Chase - Shankar - Jacobs

14e
Operations and
Supply Chain
Management
CHASE | SHANKAR | JACOBS
1–1
INTRODUCTION
Chapter One
McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
1–2
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Learning Objectives
• LO1-1: Identify the elements of operations
and supply chain management.
• LO1-2: Know the potential career
opportunities in operations and supply
chain management.
• LO1-3: Recognize the major concepts that
define the operations and supply chain
management field.
1–3
Operations Management
• Operations: Designs & Transformation process
of materials.
• Operations Management: Management of
Design & Transformation Process to convert
Raw materials into Required finished products.
1–4
Supply Chain Management
• It is the management of flow of goods.
• It comprises of;
• Sourcing of Material
• Movement & Storage of Raw Materials
• Work in Process & Finished Products
Inventory
• Movement of Finished Products to Point of
Consumption
1–5
Functions of SCM
• Sourcing of material
• Procurement
• Materials Planning
• Make or buy decision
• Inventory Management
• Receiving & Dispatch
• Stores & Warehouse
• Material handling
1–6
• Sourcing is finding the source from where the goods and
services can be procured.
• Procurement is acquiring of goods and services from
external source, often via a tendering or bidding process.
• Material Planning is the scientific method of planning
and determining the requirements of consumables, raw
materials, spare parts and other miscellaneous materials
essential for the production plan implementation.
• Make or buy decision
1–7
• Inventory Management is the management of
inventory and stock. As an element of supply
chain management, inventory
management includes aspects such as
controlling and overseeing ordering inventory,
storage of inventory, and controlling the
amount of product for sale.
1–8
• Logistics is flow of goods inside or outside the
firm.
• Receiving & Dispatch
• Stores and warehouses are for storage of product.
• Material handling is the movement, protection,
storage and control of materials and products
throughout manufacturing, warehousing,
distribution, consumption and disposal.
1–9
SCM Definition
• SCM includes Design, Planning, Execution,
Control & Monitoring of Supply Chain
activities to create value & fulfill demands of
customers.
1–10
Strategy, Processes, and
Analytics
• Operations and supply chain management involves
– Product design
– Purchasing
– Manufacturing
– Service operations
– Logistics
– Distribution
• Success depends upon
– Strategy
– Processes to deliver products and services
– Analytics to support the decisions needed to manage the firm
1–11
What Is Operations and Supply
Chain Management?
• The design, operation, and improvement of
the systems that create and delivery 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
1–12
Operations and Supply Chain
Processes
Operation Supply
s Chain
Manufacturing
and service Processes that
processes used to move information
transform and material to
resources into and from the firm
products
1–13
Accomplished?
Each Section of OSCM: What Is
1–14
Processes
1–15
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
1–16
Goods versus Services
Pure Core Core Pure

Goods Goods Services Services
Tangible Intangible
Interaction with customer required
Less interaction with customers
Inherently heterogeneous
Often homogeneous Perishable/time dependent
Not perishable – can be Defined and evaluated as a
inventoried package of features
1–17
Service Package
• The specifications of a service are defined and evaluated as a

package of features that affect the five senses. These features are:
• Supporting facility (location, decoration, layout, architectural
appropriateness, supporting equipment).
• Facilitating goods (variety, consistency, quantity of the physical
goods that go with the service; for example, the food items that
accompany a meal service)
• Explicit services (training of service personnel, consistency of
service performance, availability and access to the service, and
comprehensiveness of the service).
• Implicit services (attitude of the servers, atmosphere, waiting time,
status, privacy and security, and convenience)
1–18
Product Service Building
• When a firm builds service activities into its
product offerings to create additional value for
the customer.
1–19
Careers in Operations and
Supply Chain Management
Plant Hospital Branch Department
manager administrator manager store manager
Call center Supply chain Purchasing Quality control

manager manager manager manager
Business process Lean Project Production

improvement improvement
analyst manager manager control analyst
Facilities Chief operating

manager officer
1–20
Historical Development of
Management
Manufacturing strategy developed
Late 1970s
Just-in-time (JIT) production
Early 1980s pioneered by the Japanese
Mid 1980s Service quality and productivity
Total quality management Early 1990s
(TQM) and Quality Six-sigma quality
certification programs Mid 1990s Supply chain
Business process management (SCM)
Late 1990s
reengineering (BPR)
Electronic commerce
Early 2000s Service science
Mid 2010s
Business analytics
1–21
Current Issues in OSCM
• Coordinating relationships between mutually
supportive but separate organizations
• Optimizing global network of suppliers,
producers, and distributors
• Managing customer touch points (Customer is
king)
• Raising awareness of OSCM as a competitive
weapon
• Sustainability and triple bottom line
1–22
• Profit
• Planet
• People
Triple Bottom Line (3Ps)
1–23
Triple Bottom Line
1–24
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
1–25

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14e

• Operations and supply chain management

Pure Core Core Pure

• The specifications of a service are defined and evaluated as a

Call center Supply chain Purchasing Quality control

Business process Lean Project Production

Facilities Chief operating

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