Chapter 8: operations managment and supply chain management
1. Operations Management
a. Operations management (OM) - the management of systems or processes that convert or transform resources into goods
and services. Converts inputs into outputs.
b. Production management - describes all the activities managers do to help companies create goods
c. Transformation process - the actual conversion of inputs to outputs
d. Value-added- the term used to describe the difference between the cost of inputs and the value of price of outputs
e. Interrelated OM activities include forecasting, capacity planning, scheduling, managing inventory, assuring quality, motivating
and training employees, and locating facilities
f. OM Information Systems
i. Decision Support System
ii. Executive Information Systems
g. IT helps managers answer the following questions
i. What: What resources will be needed and in what amounts?
ii. When:When should the work be scheduled?
iii. Where:Where will the work be performed?
iv. How: How will the work be done?
v. Who: Who will perform the work?
2. Strategic OM Systems for Businesses
a. Strategic planning - focuses on long range planning
b. Strategic business units (SBUs) - consist of several stand-alone businesses
c. Materials requirement planning (MRP) - use salesforecasts to make sure that needed parts and materials are available at
the right time and place
d. Tactical planning - focuses on producing goods and services as efficiently as possible within the strategic plan
e. Global inventory management system - provides the ability to locate, track, and predict the movement of every component
or material anywhere upstream or downstream in the production process
f. Operational planning and control (OP&C) - deals with the day-to-day procedures for performing work, including scheduling,
inventory, and process management
g. Inventory management and control system- provides control and visibility to the status of individual items maintained in
inventory.
h. Transportation planning system- Track and analyze the movement of materials and products to ensure the delivery of
materials and finished goods.
i. Distribution management system- Coordinate the process of transporting materials from a manufacturer to distribution
centers to the final customer.
3. Competitive OM Strategies
a. Key priorities that add value to companies’ OM decisions
i. Cost: there can be only one lowest-cost producer, and that firm usually establishes the selling price in the market
ii. Quality:
1. Product Quality- Levels vary as to the particular market that it aims to serve
2. Process Quality- Process by which product is produced. Primary goal is to produce error-free products.
iii. Delivery: a firm’s ability to provide consistent and fast delivery
iv. Flexibility: a firm’s ability to offer a wide variety of products
v. Service: high-quality customer service adds tremendous value to an ordinary product
4. Supply Chain Management (SCM) - involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
a. Supply chain strategy – strategy for managing all resources to meet customer demand
b. Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.
c. Supply chain operation – schedule for production activities
d. Supply chain logistics – product delivery process
5. Five Basic Supply Chain Management Components
a. Plan: The strategic portion that requires planning management of all resources that go into the desired goods or service
demanded by the customer
b. Source: Carefully choose reliable suppliers to deliver goods and services required for making the product.
c. Make: Manufacturing of product by company.
d. Deliver: Logistical steps to plan and control efficient and effective transportation and storage supplies from supplier to
customer.
e. Return: Company receiving defective or excess products back and supporting customers with delivered product.
6. IT Role in Supply Fundamentals
a. IT’s primary role is to create integrations or tight process and information linkages between functions within a firm
b. Benefits of Supply Chain Management System (SCM)
i. Visibility
1. Supply chain visibility – the ability to view all areas up and down the supply chain
2. Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the
supply chain
ii. Consumer Behavior
1. Demand planning software – generates demand forecasts using statistical tools and forecasting techniques
2. Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact
that its supply chain will have on its customers and ultimately the organization’s performance.
iii. Speed
1. SCM Systems raise the accuracy, frequency, and speed of communication between suppliers and customers, as well as
between internal users.
iv. Competition
1. Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of
the supply chain
2. Supply chain execution (SCE) software – automates the different steps and stages of the supply chain
c. Fastest growing SCM components
i. Supply chain event management (SCEM)
ii. Selling chain management
iii. Collaborative engineering
iv. Collaborative demand planning
All Information above compiled from below reference
Gordon, B., & Ducham, P. (2011). Information Systems. New York: McGraw-Hill/Irwin.
a. Operations management (OM) - the management of systems or processes that convert or transform resources into goods
and services. Converts inputs into outputs.
b. Production management - describes all the activities managers do to help companies create goods
c. Transformation process - the actual conversion of inputs to outputs
d. Value-added- the term used to describe the difference between the cost of inputs and the value of price of outputs
e. Interrelated OM activities include forecasting, capacity planning, scheduling, managing inventory, assuring quality, motivating
and training employees, and locating facilities
f. OM Information Systems
i. Decision Support System
ii. Executive Information Systems
g. IT helps managers answer the following questions
i. What: What resources will be needed and in what amounts?
ii. When:When should the work be scheduled?
iii. Where:Where will the work be performed?
iv. How: How will the work be done?
v. Who: Who will perform the work?
2. Strategic OM Systems for Businesses
a. Strategic planning - focuses on long range planning
b. Strategic business units (SBUs) - consist of several stand-alone businesses
c. Materials requirement planning (MRP) - use salesforecasts to make sure that needed parts and materials are available at
the right time and place
d. Tactical planning - focuses on producing goods and services as efficiently as possible within the strategic plan
e. Global inventory management system - provides the ability to locate, track, and predict the movement of every component
or material anywhere upstream or downstream in the production process
f. Operational planning and control (OP&C) - deals with the day-to-day procedures for performing work, including scheduling,
inventory, and process management
g. Inventory management and control system- provides control and visibility to the status of individual items maintained in
inventory.
h. Transportation planning system- Track and analyze the movement of materials and products to ensure the delivery of
materials and finished goods.
i. Distribution management system- Coordinate the process of transporting materials from a manufacturer to distribution
centers to the final customer.
3. Competitive OM Strategies
a. Key priorities that add value to companies’ OM decisions
i. Cost: there can be only one lowest-cost producer, and that firm usually establishes the selling price in the market
ii. Quality:
1. Product Quality- Levels vary as to the particular market that it aims to serve
2. Process Quality- Process by which product is produced. Primary goal is to produce error-free products.
iii. Delivery: a firm’s ability to provide consistent and fast delivery
iv. Flexibility: a firm’s ability to offer a wide variety of products
v. Service: high-quality customer service adds tremendous value to an ordinary product
4. Supply Chain Management (SCM) - involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
a. Supply chain strategy – strategy for managing all resources to meet customer demand
b. Supply chain partner – partners throughout the supply chain that deliver finished products, raw materials, and services.
c. Supply chain operation – schedule for production activities
d. Supply chain logistics – product delivery process
5. Five Basic Supply Chain Management Components
a. Plan: The strategic portion that requires planning management of all resources that go into the desired goods or service
demanded by the customer
b. Source: Carefully choose reliable suppliers to deliver goods and services required for making the product.
c. Make: Manufacturing of product by company.
d. Deliver: Logistical steps to plan and control efficient and effective transportation and storage supplies from supplier to
customer.
e. Return: Company receiving defective or excess products back and supporting customers with delivered product.
6. IT Role in Supply Fundamentals
a. IT’s primary role is to create integrations or tight process and information linkages between functions within a firm
b. Benefits of Supply Chain Management System (SCM)
i. Visibility
1. Supply chain visibility – the ability to view all areas up and down the supply chain
2. Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the
supply chain
ii. Consumer Behavior
1. Demand planning software – generates demand forecasts using statistical tools and forecasting techniques
2. Once an organization understands customer demand and its effect on the supply chain it can begin to estimate the impact
that its supply chain will have on its customers and ultimately the organization’s performance.
iii. Speed
1. SCM Systems raise the accuracy, frequency, and speed of communication between suppliers and customers, as well as
between internal users.
iv. Competition
1. Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of
the supply chain
2. Supply chain execution (SCE) software – automates the different steps and stages of the supply chain
c. Fastest growing SCM components
i. Supply chain event management (SCEM)
ii. Selling chain management
iii. Collaborative engineering
iv. Collaborative demand planning
All Information above compiled from below reference
Gordon, B., & Ducham, P. (2011). Information Systems. New York: McGraw-Hill/Irwin.