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Introduction to

Managing
Operations
Across the
Supply Chain
Advance Diploma (D4)
in Foundry Engineering
February 2013
What
What is
is Operations?
Operations?

What is Operations?
a function or system that transforms inputs
into outputs of greater value. i.e. a
transformation process.

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OM
OM is
is aa process
process oriented
oriented discipline
discipline

Inputs Transformation Outputs

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Transformation
Transformation process
process

Tuna can process


Inputs and outputs?

Hospital process
Inputs and outputs?

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Why
Why do
do the
the Operations
Operations
management
management and
and Supply
Supply Chain
Chain
Management
Management matter?
matter?

In early 2005, HP
New CEO search committee when Carly Fiorina
stepped down as CEO

New CEO of HP Mark Hurd improved operations


through supply chain

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Transformation
Transformation Process
Process

Physical: as in manufacturing operations


Locational: as in transportation or
warehouse operations
Exchange: as in retail operations
Physiological: as in health care
Psychological: as in entertainment
Informational: as in communication

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What
What is
is Operations
Operations
Management?
Management?

What is Operations Management (OM)?


Operations Management is the
management of process used to design,
supply, produce, and deliver valuable
goods and services to customers.

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Operations
Operations Management
Management (OM)
(OM) is
is everywhere
everywhere

Construction
Schools Restaurants
Banks
Hospitality

Military

Agriculture Transportation
Sport Teams
Health Municipalities
Care

Govt
Manufacturers Services Entertainment
Retail Not-for-Profit
Organizations 18
Operations
Operations Management
Management (OM)
(OM) is
is everywhere
everywhere

Operations
Marketing
Finance and
Accounting
Human
Resources
Outside
Suppliers

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Supply
Supply Chain
Chain Management
Management

Supply chain: the global network of organizations


and activities involved in
(1) designing a set of goods and services and their related
processes
(2) transforming inputs into goods and services
(3) consuming goods and services
(4) disposing of these goods and services

Supply chain management: the design and


execution of relationship and flows that connect the
parties and processes across supply chain

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Supply
Supply Chain
Chain Network
Network Example
Example
Resources and Technology Supply Chain
Financial
Underwriters

Screen Writers

Talent
Agencies

Casting Film Maker /


Company Producer

Director
Product Supply Chain
Raw Materials Chemical Dye DVD
Suppliers Manufacturer Sales/Rentals

Film Stock Film Production Distributors


Manufacturer Wholesaler Company

Wood Pulp Cellulose Acetate Theaters


Supplier Manufacturer

Costume
Supplier
Props Equipment
Supplier Supplier
Tier 4 Tier 3 Tier 2 Tier 1 Echelon 1 Echelon 2
Upstream Product Supply Chain Downstream Product Supply Chain
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Characteristics
Characteristics of
of Goods
Goods and
and Services
Services

Goods Services

Tangible Intangible
Can be inventoried Cannot be inventoried
Little customer contact Extensive customer contact
Long lead time Short lead time
Often capital-intensive Often labor intensive
Quality easily assured Quality harder to assess
Material is transformed Information or customer is
transformed

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Value-Added
Value-Added && Product
Product Packages
Packages

Value-added is the difference between the cost


of inputs and the value or price of outputs.
Product packages are a combination of goods
and services.
Product packages can make a company more
competitive.

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Decline
Decline in
in Manufacturing
Manufacturing Jobs
Jobs

Productivity
Increasing productivity allows companies to maintain
or increase their output using fewer workers
Outsourcing
Some manufacturing work has been outsourced to
more productive companies

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Functional
Functional activities
activities that
that connect
connect
Operations
Operations managers
managers

Customer Management: interfaces with


customers and order processing and fulfillment

Supply Management: processes to identify,


acquire and administer inputs

Logistics Management: movement of materials


and information within, into and out of the firm

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Historical
Historical events
events in
in OM
OM

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Historical
Historical events
events in
in OM
OM
Industrial revolution (Before 1800):
Steam engine: James Watt

Division of labor: Adam Smith

Interchangeable parts: Eli Whitney

Technical capitalist (1800-1850):


Improved manufacturing technology

Emerging transportation network

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Historical
Historical events
events in
in OM
OM
mass production (1850-1890):
Emergence of local factory

Introduction of steam and electrical power

Scientific management(1890-1920):
More scientific management

Moving assembly (Henry Ford)

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Historical
Historical events
events in
in OM
OM
Human relations and Demand growth
(1920-1960):
Hawthorne studies (Elton Mayo)
Motivation theories (Abraham Maslow and Douglas
Mcgregor)
Introduction of computer usage and quantitative
methods
Increased automation

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Historical
Historical events
events in
in OM
OM
Global competition (1960-1980):
Just in time system

Early outsourcing

World class manufacturing (1980-2000):


Increased computerization and information system

Global sourcing and need for supply chain coordination

E-commerce (2000-present):
Internet revolution

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