Operations and Supply Chain Management
Operations management: is all about the ability of a company to control and or approve
its business processes.
Successful organizations understand the interconnectivity of
2. business structure,
3. and operations,
and seek to ensure that all three are integrated into the decision-making process and
that structure and operations are aligned and in support of the organization’s strategic
When we visualize the interconnectivity of these three business system components, we
should conclude the following:
1. • Strategy is what we want to accomplish.
2. • The business structure should provide the controls and the formal
communication and responsibility framework that will guide the organization as it
seeks to realize its strategy.
3. • Operations are understood to be the actual processes employed, which, when
combined with the utilization of the organization’s capital assets, enable strategic
outcomes to be actualized.
These three components and the corresponding actions that take place within the opera-
tions area result in getting the right product or service to the right customer at the right
place at the right time for the right price Successful businesses look to establish within their business systems competitive
advantages that enable them to deliver their products and/or services to their targeted
market segments in a manner superior to that of the competition.
Responsibilities of Operation managers
Operations Management is the effective design, development, and management of the
processes, procedures, and practices em- bedded within an organization’s business
system for the purpose of achieving its strategic intent
Areas of Responsibility
1. Process Management
2. Supply Chain Management
3. Product Service Management
Process Management: is the design and
development of the work flow and connectivity of the transformation requirements
(processes) needed to ensure that an organization’s products and services are efficiently
produced and effectively delivered to the marketplace. Supply Chain: is the management of the interdependencies among suppliers,
manufacturers, and distributors; it seeks to develop the terms and conditions that will
enable all parties to efficiently and effectively meet their obligations to one another due
to their business relationships
Product and Service Management refers to the variety of activities that commence
with the design and development of potential new products in R&D and extend to the
post-purchase support of products/services now in the hands of customers.
THE ORGANIZATION’S VALUE CHAIN
Value Maximization refers to maximizing the benefits (price/ quality comparison) that an
individual or set of customers will realize as a result of using a product or service
At the centre of the value chain model is the underlying principle that managers should
seek to make decisions across the chain’s activity areas in a manner that contributes
positively to the overall value of the products or services being produced or offered.
VALUE CHAIN ANALYSIS: PRIMARY ACTIVITIES
Connectivity between two key areas of business system activity.
These two areas are called
2. and supporting activities.
Primary activities relate to the specific activities through which the development and
transformation of a product or service occurs as it is produced and delivered to the
1. • Inbound logistics
2. • Operations
3. • Outbound logistics
4. • Marketing and sales
5. • Customer service 1. Inbound Logistics refers to the management of supplier relation- ships relating
to those parts and/ or components, or finished prod- ucts, that are brought into
the organization in order to produce finished products for delivery to the
2. Operations refers to the manufacturing and/or product change processes set up
to ensure that the final product the organization is manufacturing or handling is
ready for the marketplace.
3. Outbound Logistics refers to getting the finished product to the customer via a
distribution channel that is accessible, convenient, and able to minimize
stockouts and other sales impediment factors.
4. Marketing and Sales refers to those activities that create pro- file and awareness
for the organization’s products, services, or brand(s), and the benefits de- rived
from the acquisition and use of such products or services.
5. Customer Service refers to the support provided to customers before, during,
and following the purchase process
VALUE CHAIN ANALSIS: SUPPORT ACTIVITIES
Support Activities: are those areas within the organization that are not directly
associated with the actual processes the organization uses to produce products and/or
deliver services but that are an integral part of the sup- port structure the primary
activities rely on to successfully execute strategy • The IT department, which will collaborate with the operations department on the
development and application of new technologies in support of the value chain
• The research and development and engineering departments, which primarily
focus on new product development, existing product enhancement, and process
design and development.
• Human resource management, which assists in recruitment, employee
development, and support services for employees.
• Other supporting departments such as finance, accounting, legal, and
The successful execution of the primary activities of the organization is facilitated by the
organization’s support activities.
THE OPERATIONS CYCLE
Operations Cycle is the alignment of the operational tasks within an organization by its
management team in order to meet the strategic outcomes defined in the organization’s
Process Standardization is the design and utilization of common platforms and
common task se- quencing to produce/develop a variety of products or services.
Process Simplification is the design and utilization of a minimum number of tasks
when developing products and/or services. PROCESS MANAGEMENT
In terms of process management, operations managers have four core decision areas
that need to be examined (see Figure 9.9). These are as follows:
1. Process design, layout, and execution
2. Materials management
3. Facility design and layout 4. Capital asset evaluation and acquisition
Process Design, Layout, and Execution refers to the assessment and implementation
of the tasks necessary to get the required work accomplished, and how such tasks will
be grouped and sequenced to ensure that the most efficient and effective processes are
utilized in the production of products and/or services.
Process management decisions will need to be made as to how the flow of work will be
sequenced and what steps must be initiated into the process to ensure that quality,
timing, performance, and service expectations are met. PERT Chart is a scheduling methodology that focuses on task sequenc