GS/DMGM 5030 A

Manufacturing & Service

Operations Management
3:00-6:00 pm Wednesdays
LMP C101 [IBM Markham]

Fall 2023
• Professor’s York University profile page
–https://profiles.laps.yorku.ca/profiles/asolis/
• Professor’s office (Keele campus)
 256 Atkinson
• Course E-mail: opsmgta@yorku.ca
• Office hours
 1:45-2:45 pm Wednesdays
 After class (as may be required, by
appointment)
Jacobs & Chase
Operations & Supply Chain Management:
The Core
6th Edition
McGraw Hill Education, ©2023
The course aims at providing the students who have no
previous formal business education with a holistic view of
the manufacturing and service operations management
function in an organization. Key operational decisions of
each entity in supply chains are analyzed. Mechanisms
which would align objectives of each entity in supply
chains with system optimality are also discussed. The
application of key operational concepts is practiced on
case studies and/or in communication with actual
organizations.
• Basic understanding of the Operations
Management functional area
• Appreciation of key functions and some of the
more important issues and decision processes
in Manufacturing and Service Operations
Management
• Exposure to some quantitative tools and
techniques used in Manufacturing and Service
Operations Management
 Because learning changes everything.®

Chapter 1

OPERATIONS AND SUPPLY CHAIN

MANAGEMENT

© 2023 McGraw Hill, LLC. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill, LLC.
 COVID19 and Supply Chain Disruption
During the 2020-21 COVID19 crisis, all of you have heard about :
• Shortages of personal protective equipment (PPE).
• Shortages of hospital beds.
• Shortages of front-line workers.
• Medicines/therapies to treat COVID19.
• Absence or shortage of vaccines to prevent COVID19.

While all shortages cannot be solved by SC alone, most of these can be

remedied by improving supply chain by
• Better planning.
• SC diversification.
• Improved risk estimation leading to diversification and stocking strategies.
• Improved communication among SC actors.

© McGraw Hill, LLC 7

 Strategy, Processes, and Analytics
Operations and supply chain management
involves specialists in:
• Product design.
• Purchasing.
• Manufacturing.
• Service operations.
• Logistics.
• Distribution.
Success depends upon:
• Operations-related strategy.
• Processes to deliver products and services.
• Analytics to support the decisions needed to
manage the firm.
Access the text alternative for slide images.
© McGraw Hill, LLC 8
 What is Operations and Supply Chain
Management?
The design, operation, and improvement of the systems that
create and deliver the firm’s primary products and services.
Operations and Supply Chain Management (OSCM) is
concerned with the management of the entire product
production or service delivery system.
The functional fields of business are:
• Operations and Supply Chain Management.
• Marketing.
• Finance.
• Sale.

© McGraw Hill, LLC 9

 Supply Chain Entities

Warehouses,
Suppliers’ Distribution Customers/
Suppliers Suppliers Manufacturers Retailers Endusers
Centers,
Transporters

Solid bi-directional arrows represent material flows.

Backward flows may refer to returns of products/materials.

Dotted bi-directional arrows represent information flows.

Source: Mahmood, M.A., Gemoets, L.A., and Solis, A.O., “Supply Chain Management,” Encyclopedia
of Information Systems, Volume 4, Elsevier Science, © 2003, 315-327.
Supply Chain Management (SCM):
Earlier Definitions

 Planning and control of total materials flow

from suppliers through customers
early papers, c. 1985
 Not only materials flow, but materials,
information, and funds flows
later literature referred to both materials and
information flows
latest literature refers to all three

11
 Operations and Supply Chain Processes 1

Operations
Manufacturing and service processes used to transform
resources into products.
• Manufacturing produces physical products.
• Services produce intangible products.
Supply Chain
Processes that move information and material to and from
the firm.
• Logistics processes move products.
• Warehousing processes store products.
• Information makes the process more efficient.
© McGraw Hill, LLC 12
 Operations and Supply Chain Processes 2

• Planning – processes needed to operate an existing supply

chain strategically.
• Sourcing – selection of suppliers that will deliver the goods
and services needed to create the firm’s product. A set of
pricing, delivery, payments, and partner relationship metrics
needed.
• Making – producing the major product or providing the
service.
• Delivering – logistics processes such as selecting carriers,
coordinating the movement of goods and information, and
collecting payments from customers.
• Returning – processes for receiving worn-out, defective, and
excess products back from customers.

© McGraw Hill, LLC 13

 Supply Chain Processes

Exhibit 1.2

Access the text alternative for slide images.

© McGraw Hill, LLC 14
 Goods versus Services

Access the text alternative for slide images.

© McGraw Hill, LLC 15
 The Goods – Services Continuum

Exhibit 1.3

Access the text alternative for slide images.

© McGraw Hill, LLC 16
 Product - Service Bundling
Refers to a company building service activities into its
product offerings.
Many firms offer a combination of goods and services.
• Products are supported by services such as warranties
and training.
• Services are enhanced through the inclusion of products.

© McGraw Hill, LLC 17

 Efficiency, Effectiveness, and Value
Efficiency
• Doing something at the lowest possible cost.

Effectiveness
• Doing the right things to create the most value for the
customer.

Value
• The attractiveness of a product relative to its price.

© McGraw Hill, LLC 18

 Evaluating Efficiency
Benchmarking – a process in which one company studies
the processes of another company to identify best practices.
Benchmarking is important to investors.
• From an operations and supply chain perspective, the
relative cost of providing a good or service is closely
related to earnings growth.
• A small percentage reduction in materials could lead to a
large increase in ROI.

© McGraw Hill, LLC 19

 Management Efficiency Ratios 1

• Days sales outstanding – number of days that it takes to

collect cash from customers.
• Days inventory – number of days’ worth of inventory.
• Payables period – how quickly suppliers are paid.
• Cash conversion cycle – how quickly a company converts
the cash it receives from sales to company profits.
• Receivables turnover – number of times receivables are
collected.
• Inventory turnover – average number of times inventory is
sold and replaced during the year.
• Asset turnover – the amount of sales generated for every
dollar’s worth of assets.
© McGraw Hill, LLC 20
 Management Efficiency Ratios 2

Cash conversion cycle  Days sales outstanding+Days inventory  Payable period

Annual credit sales

Receivables turnover =
Average accounts receivable

Cost of goods sold

Inventory turnover =
Average inventory value

Revenue  or Sales 
Asset turnover =
Total Assets

© McGraw Hill, LLC 21

 Careers in Operations and Supply Chain
Management 1

• Plant manager.
• Hospital administrator.
• Branch manager.
• Department store manager.
• Call center manager.
• Supply chain manager.
• Purchasing manager.
• Quality control manager.
• Business process improvement analyst.
• Lean improvement manager.
• Project manager.
• Production control analyst.
• Facilities manager.
• Chief operating officer.

© McGraw Hill, LLC 22

 Careers in Operations and Supply Chain
Management 2

• Plant manager - oversees the workforce and physical resources (inventory,

equipment, and information technology) required to produce the organization’s
product.
• Hospital administrator - oversees human resource management, staffing, and
finances at a health care facility.
• Branch manager (bank) - oversees all aspects of financial transactions at a
branch.
• Department store manager - oversees all aspects of staffing and customer
service.
• Call center manager - oversees staffing and customer service activities at a
call center.
• Supply chain manager - negotiates contracts with vendors and coordinates the
flow of material inputs to the production process and the shipping of finished
products to customers.
• Purchasing manager - manages the day-to-day aspects of purchasing, such as
invoicing and follow-up.
© McGraw Hill, LLC 23
 Careers in Operations and Supply Chain
Management 3

• Logistics manager - oversees the movement of goods throughout the supply

chain.
• Warehouse/Distribution manager - oversees all aspects of running a
warehouse.
• Business process improvement analyst - applies the tools of lean production to
reduce cycle time and eliminate waste in a process.
• Quality control manager - applies techniques of statistical quality control.
• Lean improvement manager - trains organizational members in lean
production and continuous improvement methods.
• Project manager - plans and coordinates staff activities, such as new-product
development, new-technology deployment, and new-facility location.
• Production control analyst - plans and schedules day-to-day production.
• Facilities manager - ensures that the building facility design, layout, furniture,
and other equipment are operating at peak efficiency.

© McGraw Hill, LLC 24

 Historical Development of Operations and
Supply Chain Management

Exhibit 1.6
Access the text alternative for slide images.
© McGraw Hill, LLC 25
 Current Issues in OSCM
Adapting to rapidly changing global business relationships
• Rebalancing the trade balance between low-cost producing Asian
economies and Developed economies which would also reduced
supply risk.
Accommodating the shift to online retail purchasing
• This is a significant change requiring reconfiguration of stores and
warehouses.
Optimizing global supplier production and distribution networks
• SC network optimization is an on-going activity which is supported by
analytics, real-time data and artificial intelligence,
The speedy adoption of new technology and automation
• Adopting new technologies such as working form home, self-driving
trucks, robots for simpler cooking tasks such as pizza and hamburgers
will present major challenges.
© McGraw Hill, LLC 26