maintenance and replacement strategy

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to analyse:-
• Differences between preventative and repair maintenance
• Time to replace an asset calculation.

Learning Describe the differences between preventative and repair maintenance.


objective 13.1:

Learning activity: Ascertain how the maintenance of equipment and machinery is undertaken in your organisation and consider what
improvements might be made, if any.

Self-assessment Draw the two graphs from memory and write a brief piece of explanation for each one.
question:

Learning Formulate and apply a calculation for the appropriate time to replace an asset.
objective 13.2:

Learning activity: Consider how you might apply what you have learned to replacing your car at the optimal time.

Self-assessment How does the above calculation fit into the concept of ‘whole life costing’? Work through the example calculation in the study
question: guide and consider how this relates to buying a new piece of capital equipment

Checklist: (ie the • Differences between preventative and repair maintenance


principles, tools, • Time to replace an asset calculation.
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Read Chapter 17 of the RST on Quality Management


(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006


further reading Page 731 to 766
(additional further
reading text)

Additional www.thecqi.org The Chartered Quality Institute


resources

CIPS past L5-12 May 2008 Q4


examination
questions

35
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Customer communications

Notes on self-
assessment
questions (SAQ)

SAQ 13.1 The two main graphs are shown on pages 171 & 172 of the CIPS study guide.

SAQ 13.2 The calculation of the appropriate time to replace an asset is shown on pages 173 to 175 of the CIPS study guide and is
described in a very simple and understandable way.

Whole life costing considers acquisition, use, ownership and disposal. In many cases it may be better to pay more when
acquiring the product in that it may give advantages during its life eg if less energy is consumed it will pay back the difference
in price over a period but you may have to wait and give it time. There are many other examples that are worth researching.

36
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 14

Title The planning and control of operations & managing capacity

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.

Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to analyse and explain the objectives for operations
planning and control (OPC) and the actions necessary to control operations, including:-

• Definitions of OPC
• The different stages of OPC
• Definition of capacity
• Strategic capacity planning
• Measuring capacity
• Smoothing capacity
• Capacity calculations.

Learning Describe the definitions and different stages of OPC.


objective 14.1:

Learning activity: What is the nature of the planning and control of activities in your organisation? Write down a summary list.

Self-assessment Write down your own definitions of planning and control. Why is planning and control in businesses such a complex activity
question: and how is it affected by some of the other topics we have discussed in this course?

Learning Define capacity and explain the importance of strategic capacity planning.
objective 14.2:

Learning activity: Discuss, if you can, the long term capacity planning strategy with one of the senior managers in the company where you work.

Self-assessment What is the process needed for managing long term capacity requirements in any industry?
question:

Learning Describe the techniques for measuring and smoothing capacity.


objective 14.3:

Learning activity: Consider the capacity requirements of your organisation and how the business manages changes in capacity requirements.

Self-assessment What is the difference between input and output measures for capacity in different types of industry? Identify some
question: examples?

Learning Explain the main considerations when calculating capacity.


objective 14.4:

Learning activity: Consider how capacity is planned and managed in hairdressing salons and what approaches are taken to ensure that all
available capacity is used.

Self-assessment How does the management of capacity vary between manufacturing and service industries?
question:

37
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The planning and control of operations & managing capacity

Checklist: (ie the • The different stages of OPC


principles, tools, • Strategic capacity planning
techniques, • Measuring capacity
models etc that • Smoothing capacity
the student • Capacity calculations.
should be
familiar with by
the end of the
session)

Directed reading Read chapter 10 The nature of planning and control.


(recommended Read chapter 11 Capacity planning and control.
study text)

Recommended
further reading
(additional further
reading text)

Additional Operations Management – Ray Wild 6th Edition 2006.


resources Part 5 Capacity Management.

CIPS past L5 -12 November 2008 Q5.


examination L5-12 November 2007 Q2.
questions

Notes on self-
assessment
questions (SAQ)

SAQ 14.1 Planning is the formalisation of what is going to happen at some time in the future. It is a statement of intention. Control, on
the other hand, is the process of coping with changes, getting some feedback about what is happening within the plan, and
what additional resources are needed to ensure achievement of the plan.

Planning relies very much on firstly deciding how long a particular task or activity will take. This can depend on the skill and
expertise of the person carrying out that task. It can also depends on how well they are motivated and what mood they are in
(of course this is one of the benefits of using robots). It can depend on the machine they are using and whether it is working
well or whether it is old and inefficient.

Control is equally difficult because it is about collecting feedback on what has been produced and at what stage it is in the
production process. This information needs to be accurate and timely because, based on this, actions will be taken about
resources required. Timely acquisition of data is essential. The collection and collation of this type of information can be time
consuming – hence the reasons for organisations using shop floor data collection systems with barcodes and scanners.

SAQ 14.2 Long term capacity planning decisions are made on the basis of forecasting demand in the market place. This is an
exceptionally difficult task. It is about deciding how much of a product your customers need over the next 2/3 years and what
products they require (there might be new ones in the pipeline that cannot be made with existing machinery). There needs to
be approximate timings of how long it takes to make a product (work study and work measurement) in order to calculate what
machines might be required and what needs to be purchased. On this basis investment decisions will be made and depending
on what money is available to make these purchases.

38
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The planning and control of operations & managing capacity

SAQ 14.3 Input measures and output measures are mentioned in the CIPS study guide in SAQ4.1 on page 199.
Output measures include the number of cars made per week or number of gallons of petrol processed per day.
Input measures are applied in hotels and airlines but are very difficult to adjust on a day to day basis. Of course airlines want
to use the maximum capacity they have available, otherwise seats will not be used and revenue will be lost (forever).

SAQ 14.4 Capacity management varies between manufacturing and service industries because, in general, services are delivered with
people and capacity is stored in the number of people. If there are too many people and not enough work, they will be
underutilised and businesses may struggle to reach their breakeven point. There will not be enough income to meet their
salaries and overheads costs.

It is also worth noting that services cannot be stored but relate to the number of people and hours available. In the airline
industry large assets (planes) are used but need to be filled (people) to make them operate efficiently.

39
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 15

Title Forecasting

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to analyse and use of some basic techniques for
forecasting:

• Qualitative and quantitative forecasting techniques


• Characteristics of ‘push’ and ‘pull’ operations
• Independent and dependent deman.

Learning Explain the use of basic techniques to forecast demand.


objective 15.1:

Learning activity: Where are forecasts used in your organisation and who manages them?

Self-assessment How do managing a forecast and managing demand fit together?


question:

Learning Describe and explain quantitative and qualitative forecasting techniques.


objective 15.2:

Learning activity: None.

Self-assessment Explain in your own words the difference between these two types of forecasting.
question:

Learning Describe the characteristics of ‘push’ and ‘pull’ operations.


objective 15.3:

Learning activity: Research into the originator of the ‘pull’ method and consider whether it can really work in the real world.

Self-assessment What are the main methods of managing push and pull demand especially in the automotive industry.
question:

Learning Explain the theory around dependent and independent demand.


objective 15.4:

Learning activity: What are the different types of industry that experience each of these types of demand?

Self-assessment Describe some of the basic questions that a forecast seeks to answer.
question:

Checklist: (ie the • Qualitative and quantitative forecasting techniques


principles, tools, • Characteristics of ‘push’ and ‘pull’ operations
techniques, models • Independent and Dependent demand.
etc that the student
should be familiar
with by the end of
the session)

40
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Forecasting

Directed reading RST Supplement to Chapter 6 page 168 to 176 on Forecasting


(recommended
study text)

Recommended None
further reading
(additional further
reading text)

Additional Operations Management – Ray Wild 6th Edition 2006


resources Forecasting techniques Appendix II

CIPS past L5-12 November 2007 Q6


examination Notes on self-assessment questions (SAQ)
questions

SAQ 15.1 We should start by deciding the relationship between forecast and demand. A forecast is a prediction of the likely demand for
a product or service over a specified period of time. In this time period there will be a demand, but will it match the forecast?

In many businesses forecasting is an essential part of the sales and marketing department. Manufacturing and operations rely
on these forecasts to develop a plan with certain resource levels that will enable the plan to be achieved. The key to matching
the demand and the forecast is to actively move towards making the forecast match demand. This is done by encouraging
customers to buy by offering discounts and promotions or sometimes selling products at reduced prices – this is called
chasing demand.

See Demand Management Best Practices: Process, principles and collaboration by Crum and Palmatier – Integrated Business
Management Series – Co Published with APICS.

SAQ 15.2 Quantitative forecasting is concerned with developing forecasts based on the modelling of hard factual historical data in order
to predict the future.
Qualitative forecasting is based on a whole range of different factors that are open to opinion. For example how a football
team might perform. This will of course depend on the weather, location, experience, injuries etc. See Fig 51 of the CIPS study
guide page 224.

SAQ 15.3 Push type systems are based around forecasting whereas pull type systems are based around only providing a product or
service when we are sure there is a demand for the product.

Push type material planning systems are based around forecasting and, whilst these can be quite accurate, there is a distinct
possibility that they will actually generate stock. A push type system is MRP.

An example of a pull type system (which we will discuss later in this course) is Kanban, the Japanese word for ticket or signal.

For information, page 441 of the RST details the information that would be input into the MPS for an MRP system.

SAQ 15.4 Forecasting involves six basic questions


• What is the purpose of the forecast?
• What is the time horizon?
• What forecasting techniques are most appropriate?
• On what data must the forecast be based and how shall it be analysed?
• In what format shall the completed forecast be presented?
• How accurate is the forecast?

It is important to consider the above questions before starting to consider the method of forecasting. It must also be
considered that all forecasts are usually wrong! It will be rare for a forecast to be spot on!

41
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 16

Title MRP & MRP11 & ERP

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to :-

• Analyse and explain the mechanics of materials requirements planning (MRP), manufacturing resource planning (MRPII)
and enterprise resource planning (ERP)
• Define MRP/MRPII and how they work
• Detail advantages and disadvantages of MRP/MRPII
• Apply ERP.

Learning Explain what MRP (Materials Requirements Planning) is and how it works.
objective 16.1:

Learning activity: Research the origins of MRP and find three different types of software that are used to manage this tool.

Self-assessment Draw your own diagram of MRP and explain why it is important to differentiate between products that are made in house and
question: those that are bought externally.

Learning Explain what MRP11 is and how it works.


objective 16.2:

Learning activity: What sorts of organisation would gain good benefit from using an MRP11 type system and what do you think the
disadvantages are of such a system?

Self-assessment Describe some of the main challenges in implementing MRP and MRP11 systems.
question:

Learning Describe the advantages and disadvantages of both MRP and MRP11.
objective 16.3:

Learning activity: Develop a table for comparing the above advantages and disadvantages.

Self-assessment Why would this type of system not be of any use for managing the construction of a one-off project?
question:

Learning Describe and explain ERP and some of the implications for implementing this type of systems.
objective 16.4:

Learning activity: Research some of the difficulties when implementing an ERP system. What are the typical issues experienced with any
implementation. How can they be reolved?

Self-assessment How does ERP differ from MRP?


question:

42
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title MRP & MRP11 & ERP

Checklist: (ie the • MRP/MRPII and how they work


principles, tools, • Advantages and disadvantages of MRP/MRPII
techniques, • ERP – applications and content.
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Read Chapter 14 Enterprise resource planning.


(recommended
study text)

Recommended None
further reading
(additional further
reading text)

Additional See Oliver White and MRP.


resources Operations Management – Ray Wild 6th Edition 2006.

CIPS past L5-12 November 2008 Q1.


examination L5-12 May 20007 Q2.
questions

Notes on self-
assessment
questions (SAQ)

SAQ 16.1 It is a very good way to summarise MRP by drawing a diagram that will identify the different blocks within an MRP system.
There are numerous diagrams one of which is shown on page 439 of the RST.

It is important to differentiate between the parts made in house and the parts and materials bought in from external sources.
The MRP printout out of bought out parts will recommend what should be purchased and this focuses on the external supply
base. Any internal manufactured parts that need to be produced will be highlighted. The internally manufactured parts will be
made using different machines and different process routes.

This is where MRP11 becomes useful. MRP11 assists with capacity planning by aggregating the total amount of machine time
needed for each batch of components processed on each machine. Over a specified period of time MRP11 will calculate the
capacity needed for the whole business across all machines. Of course, these calculations are only as good as the information
that has been put into the system.

SAQ 16.2 The main challenge in implementing any IT system is to ensure that it does not just replicate the existing system but develops
and improves the current business systems. Many businesses find it extremely difficult to adjust their current way of doing
things and this is as much about managing change as the system itself. It is very much about the end users and what their
wants and needs are. Does it make their lives easier, does it give them the information to do their jobs, have they been trained
and developed so as to make the best of the system they have? There are numerous stories about failed IT implementations and
there are now many good courses in this demanding and challenging subject.

43
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title MRP & MRP11 & ERP

SAQ 16.3 This sounds like a simple question but the answer lies in the fact that MRP is used for planning and managing repetitive
manufacturing operations where the BOMs ( Bills of Materials) are slightly different but have a lot of common part numbers.
One-off projects are, by definition, special and so the BOMs are unlikely to be repeated except for where a product is modular.

In the production of most products there needs to be a balance between differentiation and standardisation. We want
products to be different but not so different that it makes them more complex and expensive to build. Hence the product
development approach based around different platforms helps to resolve this.

SAQ 16.4 ERP tends to be the up-to-date reference to organisational wide MIS that allows all the different departments in an
organisation to plan and manage the company activities in a co-ordinated manner around a relational database.

ERP tends to have modules based around MRP and MRP11 that can be chosen and added if applicable to the business.

44
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 17

Title Project management

Statements of Plan and manage an operations function and advise on the optimum layout for specific types of product and process work
practice covered: flows.
Formulate effective resource plans and schedules that will deliver products in a cost effective manner.

Introduction: By the end of this session students should understand and be able to :-
• Identify and analyse the key roles and objectives of project management.
• Provide definition of project management
• Describe the project life cycle
• Create a project network
• Calculate the critical path
• Identify resource constraints.

Learning Define project and the activities comprising project management, including the project life cycle.
objective 17.1:

Learning activity: Identify a range of companies that focus on project management and investigate software tools that are used to manage
complex projects.

Self-assessment What are the main challenges for project managers and how are these different when compared to operations managers?
question:

Learning Explain how to create a project network and how to calculate the critical path.
objective 17.2:

Learning activity: Develop a project network for a simple project that is being carried out at your place of work. It may be the installation of a
piece of equipment or a computer system installation.

Self-assessment Explain the main reasons why an organisation will want to know the critical path when planning and managing a project.
question:

Learning Explain how to manage resources in project management.


objective 17.3:

Learning activity: Consider a project that you are familiar with and identify the critical resources that were necessary in order to ensure that
project was completed on time.

Self-assessment Complete the SAQ activities SAQ 4.19 & 4.20 on page 277 of the CIPS study guide.
question:

Checklist: (ie the • Definition of project management


principles, tools, • The project life cycle
techniques, models • Creating a project network
etc that the student • Calculating the critical path
should be familiar • Resource constraints.
with by the end of
the session)

45
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The marketing research process

Directed reading RST Read Chapter 16 Project planning and control.


(recommended
study text

Recommended None
further reading
(additional further
reading text)

Additional Operations Management – Ray Wild 6th Edition 2006


resources Chapter 13 : Project management and network scheduling

Google - Prince 2

CIPS past A typical exam question would be as follows:


examination a) Explain what is meant by the ‘project life-cycle’ relating to a specific example.
questions b) Construct a simple project network using the critical path method of project management and describe its essential
features and their meanings.

Notes on self-
assessment
questions (SAQ)

SAQ 17.1 Project managers are managing one-off projects whereas operations managers are managing continuing operations that
provide products on a day to day basis. There is the ‘iron triangle’ of quality, cost and delivery for project managers. It should
be remembered that projects usually start from day 1 with a completion date which does not change even though, in the early
stages of the project, there may be some confusion as to exactly what the project is trying to achieve. This is commonly
referred to as the ‘fuzzy front end’.

SAQ 17.2 Managers will need to know the critical path because this represents the shortest possible time frame for delivering the
project. It also means that they know the activities on the critical path and by undertaking these activities faster they can
actually improve the delivery date. This activity is referred to as ‘crashing’ - using additional resources to improve the delivery
date or, at least, bring it back on track.

SAQ 17.3 See the solutions to the activities on pages 290/291 of the CIPS study guide.

46
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 18

Title TQM

Statements of Propose philosophies, tools and techniques for continuous improvement and be able to apply these approaches within an
practice covered: operations function in order to improve the overall competitiveness of the business

Introduction: By the end of this session students should understand and be able to analyse:-

• Explain the cultural change required to implement total quality management.


• Total Quality Management (TQM) as a philosophy
• The development of TQM by Deming, Crosby and Juran
• Benefits of TQM
• Criticisms of TQM.

Learning Describe TQM as a philosophy.


objective 18.1:

Learning activity: Research the philosophy of TQM and identify a range of different definitions.

Self-assessment How do you see TQM fitting in with philosophy of JIT (Just in Time)?
question:

Learning Describe the development of TQM by Deming, Crosby & Juran.


objective 18.2:

Learning activity: Identify whether your company has implemented any type of TQM philosophy and, if so, what have been the objectives and
challenges.

Self-assessment How many of Deming’s 14 points can you remember and what seven deadly diseases did he cite?
question:

Learning Describe the benefits of TQM.


objective 18.3:

Learning activity: What TQM benefits would your organisation benefit from and what other ways are there of achieving these?

Self-assessment How do the benefits relate to those of the JIT philosophy and are there any major differences?
question:

Learning Describe the criticisms of TQM.


objective 18.4:

Learning activity: What types of training do employees and staff need in order to develop a TQM mentality. What are the pros and cons for
management?

Self-assessment What actions can be taken by management in order to overcome some of the criticisms to TQM?
question:

47
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title TQM

Checklist: (ie the • Total Quality Management (TQM) as a philosophy


principles, tools, • The development of TQM by Deming, Crosby and Juran.
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading RST Chapters 18 & 20 on Improvement and organising for improvement
(recommended
study text)

Recommended None
further reading
(additional further
reading text)

Additional Total Quality Management – J.S.Oakland 1989


resources
Operations Management – Ray Wild 6th Edition 2006
Page 656 to 659

http://www.lean.org.uk is the site of the lean enterprise unit

www.opsman.org Definitions , links and opinion on operations management

CIPS past L5-12 May 08 Q3


examination L5-12 May 07 Q6
questions

Notes on self-
assessment
questions (SAQ)

SAQ 18.1 TQM is a philosophy as is JIT. JIT is commonly seen as delivering materials just when they are needed. Whilst this is the case,
it is also much more. It is an organisational philosophy around the elimination of waste in all its forms. Stock is seen as waste
as it does not add value but ties up money and has to be stored, insured and managed. It is this philosophy that considers
stock to be nothing more than a buffer to hide the inefficiencies of operations. As stock is reduced so these inefficiencies and
operational problems rise to the surface and this acts as the basis of a continuous improvement programme.

TQM provides the culture and the communications base for implementing the JIT philosophy and these two programmes can
work very well together.

48
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title TQM

SAQ 18.2 Remembering Deming’s 14 points and also his 7 deadly diseases is not as difficult as it may appear.

One of the main points he makes is that, whenever you implement a programme of change, you maintain the thrust with
constancy of purpose. This is why, when senior management try to implement a specific programme such as TQM, often
employees see it as just a fad and they ‘ have seen it before’.

He also considers the need for continuity of senior management and not to be changing roles every two years. They need to
be in place for a number of years so as to ensure responsibility and accountability.

He considers it important to makes sure the culture is correct and people feel free to voice their opinions and make changes
and improvements.

He also believes it is necessary to implement an education , training and development programme to help people develop and
improve their skills.

These are just some examples but, once you understand operations management and the input transformation output model,
then most of these will be self explanatory.

SAQ 18.3 There are some major differences and yet there is also overlap. In TQM the programme is top down. This means it is
instigated by top management who provide the resources for training and development. They also provide improved
communications to enable staff to take on more responsibility for ensuring excellent quality products. The senior management
realise that it is the people who deliver the service and produce the products and who have the capability to improve providing
they are given the resources and responsibility.

JIT, as we said in the 18.2, is also a philosophy and, whilst JIT does have a shop floor and operational focus, TQM does tend
to be implemented within and throughout the whole organisation.

SAQ 18.4 If we look at the criticisms of TQM then a few of them have much in common. It is important to be focused on TQM but it is
ultimately a programme that facilitates improvement which will hopefully transform the company in the long term. It is
important to ensure that TQM is focused on the improvement of the workforce and developing/changing the culture. It needs
to be implemented in a concise and succinct package without getting overly complex and inwardly focused.

Often organisation become focused too much on TQM and lose sight of the business – this is the role of top management to
ensure that this does not happen!!

49
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 19

Title The philosophy of JIT

Statements of Propose philosophies, tools and techniques for continuous improvement and be able to apply these approaches within an
practice covered: operations function in order to improve the overall competitiveness of the business.

Introduction: By the end of this session students should understand and be able to:-

• Examine and evaluate the philosophy of just in time (JIT) and continuous performance improvement in the context of lean
manufacturing.
• The definition and philosophy of JIT
• JIT as the basis for a continuous improvement programme
• The advantages of JIT
• Aspects of lean manufacturing and lean supply chains.

Learning Explain the definition of JIT and the background philosophy and principles.
objective 19.1:

Learning activity: Research the origination of JIT and its relationship with the car company Toyota.

Self-assessment Read the case on Toyota entitled Operations in Practice on page 465 of the RST and consider the four rules that are stated at
question: the end of the article.

Learning Explain how JIT can act as the basis for a continuous improvement programme.
objective 19.2:

Learning activity: How would you implement a Kanban system for reducing stock with one of your suppliers and what are the prerequisites for
success?

Self-assessment How does JIT differ from MRP?


question:

Learning Explain the advantages of JIT.


objective 19.3:

Learning activity: Does your organisation practice JIT and, if so, what have been the major challenges during implementation?

Self-assessment Detail 4 different elements that would be challenging for any organisation trying to implement the JIT philosophy.
question:

Learning Explain the basis of lean manufacturing and lean supply chains in terms of JIT and TQM.
objective 19.4:

Learning activity: There is also talk about agile organisations and manufacturing businesses. Research what agile means in this context.

Self-assessment What are some of the main disadvantages of JIT?


question:

50
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The philosophy of JIT

Checklist: (ie the • JIT as the basis for a continuous improvement programme
principles, tools, • Aspects of lean manufacturing and lean supply chains
techniques,
models etc that
the student
should be
familiar with by
the end of the
session)

Directed reading Read chapter 15 Lean synchronisation and the Case operations in practice : Toyota page 430
(recommended
study text)

Recommended Operations Management – Ray Wild 6th Edition 2006 Page 351
further reading
(additional further
reading text)

Additional Google JIT and peruse the range of articles and sources of information
resources
http://www.lean.org.uk is the site of the lean enterprise unit

www.opsman.org Definitions , links and opinion on operations management

CIPS past L5-12 November 2008 Q6


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 19.1 These four rules are again very simple and aim to ensure that tasks are well specified, and that the routes for communication
are well defined and simple. Any improvement needs to be implemented based on the scientific method, under the guidance
of a teacher and the lowest level in the organisation.

These rules operate on the basis that if things are kept simple then they will be adhered to. Any rules or regulations that are
overly complex and need many levels of approval will, generally, either not be adhered to or end up with no decision being
made at all!

SAQ 19.2 JIT is more of an organisational philosophy based around the elimination of stock which is seen as waste or adding no value.

MRP is a software tool that performs thousands of calculations very quickly. MRP is used for repetitive manufacturing and is
only as good as the information that is put into the system. MRP is a push system.

JIT is more of a manual based or pull system based on Kanban.

Many organisations have used a mixture of MRP and Kanban for materials management which has been very successful.
Kanban can be very useful for the replenishment of low value items but needs people to understand the system in order for it
to operate successfully. It also needs stable demand.

51
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title The philosophy of JIT

SAQ 19.3 Five challenges for anyone implementing JIT are as follows:
• Ensuring the people in the organisation understand the philosophy
• Making sure the systems and processes in place are adhered to by the staff and employees
• Getting the buy in of suppliers to the business to the philosophy of JIT
• Making sure quality of supply is of a sufficiently acceptable level. JIT relies heavily on suppliers delivering 100% quality
• Stocks are going to be low and so any quality rejects can have a significant impact on the operational performance.

There are many more!!

SAQ 19.4 The disadvantages of JIT are as follows

• Organisations with no safety stocks are vulnerable to failure and this is why there has to be complete and utter
commitment to the philosophy and an unending drive to achieve the best possible performance
• JIT is more suitable for ‘flow’ and less suitable for ‘batch’ production
• There needs to be stability of demand
• Long term commitments to supplier partnerships through the good and the bad times
• Small lot sizes can lead to increased transportation costs. JIT can be more appropriate for high volume repetitive industries
eg automotive and fmcg.

52
Advanced diploma in purchasing and supply
Operations management in the supply chain

STUDY SESSION 20

Title Approaches to continuous improvement

Statements of Propose philosophies, tools and techniques for continuous improvement and be able to apply these approaches within an
practice covered operations function in order to improve the overall competitiveness of the business.

Introduction: By the end of this session students should understand and be able to:

Analyse and explain the different approaches to continuous improvement:

• Process mapping
• Failure Modes and Effect Analysis (FMEA)
• The PDCA (plan, do, check, act) cycle
• Different methods for managing and reducing stockholding.

Learning Describe and explain the technique of process mapping.


objective 20.1:

Learning activity: Carry out a process mapping exercise in your organisation and identify some of the non-added value activities.

Self-assessment Read the short case Perkins in the RST and answer the questions.
question:

Learning Describe and explain the technique of FMEA.


objective 20.2:

Learning activity: Apply the technique of FMEA to a problem you have experienced and evaluate the outcomes.

Self-assessment What is an FMEA and what is it used for?


question:

Learning Describe and explain the technique of the PDCA cycle.


objective 20.3:

Learning activity: Apply the PDCA cycle to a problem you have experienced.

Self-assessment Describe another improvement cycle other than the PDCA cycle and identify the most important point of each cycle.
question:

Learning Describe and explain the different techniques for reducing stockholding.
objective 20.4

Learning activity: Review the different methods of stock reduction and decide which particular techniques would be most appropriate for your
organisation.

Self-assessment What are the main issues that need to be considered when implementing a consignment stock system or vendor management
question: inventory system?

53
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Approaches to continuous improvement

Checklist: (ie the • Process mapping


principles, tools, • FMEA
techniques, • The PDCA cycle
models etc that • Different methods for managing and reducing stockholding.
the student
should be
familiar with by
the end of the
session)

Directed reading If you haven’t read Chapters 18 & 20 read them now.
(recommended
study text)

Recommended None.
further reading
(additional further
reading text)

Additional The Lean Toolbox – John Bicheno


resources
http://www.lean.org.uk is the site of the lean enterprise unit

www.opsman.org Definitions , links and opinion on operations management

CIPS past L5-12 May 2007 Q1


examination
questions

Notes on self-
assessment
questions (SAQ)

SAQ 20.1 This is a simple exercise in trying to provide a value stream map of the Perkins organisation. There is also an example on page
472 of a value stream map for an industrial air conditioning installation service.

A worked example is also shown on page 473.

SAQ 20.2 FMEA is a technique used to identify potential problems before the event and to determine what actions can be taken to
prevent them. By “ before the event” we mean, before a design is signed off and before production commences.

The main benefits for the use and application of FMEA are that, having established all the potential failure modes, effects and
causes, they are put into priority order. This is done by rating activities and aiming to focus attention on where action needs to
be taken. Essentially they are looking at risks of failure in a variety of different areas.

FMEAs need to be developed by cross functional teams to ensure a broad cross section of relevant knowledge and skills are
utilised within the company.

See RST page 629 for a worked example of an FMEA.

54
Advanced diploma in purchasing and supply
Operations management in the supply chain

Title Approaches to continuous improvement

SAQ 20.3 An alternative improvement cycle to the PDCA is the DMAIC which has been made more popular by its application around the
6 Sigma approach. It is detailed on page 598 of the RST.

The essential part of these improvement cycles is that the final point is the most important, since this is where the cycle starts
again. This ensures that continuous improvement is ongoing and, quite literally, never stops. It becomes a natural part of
everybody’s job.

It is worth reviewing the content and philosophy around 6 Sigma.

SAQ 20.4 • The main considerations when implementing this type of system are as follows
• They are usually used for lower value items that have a stable demand and regular turnover
• The stock is usually owned by the supplier until withdrawn from stock and used by the customer
• They need to be reviewed regularly to ensure the stocks are correct and invoicing is accurate
• There needs to be a strict discipline in withdrawing stock from the system
• Often it is useful to have the stock enclosed within a secure area
• Stockholding is based on replacement lead time.

55
BK01/01/07

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