OPERATIONS MANAGEMENT

Ms. Naheed Ghaffar

M. Phil Supply Chain Management

Week # 02 : Supply Chain in Operation Management

Supply Chain Management ? Management of Supply chain Network
Supply Chain Network ? Network of Inter-related Firms
Network of Inter-related Firms? Firms that are related with Producer
Who is Producer (Manufacturer or Service provider)?
The Focus Firm or
the Firm in observation to identify it’s
Supply chain

Who are Inter-related firms ?

No firm (Producer) works in vacuum.
It work with other firm.
They have their specific stages/roles in SC Network like
Supplier-Producer-Distributor- Retailer – Logistics - Customer
Definitions
Product : Goods or Services that are produced to sale in
target market. Product
Types

Commodity Services

Producer : Any Firm, company, person, or a country – who

produces a product to sale in market
Production : it a process of producing goods and services.
Example Manufacturing for goods, operations for services
Production
Types

Manufacturing Operations to
to produce produce
Commodity Services
Process : Sequential activities or step by step sequence of
activities to achieve a specified target/objective
 Company = is the collection of Departments

Department’s Categories based on

Activities

Primary Activities Secondary or Support Activities

Plan Accounts and Finance

Source – Purchase or HR
Procurements or Buying
IT
Store
Etc….
Make - Production

Ware house – DC Note : Service Product is

Produced as Result of all
Deliver – Sales and Marketing Operations in Each
Department
Return – Reversal
Business Model
 Activities – the work in
each Department

Operations – set of related activities to get specific

result and The Operations should be systematic

Why Systematic – systematic work for Excellent Results

What is System

Input Process Output

3-10 2 - Process = the

method of doing 1 = Output is Product or End
Business Resources work Result/Solution - For Customer

Dis-satisfy Satisfy

Note : it’s a Link of System

with (1-10)10 critical and Reject – look for feed Accept
back for the required
strategic Decision Areas of Change in Process or
Operations Input to Improve the
System
Shown in next slide
The SCOR Model for A Single Company

Plan Source Make Deliver Return

SCOR was developed in 1996 by the management consulting firm PRTM and endorsed
by the Supply-Chain Council (SCC)

FLOWS of Supply Chain Management :The 3 main elements which

flows between different Functional Departments of an Organization

1. Materials [Store, plant, warehouse….]

2. Funds [Finance - Funds based ] Internal and

External SC
Management
3. Information [Sales, Pricing & CSD ]

ERP- Enterprise Resource Planning is the tool to integrate all functional activity
INFORMATION of the business. Giving Technology Enabled visibility. Bringing Supply
Chain Excellence
SCOR MODEL DEFINING MANAGEMENT
PROCESSES OR FUNCTIONS
 LOCAL SUPPLY CHAIN TO GLOBAL SUPPLY CHAIN
PLAN

OF MANAGEMENT

SOURCE MAKE DELIVER

OF RAW
A PRODUCT VIA DISTRIBUTOR, RETAILER
MATERIAL
COMMDITY-COMM/SER-COMM=SER-
OR DIRECT
SER/COMM-SERVICE

RETURN TO RETURNS FROM

DEALS WITH SC
SUPPLIERS INTERNAL STAFF CUSTOMERS
PARTNERS

DEPARTMENT PROCUREMENT PRODUCTION MARKETING

BUYING/PURCH
MANUFACTURING / OPERATIONS SALES
FUNCTION OF ASE
LOCAL
TRADE TYPE LOCAL SALES
PURCHASE

INTERNATIONA
INTERNATIONAL SALES-
GLOBAL SUPPLY CHAIN L PURCHASE -
EPXORT
IMPORT

PAYMENTS TO RECEIVINGS FROM

FUNDS SUPPLIERS CUSTOMERS
BALANCE OF TRADE IMPORTS = EXPORT
'-VE BOT -TRADE A/PAYABLES A/RECEIVABLE FROM
DEFICIT- UNFAVORABLE FOR IMPORT EXPORT
'+VE BOT -TRADE A/PAYABLES A/RECEIVABLE FROM
SURPLUS- FAVORABLE FOR IMPORT EXPORT
A value chain is a set of activities that a firm operating in a specific industry performs
in order to deliver a valuable product for the market
The concept comes through business management and was first described by Michael
Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior
Performance.[1]
The idea of the value chain is based on the process view of organizations, the idea of
seeing a manufacturing (or service) organization as a system, made up of subsystems
each with inputs, transformation processes and outputs. Inputs, transformation
processes, and outputs involve the acquisition and consumption of resources – money,
labour, materials, equipment, buildings, land, administration and management. How
value chain activities are carried out determines costs and affects profits.
— IfM, Cambridge

Value chain analysis is a strategy tool used to analyze internal firm activities. Its
goal is to recognize, which activities are the most valuable (i.e. are the source of cost
or differentiation advantage) to the firm and which ones could be improved to
provide competitive advantage.
The concept of value chains as decision support tools, was added onto the
competitive strategies paradigm developed by Porter as early as 1979.[dubious – discuss][3] In
Porter's value chains, Inbound Logistics, Operations, Outbound Logistics, Marketing
and Sales, and Service are categorized as primary activities. Secondary activities
include Procurement, Human Resource management, Technological Development and
Infrastructure (Porter 1985, pp. 11–15).[1][2]
Understanding Business Functions of Single Company/ Producer
(Value Chain Analysis) with its integrated Supply Chain

Support Functions HR, IT, Accounts, R&D,CSD, Logistics, etc

/Activities

Primary Functions /
Activities Plan Source Make/Produce Delivery Return
(SCOR Model)

Integration in
Supply Chain Supplier - Manufacturer- Distributor-Retailer
Network / Producer -Consumer

Different inter-related companies collaborates and integrate to form a Supply Chain

Network for their mutual benefits. SC Companies built a successful partnership to
improve service and reduce the cost of product for End user
By focusing the End User Product – Supply Chain for that Product can be identified
SC for Packed Masalah – Consumer-Logistics- Retailer-Distributer-Manufacturer-Supp
 SUPPLY CHAIN PARTNERS :
Company = Organization or Firm or Business or Enterprise
No company works in vacuum and has its Partners. It Works with other companies (partners) and forms its Supply
Chain Network.
Supply Chain Network : is the network of inter-related companies
These inter-related companies/organizations/firms work together to form a Supply Chain Network means
A Company
- buys raw material from one company (its Supplier) and
- than transform those raw materials to produce a finished product (becomes Producer)
- than sale it to another company (its Customer) .
( Producer means the company who produce a product)
These companies can be called as partner to each other
Minimum Supply Chain Partners : Supplier – Producer – Customer/Consumer
Extended Supply Chain Partners = Supplier – Producer – Distributor – Retailer – Customer -Logistics
Where to start to identify or to design the Supply Chain Network?
Focus Company / Reference Company :
Although Each company is producer as it produces a product to sell it to customer.
But only The Organization under observation or focus is called Producer.
Like DHL, Emirates Airline, Nestle…etc
Supply Chain Stages = Sequence of Supply Chain Partners and show Roles of each company
Supplier – Producer – Distributor – Retailer – Customer –Logistics
For Example our Focus company is Nestle than its Supply Chain Network world be like this
: Suppliers of Nestle – Nestle – Distributor of Nestle – Retailer of Nestle – Customer of Nestle Logistics
provider of Nestle
So Minimum size Supply Chain consist : Supplier – Producer – Customer
Extended Supply Chain :
Note : Distributor and Retailers are optional or depend on Supply Chain Network Design
 Supply Chain Management is the Management of Supply Chain Network Partners

Producer = Focus Company = Nestle

Supply Chain Network of Partners

Minimum Supply Chain Network Partners Extended Supply Chain Network Partners

Supplier means Suppliers of Supplier means Suppliers of

Producer Producer

Producer Producer

Customer means Customers Distributor means Distributor of

of Producer Producer

Retailer means Retailer of

Producer

Customer means Customers of

Producer
 Supply Chain Management for a Producer’s (Focal Firm’s ) Product
Stages or Roles of Inter-related Firms of Supply Chain
Activities or Functions Performed at this Stage
Supply Chain Management

Producer –
Supplier Distributor Retailer Logistics Consumer
Focal Firm

B2B B2B - Consumption

B2B B2B – Bulk
Purchase / Medium Storage/ Ware Level
Purchase Purchase
Grow Purchase Housing / Purchase
DC
Transform Transform
Hold Hold Consumes
/Hold to Produce

Movement via
Packing / Transportation
Packing Repacking Repacking
Repacking

Sale B2B or
B2B OR Sale B2C as
Sale B2B B2C as
B2C Sale Vendor
Vendor
 Industry Suppliers Distribu Retailers Logistics Customer
Product Producers tors s

Parcel shipping Courier Various air lines, DHL, FedEx, TCS Country- Franchise Shipping Organizatio
Service transporters wise or line. Airline, ns have
Agent’s Collections trucks.. Time
Head Points sensitive
Office shipments
By Sea - Moving Shipping Ship Parts APL, MAERSK, MSC, Shipping Freight All or by Importers,
cargos Producers COSCO Agency Forwarders Ship only Exporters

Cars Auto cars Parts providers BMW, Honda, Suzuki World Multiple
wide DC show
rooms in
cities