INTRODUCTION

Chapter One
McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
 LO1-1: Identify the elements of
operations and supply chain
management (OSCM).
 LO1-2: Know the potential career
opportunities in operations and supply
chain management (OSCM).
 LO1-3: Recognize the major concepts
that define the operations and supply
chain management (OSCM) field.
 LO1-4: Evaluate the efficiency of a
firm. 1-2
 Operations and Supply
Chain Management
(OSCM)
 Operations and supply chain
management (OSCM) involves
 Product/service design
 Purchasing
 Manufacturing
 Service operations
 Logistics
 Distribution

1-3
What Is Operations and Supply Chain
Management (OSCM)?

 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
 A functional field of business
 Concerned with the management of
the entire production/delivery system

1-4
5
6
 Operations and Supply Chain
Processes

Operati Supply
ons Chain
Manufacturin
Processes
g and service
that move
processes
information
used to
and material
transform
to and from
resources
the firm
into products
1-7
Strategy, Processes, and
Analytics
 Success depends upon
 Strategy
 Processes to deliver products and services
 Analytics to support the decisions needed
to manage the firm

1-8
 Business Analytics
(Davenport & Harris, 2007)

• Analytics is defined as the extensive

use of data, statistical and
quantitative analysis, explanatory
and predictive models, and fact-
based management to drive
decisions and actions.
• Analytics are a subset of business
intelligence: a set of technologies
and processes that use data to
understand and analyze business
performance 1-9
 Business Analytics
(Davenport & Harris, 2007)

 Statistical analysis (Why is this

happening?)
 Forecasting/extrapolation (What if
these trends continue?)
 Predictive modeling (What will
happen next?)
 Optimization (What’s the best that
can happen?)

1-10
 Business Analytics
(Davenport & Harris, 2007)

 Application Domains for Analytics

• Internal analytics:
 Financial
 Manufacturing/Operations
 Researchand development
 Human resources

• External analytics:
 Customer
 Supplier

1-11
Operations and Supply Chain
Processes

1-12
 Process Activities
 Planning – processes needed to operate an existing
supply chain
 Sourcing – selection of suppliers that will deliver
the goods and services needed to create the firm’s
product
 Making – producing the major product or service
 Delivering – logistics processes such as selecting
carriers, coordinating the movement of goods
and information, and collecting payments from
customers
 Returning – receiving worn-out, excess, and/or
defective products back from customers

1-13
 Goods versus Services
Good Servi
s ces

Pure Goods Core Goods Core Services Pure Services

Tangible
Less interaction with customers
Often homogeneous
Not perishable – can be
inventoried
Intangible
Interaction with customer
required
Inherently heterogeneous
Perishable/time dependent
Defined and evaluated as a
package of features
1-14
 Product-Service
Bundling
 Product-service bundling refers to a
company building service activities
into its product offerings for its
customers.

1-15
Careers in Operations and Supply Chain
Management

Hospital Department
Plant Branch
administrat store
manager manager
or manager

Supply Quality
Call center Purchasing
chain control
manager manager
manager manager

Business
Lean Production
process Project
improveme control
improveme manager
nt manager analyst
nt analyst
Chief
Facilities operating
manager officer
(COO)

1-16
 Historical Development of
Operations and Supply Chain
Management

1-17
 Current Issues in OSCM
 Coordinating relationships between
members of Supply Chain
 Optimizing global network of
suppliers, producers, and distributors
 Managing customer touch points
 Raising awareness of OSCM as a
competitive weapon
 Sustainability and triple bottom line

1-18
Efficiency, Effectiveness,
and Value
Efficiency
• Doing something at the lowest possible cost

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

Value
• The attractiveness of a product relative to its
cost
1-19
 Productivity
 Productivity = Output/Input
= Effectiveness/Efficiency
= Value to Customer/Cost to
Producer
= Doing the right
things/Doing things right

1-20
Efficiency and Wall
Street
  

1-22