• Operations and Supply Management (Operations Management) is the design, operation, and improvement of the systems that create and deliver the firm’s primary
products and services.
o OM is about getting work done quickly, efficiently, without error, and at low cost.
o OM is starts from one end of coordinating the purchase of materials from suppliers to the other end of supplying the product or service to customers.
• Efficiency means doing something at the lowest possible cost, i.e. to produce a good or service by using the smallest input of resources.
• Effectiveness means doing the right things to create the most value for the company.
o Trade-off – maximizing effectiveness and efficiency at the same time create conflict between these tow goals.
• Value is quality divided by price.
o Reasons for studying OM are:
o A business education is incomplete without an understanding of modern approaches to managing operations.
o OM provides a systematic approach of looking at organizational process.
o OM presents interesting career opportunities.
o The concepts and tools for OM are widely used in managing other function of a business.
• Operations and Supply Strategy – Setting broad policies and plans for using the recourses of a firm to best support its long-term competitive strategy
o Customer Needs Corporate Strategy Operations and Supply StrategyDecisions on Processes and Infrastructure
o E.g. More Product Increase Org. Size Increase Production CapacityBuild New Factory
• Supply Chain – Encompasses all activities associated with the flow and transformation of goods from the raw materials stage (extraction), through to the end user, as well as
the associated information flows.
o All stages involved, directly or indirectly, in fulfilling a customer request
o Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers
o Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution,
finance, customer service)
• Competitive Dimensions
o Cost or Price – Make the Product or Deliver the Service at Low Cost
o Quality – Make a Great Product or Deliver a Great Service
o Delivery Speed – Make the Product or Deliver the Service Quickly
o Delivery Reliability – Deliver It When Promised
o Coping with Changes in Demand – Change Its Volume
o Flexibility and New Product Introduction Speed – Change It, Variety of Products, Time to Market
o Other Product-Specific Criteria – Support It, Customization, installation support, after-sales service, etc.
• Trade off – Cost vs. Quality and Flexible vs. Delivery
For example, if we reduce costs by reducing product quality inspections, we might reduce product quality.
o For example, if we improve customer service problem solving by cross-training personnel to deal with a wider-range of problems, they may become less efficient
at dealing with commonly occurring problems.
• Straddling occurs when a company seeks to match the benefits of a successful position while maintaining its existing position. It adds new features, services, or technologies
onto the activities it already performs. This is risky and sometimes create problem when certain trade-offs need to be made.
• Order qualifiers are the basic criteria that permit the firm’s products to be considered as candidates for purchase by customers
• Order winners are the criteria that differentiates the products and services of one firm from another. E.g. cost of product, product quality and reliability etc.
• E.g. A brand name car can be an “order qualifier” while Repair services can be “order winners” Examples: Warranty, Roadside Assistance, Leases, etc.
• Core Capabilities or Competencies are the skills that differentiate the service or manufacturing firm from its competitors.
• Synergies must exist with other functional areas of the organization. Operations account for 60-80% of the direct expenses that burden a firm’s profit.
Chapter 2: Project Management
• Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform.
• Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time
constraints of a project.
• A Pure Project is where a self-contained team works full-time on the Advantages:
1--The project manager has full authority over the project 2--Team members report to one boss, no loyalty problem 3--Shortened communication lines 4---Team pride, motivation, and
commitment are high
1---Duplication of resources 2---Organizational goals and policies are ignored 3---Lack of technology transfer 4---Team members have no functional area "home" – worry about life-
• Functional Project is housed within a functional division o Advantages:
1---A team member can work on several projects 2---Technical expertise is maintained within the functional area 3---The functional area is a “home” after the project is completed
4---Critical mass of specialized knowledge create synergistic solution to problem
1---Aspects of the project that are not directly related to the functional area get short-changed 2---Motivation of team members is often weak 3--Needs of the client are secondary and are
responded to slowly
• Matrix Project
1---Enhanced communications between functional areas 2-0--Pinpointed responsibility 3--Duplication of resources is minimized 4---Functional “home” for team members 5--Policies of
the parent organization are followed
1--Too many bosses 2--Depends on project manager’s negotiating skills 3--Potential for sub-optimization – keep resources for their own projharm other project.
Work Breakdown Structure defines the hierarchy of project tasks, subtasks, and work packages. It breaks the project down into manageable pieces.
• Project Milestone is a specific event to be reached at points in time.
• Gantt chart or Bar chart shows both the amount of time involved and the sequence in which activities can be performed.
• Network-Planning Models: Critical Path Method (CPM) – based on the assumption that project activity time can be estimated accurately and that they do not vary.
Program Evaluation and Review Technique (PERT) – developed to handle uncertain time estimates. But, the difference of CPM and PERT
• Project is made up of a sequence of activities that form a network representing a project
• Critical path – the path taking longest time through this network of activities
• The critical path provides a wide range of scheduling information useful in managing a project
• Critical Path Method (CPM) helps to identify the critical path(s) in the project networks
• Critical Path Method (CPM) is used when activity times are known with certainty and used to determine timing estimates for the project, each activity in the project, and
slack time for activities
• A project must have:
1---well-defined jobs or tasks whose completion marks the end of the project; 2--independent jobs or tasks; 3-------and tasks that follow a given sequence.
• Predecessor and Successor Activities
o Activity A is called a predecessor of activity B if activity A needs to be completed before activity B can be started.
o In this case, activity B is called a successor of activi3----te: An activity may have more than one predecessor and/or more than one successor.
Chapter 4: Manufacturing Process
• Process Selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. For example,
1--If the volume is very low, we may just have a worker manually assemble each computer by hand. 2---In contrast, if the volume is higher, setting up an assembly line is appropriate,
• The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures: project, workcenter, manufacturing cell,
assembly line, and continuous process.
Product Layout – the product (by virtue of its bulk or weight) remains in a fixed location. Manufacturing equipment is moved to the product rather than vice versa. Example:
construction sites (houses and roads) and movie shooting lots.
Workcenter is where similar equipment or functions are grouped together, such as all drilling machines in one area and all stamping machines in another. This type of layout sometimes
is referred to as a job shop.
Manufacturing Cell is a dedicated area where products that are similar in processing requirements are produced.
These cells are designed to perform a specific set of process
1--The cells are dedicated to a limited range of products. 2---A firm may have many different cells in a production area, each set up to produce a single product or a similar group of
3--These cells typically are scheduled to produce “as needed” in response to current customer demand.
Assembly Line is where work processes are arranged according to the progressive steps by which the product is made.
1-The path for each part is, in effect, a straight line. 2--Discrete parts are made by moving from workstation to workstation at a controlled rate. Following the sequence need to build the
3----Examples: the assembly of toys, appliance, and automobiles.
• Continuous Process is similar to an assembly line in that production follows a predetermined sequence of stops, but the flow is continuous rather than discrete.
o Such structures are usually highly automated and, in effect, constitute one integrated “machine” that may operate 24 hours a day to avoid expensive shutdowns