Code BUS558

Operations & Supply Chain

Management

Used Textbook
F. R. Chase and R. B. Jacobs, Operations and Supply Chain Management,
17th ed., 2024 OR 16th ed, 2021 Global Edition McGraw-Hill
 Assessment Criteria

Course Requirement Points

Assessment 1 10
Assessment 2 Mid-Term Exam 20
Assessment 3 30
Assessment 4 Final Exam 40
Total 100

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Chapter 1
Introduction
Chapter 1: Introduction
• L O1-1: Identify the elements of operations and supply chain management (O S C M).
• L O1-2: Know the potential career opportunities in operations and supply chain
management.
• L O1-3: Recognize the major concepts that define the operations and supply chain
management field.
• L O1-4: Evaluate the efficiency of a firm.

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 Operations and Supply Chain Management
• Change in business has never occurred at a faster pace in history, and much of
the change has a direct impact on operations and supply chain processes.
• Where a firm locates its operating facilities has a direct impact on the cost of
services and products.
• Reacting to opportunities relative to new platforms for conducting business and
technological innovations are vital to the long-term success of a business.
• That needs designing and operating processes that deliver a firm's goods and
services in a manner that matches customers' expectations.
Southwest Airlines
Turnaround Efficiency
 Southwest Airlines Turnaround Efficiency
§ To be efficient for Southwest, § Southwest jet
§ Getting passengers on a plane quickly can § 4,000 flights a day using 740 planes.
greatly affect an airline's cost. § An average of 5 flights per plane.
§ Considered the fastest at turning a plane § Can do a turnaround in 30 to 55
around, does not assign seats. minutes.
§ the goal is to have its airplanes in the air as § Still spends about 3.75 hours on the
much as possible. ground each day waiting at the gate.

§ Think about this:

§ Any saving in turnaround could mean more
flights per plane per day.
§ More revenue per day.
§ Southwest is a leader in minimizing
turnaround time.

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Introduction—The Elements of O S C M
• Successful firms have a clear and focused idea of how they intend to make
money.
• Whether it be high-end products and services
• Custom-tailored to the needs of a single customer
• or generic and inexpensive commodities bought largely on the basis of cost,
competitively producing and distributing these products is a major
challenge.
• Doing this at low cost while meeting the requirements of demanding
customers.
• Clever integration of a great operations-related strategy.
• Processes to deliver products and services.
• Analytics to support the decisions needed to manage the firm.

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O S C M Specialist Areas

Product
Purchasing. Manufacturing.
design.

Service
Logistics. Distribution.
operations.

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What Is Operations and Supply Chain Management?
• Operations and supply chain management (O S C M),
Is defined as the design, operation, and improvement of the systems that create and
deliver the firm’s primary products and services.

• O S C M is a functional field of business with clear line management responsibilities.

• Operations and supply chain management (O S C M) is:

• A functional field of business.
• Clear line management responsibilities.
• Concerned with the management of the entire production/delivery system.

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Jeans Supply Chain

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 Operations Vs Supply Chain Processes

Operations Supply Chain

• Manufacturing and service • Processes that move

processes used to transform information and material to
resources into products. and from the firm

• Success in today's global markets requires:

• a business strategy that matches the preferences of customers with the realities imposed
by complex supply networks.
• A sustainable strategy that meets the needs of shareholders and employees and
preserves the environment is critical.
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 Categorizing Operations &
Supply Chain Processes

• Operations and supply chain

processes can be conveniently
categorized, particularly from the
view of a producer of consumer
products and services, as planning,
sourcing, making, delivering, and
returning.
• Exhibit 1.3 depicts where the
processes are used in different parts
of a supply chain.

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 Processes needed to operate an
Categorizing Operations & Planning
existing supply chain
Supply Chain Processes Selection of suppliers that will deliver
Sourcing the goods and services needed to
create the firm’s product
• The following describes the work
Producing the major product or
involved in each type of process Making
service
Logistics processes such as selecting
carriers, coordinating the movement
Delivering
of goods and information, and
collecting payments from customers
Receiving worn-out, excess, and/or
Returning defective products back from
customers

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 Differences between Services and Goods
• There are five essential difference between services and goods,
• A service is an intangible process that cannot be weighed or measured, whereas a
good is a tangible output of a process that has physical dimension.
• A service requires some degree of interaction with the customer for it to be a service.
• Services are inherently heterogeneous.
• With the big exception of hard technologies and information technologies.
• Service as a process is perishable and time dependent, and unlike goods, can’t be
stored.
• The specifications of a service are defined and evaluated as a package of features the
effect customer perceptions.

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 • Services can be categorized in four groups
Categorization of Service 1. Businesses impacting human bodies (e.g.,
Businesses salons, fitness center, health center)
2. Businesses that are directed at physical
products (e.g., freight transportation,
laundry)
3. Businesses that are directed at people’s
minds (e.g., advertising, education, arts
and entertainment)
4. Businesses directed at risk and money
management (e.g., insurance, legal services,
banking)
• Product–Service bundling refers to; a company
building service activities into its product
The Goods–Services Continuum offerings for its customers.

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 Careers in O S C M
• O S C M careers specialize in managing Possible Careers in O S C M
the planning, production, and distribution
Department
of goods and services. Plant Hospital Branch
store
manager administrator manager
• An operations and supply chain manager
manager works with people to figure out Quality
Call center Supply chain Purchasing
the best way to deliver the goods and manager manager manager
control
services of the firm. manager
Business
• O S C M jobs are hands-on, working Lean
Project
Production
process
with people and figuring out the best improvement
improvement
manager
control
way to do things analyst
manager analyst
Facilities Chief operating
manager officer
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 Just-in-time (J I T)

Time-Line Total quality control (T Q C)

Lean manufacturing

Depicting When By McDonald

Major O S C M
Concepts
Became Popular

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 Emphasizes how a factory’s capabilities
Manufacturing
could be used strategically to gain
strategy
advantage over a competing company.

The Major
An integrated set of activities designed
Just-in-time to achieve high-volume production using
(J I T) minimal inventories of parts that arrive
Concepts that exactly when they are needed.
Total quality Aggressively seeks to eliminate causes
Define the O S C M control (T Q C) of production defects.
Lean To achieve high customer service with
Field 1 manufacturing minimum levels of inventory investment.

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 Managing the entire organization so
Total quality
it excels in all dimensions of products
management
and services important to the
(T Q M)
customer.
Business An approach to improving business

The Major process processes that seeks to make

reengineering revolutionary changes as opposed to

Concepts that (B P R) evolutionary (small) changes.

A statistical term to describe the

Define the O S C M Six Sigma

quality goal of no more than 3.4
defects out of every million units.
Also refers to a quality improvement
Field 2 philosophy and program.
The ability to produce a unique
Mass
product exactly to a particular
customization
customer’s requirements.

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 Electronic The use of the Internet as an essential
commerce element of business activity.
The ability to meet current resource
The Major Sustainability
needs without compromising the ability
of future generations to meet their
Concepts that needs.
A business strategy that includes
Define the O S C M
Triple bottom
social, economic, and environmental
line
criteria.

Field 3 Business
analytics
The use of current business data to
solve business problems using
mathematical analysis.
Internet of Refers to the billions of devices that
Things are connected to the Internet.

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 Current Issues in Operations and Supply Chain
Management

• Disruptions in global supply chains.

• Uncertainty in global tariffs and regulations.
• Difficulty in hiring and keeping employees.
• Adapting to change in business technology and infrastructure.

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Efficiency, Effectiveness, and Value
Efficiency A ratio of the actual output of a
process relative to some standard.
Also, being “efficient” means doing
• Compared with most of the other ways something at the lowest possible
managers try to stimulate growth- cost.
technology investments, acquisitions, and
major market campaigns, for example- Effectiveness Doing the things that will create the
innovations in operations are relatively most value for the customer.
reliable and low cost.
Value The attractiveness of a product
relative to its price.
Quality the attractiveness of the product,
considering its features and
durability
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 Using Wall Street Efficiency Measures

• Earnings growth is largely a Management Efficiency Ratios

function of profitability. 𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠
𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
• Profits can be increased through 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
higher sales or lower cost.
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
• Highly efficient firms usually do 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑉𝑎𝑙𝑢𝑒
well during recessions.
• Benchmarking—a process in 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑂𝑅 𝑆𝑎𝑙𝑒𝑠
which one company studies the 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
processes of another company (or
industry) to identify best practices. Cash conversion cycle =
Days sales outstanding + Days inventory - Days payables
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Analytics Exercise: Comparing Companies
Using Wall Street Efficiency Measures

Identify which company appears to have the most productive

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