9/24/2024
Khulna University
MBA 1st year, 2nd term
Operations and Supply Chain Management
(0413 03 MBA 5217)
Week 1 (Introduction)
By
Dr. ATM Jahiruddin
Introduction 1
• Firms objective is to add Value which refers to
adding something to the product that increases
its price
• Value addition is made through different core
and support activities like:
• Production
• Marketing
• Finance and Accounts
• HR
• R&D, etc.
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Introduction 2
• Operations are the foundation of a business, including
how it deals with supply chain and logistics.
• Profits rely on lean, efficient operations.
• Poor business operations can threaten a business’s
survival, so processes must be optimized, the right
staff needs to be employed, and physical locations
must be strategic, ethical, and safe.
• Therefore managing the operations occupies a
significant role in the management of an organization
Operations and Operations Management
• Operations refers to a function or system that
transforms inputs into outputs of greater value
• Transformation refers to a series of activities along a
value chain extending from supplier to customer
• The transformation process is the predominant activity
of a production system.
• The primary concern of an operations manager is the
activities of the transformation process.
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Operations functions in Management
Transformation process
• Transformation refers to a series of activities along a
value chain extending from supplier to customer
• activities that do not add value are superfluous and
should be eliminated
• Transformation types
• Physical: as in manufacturing operations
• Locational: as in transportation or Transformation Process
(warehouse operations)
• Exchange: as in retail operations
• Physiological: as in health care
• Psychological: as in entertainment
• Informational: as in communication
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Operations functions (from p. 2)
INPUT
•Material
•Machines OUTPUT
TRANSFORMATION •Goods
•Labor PROCESS
•Management •Services
•Capital
Feedback & Requirements
Operations Functions
• Organizing work
• Selecting processes
• Arranging layouts
• Locating facilities
• Designing jobs
• Measuring performance
• Controlling quality
• Scheduling work
• Managing inventory
• Planning production
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Operations management
• is the management of an organization’s productive
resources or its production system.
• refers to the decisions making regarding the
operations function and its connection with other
functions. The operations managers plan and
control the production system and its interfaces
within the organization and with the external
environment.” (Schroeder 2000)
Broader view of Operations management
• OM involves management of the entire system of
production of goods and services and all the activities
that has forward and backward linkage with
production system
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Broader view of Operations management
Materials
Money
Information
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Broader view of Operations management
• OM involves management of the entire system of
production of goods and services and all the activities
that has forward and backward linkage with
production system
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Decisions in Operations management
Good and service design HR and job design
Quality Supply-chain
Process and capacity management
design Inventory
Location selection Scheduling
Layout design Maintenance
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Goods and services
Physical products Service
• Tangible • Intangible
• Use of physical entity • Can’t be stored and
in consumption Preserved an most
• Can be stored cases
• Production and • Simultaneous
delivery can be production and delivery
separately done • More personal
involvement
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Recent trend of production
Physical Service
product
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Relationship with other functional area
(from p. 4)
• Operations
• Marketing
• Finance and
Accounting
• Human
Resources
• Suppliers
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Operations Managers in the hierarchy (p. 5)
CEO
Chief Executive Officer
CFO COO CIO
Chief Financial Officer Chief Operating Officer Chief Information Officer
VP Human Resources
VP Operations
VP Supply Chain
Management
VP Marketing
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Milestone/ evolution of Operations
management (p. 6)
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Frank and Lillian
Scientific Time and motion studies 1911 Gilbreth
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
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Milestone/ evolution of Operations
management- 2
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human 1940s Abraham Maslow
Relations Motivation theories 1950s Frederick Herzberg
1960s Douglas McGregor
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
Operations Operations research
line theory, decision 1950s
Research groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others
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Milestone/ evolution of Operations
management- 3
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
1980s
management) Joseph Juran
Quality Strategy and Wickham Skinner,
1980s
Revolution operations Robert Hayes
Michael Hammer,
Reengineering 1990s
James Champy
Six Sigma 1990s GE, Motorola
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Milestone/ evolution of Operations
management- 4
Era Events/Concepts Dates Originator
Internet Internet, WWW, ERP, 1990s ARPANET, Tim
Revolution supply chain management Berners-Lee SAP,
i2 Technologies,
ORACLE, Dell
E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
Globalization WTO, European Union, 1990s China, India,
Global supply chains, 2000s Emerging
Outsourcing, Service economies
Science
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Milestone/ evolution of Operations
management- 5
Era Events/Concepts Dates Originator
Sustainability Global warming Today Numerous
Carbon footprint companies,
Green products statesmen,
governments,
Corporate social
responsibility (CSR) United Nations,
World Economic
UN Global Compact Forum
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Supply Chain Management – an intro (p. 6)
• With more and more activities taking place outside
the enterprise in factories, distribution centers,
offices and stores overseas, managers needed to
develop skills in coordinating operations across a
global supply chain.
• Supply chain management refers to managing the
flow of information, products, and services across a
network of customers, enterprises, and supply chain
partners.
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Supply Chain Management
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Recent trend in OM
• Effectively consolidating the operations resulting
from mergers.
• Developing flexible supply chains to enable mass
customization of products and services.
• Managing global supplier, production and
distribution networks.
• Increased “commiditization” of suppliers
• Achieving good service from service firms
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Factors affecting OM
• Global Competition
• Quality, Customer Service, and Cost Challenges
• Rapid Expansion of Advanced Technologies
• Continued Growth of the Service Sector
• Scarcity of Operations Resources
• Social-Responsibility Issues
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Contemporary Challenges in OM 1
• Globalization (p. 9)
– Two thirds of today’s businesses operate globally through
global markets, operations, financing, and supply chains.
– Globalization can take the form of selling in foreign
markets, producing in foreign lands, purchasing from foreign
suppliers, or partnering with foreign firms.
– Falling trade barriers, WTO and Trade blocks, ICT and
development of transportation technology are the
proponents
– Companies “go global” to take advantage of favorable costs,
to gain access to international markets, to be more responsive
to changes in demand, to build reliable sources of supply, and
to keep abreast of the latest trends and technologies
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Contemporary Challenges in OM 2
• Scarcity of Operations Resources
– Increasing number of competitors against limited resources
– Drive for alternative resources
– Pressure on cost curtail
• Rapid change of Technology
– Computer and Software
– Process, Machineries and equipment
– Internet and intranet
• Continued Growth of the Service Sector
– Tourism and hotel business
– Media
– Telecommunication
– Financial institution
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Contemporary Challenges in OM 3
• Quality and Cost Challenges
– Increasing conscious and demanding customers
– Heightened competition
– Government regulations
– Outsourcing
• Social Responsibilities Issues
– Environment, heal and pollution
– Government regulations
– Charity and social welfare
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