Download om and the supply chain - McGraw Hill Higher Education

BUSINESS PLUG-IN
B16
Operations
Management
McGraw-Hill/Irwin
© The McGraw-Hill Companies, All Rights Reserved
LEARNING OUTCOMES
1. Define the term operations management
2. Explain operations management role in
business
B16-2
LEARNING OUTCOMES
3. Describe the correlation between
operations management and information
technology
4. Describe the five characteristics of
competitive priorities
B16-3
OM FUNDAMENTALS
• Production - is the creation of goods and
services using the factors of production
• Production management - describes all the
activities managers do to help companies
create goods
• Operations management (OM) - the
management of systems or processes that
convert or transform resources into goods
and services
B16-4
OM FUNDAMENTALS
• Transformation process - the actual
conversion of inputs to outputs
B16-5
OM FUNDAMENTALS
B16-6
OM FUNDAMENTALS
• Value-added - the term used to describe
the difference between the cost of inputs
and the value of price of outputs
B16-7
OM IN BUSINESS
• How does an airline service organization’s
OM team adds value?
– Forecasting
– Capacity planning
– Scheduling
– Managing inventory
– Assuring quality
– Motivating and training employees
– Locating facilities
B16-8
IT’S ROLE IN OM
• Managers use IT to heavily influence OM
decisions including :
– What: What resources will be needed and in
what amounts?
– When: When should the work be scheduled?
– Where: Where will the work be performed?
– How: How will the work be done?
– Who: Who will perform the work?
B16-9
OM Strategic Business Systems
• Operations strategy addresses broad questions
about using major resources to achieve corporate
objectives
• Major long-term issues addressed in operations
strategy include:
– How big to make the facilities?
– Where to locate the facilities?
– When to build additional facilities?
– What type of process(es) to install to make the
products?
B16-10
OM Strategic Business Systems
• Strategic planning - focuses on long range
planning
• Strategic business units (SBUs) - consist
of several stand-alone businesses
• Materials requirement planning (MRP) use sales forecasts to make sure that
needed parts and materials are available at
the right time and place
B16-11
OM Strategic Business Systems
• Tactical planning - focuses on producing
goods and services as efficiently as
possible within the strategic plan
• 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
B16-12
OM Strategic Business Systems
• Operational planning and control
(OP&C) - deals with the day-to-day
procedures for performing work, including
scheduling, inventory, and process
management
– Inventory management and control
system
– Transportation planning system
– Distribution management system
B16-13
COMPETITIVE OM STRATEGY
• Five key competitive priorities which a
company can add value to its OM
decisions including:
1.
2.
3.
4.
5.
Cost
Quality
Delivery
Flexibility
Service
B16-14
COMPETITIVE OM STRATEGY
1. Cost: There can be only one lowest-cost
producer, and that firm usually establishes
the selling price in the market
2. Quality: Is divided into two categories
product and process quality
–
–
–
–
Six Sigma Quality
Malcolm Balridge National Quality Awards
ISO 900, ISO 14000
CMMI
B16-15
COMPETITIVE OM STRATEGY
3. Delivery: a firms ability to provide
consistent and fast delivery
4. Flexibility: a firms ability to offer a wide
variety of products
5. Service: high-quality customer service
adds tremendous value to an ordinary
product
B16-16
OM AND THE SUPPLY CHAIN
• Supply chain - consists of all parties
involved, directly or indirectly, in the
procurement of a product or raw material
• 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
B16-17
OM AND THE SUPPLY CHAIN
• Typical manufacturing supply chain
B16-18
OM AND THE SUPPLY CHAIN
• Typical service supply chain
B16-19
CLOSING CASE ONE
How Levi’s Got Its Jeans into Wal-Mart
1. How did Levi Strauss achieve business success
through the use of supply chain management?
2. What might have happened to Levi’s if its top
executives had not supported investments in
SCM?
3. David Bergen, Levi’s CIO, put together a crossfunctional team of key managers from IT, finance,
and sales to transform Levi’s systems to meet
Wal-Mart’s requirements. Analyze the
relationships between these three business areas
and OM. How can OM systems help support these
three critical business areas?
B16-20
CLOSING CASE ONE
How Levi’s Got Its Jeans into Wal-Mart
4. Describe the five basic SCM components in
reference to Wal-Mart’s business model
5. Explain RFID and provide an example of
how Levi’s could use the technology to
increase its business operations
6. Identify any security and ethical issues that
might occur for a company doing business
with Wal-Mart
B16-21
CLOSING CASE TWO
The Digital Hospital
1. Why would operations management be a
critical component to a hospital?
2. How would a hospital use each of the
three OM planning strategies to improve
its operations?
3. How might a hospital use each of the five
competitive priorities to increase value to
its goods and services?
B16-22