CHAPTER EIGHT OVERVIEW
Chapter 8
SECTION 8.1 – OPERATIONS MANAGEMENT
• Operations Management Fundamentals
• OM in Business
• IT’s Role in OM
• Competitive OM Strategy
• OM and the Supply Chain
•
SECTION 8.2- SUPPLY CHAIN MANAGEMENT
• Supply Chain Fundamentals
• IT’s Role in the Supply Chain
• Supply Chain Management Success Factors
• Supply Chain Management Success Stories
• Future Supply Chain Trends
8-1
OM FUNDAMENTALS
Chapter 8
• Transformation
process - the actual
conversion of inputs
to outputs
• Value-added
- the
term used to
describe the
difference between
the cost of inputs
and the value of
price of outputs
8-2
OM IN BUSINESS
Chapter 8
• 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
8-3
OM STRATEGIC BUSINESS SYSTEMS
Chapter 8
• 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?
8-4
OM STRATEGIC BUSINESS SYSTEMS
Chapter 8
8-5
COMPETITIVE OM STRATEGY
Chapter 8
• 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
8-6
OM AND THE SUPPLY CHAIN
Chapter 8
•
Four basic components of supply chain management
include:
1.
2.
3.
4.
Supply chain strategy – strategy for managing all
resources to meet customer demand
Supply chain partner – partners throughout the supply
chain that deliver finished products, raw materials, and
services.
Supply chain operation – schedule for production
activities
Supply chain logistics – product delivery process
8-7
OM AND THE SUPPLY CHAIN
Chapter 8
• Effective and efficient SCM systems can enable an
organization to:
 Decrease the power of its buyers
 Increase its own supplier power
 Increase switching costs to reduce the threat of substitute
products or services
 Create entry barriers thereby reducing the threat of new
entrants
 Increase efficiencies while seeking a competitive advantage
through cost leadership
8-8
OM AND THE SUPPLY CHAIN
Chapter 8
• Effective and efficient SCM systems effect on
Porter’s Five Forces
8-9
SUPPLY CHAIN FUNDAMENTALS
Chapter 8
• Organizations must embrace technologies that can
effectively manage supply chains
8-10
IT’S ROLE IN THE SUPPLY CHAIN
Chapter 8
• IT’s primary role is to create integrations or tight process and
information linkages between functions within a firm
8-11
IT’S ROLE IN THE SUPPLY CHAIN
Chapter 8
Factors Driving SCM
8-12
SCM SUCCESS FACTORS
Chapter 8
• Segment customers
• Customize the logistics network
• Listen to signals of market demand and plan
•
•
•
•
accordingly
Differentiate products closer to the customer
Strategically manage sources of supply
Develop a supply chain IT strategy
Adopt performance evaluation measures
8-13
FUTURE SUPPLY CHAIN TRENDS
Chapter 8
Fastest growing SCM components
•




Supply chain event management (SCEM)
Selling chain management
Collaborative engineering
Collaborative demand planning
8-14