Week 9 - Chapter 8 - Operations Management and Supply Chain

Chapter 8 Weekly Questions

1. Define the term operations management
(OM)

Operations management, is the management and responsibility of systems or processes that convert/transform resources into goods and services. That is, identifies strategies to turn inputs into outputs.

Three Foundational Components of Operations Management; Product Design (planning the processes and design of the product or service) Product Development (i.e manufacturing, turning inputs into outputs), Supply Chain (the processes involved, directly or indirectly, in the procurement of a product or raw material). This photo is available on: http://www.ocw.nur.ac.rw/NR/rdonlyres/Global/4/485BFEBE-85DD-49B7-9E93-802DA4390769/0/chp_ops_mgt_foundation.jpg.

Turning inputs into outputs through the implementation of design, plan, scheduling and improvement of the product or service. This photo is available on: http://www.sussex.ac.uk/Users/dt31/TOMI/images/om-model.gif

2. Explain operations management’s role in business

Operations management is responsible for managing the core processes used to manufacture goods and produce services. OM perform the following activities; forecasting, capacity planning, scheduling, managing inventory, assuring quality processes, motivating, training employees, and locating facilities. Reviewing these activities for any service will allow a business to understand how an operations management team adds value.

Watch: http://www.youtube.com/watch?v=LeeTy3YaMu0, to identify and learn more about the role of operations management, how it plays a part in every product and service in the world.

Watch: http://www.youtube.com/watch?v=hT6LnqNe-NI&feature=related. The significance of operations management in the world and in every business.

3. Describe the correlation between operations management and information technology


Managers use IT to influence OM decisions, these include: productivity, costs, flexibility, quality and customer satisfaction. Benefits of IT on OM is in making operational decisions as OM’s influence over an organization is crucial to objectives and goals for a firm. OM information systems are critical for managers to be able to make strategic decisions. A large amount of information and activity is involved within the role of OM, therefore OM rely heavily on information systems to provide them with the visibility over an organization, that is, for example, processes are either productive or nonproductive. Information systems enables OM to identify:

- What types of resources or employees they need. Also what will be needed and what amounts.

- How much resources are needed or how will be the product or service be designed. How will business processes such as wireless technology track customers, giving real time information to the firm for decision making.

- When will each resource be needed (scheduling) or when will materials be ordered. Further, ensuring adequate inventory is available, implementing a just in time method for ordering supplies.

- Where will work be performed, i.e. OM chooses best locations to work, eg close to transport, close to suppliers.

- Who will perform work i.e. either firms are going to insource or outsource

4. Explain supply chain management and its role in a business


Supply chain are sequences or processes involved in the production and distribution of a commodity ie all the links involved, in the procurement of a product or raw material, that is having goods and services moving information backwards and forwards (upstream, downstream). Supply chain management involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability. i.e flow of produces from suppliers to manufactures to distributors to retailers to customers. A productive supply chain enables a firm to decrease cost of goods sold and become efficient in manufacturing, supplying and distributing goods and services.

watch: http://www.youtube.com/watch?v=Mi1QBxVjZAw. What is supply chain management?

5. List and describe the five components of a typical supply chain


Movement of materials from raw materials to finished goods.

1. Plan (focusing on Customers)– companies must have a plan for managing resources that go toward meeting customer demands for products or services.

2. Source (Supplier) – companies choose reliable suppliers that will deliver goods and services required for making products, either outsource or insource. Companies also develop set pricing, delivery and payment with suppliers.

3. Make (Manufacturer) – companies manufacture their products or services, such activities for production include: testing, packaging and preparation for delivery.

4. Deliver (Distributer) – logistics – the processes that plans how a product or service is to be delivered and ensuring effective processes from distributers to retailers then customers

5. Return (Retailer) – companies ensure they have enough inventory and there not defective, organisations can implement a just in time method for inventory. If companies have excess products then they must have a way for returning these products.

Steps of a supply chain - available: http://www.hoyer-group.com/en/images/supplychain.gif & http://dspace.mit.edu/bitstream/handle/1721.1/39816/ESD-260JFall2003/NR/rdonlyres/Engineering-Systems-Division/ESD-260JFall2003/C63EDF2B-1583-46F8-A430-5A2330821E3A/0/chp_supchain.jpg

6. Define the relationship between information technology and the supply chain.

Advancements in technology including the five SRM components have significantly improved companies forecasting, scheduling and business operations. Integrated systems provide companies with greater visibility over the supply chain inventory levels. IT’s primary role is to create integrations or tight process and information linkages between functions within an organization such as creating tight process and communication between the sales department, the marketing department, etc. This will allow for a smooth, effective flow of information and service of products between customers, suppliers and transportation across the supply chain.

The Supply chain is very complex and it involves movement of materials, information and funds up and down stream along the chain. IT gives firms visibility of inventories, it helps manage complexity & information flows between suppliers are more accuarate and faster. Wireless technologies are helping with inventory tracking and auditing such as RFID.

Supply chain management relies on IT to make accurate decisions regarding each step in the supply chain, i.e, enabling the firm to identify decisions surrounding, forecasting, scheduling, and additional business processes.

Example, imported extranet, each stage of the supply chain companies use electronic data in exchange, meaning systems from suppliers can see systems from manufactures, and triggeres of events such as if too much supply exists, an organisation can hold back supply. This allows for a more efficient supply chain and further reduces cost of goods sold.

Disintermediation refers to the situation when intermediaries are removed from the supply chain, cutting out specific processes within the supply chain. For instance, if you buy a product from eBay, the retail store is not required in the process, thus cost effective and efficient for the customer and firm. IT can identify steps in the supply chain that aren't effective and can eliminate and discover new ways of cutting costs and making a product more effective.