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Chapter 1 - Operation and Supply Chain Menagement

Operations and Supply Chain Management (OSCM) involves the design, operation, and improvement of systems that create and deliver products and services, focusing on efficiency and effectiveness. The field is dynamic, requiring strategies that align consumer preferences with complex supply networks while emphasizing sustainability. Key processes include planning, sourcing, making, delivering, and returning, with a focus on continuous improvement and adapting to global market changes.

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3 views4 pages

Chapter 1 - Operation and Supply Chain Menagement

Operations and Supply Chain Management (OSCM) involves the design, operation, and improvement of systems that create and deliver products and services, focusing on efficiency and effectiveness. The field is dynamic, requiring strategies that align consumer preferences with complex supply networks while emphasizing sustainability. Key processes include planning, sourcing, making, delivering, and returning, with a focus on continuous improvement and adapting to global market changes.

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iannuzzibeatrice
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CHAPTER 1 – OPERATION AND SUPPLY CHAIN

MANAGEMENT

What is a OPERATION AND SUPPLY CHAIN MENAGENT (OSCM) ?


Operations and supply management (OSM): the design, operation, and improvement of the
systems that create and deliver the firm’s primary products and services
-Functional field of business
-Clear line management responsibilities
OMSC is concerned with the management of the entire system that produces a good or delivers a
service
Producing a products involves a complex of series of transformation processes
Success in today’s global markets requires a business startegy that matches the preferences of
consumers with the realities imposed by complex supply networks
OPERATION  refers to manifacturing and servises process that are used to tranform the
resouces implyed by a firm into products desired by constumers
Manifactury process  physical products
Servis process  intangible products
Planning the use of these processes involves analysing capacity, labor and material needs over
time. Ensuring quality and making ongoing improvements to these process are needed to manage
these processes.
SUPPLY CHAIN  refers to the processes that move information and material to and from the
manifacturing and service processes of the firm ( logistic process, warehouse and storage
processes )
Supply chain refers to provinding products and service to plants and warehouse an the input end
and also to supply of products and service to the consumers on the output end of the supply chain.

The field of OSMC is ever changing due to the dynamic nature of competing in global business
and the constant evolution of information technology

Success in today’s global markets requires a business strategy that matches the preferences of
customers with the realities of supply networks
A sustainable strategy is critical
-Meets the needs of shareholders and employees
-Preserves the environment
Supply refers to processes that move information and material to and from the manufacturing and
service processes of the firm
Operations and supply chain PROCESS can be conventionally categorized as :
Planning: the processes needed to operate an existing supply chain strategically
Sourcing: the selection of suppliers that will deliver the goods and services needed to create the
firm’s product
Making: Where the major product is produced or the service provided
Delivering: carriers are picked to move products to warehouses and customers
Returning: the processes for receiving worn-out, defective, and excess products back from
customers

differences between good and service

 innovations in operation is one way managers try to stimulate growth; and it is relatively
reliable and low cost
Efficiency: Doing something at the lowest possible cost.
The goal of an effecient processi s to produce a good or provide a service by using the smallest
input of resurces, These resources are the material , labor, equipment and facilities used in OMSC
processes.

Effectiveness: Doing the right things to create the most value for the company
often maximizing effectiviness and efficiency at the same time create conflict between the two
goals.
EX = efficiency : use the lowest number of employer at the check out line
Effectiviness : minimizing the amount of time customers need to wait in line
Related to the concept of efficiency and effectiviness is the concept of VALUE = quality divided by
price
quality
Value
¿
price ¿
¿
Quality = attractiviness of the product considering its feature of durability
EX : better car without changing price = value up
Better car at a lower price = value goes way up

How does Wall Street evaluate Efficency?


The financial indicators that w.s traks to benchmark companies are called efficency riots.
Benchmarking: is when a company studies the processes of another company to identify
best practices.
The riots are:
1. Net income per emploee that is the income with the taxes
2. Sales per emploee ($) that is the income without the taxes.
3. Recivables Turnover: company's efficiency in collecting sales on credit. A higher
recivables ratio implies either that the company operates on a cash basis, or that it's
extension of credit and collection methods are inefficent. A high ratio reflects a short lapse
between sales and the collection of cash.
RECEIVABLE TURNOVER= ANNUAL CREDIT SALES / AVERAGE ACCOUNTS RECEIVABLE

4. Inventory turnover : averge number of times inventory is sold and repleaced during the
fiscal year. Measurs the company efficency to transform the inventory into sales. It is used to
measure the speed of inventory usage. The higher the better. I high invenotry turnover ratio
can indicate better liquidity .
NVENTORY TURNOVER = COST OF GOOD SOLD / AVERAGE INVENTORY VALUE

5. Asset trunover : measures a firm's efficiency at using its asset in generating


sales revenues, the higher the number, the better.
ASSET TURNOVER = SALES / TOTAL ASSETS

CAREER IN OPERATION AND SUPPLY CHAI MANAGER


People who persue career in OSCN specialize in managing the production and distribution of good
and service, Every organization is dependent on effective performance of this fundamental activity
for its long-term success.
The following are some typical entry-level and staff jobs in OSCM: ( see on book )

HISTORICAL DEVELOPMENT OF OPERATION AND SUPPLY CHAIN MANAGEMENT


= major operatios-related concept that have been popular since 1980s.
The late 1970s and early 80s saw the development of the manifacturing strategy where the
capabilities of a company could be used as strategic competitive weapons to gain advantage over
competing company.
1.Lean manifacturing: refers both to JIN and TQC
 JIT (Just in time) an integrated set of qactivities designed to achive high-volume production
using minimal inventories of parts that arrive exatly when they are need.
 TQC (total quality control) = aggressivly seeks to eliminate causes of production defects
2.Total quality management (TQM): Managing the entire organization so hat it excels on all
dimentions of products and services that are important to the constumer.
3.Total quality certification (TQM) = menaging the entire organization so that it excels on all
dimension of products and serveces that are important to the consumers
4.Business process reengineering ( BPR) : an approach to improving business processes that
seek to make revolutionary changes as opposed to small changes, eliminating non value added
steps and computerizing the remaining ones.
5.Six-sigma quality : a statistical term to describe the quality goal of no more than 3.4 defects out
of every million units. Also refer to a quality improvement philosofy and program
6. Supply chain management: managng the flow of information. materials and services from raw
materials suppliers to factories and wharehouses, to the final customer. Mass customization = the
ability to produce a unique product exactly to a particular customer’s requirements.
7. Electronic commerce: refers to the use of the internet as an essential element of the business
activity, the use of web pages has changed the way people collect informations shop and
comunicate and also the way of operating of the managers.

Sustainability and the triple bottom line: Sustainability is the ability to meet the current
resource needs without compromising the ability of future generations of compromising their needs
while the triple bottom line it's a buisnes strategy that includes social, economic and environmental
criterias

CURRENT ISSUES IN OPERATION AND SUPPLY CHAIN MANAGEMENT

- Coordinating the relationship between mutually supportive but separate


organizations.
 Optimizing global supplier, production and distribution networks
 Managing customer tuch points
 Raising senior management awareness of operations as a competitive weapon
 Sustainability and the triple bottom line -->( economic / social / natural of a company )

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