Operations Management Krajewski Chapter 1

Operations Management
(Processes and Supply Chain)

10th Edition.
(Krajewski, Ritzman, &
Malhotra)
Lecturer: M. Avais
Outline of Chapters
Part 1 (Competing with Operations)

Using Operations to Compete
Decision Making Models
Managing Effective Projects
Part 2 (Designing and Managing Processes)

Developing a Process Strategy
Analyzing Process
Managing Quality
Planning Capacity
Waiting Line Models
Managing Process Constraints
Designing Lean Systems
Part 3 (Designing and Managing Supply Chains)

Managing Inventories
Special Inventory Models
Designing Effective Supply Chain
Locating Facilities
Integrating the Supply Chain
Managing Sustainable Supply Chain
Forecasting Demand
Planning and Scheduling Operations
Planning Sufficient Resources
Linear Programming Models
Chapter 1
Using Operations to Compete
1. Operations Management (OM) and Supply
Chain Management (SCM) Across the
Organization.
2. Historical Evolution of SCM and OM.
3. A Process View.
4. The Supply Chain View.
5. Competitive Priorities and Capabilities.
6. Operations Strategy as a Pattern of
Decisions.
7. Addressing the Challenges in OM.
4

Organization.
Operations Management is the systematic design, direction,
and control of processes that transform inputs into services and
products for internal, as well as external, customers.
A Process is any activity or group of activities that takes one or
more inputs, transforms them, and provides one or more outputs
for its customers.
An Operation is a group of resources performing all or part of one
or more processes.
Supply Chain is an interrelated series of processes within and
across firms that produces a service or product to the satisfaction
of customers.
Supply Chain Management* is the synchronization of a firms
processes with those of its suppliers and customers to match the
flow of materials, services, and information with customer
demand.
*The terms supply chain and value chain are sometimes used interchangeably.

Organization.
OM and SCM spreads across all the

department of any organization and
to be a successful manager
understanding and proper execution
of such processes is desirable.
Chief Operating Officer (COO) or Vice
President of Manufacturing are the
titles used in the industry for
operations manager supervising the
whole organizations process.

Organization.

Organization.
In figure 1.1 basic functions like Operations, Marketing,
and Finance are shown.
Finance generate resources and then decide where and
how to invest them and convert them into assets and
material inputs. Operations transforms these inputs into
outputs and then marketing is responsible for producing
sales revenue of the outputs.
Functions such as accounting, information systems,
human resources, and engineering make the firm
complete by providing essential information, services, and
other managerial support.
All these functions provide a strategic directions of the
organization and almost all of these are essential for any
organization.
8
2 Historical Evolution of SCM and

OM
Modern operations and SCM has been around for nearly 200 years.
James Watt invented the steam engine in 1785 and subsequently railroad
facilitated efficient and fast movement of goods.
With the invention of the cotton gin in 1794, Eli Whitney introduced the
concept of interchangeable parts.
These developments and interchangeable machine parts ignited the
industrial revolution in England, rest of the Europe, and USA.
The internal combustion engine, steam-powered ships, metallurgy of iron
making, large-scale production of chemicals, and invention of machine
tools, among others innovations laid the foundations of modern
manufacturing.
Technological breakthroughs were also inspired by the creation of a
mechanical computer by Charles Babbage in the early part of the
nineteenth century.
He also pioneered the concept of division of labor, which laid the
foundation for scientific management of operations and supply chain
management that was further improved upon by Frederick Taylor in 1911.
9

OM
Three other landmark events from the twentieth century define
the history of operations and supply chain management.
First is the invention of the assembly line for the Model T car by
Henry Ford in 1909. The era of mass production was born, where
complex products like automobiles could be manufactured in
large numbers at affordable prices through repetitive
manufacturing.
Second, Alfred Sloan in the 1930s introduced the idea of
strategic planning for achieving product proliferation and variety,
with the newly founded General Motors Corporation offering a
car for every purse and purpose.
Finally, with the publication of the Toyota Production System in
1978, Taiichi Ohno laid the groundwork for removing wasteful
activities from an organization, a concept that we explore further
in this book while learning about lean systems.
10

OM
The recent history of operations and supply chains over the past
three decades has been steeped in technological advances.
The 1980s were characterized by wide availability of computer
aided design (CAD), computer aided manufacturing (CAM), and
automation.
Information technology applications started playing an
increasingly important role in 1990s, and started connecting the
firm with its extended enterprise through Enterprise Resource
Planning Systems and outsourced technology hosting for supply
chain solutions.
Service organizations like Federal Ex- press, United Parcel Service
(UPS), and Walmart also became sophisticated users of
information technology in operations, logistics, and management
of supply chains.
The new millennium has seen an acceleration of this trend, along
with an increased focus on sustainability and the natural
environment.
11
3 A Process View
Process can be considered at the heart of an
organization.
A process can have its own objectives, inputs,
and outputs.
Figure 1.2 (next slide) shows how processes
work in an organization.
Any process has inputs and outputs. Inputs can
include a combination of human resources
(workers and managers), capital (equipment
and facilities), purchased materials and
services, land, and energy.
12
3 A Process View
13
3 A Process View
Figure 1.2 can represent a whole firm, a
department, a small group, or even a single
individual.
Inputs can be from internal (daily sales
report, cooking material for cook in a
restaurant) or external (like fuel for
Deawoo) customers.
Also, outputs can be for internal (preparing
car parts for final assembly) or external
customers (any final products or services).
14
3 A Process View
Almost all of these processes would be presents in
some form or the other in all organizations.
Each one has inputs and uses processes at various
operations to provide outputs. The dashed lines
represent two special types of input:
Participation by customers (students participation
during class discussion) and
Information on performance from both internal and
external sources (customer services, inventory levels).
Managers need all types of information to

administer effectively.
15
3 A Process View
Nested Processes is a concept of a
process within a process.
A process can be divided into subprocesses as one person or one
department may be unable to perform all
parts of the process, or different parts of
the process may require different skills.
Some parts of the process may be
designed for routine work while other parts
may be geared for customized work.
16
3 A Process View
Services and Manufacturing Processes
are the two major types of processes.
Service processes pervade the business
world and have a prominent place in our
discussion of operations management.
Manufacturing processes are also
important; without them the products we
enjoy as part of our daily lives would not
exist. In addition, manufacturing gives rise
to service opportunities.
17
3 A Process View
Continuum of Characteristics
of Manufacturing and Service
18
Processes
3 A Process View
The two main differences are (i) nature of the
output and (ii) degree of contact with the
customers.
In general, manufacturing processes also have
longer response times, are more capital
intensive, and their quality can be measured
more easily than those of service processes.
Manufacturing processes convert materials
into goods that have a physical form we call
products.
19
3 A Process View
1. Physical properties
2. Shape
3. Size (e.g., length, breadth, and height of a rectangular
block of wood)
4. Surface finish
5. Joining parts and materials
. The outputs from manufacturing processes can be
produced, stored, and transported in anticipation of
future demand.
. If a process does not change the five properties of
materials on at least one of these five dimensions, it is
considered a service (or non-manufacturing) process.
. Service processes tend to produce intangible,
perishable outputs.
20
3 A Process View
There can be similarities or presence of
product and service under same roof as in
restaurants or hospitals.
There can be a debate about as how to
classify an organization either
manufacturing or service based
organization.
For this, we have to look at the processes
and know the kind and impact and impact
of that process on the organization.
21

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Operations Management

(Processes and Supply Chain)

Part 1 (Competing with Operations)

Part 2 (Designing and Managing Processes)

Part 3 (Designing and Managing Supply Chains)

1. Operations Management (OM) and Supply

1. Operations Management (OM) and Supply

OM and SCM spreads across all the

1. Operations Management (OM) and Supply

1. Operations Management (OM) and Supply

2 Historical Evolution of SCM and

2 Historical Evolution of SCM and

2 Historical Evolution of SCM and

Managers need all types of information to

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