Operations and Supply Chain Management Week 1
Operations and Supply Chain Management Week 1
Operations and Supply Chain Management Week 1
Chapter 1
1. INTRODUCTIONS – THE ELEMENTS OF OSCM
Goods:
1. a good is a tangible output of a process that has physical dimensions.
2. Goods are generally produced in a facility separate from the customer.
3. Goods, can be produced to meet very tight specifications day-in and day-out with
essentially zero variability
4. Goods not time dependent so they can be stored.
2. CAREERS IN OSCM
Jobs abound for people who can do this well since every organization is dependent on effective
performance of this fundamental activity for its long-term success. The following are some
typical jobs in OSCM:
- . Plant manager—Oversees the workforce and physical resources (inventory, equipment,
and information technology) required to produce the organization’s product.
- . Hospital administrator—Oversees human resource management, staffing, supplies, and
finances at a health care facility.
- Branch manager (bank)—Oversees all aspects of financial transactions at a branch.
- . Department store manager—Oversees all aspects of staffing and customer service at a
store.
- . Call center manager—Oversees staffing and customer service activities at a call center.
- . Supply chain manager—Negotiates contracts with vendors and coordinates the flow of
material inputs to the production process and the shipping of finished products to
customers.
- . Purchasing manager—Manages the day-to-day aspects of purchasing, such as invoicing
and follow-up.
- . Logistics manager—Oversees the movement of goods throughout the supply chain.
- . Warehouse/distribution manager—Oversees all aspects of running a warehouse,
including replenishment, customer order fulfillment, and staffing.
- . Business process improvement analyst—Applies the tools of lean production to reduce
cycle time and eliminate waste in a process.
- . Quality control manager—Applies techniques of statistical quality control, such as
acceptance sampling and control charts, to the firm’s products.
- . Lean improvement manager—Trains organizational members in lean production and
continuous improvement methods.
- . Project manager—Plans and coordinates staff activities, such as new-product
development, new-technology deployment, and new-facility location.
- . Production control analyst—Plans and schedules day-to-day production.
- . Facilities manager—Ensures that the building facility design, layout, furniture, and
other equipment are operating at peak efficiency.
ELECTRONIC COMMERCE
The quick adoption of the Internet and the World Wide Web during the late 1990s was
remarkable. The term electronic commerce refers to the use of the Internet as an essential
element of business activity.
BUSINESS ANALYTICS
Business analytics involves the analysis of data to better solve business problems. Not that this is
something new: Data has always been used to solve business problems. What is new is the
reality that so much more data is now captured and available for decision-making analysis than
was available in the past. In addition, mathematical tools are now readily available that can be
used to support the decision-making process.
CURRENT ISSUES IN OPERATIONS AND SUPPLY CHAIN MANAGEMENT
1. Coordinating the relationships between mutually supportive but separate organizations.
2. Optimizing global supplier, production, and distribution networks.
3. Managing customer touch points.
4. Raising senior management awareness of OSCM as a significant competitive weapon.
DDD
4. EFFICIENCY, EFFECTIVENESS, AND VALUE
EFFICIENCY - A ratio of the actual output of a process relative to some standard. Also, being
“efficient” means doing something at the lowest possible cost.
EFFECTIVENESS - Doing the things that will create the most value for the customer.
VALUE - The attractiveness of a product relative to its price.
A third efficiency ratio measures the number of times receivables are collected, on average,
during the fiscal year. This ratio is called the receivables turnover ratio, and it is calculated as
follows:
The receivables turnover ratio measures a company’s efficiency in collecting its sales on credit.
Accounts receivable represent the indirect interest-free loans that the company is providing to its
clients. The lower the ratio, the longer receivables are being held and the higher the risk of them
not being collected.
Another efficiency ratio is inventory turnover. It measures the average number of times
inventory is sold and replaced during the fiscal year. The inventory turnover ratio formula is:
This ratio measures the company’s efficiency in turning its inventory into sales. Its purpose is to
measure the liquidity or speed of inventory usage. This ratio is generally compared against
industry averages.
Factors such as order lead times, purchasing practices, the number of items being stocked, and
production and order quantities have a direct impact on the ratio.
The final efficiency ratio considered here is asset turnover. This is the amount of sales generated
for every dollar’s worth of assets. The formula for the ratio is:
Asset turnover measures a firm’s efficiency at using its assets in generating sales revenue—the
higher the number, the better. It also indicates pricing strategy: Companies with low profit
margins tend to have high asset turnover, while those with high profit margins have low asset
turnover.
These ratios can be calculated from data in a firm’s annual financial statements and are readily
available on the Internet from websites such as AOL Finance.