Introduction to Operations and Supply Chain Management PDF (2022)

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(Video) Introduction to Supply Chain Management

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Introduction to Operations and Supply Chain Management

1. Introduction to Operations and Supply Chain Management

1.1. Why study Operations and Supply Chain Management?

Three reasons:

1.Every organization must make a product or provide a service that someone values

Each organization has an operations function/ operations

This is the collection of people, technology and system in an organization that has primary
responsibility for providing the organization’s products or services

2.Most organizations function as part of larger supply chains

Supply chain= network of manufacturers and service providers that work together to create
products or services needed by end users

Manufacturers are linked together through physical, information and monetary flows

Much supply chain activities are conversion, storage and movement of materials and products

Supply chains link together the operations functions of many different organizations to provide
real value to consumers

3.Organizations must carefully manage their operations and supply chains in order to prosper and
survive

Organizations faces many decisions with regards to its role in the supply chain

The right choice can lead to higher profitability andincreased market share

The wrong choice can cost the company dearly or even put it out of business

Operations Management

Traditional way to think about operations is as a transformations process

Inputs (Materials, intangible needs, information’s likedemand forecast)

Transformation Process (manufacturing operations, service operations)

Outputs (tangible goods, fulfilled needs, satisfied customers, intangible services = nicht greifbar
-> law firm)

Operations areoften highly dependent on the quality and availability of inputs

Nearly all operations activities require coordination with other business functions-> cross
functional decision making

Operations management activities are information and decision intensive

(Video) Module 1: What is Supply Chain Management? (ASU-WPC-SCM) - ASU's W. P. Carey School

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Operations Management = the planning, scheduling and control of the activities that
transform inputs into finished goods and services

Operations management decisions can range from long-term, fundamental decisions to more
immediate issues

With operations management, organizations hope to provide the best value to their costumers
while making the best use of resources

Supply Chain Management (SCM)
Operations management mostly focuses on managing its own operations

But managers must also understand how the company is linked with the operations of its
suppliers, distributors and costumers-> supply chain

Organizations in supply chain are linked through physical, information and monetary flows

Flows go both up and down the chain-> flows go both ways

INBEV returning empty pallets to its firs-tier supplier-> flow of physical goods back up the
supply chain

Most of the participants in a supply chain are both customers and suppliers

Supply chain must be very efficient

Supply chains are not new
Supply chain management = active management of supply chain activities and relationships
in order to maximize customer value and achieve a sustainable and competitive advantage

It represents a conscious effort by a firm or a group of firms to develop and run supply
chains in the most effective and efficient way possible

Supply Chain Reference model (SCOR)

It is a framework, developed by the Supply Chain council, that seeks to provide standard
descriptions of the processes, relationships and metrics that defineSCM

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According to SCOR-model, SCM covers five broad areas:

1.Planning activities:to balance demand requirement against resources and communicate
these plans to all the participants

2.Sourcing activities:identifying, developing and contracting withsuppliers and scheduling
the delivery of incoming goods and services

3.Productions activities:actual production of a good or service

4.Delivery activities:all the activities from entering customer orders and determining
delivery dates to storing and movinggoods to theit final destination

5.Return activities:activities necessary to return and process defective or excess products or
materials

Walmart is one of the earliest proponents of SCM (1980er and 1990er)

Stores sent daily sales information’s to Walmart to use them for the production

Dedicated fleet of trucks to ship good from warehouse to store in less than 48 hours

They replenish store inventories twice a week

Result: better customer service (products always available), lower production and
transportation cost (suppliers made and shipped only what was needed) and better use
of retail store space

Now many retailers make multiple shipments to stores each day based on continuous sales
updates

Two cases:

1.One very powerful firm took primary responsibility for improving performance across its
own supply chain-> Walmart

2.Companies within an industry form councils or groups to identify and adopt supply chain
practices that will benefit all firm in the industry

Automotive Industry Action Group (AIAG): provide an open forum where members
cooperate in developing and promoting solutions than enhance the prosperity of
the automotive industry

4
Grocery Manufacturers of America (GMA)

Supply Chain Council (SCC): improve supply chain performance across many
industries

1.2. Important Trends

Operations management and SCM require interaction and trust between companies

Three developments made operations and supply chain management so important for
managers:

1.Electronic commerce

2.Increasing Competition and Globalization

3.Relationship management

Electronic Commerce
Use of computer and telecommunications technologies to conduct business via electronic
transfer of data and documents

Breakthroughs in information technology have made instantaneous communications across
supply chain partners a reality

It linked together suppliers, manufacturers, distributors, retail outlets and customers regardless
of location

Provide visibility into incoming shipments and delays

Increasing Competition and Globalization

Rate of changein markets is escalating

So managers must make decisions on shorter notice with less information and higher penalty
costs if they make mistakes

Customers want quicker delivery and services suited to their individual needs

New competitors entering markets

Increasing Competition and Globalization have given opportunities to many firms to break
away from the pack

Relationship Management
The improve supply chain performance you need the cooperation with other firms->
companies invest more in relationshipmanagement

But relationship management is difficult and poor relationships in the supply chain have
disastrous consequences for all the members

5
Organizations must manage the relationships with their upstream suppliers and
downstream costumers

1.3. Operations and Supply Chain Management to you

Many careers option

Professionals Organizations can help

1.APICS: Association for Operations Management

Society for persons interested in operations and supply chain management; In USA

2.ISM: Institute for SupplyManagement

Provide national and international leadership in purchasing and materials management

3.CSCMP: Council of SCM Professionals

Providing worldwide leadership for the evolving logistics profession through the
development, dissemination and advancement of logistic knowledge

4.ASQ: American Society for Quality

Education and quality improvement

Operations and SCM work together with other functions in firms and are nor working in a
vacuum

1.4. Chapter Summary

Every organization must provide a product or service that someone values

Primary responsibility of the operations function

Most organizations activities are linked with those of other organizations through supply chains

You need management of operations and suppl chain

2. Operations andSupply Chain Strategies

2.1. Elements of the Business

Business elements include structural and infrastructural elements

1.Structural Elements

Tangible resources such as buildings, equipment and information technology

these resources require large capitalinvestment that are difficult to reverse

high cost and inflexibility
structural elements are changed infrequently and after much deliberation

(Video) Chapter 1: Operations & Productivity

6
2.Infrastructural Elements

People, policies, decision rules and organizational structure choices made by thefirm

Elements are often not visible but very important

All the elements must work together

Businesses need to ensure that their decisions are appropriate and consistent with one another

Strategy is necessary

2.2. Strategy

Strategy= a mechanism bywhich a business coordinates their decisions regarding their
structural and infrastructural elements

Do many things well not only a few

Integrating

Strategies are long-term game plans (several years ore more)

Most organizations have many levels of strategy from upper-level business strategies to
more detailed ones

When organizations have different businessesthey have an overall corporate strategy
and individual business unit strategies

Mission statement =explains why an organization existit describes what is important to the
organization, called it core values, and identifies the organization’s domain

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Example: mission statement = Become a world-class competitor in our industry

Business strategy = Increase our European businesspresence

Functional level = develop a European source for raw material x

Business Strategy =strategy that identifies a firm’s targeted customers and sets time frames and
performance objectives for the business

Business Strategy parts,which are relevant for operations and SC-strategies:

1.Identify the firms targeted customers and indicate wat the operations and supply chain functions
need to do to provide value to these customers

2.Set time frames and performance objectives than managers can use to track the firm’s progress
toward fulfilling its business strategy

3.Identify and support the development of core competencies in the operations and supply chain
areas

Core Competencies =organizational strengths or abilities, developed over a long period, that
customers find valuable and competitors find difficult or impossible to copy

Could also be the ability to manage its supply chain partners

Functional Strategy =translate a business strategy into specific actions for functional areas suchas
marketing, ...

Supply chain strategy might address the manufacturing or service process

A firm’s strategy should also be aligned across the functional areas

Many functionallevel strategies (new product development) are described as cross-
functional because the responsibility often reside in multiple areas

2.3. Operations and Supply Chain Strategies

Operations and Supply Chain Strategy =functional strategy that indicates how structural and
infrastructural elements within the operations and supplychain areas will be acquired and
developed to support the overall business strategy

Executing successful operations and supply chain strategies means choosing and implementing the
right mix of structural and infrastructural elements

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Three primary objectives of an operations and supply chain strategy:

1.Help management choose the right mix of structural and infrastructural elements, based on a clear
understanding of the performance dimensions valued by customers and the trade-offs involved

2.Ensure that the firms structural and infrastructural choices are strategically aligned with the firm’s
strategy

3.Support the development of core competencies in the firm’s operations and supply chains

Customer Value

Must customers evaluateproducts and services based on multiple performance dimensions
such as performance quality and delivery speed

The organizations that provide the best mix of these dimensions will have the highest value

Example for calculating value:

1.Choose categories andgive the numbers for the importance (1 = not important, 5
=very)-I

2.Give the company’s grades for the category’s (1= poor, 5= excellent)-P

3.V (Value) = Summe (IxP)

Four Performance Dimensions

1.Quality

2.Time

3.Flexibility

4.Cost

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FAQs

What is operations management and supply chain? ›

Operations and Supply Chain Management (OSCM) includes a broad area that covers both manufacturing and service industries, involving the functions of sourcing, materials management, operations planning, distribution, logistics, retail, demand forecasting, order fulfillment, and more.

What is supply chain operations PDF? ›

“Supply chain management (SCM) is the process of planning, implementing, and. controlling the operations of the supply chain with the purpose to satisfy customer. requirements as efficiently as possible. Supply chain management spans all. movement and storage of raw materials, work-in-

What is supply chain management and introduction? ›

Supply chain management (SCM) is the discipline that manages the flow of supplies through all of the stages of a production cycle. SCM applies to any organization that executes projects, produces goods or provides services, as those activities require a supply chain to maintain a steady flow of resources.

What is the importance of operations and supply chain management? ›

Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand.

What are the 4 types of operations management? ›

Every business operates along four basic focus dimensions: finance, customers, internal processes, and learning and innovation. These theoretical divisions of operations management come from the research of Robert S. Kaplan and David P.

What are three 3 aspects of operations and supply chain management? ›

The three levels of supply chain management are strategic, tactical and operational.
  • Strategic Planning. This level of supply chain management is responsible for developing long-term plans that outline the company's overall objectives and goals. ...
  • Tactical Planning. ...
  • Operational Execution.

What are the 3 basic supply chain? ›

There are three main flows of supply chain management: the product flow, the information flow, and the finances flow. The Product Flow – The product flow involves the movement of goods from a supplier to a customer. This supply chain management flow also concerns customer returns and service needs.

What are the 5 basic steps of supply chain management PDF? ›

Supply management is made up of five areas: supply planning, production planning, inventory planning, capacity planning, and distribution planning.

What are the 4 components of supply chain management? ›

What are the components of your supply chain you should be focusing on right now?
  • INTEGRATION. Integration starts at your strategic planning phase and is critical throughout your communications and information sharing and data analysis and storage. ...
  • OPERATIONS. ...
  • PURCHASING. ...
  • DISTRIBUTION.

What are the 7 supply chain functions? ›

The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service. Today, many supply chains are global in scale. Effective supply chain management results in lower costs and a faster production cycle.

What is the relationship between operations and supply chain? ›

The primary difference between supply chain management and operations management is that the supply chain deals with materials that are received or sent from external places and operations management is more involved with the internal processes.

What are examples of supply chain operations? ›

Examples of supply chain activities include farming, refining, design, manufacturing, packaging, and transportation.

What is the main objective of supply chain management? ›

The basic objective of supply chain management is to ensure minimum cost and maximum efficiency in every aspect of handling of raw material, component parts and finished goods as they move from production centre to the final consumer.

What are the 5 basic principles of operation management? ›

At the most fundamental level, management is a discipline that consists of a set of five general functions: planning, organizing, staffing, leading and controlling. These five functions are part of a body of practices and theories on how to be a successful manager.

What are the 3 roles of operations management? ›

The term operations management encompasses planning, implementing, and supervising the production of goods or services.

What are types of operations? ›

The main types of business operations are production, procurement, quality assurance, and customer service. Managing business operations includes using various resources such as employees, raw materials, and equipment to develop an efficient production of the final good or service.

What are the five pillars of supply chain management? ›

The five pillars of supply chain resilience
  • Pillar 1 – Vulnerability. ...
  • Pillar 2 – Management Culture. ...
  • Pillar 3 – Procurement. ...
  • Pillar 4 – Operations. ...
  • Pillar 5 – Demand & Visibility.

What are the four flow in supply chain? ›

Integration, operations, purchasing and distribution are the four elements of the supply chain that work together to establish a path to competition that is both cost-effective and competitive.

How many pillars are in supply chain? ›

The three pillars of supply chain management are strategy, service, and cost. Those three pillars alignment could drives satisfaction and confidence among all stakeholders.

What is SCM strategy? ›

Supply chain management (SCM) involves the movement of products and services from suppliers to distributors. SCM involves the flow of information and products between and among supply chain stages to maximize profitability.

What are the stages of supply chain? ›

At their most basic, the key steps in a supply chain include:
  • Original sourcing or extraction of raw materials.
  • Refining or manufacturing materials into basic parts.
  • Assembling basic parts into finished products.
  • Selling finished products to end users.
  • Delivering finished products to end users or consumers.
6 Nov 2018

What is supply chain diagram? ›

A supply chain diagram is a graphic representation or model of the elements of a supply chain as raw materials, information and money flow between suppliers, manufacturers and buyers.

What are the 10 key elements of supply chain management? ›

What are the 10 Basic Elements of Supply Chain Management?
  • Integration. Every business needs strategic planning for the better functioning of operations. ...
  • Operations. ...
  • Purchasing. ...
  • Distribution. ...
  • Agility. ...
  • Innovation. ...
  • Performance Measurement. ...
  • Alignment.
8 Jul 2022

What are the benefits of supply chain? ›

Important benefits of supply chain management
  • Better collaboration with suppliers.
  • Better quality control.
  • Shipping optimisation.
  • Reduced inventory and overhead costs.
  • Improved risk mitigation.
  • Stronger cash flow.
  • A more agile business.
  • Better visibility and data analytics.
26 Jan 2022

What is supply chain in simple words? ›

A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.

What is the most important part of supply chain? ›

Production is one among the most important aspects of this system. It is only possible when all the other components of the supply chain are in tandem with each other. For the process of production to start it is essential that proper planning and supply of goods, as well as the inventory, are well maintained.

Why is it called supply chain? ›

The physical analogy of a long, interconnected set of supplier operations that eventually lead to the shipping of a finished product was first popularized by Keith Oliver at Booz Allen Hamilton.

IS operations management and supply chain management the same? ›

The major difference between supply chain management and operations management is that the supply chain is mainly concerned with what happens outside the company – obtaining materials and delivering products – while operations management is concerned with what happens inside the company.

What is supply chain in simple words? ›

A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product. A supply chain encompasses everything from the delivery of source materials from the supplier to the manufacturer through to its eventual delivery to the end user.

Is supply chain management a good career? ›

Yes, Supply Chain Management is a good career as it offers a plenty of job opportunities with good salaries and a lot to learn ensuring positive growth in career. It is one of the most diverse field in the business sector as it is interconnected with all other functions.

What are the responsibilities of a supply chain manager? ›

What does a supply manager do? Supply chain managers keep track of logistics and update the company's inventory. They analyze operational performance and resolve issues. They also collaborate with vendors and suppliers to ensure all operations (e.g. shipping, delivery) meet quality and safety standards.

What is the relationship between operations and supply chain? ›

The primary difference between supply chain management and operations management is that the supply chain deals with materials that are received or sent from external places and operations management is more involved with the internal processes.

What are examples of supply chain operations? ›

Examples of supply chain activities include farming, refining, design, manufacturing, packaging, and transportation.

What are the four walls of supply chain? ›

There are four major elements of supply chain management: integration, operations, purchasing and distribution. Each relies on the others to provide a seamless path from plan to completion as affordably as possible.

What is another name for supply chain? ›

The terms supply chain management (SCM) and business logistics management—or simply, logistics—are often used interchangeably.

What are the 7 supply chain functions? ›

While supply chain is a very broad career field, it has 7 primary functional areas: Purchasing, Manufacturing, Inventory Management, Demand Planning, Warehousing, Transportation, and Customer Service.

What are the 5 types of supply chain? ›

Here are six types of supply chain models that can drive supply chain management for a business:
  • Continuous Flow. This is one of the most traditional models on the list. ...
  • Fast chain. The fast chain model is one of the new names in supply chain strategies. ...
  • Efficient Chain. ...
  • Agile. ...
  • Custom-configured. ...
  • Flexible.
10 May 2022

Is supply chain management a lot of math? ›

Yes. Many advanced tools and techniques in supply chain planning, such as machine learning, inventory management, predictive maintenance, and automation, all rely heavily on mathematics.

What are the benefits of supply chain? ›

Important benefits of supply chain management
  • Better collaboration with suppliers.
  • Better quality control.
  • Shipping optimisation.
  • Reduced inventory and overhead costs.
  • Improved risk mitigation.
  • Stronger cash flow.
  • A more agile business.
  • Better visibility and data analytics.
26 Jan 2022

Is supply chain management hard to study? ›

Is Studying Supply Chain Difficult? Because supply chain management is so diverse, its learning difficulty will depend on the things you find easy and hard. Below are some scenarios. Fundamental math and language skills can make many of supply chain management's aspects more accessible.

What skills are required for supply chain management? ›

ability to use data to track orders and shipments, sales trends, demand and any weaknesses and inefficiencies. understanding of technology—artificial intelligence, machine learning, Internet of Things, analytics software and apps. soft skills to negotiate and build relationships with suppliers, customers and team ...

What is KPI in supply chain management? ›

Key performance indicators (KPIs) are a set of quantitative metrics that can help you gauge your business' performance over time. Specifically, they enable you to monitor how effectively your organization is achieving its target goals.

Who are the members of SCM? ›

In every supply chain there are: 1) producers; 2) distributors or wholesalers; 3) retailers; and 4) customers or consumers. Supplying customer demand for products and services is the reason for supply chains to exist. In its simplest form, a supply chain is composed of a company and its suppliers and customers.

Videos

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(scmpdf)
2. Introduction to Operations Management Part 1
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3. Lecture 01 Operations Management: Basics
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4. MCQ's on Introduction to Operations and Supply Chain Management (use Headphone for Mobile viewing)
(Dr. Prashant Kalaskar)
5. Supply Chain Management - Hesham Al Araky - |هشام العركي - اللوجستاوي - معني سلاسل الامداد
(Hesham Al Araky اللوجستاوي)
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