ADM 2372 Chapter Notes - Chapter 5: Demand Forecasting, Supply Chain, Operations Management

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15 Apr 2012
Chapter 5 Operations Management and Supply Chain Management
Operations Management Fundamentals
Information Systems’ Role in OM
OM and the Supply Chain
Basics of Supply Chain
Information Systems’ Role in the Supply Chain
Supply Chain Management Success Factors
Future Supply Chain Trends
Operations Management Fundamentals
What is Operations Management (OM)?
It is the management of systems or processes that convert or transform
resources (including human resources) into goods and services.
A transformation process is often referred to as the technical core, especially
in manufacturing organizations, and is the actual conversion of inputs to
Examples of inputs and outputs??
Raw materials
Human resources
Data that comes in
Education: textbooks, professors, knowledge
Customer Service
Education: educated students
Outputs are not necessarily always positive.
You need quality and control monitoring, for positive outputs.
What is the value added from inputs to the outputs?
- The cost of things.
- Value-added of outputs is that it costs less.
- When employees are trained, it’s cheaper for us.
- When employees are not trained, we need to pay for training.
Operations Management Fundamentals
OM in Business p.142 The transformation of resources into goods and services
involves various activities (things you can and should do). What are they?
- Forecasting
- Capacity Planning (resources, hours, people, design)
- Scheduling
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- Managing Inventory
- Assuring Quality
- Motivating and Training employees
- Locating Facilities
OM and the supply chain
- What is a supply chain?
o Supply chain consists of all parties involved directly or indirectly
in the procurement of a product or raw material
- What is supply chain management
o Supply Chain Management (SCM) involves the management of
information flow between and among stages in a supply chain to
maximize total effectiveness and profitability.
Four basic components of supply chain management:
1. Supply chain strategy
Strategy for managing all resources to meet customer demand for products
and services
2. Supply chain partners
Partners chosen to deliver finished products, raw materials, and services
3. Supply chain operation
Schedule for production activities (testing, packaging, preparation for
4. Supply chain logistics
Product delivery processes and elements (warehouses, carriers, invoicing,
defective returns)
Supply Chain Fundamentals
- How much does an average company spend on production needs out of each
dollar earned?
- Nearly half of every dollar earned is spent on production needs
- “Production needs” implies goods and services needed from external suppliers
to keep producing Supply chain
- Extending an organization through SCM
The supply chain has three main links:
o Materials flow from suppliers and their “upstream” suppliers at all
o Transformation of materials into semi-finished and finished products
through the organization’s own production process
o Distribution of products to customers and their “downstream”
customers at all levels
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