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LO1-1 IDENTIFY

THE ELEMENTS OF OPERATIONS AND SUPPLY

CHAIN MANAGEMENT



OSCM



INVOLVES THE INTEGRATION OF STRATEGY PROCESSES



TO IMPLEMENT THE STRATEGY, AND ANALYTICS TO SUPPORT

OSCM: THE

DESIGN, OPERATION, AND IMPROVEMENT OF THE

SYSTEMS THAT CREATE AND DELIVER THE FIRM’S PRIMARY

 

PRODUCTS AND SERVICES, PROCESS: ONE OR MORE ACTIVITIES THAT TRANSFORM INPUTS INTO OUTPUTS. PRODUCT-SERVICE BUNDLING: WHEN A FIRM BUILDS SERVICE ACTIVITIES INTO ITS PRODUCT OFFERINGS TO CREATE ADDITIONAL VALUE FOR THE CUSTOMER.

LO1-2 KNOW THE POTENTIAL CAREER OPPORTUNITIES IN OSCM  OSCM PEOPLE SPECIALIZE IN MANAGING THE PRODUCTION OF GOODS AND SERVICES. OSCM JOBS ARE HANDS ON AND REQUIRE WORKING WITH OTHERS AND FIGURING OUT THE BEST WAY TO DO THINGS.

USE OF CURRENT BUSINESS DATA TO

THE COO

WORKS WITH THE

CEO

SUSTAINABILITY: THE

ABILITY TO MEET CURRENT RESOURCE

NEEDS WITHOUT COMPROMISING THE ABILITY OF FUTURE

THE ONGOING DECISIONS NEEDED TO MANAGE THE FIRM.



BUSINESS ANALYTICS: THE

SOLVE BUSINESS PROBLEMS USING MATHEMATICAL ANALYSIS.

(OSCM)



GENERATIONS TO MEET THEIR NEEDS. TRIPLE BOTTOM LINE: A BUSINESS STRATEGY THAT SOCIAL, ECONOMIC, AND ENVIRONMENTAL CRITERIA.

INCLUDES

LO1-4 EVALUATE THE EFFICIENCY OF A FIRM  CRITERIA THAT RELATE TO HOW WELL THE FIRM IS DOING ARE THE FIRM’S EFFICIENCY, ITS EFFECTIVENESS, AND THE VALUE CREATED IN ITS PRODUCTS AND SERVICES.  EFFECTIVENESS: DOING THE THINGS THAT WILL CREATE THE MOST VALUE FOR THE CUSTOMER.  EFFICIENCY: DOING SOMETHING AT THE LOWEST POSSIBLE COST.  VALUE: THE ATTRACTIVENESS OF A PRODUCT RELATIVE TO ITS PRICE.  BENCHMARKING: WHEN ONE COMPANY STUDIES THE PROCESSES OF ANOTHER COMPANY TO IDENTIFY BEST PRACTICES.

AND

COMPANY PRESIDENT TO DETERMINE THE COMPANY’S

COOS DETERMINE AN ORGANIZATION’S LOCATION, ITS FACILITIES, WHICH VENDORS TO USE, AND HOW THE HIRING POLICY WILL BE IMPLEMENTED.

CHAPTER 1 FORMULAS:

COMPETITIVE STRATEGY.

LO1-3 RECOGNIZE

THE CONCEPTS THAT DEFINE THE

OSCM

CONCEPTS INCLUDE JIT PRODUCTION, TQM, SIX SIGMA QUALITY, BUSINESS PROCESS REENGINEERING, SCM, AND ELECTRONIC COMMERCE. ONE OF THE IMPORTANT ISSUES THAT CHALLENGE OPERATIONS MANAGERS IS THE ABILITY TO BALANCE THE ECONOMIC, EMPLOYEE, AND ENVIRONMENTAL



ACCOUNTS RECEIVABLE 2. INVENTORY TURNOVER = COGS / AVG INVENTORY VALUE 3. ASSET TURNOVER = REVENUE (SALES) / TOTAL ASSETS

FIELD



1. RECEIVABLE TURNOVER = ANNUAL CREDIT SALES / AVG

VIABILITY OF BUSINESS. MASS CUSTOMIZATION: THE

LO11-1 EXEMPLIFY

A TYPICAL BUSINESS PROCESS AND HOW

IT CAN BE ANALYZED



COMPANIES

GET THINGS DONE WITH PROCESSES.

CREATE VALUE FOR THE ORGANIZATION. ABILITY TO PRODUCE A UNIQUE

PRODUCT EXACTLY TO A PARTICULAR CUSTOMER’S REQUIREMENTS.

A

PROCESS

TAKES INPUTS AND TRANSFORMS THEM INTO OUTPUTS THAT

EVERYTHING FROM

ORDERING MATERIAL FROM VENDORS ON THE SUPPLY SIDE AND FABRICATING A PRODUCT IN A FACTORY TO SHIPPING GOODS TO

CUSTOMERS ON THE DEMAND SIDE IS DONE WITH PROCESSES.

TO PRODUCE A UNIT BY THE PROCESS, AND THE PRODUCTION

A

RATE OR CAPACITY OF THE PROCESS.

COMPANY MAY LITERALLY HAVE THOUSANDS OF DIFFERENT

PROCESSES. CHAPTER.

DESIGNING PROCESSES

UNDERSTANDING A

IS THE FOCUS OF THIS

PROCESS USUALLY STARTS WITH

FORMULA 11.1 - LITTLE’S LAW:

THE PREPARATION OF A FLOWCHART THAT DEPICTS TASKS,



FLOWS, AND STORAGE AREAS. PROCESS: ANY SET OF ACTIVITIES

INVENTORY = THROUGHPUT RATE * FLOW TIME PERFORMED BY AN

ORGANIZATION THAT TAKES INPUTS AND TRANSFORMS THEM INTO



CYCLE TIME: THE



AVERAGE TIME BETWEEN COMPLETIONS OF

UTILIZATION: THE

BLOCKING: THE

ACTIVITIES IN THE STAGE MUST STOP BECAUSE

THERE IS NO PLACE TO DEPOSIT THE ITEM JUST COMPLETED.

SUCCESSIVE UNITS IN A PROCESS.



STORAGE AREA BETWEEN STAGES WHERE THE

DOWNSTREAM STAGE.

THE ORIGINAL INPUTS.



BUFFERING: A

OUTPUT OF A STAGE IS PLACED PRIOR TO BEING USED IN A

OUTPUTS IDEALLY OF GREATER VALUE TO THE ORGANIZATION THAN



RATIO OF THE TIME THAT A RESOURCE IS

FOR USE.

STARVING: THE

ACTIVITIES IN A STAGE MUST STOP BECAUSE

THERE IS NO WORK.

ACTUALLY ACTIVATED RELATIVE TO THE TIME THAT IT IS AVAILABLE



BOTTLENECK: A

RESOURCE THAT LIMITS THE CAPACITY OR MAX

OUTPUT OF THE PROCESS.

LO11-2 COMPARE DIFFERENT TYPES OF PROCESSES  IN THE CASE OF A MULTISTAGE PROCESS THAT HAS A

 

ALLOWS



THE

BOTTLENECK IS

  

THE MOST AND IT LIMITS THE CAPACITY OF THE ENTIRE

A

PROCESS THAT IS ONLY ACTIVATED AFTER AN

ACTUAL ORDER ARRIVES IS CALLED MAKE TO ORDER.

MAKE

TO

STOCK PROCESSES SUPPLY INVENTORY FROM WHICH ACTUAL CUSTOMER ORDERS ARE FILLED.



BASIC

 

PROCESS PERFORMANCE IS MEASURED BY ITS SPEED

AND CAPACITY.

MEASURES

THAT DRIVE COST INCLUDE THE



EFFICIENCY, PRODUCTIVITY, AND UTILIZATION OF RESOURCES USED IN THE PROCESS.

LITTLE’S

MADE

TO

STOCK: A

PROCESS THAT PRODUCES STANDARD

LAW IS A FORMULA THAT

CAPTURES THE RELATIONSHIP BETWEEN THE AMOUNT OF INVENTORY OF ALL TYPES IN THE PROCESS, THE TIME REQUIRED

HYBRID: COMBINES

THE FEATURES OF BOTH MADE TO ORDER

PACING: MOVEMENT

OF ITEMS THROUGH A PROCESS IS

COORDINATED THROUGH A TIMING MECHANISM.

THE ACTIVITY OR STAGE IN THE PROCESS THAT LIMITS OUTPUT PROCESS.

PROCESS THAT IS ACTIVATED ONLY IN

AND MADE TO STOCK.

THE ACTIVITIES TO OPERATE RELATIVELY INDEPENDENTLY AND HELPS PREVENT STARVING AND BLOCKING.

ORDER: A

PRODUCTS THAT ARE STORED IN FINISHED GOODS INVENTORY.

ORDER, IT IS OFTEN USEFUL TO BUFFER THE ACTIVITIES BY

THIS

TO

RESPONSE TO AN ACTUAL ORDER.

SEQUENCE OF ACTIVITIES THAT MUST BE DONE IN A SPECIFIC PLACING INVENTORY BETWEEN THE ACTIVITIES.

MADE



PRODUCTIVITY: THE RATIO OF OUTPUT TO INPUT. EFFICIENCY: A RATIO OF THE ACTUAL OUTPUT OF A PROCESS RELATIVE TO SOME STANDARD. RUN TIME: THE TIME REQUIRED TO PRODUCE A BATCH OF PARTS. SETUP TIME: THE TIME REQUIRED TO PRODUCE A BATCH OF PARTS. OPERATION TIME: THE SUM OF THE STARTUP TIME AND RUN TIME FOR A BATCH OF PARTS THAT ARE RUN ON A MACHINE. FLOW TIME: THE AVG TIME THAT IT TAKES A UNIT TO MOVE THROUGH AN ENTIRE PROCESS.



THROUGHPUT RATE: THE

OUTPUT RATE THAT THE PROCESS IS



WORK MEASUREMENT: SETTING TIME

STANDARDS FOR A JOB.

EXPECTED TO PRODUCE OVER A PERIOD OF TIME.

  

  

PROCESS VELOCITY: (THROUGHPUT RATIO) THE RATIO OF THE VALUE-ADDED TIME TO THE FLOW TIME. VALUE-ADDED TIME: THE TIME IN WHICH USEFUL WORK IS ACTUALLY BEING DONE ON THE UNIT. TOTAL AVG VALUE OF INVENTORY: THE TOTAL AVG INVESTMENT IN RAW MATERIAL, WIP, AND FINISHED GOODS INVENTORY. INVENTORY TURN: COGS DIVIDED BY THE TOTAL AVG VALUE OF INVENTORY. DAYS OF SUPPLY: THE NUMBER OF DAYS OF INVENTORY OF AN ITEM. LITTLE’S LAW: STATES A MATHEMATICAL RELATIONSHIP BETWEEN THROUGHPUT RATE, FLOW TIME, AND THE AMOUNT OF WIP INVENTORY.

LO11-3 EXPLAIN HOW JOBS ARE DESIGNED  DESIGNING EACH TASK THAT MUST BE PERFORMED IN A PROCESS IS IMPORTANT. EACH TASK TAKES TIME AND MUST BE PERFORMED BY EITHER A PERSON OR MACHINE. JOB DESIGN IS THE STUDY OF HOW WORK ACTIVITIES ARE DESIGNED FOR INDIVIDUALS OR GROUPS OF WORKERS.

A

KEY DESIGN

DECISION IS THE AMOUNT OF SPECIALIZATION THAT A JOB ENTAILS. JOBS THAT ARE TOO SPECIALIZED MAY BE BORING AND CREATE HEALTH PROBLEMS FOR WORKERS.

TRADEOFFS

LO11-4 ANALYZE 

  

FUNDAMENTAL CONCEPT WITH RESPECT TO A PROCESS IS

PROCESS IN SOME FORM. IF INPUTS SUCH AS MATERIALS ARE GOING INTO THE PROCESS FASTER THAN THEY ARE BEING CONSUMED, THEN THESE INPUTS WILL BUILD UP WITHIN THE PROCESS.

THIS CAN CREATE SERIOUS PROBLEMS FOR THE COORDINATING THE INPUTS AND OUTPUTS IS IMPORTANT HAVING A GOOD PROCESS.

FIRM. TO

LO7-1 UNDERSTAND WHAT A MANUFACTURING PROCESS IS  MANUFACTURING PROCESSES ARE USED TO MAKE TANGIBLE ITEMS. AT A HIGH LEVEL THESE PROCESSES CAN BE DIVIDED INTO THREE STEPS: O 1. SOURCING THE PARTS NEEDED O 2. MAKING THE ITEM O 3. SENDING THE ITEM TO THE CUSTOMER  IN ORDER TO ALLOW PARTS OF THE PROCESS TO OPERATE INDEPENDENTLY, INVENTORY IS STRATEGICALLY POSITIONED IN THE PROCESS. THESE PLACES IN THE PROCESS ARE CALLED DECOUPLING POINTS. POSITIONING THE DECOUPLING POINTS HAS AN IMPACT ON HOW FAST A CUSTOMER CAN BE SERVED,

EXIST

JOB DESIGN: SPECIFICATION OF THE WORK ACTIVITIES OF AN INDIVIDUAL OR GROUP. SPECIALIZATION OF LABOR: SIMPLE, REPETITIVE JOBS ARE ASSIGNED TO EACH WORKER. JOB ENRICHMENT: SPECIALIZED WORK IS MADE MORE

A

THAT WHAT GOES INTO A PROCESS MUST COME OUT OF THE

THE FLEXIBILITY THE FIRM HAS IN RESPONDING TO SPECIFIC

BETWEEN THE QUALITY AND RELATIVE PRODUCTIVITY OF A PROCESS AND DEPEND ON HOW THE JOBS ARE DESIGNED.

  

CUSTOMER REQUESTS, AND MANY OTHER TRADE-OFFS. LEAD TIME: THE TIME NEEDED TO RESPOND TO A CUSTOMER ORDER. CUSTOMER ORDER DECOUPLING POINT: WHERE INVENTORY IS POSITIONED IN THE SUPPLY CHAIN. LEAN MANUFACTURING: THE ACHIEVE HIGH CUSTOMER SERVICE WITH MINIMUM LEVELS OF INVENTORY INVESTMENT.

INTERESTING BY GIVING THE WORKER A GREATER VARIETY OF TASKS.

MANUFACTURING, SERVICE, AND LOGISTICS

PROCESSES TO ENSURE THE COMPETITIVENESS OF A FIRM

FORMULA 7.1:

DRAWINGS, ASSEMBLY CHARTS, AND FLOWCHARTS.

FLOWCHARTS

TOTAL # COMBINATIONS = N1 * N2 * N3 * … * NN

ARE MOST USEFUL FOR OUR PURPOSES.

SIMPLE

ANALYSIS OF THE CAPACITY OF A PROCESS AND THE VARIABLE

LO7-2 EXPLAIN

COST TO PRODUCE EACH UNIT IS USEFUL.

HOW MANUFACTURING PROCESSES ARE

LO8-1 ANALYZE

ORGANIZED



MANUFACTURING LAYOUTS ARE DESIGNED BASED ON THE NATURE OF THE PRODUCT, VOLUME NEEDED TO MEET DEMAND, AND COST OF EQUIPMENT. THE TRADE-OFFS ARE DEPICTED IN THE PRODUCT-PROCESS MATRIX, WHICH DEPICTS THE TYPE OF



BREAKEVEN ANALYSIS

  





THE

FOUR MOST COMMON TYPES OF LAYOUTS USED

FOR MANUFACTURING ARE THE WORKCENTER, ASSEMBLY LINE, MANUFACTURING CELL, AND PROJECT LAYOUTS.

IS

WORKCENTER

LAYOUTS (OFTEN REFERRED TO AS JOB SHOPS) INVOLVE ARRANGING FUNCTIONAL WORKCENTERS (AREAS WHERE A

ALTERNATIVE EQUIPMENT CHOICES.

PROJECT LAYOUT: FOR LARGE

FOCUS IS ON UNDERSTANDING THE QUANTITATIVE

LAYOUTS.

USEFUL FOR UNDERSTANDING THE COST TRADE-OFFS BETWEEN



THE

TECHNIQUES THAT ARE USED TO DESIGN MANUFACTURING

LAYOUT RELATIVE TO PRODUCT VOLUME AND THE RELATIVE STANDARDIZATION OF THE PRODUCT.

THE COMMON TYPES OF MANUFACTURING

LAYOUTS

SPECIFIC TYPE OF WORK IS DONE) TO OPTIMIZE THE FLOW

OR MASSIVE PRODUCTS

PRODUCED IN A SPECIFIC LOCATION, LABOR, MATERIAL, AND

BETWEEN THESE AREAS.

EQUIPMENT ARE MOVED TO THE PRODUCT RATHER THAN VICE

CENTERED ON DEFINING THE WORK CONTENT OF

VERSA. WORKCENTER: A

WORKSTATIONS THAT ARE TYPICALLY SPACED ALONG THE LINE.

THIS

PROCESS WITH GREAT FLEXIBILITY TO PRODUCE

THE

ASSEMBLY LINE DESIGN IS

TECHNIQUE IS CALLED ASSEMBLY LINE BALANCING.

THE

A VARIETY OF PRODUCTS, TYPICALLY AT LOWER VOLUME LEVELS.

WORKSTATIONS NEED TO BE DEFINED SO THAT EFFICIENCY IS

MANUFACTURING CELL: DEDICATED AREA WHERE A GROUP OF SIMILAR PRODUCTS ARE PRODUCED. ASSEMBLY LINE: AN ITEM IS PRODUCED THROUGH A FIXED SEQUENCE OF WORKSTATIONS, DESIGNED TO ACHIEVE A SPECIFIC PRODUCTION RATE. CONTINUOUS PROCESS: A PROCESS THAT CONVERTS RAW

MAXIMIZED WHILE MEETING MAXIMIZING CYCLE TIMES AND

MATERIALS INTO FINISHED PRODUCT IN ONE CONTIGUOUS

GENERAL PURPOSE MACHINES (LIKE THOSE USED IN A

PROCESS. PRODUCT-PROCESS MATRIX: A

WORKCENTER) TO AN AREA THAT IS DESIGNED TO PRODUCE

PRESENCE CONSTRAINTS. IN MANY SETTINGS, IT IS DESIRABLE TO MAKE SIMILAR ITEMS ON THE SAME ASSEMBLY LINE.

THIS IS MANUFACTURING SETTINGS (COMPARED TO

CALLED MIXED MODEL LINE BALANCING. CELLS ARE USED FOR LOWER VOLUME ASSEMBLY LINES).

SIMILAR ITEMS.

FRAMEWORK DEPICTING WHEN

THE

IDEA IS TO ALLOCATE DISSIMILAR

TYPICALLY,

A TEAM OF WORKERS PERFORM THE

WORK IN A CELL.

THE DIFFERENT PRODUCTION PROCESS TYPES ARE TYPICALLY USED DEPENDING ON PRODUCT VOLUME AND HOW STANDARDIZED THE PRODUCT IS.

LO7-3 ANALYZE SIMPLE MANUFACTURING PROCESSES  VISUAL CHARTS CAN BE USED TO DOCUMENT MANUFACTURING PROCESS FLOWS. SOME COMMON CHARTS ARE ASSEMBLY

FORMULA 8.1 – WORKSTATION CYCLE TIME: 

C = PRODUCTION TIME PER DAY (IN UNITS)

PER DAY

/ REQUIRED

OUTPUT

FORMULA 8.2 – MINIMUM NUMBER OF WORKSTATIONS REQUIRED TO SATISFY THE WORKSTATION CYCLE TIME CONSTRAINT

LO8-2 ILLUSTRATE 



NT = SUM

OF

LAYOUTS USED IN NONMANUFACTURING

SETTINGS

OTHER TYPES

OF LAYOUTS INCLUDE THOSE USED IN RETAIL

STORES AND OFFICES. IN THE CASE OF A RETAIL STORE, THE

TASK TIMES (T) / CYCLE TIME (C)

OBJECTIVE IS OFTEN BASED ON MAXIMIZING THE NET PROFIT PER SQUARE FOOT OF FLOOR SPACE.

FORMULA 8.3 – EFFICIENCY 





EFFICIENCY = SUM OF TASK TIMES (T) / (ACTUAL # OF WORKSTATIONS (NA ) * WORKSTATION CYCLE TIME (C))

WORKCENTER: ALSO CALLED A JOB-SHOP OR FUNCTIONAL LAYOUT; A FORMAT IN WHICH SIMILAR EQUIPMENT OR FUNCTIONS ARE GROUPED TOGETHER. ASSEMBLY LINE: EQUIPMENT OR WORK PROCESSES ARE ARRANGED ACCORDING TO THE PROGRESSIVE STEPS BY WHICH THE



PRODUCT IS MADE. MANUFACTURING CELL: GROUPS

DISSIMILAR MACHINES TO

WORK ON PRODUCTS THAT HAVE SIMILAR SHAPES AND PROCESSING REQUIREMENTS.



PROJECT LAYOUT: THE

PROJECT REMAINS AT ONE LOCATION,

AND EQUIPMENT IS MOVED TO THE PRODUCT.



SYSTEMATIC LAYOUT PLANNING (SLP): A

TECHNIQUE FOR

SOLVING PROBLEMS WHEN THE USE OF NUMERICAL FLOW DATA BETWEEN DEPARTMENTS IS NOT PRACTICAL.

THE

TECHNIQUE USES

AN ACTIVITY RELATIONSHIP DIAGRAM THAT IS ADJUSTED BY TRIAL AND ERROR UNTIL A SATISFACTORY ADJACENCY PATTERN IS OBTAINED.



WORKSTATION CYCLE TIME: THE

TIME BETWEEN SUCCESSIVE

UNITS COMING OFF THE END OF AN ASSEMBLY LINE.



ASSEMBLY LINE BALANCING: THE

PROBLEM OF ASSIGNING

TASKS TO A SERIES OF WORKSTATIONS SO THAT THE REQUIRED CYCLE TIME IS MET AND IDLE TIME IS MINIMIZED.



PRECEDENCE RELATIONSHIP: THE

REQUIRED ORDER IN WHICH

TASKS MUST BE PERFORMED IN AN ASSEMBLY PROCESS.

         

COST, QUALITY, SPEED, FLEXIBILITY BUY, MAKE, MOVE, SELL, SERVICE PROFIT = REVENUE – COST ROI IS A MEASURE OF CAPITAL EFFICIENCY ROI = PROFIT / INVESTMENT VALUE = WHAT CUSTOMERS GET / WHAT THEY “PAY” FOR PRODUCTIVITY = OUTPUT / INPUT DESIGN QUALITY, PRODUCTION QUALITY, PERCEIVED QUALITY CROSS-TRAINING, MASS CUSTOMIZATION, DESIGN FLEXIBILITY PLANNING AND QUALITY CONTROL FOR SERVICES IS MORE CHALLENGING THAN PHYSICAL PRODUCTS....