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26 views

Chapter 1

Uploaded by

prabhnoors392
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Operations and Supply

Chain Management, 2e
Chapter 1: Operations
Management Value Chains
(Collier & Evans, 2021)

Week 1
Learning Outcomes
1. Describe the importance of operations management and strategies
that contribute to the effective management of manufacturing and
service firms.
(Collier & Evans, 2021)

Learning Objectives (1 of 2)

By the end of this chapter you should be able to:

1. Explain the concept and importance of operations management.


2. Explain the differences between goods and services.
3. Illustrate differences and similarities between manufacturing and service activities
4. Define the concept of value and explain how the value of goods and services can be enhanced.
5. Explain how organizations seek to gain competitive advantage and the five key competitive priorities.
6. Summarize the historical development of OM.
7. Describe key challenges facing the operations and supply chain management industry.
(Collier & Evans, 2021)
Operations Management (OM), Part 1

• Science and art of ensuring that goods and services are


created and delivered successfully to customers​
• Includes:​
• Design of goods, services, and the processes
that create them​
• Day-to-day management of processes​
• Continual improvement of goods, services, and
processes
(Collier & Evans, 2021)
Operations Management (OM), Part 2

• Depends on:
• Efficiency
• Cost of operations
• Quality of goods
(Collier & Evans, 2021)
What Do Operations Managers Do?

• Forecasting • Resource and Capacity Management


• Supply Chain Management • Process Design
• Facility Layout and Design
• Job Design
• Technology Selection
• Service Encounter Design
• Quality Management
• Purchasing • Scheduling

• Sustainability
(Collier & Evans, 2021)

Transactions between Buyers and Sellers, Part 1

• Types

• Good: Physical product that a person sees, touches, or consumes


• Durable good: Product that does not quickly wear out and lasts at
least three years
• Non-durable good: Product that perishes and lasts for less than three
years
• Service: Primary or complementary activity that does not directly produce
a physical product
(Collier & Evans, 2021)

Transactions between Buyers and Sellers, Part 2

• Driven by customers and provide value and satisfaction to customers


who purchase and use them

• Standardized or customized to individual wants and needs


(Collier & Evans, 2021)
Goods versus Services, Part 1
(Collier & Evans, 2021)
Goods versus Services, Part 2
(Collier & Evans, 2021)

Value
• Perception of the benefits associated with a good, service, or bundle
of goods and services in relation to what a buyer pays

− Goods or services are perceived favourably by customers if the


ratio of perceived benefits to price to the customer is high
(Collier & Evans, 2021)

Customer Benefit Packages (CBP), Part 1

• Clearly defined set of tangible and intangible features that a customer


recognizes, pays for, uses, or experiences
(Collier & Evans, 2021)
Customer Benefit Packages (CBP), Part 2
(Collier & Evans, 2021)

Value Chain

• Network of facilities and processes

• Describes the flow of materials, finished goods, services, information, and


financial transactions from suppliers

• Through the facilities and processes that create goods and services, and
those that deliver them to the customer
(Collier & Evans, 2021)

Supply Chain

• Portion of value chain that focuses on:

• Physical movement of goods and materials

• Supporting flow of information and financial transactions through the supply,


production, and distribution processes
(Collier & Evans, 2021)
Types of Business Processes
(Collier & Evans, 2021)
How Primary, Support, Supplier and
Management Processes are Related
(Collier & Evans, 2021)

Input-Output Framework of a Value Chain


(Collier & Evans, 2021)
Pre- and Postservice View of the Value Chain
(Collier & Evans, 2021)
Typical Goods-Producing Supply Chain Structure
(Collier & Evans, 2021)

Goods-Producing Supply Chain

• Activities include shipping finished goods to distribution centers (DCs)

• Distribution centers

• Warehouses that act as intermediaries between factories and customers and


ship directly to customers or to retail stores

• Inventory: Raw materials, work-in-process, or finished goods that are


maintained to support production or satisfy customer demand
(Collier & Evans, 2021)

Exhibit 1.11 Seven Eras of Operations Management


(Collier & Evans, 2021)

Sustainability

• Organization’s ability to strategically address current business needs and


develop a long-term strategy to:

• Embrace opportunities and manage risks for products, systems, supply


chains, and processes

• Preserve resources for future generations


(Collier & Evans, 2021)

Perspectives of Sustainability, Part 1

• Environmental sustainability

− Organization’s commitment to the long-term quality of the environment

• Social sustainability

− Organization’s commitment to maintain healthy communities and a


society that improves the quality of life
(Collier & Evans, 2021)

Perspectives of Sustainability, Part 2

• Economic sustainability: Organization’s commitment to:

− Address current business needs and economic vitality

− Have the agility and strategic management to prepare successfully for


future business, markets, and operating environments
(Collier & Evans, 2021)

Analytics and Big Data

• Used to evaluate:

− Operations performance, quality, order accuracy, customer satisfaction,


delivery, cost, environmental compliance, etc.

• Helps make decisions using business analytics

− Business analytics: Process of transforming data into actions through


analysis and insights in the context of decision making and problem solving
(Collier & Evans, 2021)

Current Challenges in OM
(Collier & Evans, 2021)

KEY TERMS, Part 1

• Operations management • Customer benefit packages (CBP)


• Goods • Primary good or service
• Durable good • Peripheral goods or services
• Nondurable good • Variant
• Service • Biztainment
• Service encounter • Value chain
• Moments of truth • Supply chain
• Service management • Process
• Value
(Collier & Evans, 2021)

KEY TERMS, Part 2

• Distribution centers (DCs)


• Inventory
• Sustainability
• Environmental sustainability
• Social sustainability
• Economic sustainability
• Business analytics
(Collier & Evans, 2021)

Summary

• Principles of OM are used in goods manufacturing and production activities


• Goods and services are two major transactions between buyers and sellers
• Evaluating the value of products and customer benefit packages are a part of
OM activities
• OM should focus on developing sustainable business operations
Reference

• Collier, D. A., & Evans, J. R. (2021). Operations and Supply Chain Management. Cengage.

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