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Operations and Supply Chain

Management

Chapter 1

Chapter Objectives
Be able to:
 Describe what the operations function is and why it is
critical to an organization’s survival.
 Describe what a supply chain is and how it relates to a
particular organization’s operations function.
 Discuss what is meant by operations management and
supply chain management.
 Identify some of the major operations and supply chain
activities, as well as career opportunities in these areas.

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Why study Operations and

Supply Chain Management?

What do the following organizations have in common?

Saigon Co-op
Tiki
Samsung
SAP
DHL
Jabil

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Why study Operations and

Supply Chain Management?
 Every organization must make a product or a
service that someone values.
Why would the organization exist?
Givral Barkery The operations function is the
collection of people,
HCMUT technology, and systems
within an organization that has
Vietnam Airline primary responsibility for
providing the organization’s
….
products or services.
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Why study Operations and

Supply Chain Management?

How can
sporting
shoes be
made?

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Why study Operations and

Supply Chain Management?
 Most organizations function as part of larger supply chains.

Who are in the sporting shoes supply chains?

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Why study Operations and

Supply Chain Management?

Supply chain
A network of manufacturers
and service providers that
work together to create
products or services needed
by end users. These
manufacturers and service
providers are linked
together through physical
flows, information flows,
and monetary flows.

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Why study Operations and

Supply Chain Management?
 Organizations must carefully manage their operations
and supply chains in order to prosper, and indeed,
survive.

What are fundamental operations decisions made by

sporting shoes supply chain parners?

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Operations Management
 Operations Management – The planning,
scheduling, and control of the activities that
transform inputs into finished goods and services.

All organizations must:

make products or provide services that someone values,
and the operations function has the primary responsibility for
making sure this happens.
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Manufacturing
 Tangible product

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Manufacturing
 Tangible product
 Key decisions driven by physical
characteristics of the product:
 How is the product made?
 How do we store it?
 How do we move it?
 Etc.

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Services
 Intangible Product or Service
 Location, Exchange, Storage, Physiological,
Information

 Key decisions:
 How much customer involvement?
 How much customization?

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Operations Management

 Inputs to operations can come from many places and take many
different forms.
 Operations activities require coordination with other business
functions, including engineering, marketing, and human
resources.
 Operations management activities are information and decision
intensive.
>> organizations hope to provide the best value to their customers
while making the best use of resources. 1 - 15

Supply Chain Management

 Supply Chain
Management – The
active management
of supply chain
activities and
relationships in
order to maximize
customer value and
achieve a
sustainable
competitive Managers must also understand how the company
advantage. is linked in with the operations of its suppliers,
distributors, and customers
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Supply Chain Terminology

 Upstream –
Activities
positioned
earlier in the
supply chain.
 Downstream –
Activities
positioned later
in the supply
chain.
• First-tier supplier – A supplier that provides products or services
directly to a firm.
• Second-tier supplier – A supplier that provides products or services to
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a first-tier supplier

Supply Chain Operations

Reference (SCOR) Model
It represents a conscious effort by a firm or group of
firms to develop and run supply chains in the most
effective and efficient ways possible.

Supply Chain Operations Reference (SCOR) model

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Supply Chain Operations

Reference (SCOR) Model
Consists of:
1. Planning activities, which seek to balance demand requirements
against resources and communicate these plans to the various
participants.
2. Sourcing activities, which include identifying, developing, and
contracting with suppliers and scheduling the delivery of incoming
goods and services.
3. “Make,” or production, activities, which cover the actual
production of a good or service.
4. Delivery activities, which include everything from entering
customer orders and determining delivery dates to storing and
moving goods to their final destination.
5. Return activities, which include the activities necessary to return
and process defective or excess products or materials
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Supply Chain Operations

Reference (SCOR) Model

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Important Trends
Three enduring trends:
 Agility
 Information technologies
 People

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Important Trends
 Agility
the ability to recalculate
plans in the face of market,
demand and supply
volatility and deliver the
same or comparable
cost, quality and customer
service

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Important Trends
 Agility

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Important Trends
Information Technologies
 Electronic commerce
 E-commerce for short, refers to “the use of computer and
telecommunications technologies to conduct business via
electronic transfer of data and documents”.
 Reduces the costs and time associated with supply chain
relationships
 Radio Frequency Identification (RFID)
to precisely track the location of millions of bags in real
 Cloud computing and the Internet of Things (IoT)
using sophisticated decision support systems to develop
long-term business plans
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Important Trends
People
 the current shortage of talented operations and
supply chain professionals and the importance of
relationship management.
 Relationship management
 Competition between chains, not individual firms
 Trust and coordination
 Organizations must manage the relationships with their
upstream suppliers as well as their downstream customers
 Increasing competition and globalization
 Fewer industries protected by geography
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Professional Organizations
A number of professional organizations:
 APICS – Association for Operations
Management
 ISM – Institute for Supply Management
 CSCMP – The Council of Supply Chain
Management Professionals
 ASQ – The American Society for Quality

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Supply Chain Careers

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 1 - 27

Cross-Functional and
Interorganizational Linkages

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EMPLOYABILITY SKILLS
 Critical Thinking
 involves purposeful and goal-directed thinking used to define and
solve problems, make decisions, or form judgments related to a
particular situation or set of circumstances.
 Collaboration
 many key operations and supply chain activities require close
collaboration with participants from other areas, such as
marketing, engineering, and finance.
 Knowledge Application and Analysis
 The ability to learn a concept and then apply that knowledge in
another setting to achieve a higher level of understanding.
 Information Technology Application and Computing Skills
 The ability to select and use appropriate technology to accomplish
a given task
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CHAPTER SUMMARY
 Operations and supply chains are pervasive in
business
 There are numerous career opportunities for
students interested in the area.
 Trends in e-commerce and global competition, as
well as the growing importance of maintaining good
relationships with other supply chain partners
 Many professional organizations, including APICS,
CSCMP, and ISM

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